This paper aims to explore hidden wellsprings of risk-taking in family firms.
The high tolerance for risk shown repeatedly by the famous family firm Hipp of Germany is documented. Three major risk-taking episodes at Hipp are examined.
Counterintuitively, conservative values were actually a major facilitator of risk-taking at Hipp.
The ramifications for other family firms, especially in Germany’s so-called Mittelstand, are examined. An open question is whether the relevant scope of the foregoing analysis may be confined to national contexts like German Mittelstand with its highly developed sector of family firms.
Contrary to received wisdom, family firms with conservative values may actually have certain advantages in their capacity not only to assume certain types of risks but also to mitigate such risks. Especially the communitarian embeddedness of such values may provide a layer of risk mitigation.
At least in some countries, such as Germany, family firms are indeed willing to engage in substantial risk-taking. With their approach of combining conservative values and risk-taking, they contribute to considerable wealth and societal development.
Conservatism in management and risk-taking propensity are usually thought of as antipodes. However, it is necessary to distinguish between conservatism (which usually equates to risk aversion) and conservative values (which, as shown, may be highly compatible with a willingness to engage and succeed in risky undertakings).
Lehrer, M. and Schmid, S. (2019), "Family firms taking surprising risks: building success on conservative values", Journal of Business Strategy, Vol. 40 No. 5, pp. 21-27. https://doi.org/10.1108/JBS-06-2018-0116Download as .RIS
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