Page - (000078) - in Knowledge and Networks

69 network differ structurally in terms of knowledge creation and why localized learning in developing communities can be expected to evolve from closed to open networks. Family Ties and Economic Development The family is a basic social organization in both traditional and modern societies. Family and kinship groups, connected biologically, constitute a natural association of individuals and influence economic behaviors to different degrees from one soci- ety to the next. In traditional communities, where family structures predominate, individuals are both economically and socially affiliated to their families. These family networks become an institution through which seniors are empowered with authority over resource allocation and the resolution of disputes among family members. Societies of this kind are by nature composed of families rather than indi- viduals because individuals in these contexts cannot freely make choices and take actions. Family control reduces labor participation, geographical mobility, and civil engagement and results in low economic development (Alesina & Giuliano, 2013; Bertrand & Schoar, 2006). Strong family structure has therefore long been generally regarded as an obstacle to the development of capitalism. The point is illustrated by the underdevelopment of capitalism in some family-dominated societies such as traditional China and southern Italy (Banfield, 1958; Weber, 1951) and by the fact that family and kinship networks declined with the ascendance of modern corpora- tions and economic development in Europe (Greif, 2006). Strong family structures are still found to be related to the low development of some European regions (Duranton, Rodríguez-Pose, & Sandall, 2009). These arguments on the incompati- bility of family ties in capitalism depend on the idea that activities of individuals cannot be organized beyond the family level in a society with excessively strong family structures and, hence, that civic spirit and public institutions cannot take root therein. Unlike western individualistic societies, Asian societies tend to emphasize fam- ily values strongly. The successes of several Asian economies in the past decades therefore defy the understanding that family ties inhibit the development of capital- ism. In these economies a keen sense of family obligation motivates individuals to work hard and reduce consumption in order to support family members, especially the next generation, and to increase their education. Strong family ties, as an impor- tant kind of social capital, help develop human capital (Coleman, 1988). Besides improving the labor market, strong commitment to the family also accelerates capi- tal accumulation because family workers tend to consume less and save more than singles do. Family structure thereby contributes to the growth of Asian economies (Whyte, 1996). Since the Asian financial crisis in the 1990s, however, it has been recognized that family involvement in Asian economies is, to a large extent, respon- sible for the weakness of those economies (Perkins, 2000). At the national level, cronyism—family networks among political authorities such as Suharto’s family in 4 Family Networks for Learning and Knowledge Creation