Innovation underperformance, socioemotional wealth and de-familization in family firms
Nankai Business Review International
ISSN: 2040-8749
Article publication date: 25 August 2022
Issue publication date: 5 June 2023
Abstract
Purpose
The phenomenon of defamilization of family firms is gradually increasing for the growth of family firms, that is, nonfamily executives are increasingly present in the executive teams of family firms. Although previous scholars have identified various determinants of family firms' defamilization, whether and when innovation underperformance affects the decision to defamilize family firms has not been explore. This study aims to fill the aforementioned research gaps.
Design/methodology/approach
This study empirically tests the theoretical view based on the data of Chinese A-share family listed companies from 2009 to 2017.
Findings
The authors found that innovation underperformance drives family companies to increase the percentage of nonfamily executives in their executive teams. Further, the authors found that family firms are less willing to hire nonfamily executives with an increase in socioemotional wealth, particularly when founders of such businesses serve as directors or are major shareholders, even when they are not directors.
Originality/value
This study shows that innovation underperformance and socioemotional wealth are important predictors of family firms’ defamilization decisions.
Keywords
Acknowledgements
This work was supported by the Guangdong Basic and Applied Basic Research Foundation (Grant No. 2021A1515110864) and the National Natural Science Foundation Project of China (Grant No.71872053).
Citation
Zhong, X., Ren, L. and Ren, G. (2023), "Innovation underperformance, socioemotional wealth and de-familization in family firms", Nankai Business Review International, Vol. 14 No. 2, pp. 316-337. https://doi.org/10.1108/NBRI-05-2022-0054
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited