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Article
Publication date: 1 March 2016

Manon Deslandes, Anne Fortin and Suzanne Landry

The objective of this study is to explain family firm payout decisions based on socioemotional wealth (SEW) considerations.

Abstract

Purpose

The objective of this study is to explain family firm payout decisions based on socioemotional wealth (SEW) considerations.

Design/methodology/approach

A sample of publicly listed Canadian companies is examined for the period from 2003 to 2008. Distinguishing family firms from nonfamily firms, a Probit regression is used to analyze the likelihood of making a payout. For payout firms, regressions are used to analyze the relationship between payout level (dividends and share repurchases) and payout mix and family firms.

Findings

Results indicate that family firms are more likely to make a payout than nonfamily firms. Among payout firms, the level of payout among payout firms is lower for family firms than for nonfamily firms and their portion of payout in the form of dividends is higher. Lone founder family firms have a lower likelihood of making payouts than other family firms. However, among payout firms, they pay out more than other family firms and have a smaller percentage of their total payout in dividends than other family firms.

Research limitations/implications

Results are impacted by the definition of what constitutes a family firm. Family ownership was used as a proxy for the underlying SEW considerations. Future research could involve interviews with family firm representatives to investigate the relative importance of SEW considerations in their payout decisions.

Originality/value

In providing an alternative theoretical framing of family firms’ payout policies, the study suggests that payout differences between family and nonfamily firms may be driven in part by SEW considerations.

Details

Journal of Family Business Management, vol. 6 no. 1
Type: Research Article
ISSN: 2043-6238

Article
Publication date: 21 November 2016

James J. Chrisman and Daniel T. Holt

The purpose of this paper is to explain how the concept of socioemotional wealth can be combined with other important concepts in the family firm literature to develop a theory of…

668

Abstract

Purpose

The purpose of this paper is to explain how the concept of socioemotional wealth can be combined with other important concepts in the family firm literature to develop a theory of the family firm.

Design/methodology/approach

This is a conceptual paper based on a review of the paper of Martin and Gómez-Mejía in this issue as well as the family business literature in general.

Findings

Martin and Gómez-Mejía (this issue) present a theoretical model and propositions on the relationship between socioemotional and financial wealth that advances understanding of family firm decision-making. That paper provides an initial step toward a theory of the family firm that can explain why firms select the family form of organization to conduct economic activities, what determines their scale and scope and why heterogeneity is observed among family firms. This commentary takes another step toward such a theory by discussing how the combined consideration of goals, governance and resources could be used to address the above three questions.

Originality/value

The precepts of a new theory of the family firm is presented that incorporates the concepts of goals (socioemotional wealth), governance (family ownership and control) and resources (familiness) of family firms to explain why family firms exist and potentially thrive as well as to explain the heterogeneity among family firms.

Details

Management Research: Journal of the Iberoamerican Academy of Management, vol. 14 no. 3
Type: Research Article
ISSN: 1536-5433

Keywords

Article
Publication date: 11 March 2019

Frank Lattuch

When studying innovation in family firms, several contradictions appear, as the family and the firm represent different social systems that follow different rules and…

915

Abstract

Purpose

When studying innovation in family firms, several contradictions appear, as the family and the firm represent different social systems that follow different rules and expectations. This paper aims to argue that a deeper understanding and effective management of those paradoxes is crucial for the family firm’s innovation performance.

Design/methodology/approach

Using theory-building principles, this paper has an abductive character; new research propositions are offered to provide insights into the apparently paradoxical aspects of successfully managing a family firm’s innovation strategy.

Findings

Three contradictions are presented and discussed: first, the family can be a hazard and source for the firm; second, family members acting as shareholder and investor; and third, established practice and innovation issues may compete against each other in the quest to sustainably rejuvenate the organization. Inferences are drawn from these apparent contradictions concerning family firm management, providing a basis to form propositions that effectively support innovation.

Originality/value

This paper provides a paradoxical perspective on the innovation phenomenon in family firms and offers practical implications to help leaders better shape their organization’s innovation strategy.

Details

Journal of Business Strategy, vol. 40 no. 3
Type: Research Article
ISSN: 0275-6668

Keywords

Article
Publication date: 1 January 2012

Eva Lutz and Stephanie Schraml

The purpose of this paper is to examine motives for hiring a non‐family Chief Financial Officer (CFO) in family firms. The authors explore the perceptions of family firm owners

1725

Abstract

Purpose

The purpose of this paper is to examine motives for hiring a non‐family Chief Financial Officer (CFO) in family firms. The authors explore the perceptions of family firm owners towards external managers by analyzing how their goals relate to the employment of a non‐family CFO.

