Kin-selection based altruism and financing behavior of small business

Analyzing the relationship of kin selection and internal financing, this paper manages to shed light on the social mechanism of the formation of internal financing group in which lenders offer credit to small businesses. Our analysis shows that, embedded in their community, the most complex social system, small business internal financing is actually a kind of altruistic behavior between firm owners and their relatives who constitute the majority of internal financing social group. Their relatives are benefactors and those owners are receivers. The basic purpose of altruistic financing is: firstly, to promote the profitability of the company and that of the benefactor; secondly, to promote the competence of the owner´s family business so as to keep the family´s independent control on it in the long run, and improve the family members´ and their descendants´ profitability simultaneously.