Abstract
As firms are facing the critical point of transformation or on the start- up stage of company establishment, the assessment on the capital that they own is essential. Nowadays, entrepreneurs, companies are not only seeking tangible capital, such as cash, equipment or tools, factories and land,they also evaluate their intangible capital, such as knowledge, know-how, the patent portfolio and the human capital to make the right decision for their firms. Whether the relational network also called” guanxi” in Chinese, is one of the forms of intangible capital included in the planning? Guanxi has been long considered a subtle capital in Chinese society. However, it is also embedded with a negative notation. This research will review the value of guanxi and try to correct the stereotype of guanxi. From the study of founders’ relational networks to how companies construct social network as intangible capital during the transformation or diversification period, the interesting phenomenon was found that the big firms in the high-tech industry are more peer-oriented when they first started, unlike the majority family business in other industries. Also, high-tech firms at their transformation stage are likely to construct the social network. The social network change from family dominated to peer oriented proved that its high influence on industry and the role of social capital is important for business.