Design/methodology/approach

This study is based on a survey of 195 small‐ and medium‐sized privately‐held German family firms. It investigates the relationship between goals of the family and the employment of a non‐family CFO.

Findings

Family firm owners decide against an external CFO when their goal of independence and control is high. Furthermore, they do not seem to trust external managers to act in accordance with their goal of enterprise value growth. However, they seem to realize that non‐family CFOs are likely to decrease financial risk through the provision of additional capabilities.

Originality/value

The findings are relevant to understand the relationship between external managers and family firm owners. By employing a non‐family CFO, family firm owners give away part of the control, but they can also gain additional valuable input and potentially lower their financial risk. They should however put effort into setting up appropriate incentive structures for the manager.

Details

Journal of Business Strategy, vol. 33 no. 1
Type: Research Article
ISSN: 0275-6668

Keywords

Article
Publication date: 1 December 2003

A.B. Ibrahim, K. Soufani and Jose Lam

Family firms play an important role in the working of the Canadian economy; despite their importance to the economic activities and job creation it is observed that family

2349

Abstract

Family firms play an important role in the working of the Canadian economy; despite their importance to the economic activities and job creation it is observed that family businesses have lower survival rates than non‐family firms, some argue that this can possibly be attributed (amongst other factors) to the lack of training. Most of the training activities in Canadian family businesses tend to be limited, and it is argued that family firms tend to perceive training more as an expense than an asset that enhances future growth and development of the business. This paper introduces a training framework and a coherent strategy that provides key elements of a national training agenda for Canadian small family firms, including the role of various relevant organizations.

Details

Education + Training, vol. 45 no. 8/9
Type: Research Article
ISSN: 0040-0912

Keywords

Article
Publication date: 21 November 2016

William Schulze

In this commentary, the author aims to question whether the socio-emotional wealth (SEW) construct should be limited to family firms by noting that non-family owners and founders…

641

Abstract

Purpose

In this commentary, the author aims to question whether the socio-emotional wealth (SEW) construct should be limited to family firms by noting that non-family owners and founders, i.e. those who yet have to involve family in their enterprise‘s operations, management or ownership, are also motivated to maximize their socioemotional wealth.

Design/methodology/approach

The concept of SEW has generated significant traction in the family business literature and motivated an important body of work about how SEW alters decision-making in family firms. Professors Martin and Gomez–Mejia (this issue) extend past contributions by teasing apart complex relationships among the underlying dimensions of the construct. However, the domain of that paper, as well as the SEW construct, has heretofore been limited to family firms. The author builds his commentary on the work of Martin and Gomez–Mejia (this issue) to argue that the notion that SEW shapes decision-making in the owner controlled and owner-managed non-family firms, as well as family firms.

Findings

The author’s overarching conclusion is that there are several dimensions in which family interests materially alter decision-making but others in which family likely plays a moderating and possibly even a suppressor role. The surprising implication is that it may not be SEW per se that distinguishes family firms from non-family firms but rather how the family dynamic alters the influence of SEW on outcomes of interest.

Originality/value

Acknowledging that personal and familial SEW have a common foundation allows one to sharpen the research focus and shift it from questions about how SEW might alter decision-making in family firms to questions about how the presence of family members alters the influence of SEW on decision-making in owner-controlled and owner-managed firms. This commentary explicates the argument and offers some suggestions about how this re-framing might allow for the extension of the SEW concept from the family firm to its influence on founder-managed and non-family firms.

Details

Management Research: Journal of the Iberoamerican Academy of Management, vol. 14 no. 3
Type: Research Article
ISSN: 1536-5433

Keywords

Article
Publication date: 29 March 2013

Martin R.W. Hiebl

This article seeks to explore success factors for integrating non‐family chief financial officers (CFOs) in family firms. The integration of non‐family CFOs is of great importance

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Abstract

Purpose

This article seeks to explore success factors for integrating non‐family chief financial officers (CFOs) in family firms. The integration of non‐family CFOs is of great importance to family firms, as the CFO position is often the first management position in family firms for which non‐family managers are recruited. Moreover, non‐family CFOs can bring in valuable know‐how to the family firm and reduce the family firm's financial risk.

Design/methodology/approach

The findings of this study are based on a qualitative field study in Austrian family firms. The views of non‐family CFOs, family managers, family board members, and non‐family CEOs were obtained through semi‐structured interviews.

Findings

Four larger success factors for non‐family CFOs and five for controlling families were derived. The most important factor for non‐family CFOs that emerged from the study was that CFOs should be appreciative of the peculiarities of family firms. For controlling families, the results suggest that it is advisable to provide the non‐family CFO enough space to effectively conduct their job as well as respect the CFO's views.

Practical implications

Both non‐family CFOs and controlling families may find the results presented in this article useful for creating a successful integration of non‐family CFOs in family firms. The success factors presented should be directly applicable for CFOs and controlling families.

Originality/value

This study is the first to investigate success factors for the integration of non‐family CFOs into family firms. Moreover, the results of this article may also be useful to the under‐researched field of non‐family managers in family firms in general.

Details

Journal of Business Strategy, vol. 34 no. 2
Type: Research Article
ISSN: 0275-6668

Keywords

Article
Publication date: 17 April 2020

Stella C. Lind and Frank Lattuch

Experience suggests that a loss of trust may occur on both sides of the merger and acquisition (M&A) equation – acquirer and acquiree – though the latter is more generally…

Abstract

Purpose

Experience suggests that a loss of trust may occur on both sides of the merger and acquisition (M&A) equation – acquirer and acquiree – though the latter is more generally considered the most affected. The purpose of this paper is to explore how a loss of trust during the M&A process in family firms can be avoided. An acquisition potentially triggers a loss of trust in the workplace and, as a result, a loss of productivity thereby causing the merged business to totter. Moreover, trust in a firm’s owner tends to be a key driver in merging family firms.

Design/methodology/approach

The authors investigated an expanding German family firm that recently acquired other family firms. They conducted in-depth interviews on all hierarchical levels in both the acquiring and the acquired firm. These cases are taken from a wider study of acquiring family firms completed in 2019.

Findings

Value congruence, integrity and openness are found to enhance trust during M&As, in particular, if the new owner of a merged enterprise is also a family entrepreneur. Under certain circumstances, the trust of employees in the acquired firm’s previous owner can be transferred to the new owner.

Originality/value

This study explores how specific circumstances of family firms impacts organizational trust in M&A processes. The developed framework helps family firms to use characteristics of their specific nature as an asset to maintain their employees’ organizational trust before, during and even after M&As.

Details

Journal of Business Strategy, vol. 42 no. 3
Type: Research Article
ISSN: 0275-6668

Keywords

Content available
Article
Publication date: 1 March 2007

Noel D. Campbell, Kirk H. Heriot and Dianne H. B. Welsh

Using the family business succession, resourcebased view of firms, familiness, and organizational clan literatures, this article develops a model based on the ability of the family

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Abstract

Using the family business succession, resourcebased view of firms, familiness, and organizational clan literatures, this article develops a model based on the ability of the family business to use familiness, a specific bundle of attributes deriving from a family’s culture, as a competitive advantage for the family firm. In particular, this resource-based framework of family business shows how familiness can distinguish between family firms that succeed beyond the second generation and those that do not. Implications for future research are discussed.

Details

New England Journal of Entrepreneurship, vol. 10 no. 2
Type: Research Article
ISSN: 2574-8904

Article
Publication date: 1 September 1994

Karen Maru File, Judith L. Mack and Russ Alan Prince

There are increasing signs that business‐to‐business marketers aretargeting the 50 percent of all US companies which are family firms. Newtheory from the family business studies…

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Abstract

There are increasing signs that business‐to‐business marketers are targeting the 50 percent of all US companies which are family firms. New theory from the family business studies field creates a reasonable expectation that the buyer behavior of family firms is distinctive, but there has been, to date, no empirical validation of this hypothesis. This exploratory study of 124 businesses contrasts family and non‐family firms on four dimensions of purchasing and finds that family business engage in more protracted pre‐purchase search processes, and require more interaction with their providers but reward providers with higher propensity to engage in positive word‐of‐mouth behaviors and repurchase intentions. These findings are both consistent with emerging theory in the field and relevant to marketers to family businesses.

Details

Journal of Business & Industrial Marketing, vol. 9 no. 3
Type: Research Article
ISSN: 0885-8624

Keywords

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