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Article
Publication date: 27 August 2019

Mohammad Rezaur Razzak and Suaad Jassem

Although family business literature acknowledges that family firms owners are motivated by a set of socioemotional wealth (SEW) goals along with firm-centric business…

Abstract

Purpose

Although family business literature acknowledges that family firms owners are motivated by a set of socioemotional wealth (SEW) goals along with firm-centric business goals, yet a consistently predictable pattern of relationship between SEW and financial wealth is yet to be discerned. The purpose of this paper is to propose a theoretical model based on the stakeholder approach to suggest that family commitment mediates the association between the dimensions of SEW and firm performance.

Design/methodology/approach

A set of hypotheses are proposed that are tested using structural equation modeling with data collected from 357 medium to large sized privately held family firms in Bangladesh. The data analysis is done with SmartPLS (v.3.2).

Findings

The results indicate that family commitment partially mediates the relationships between family control and influence, family identification, emotional attachment and renewal of family bonds through dynastic succession and firm performance. The only non-significant relationship was between binding social ties and firm performance. The results provide a more nuanced understanding of the link between SEW goals and firm performance, and present important implications for theory and practice.

Research limitations/implications

The cross-sectional nature of the study exposes it to the specter of common method bias despite the fact that procedural remedies were initiated to minimize the impact of such occurrence. A longitudinal study with data obtained from multiple individuals at different levels of the organization would possibly yield more robust findings. Furthermore, in the absence of a multi-country and multi-sector analysis, a broad generalization of the findings may not be feasible.

Practical implications

The knowledge that family identity, emotional attachment and renewal of family bonds through dynastic succession may be leveraged to enhance the commitment of subsequent generation of family firm owners to the firm that may be pertinent to incumbents who desire to see their successors more engaged in the family enterprise. Furthermore, knowing that excessive focus on family control over the firm leads to negative outcomes is also pertinent to family firm leaders.

Social implications

Survival of family businesses is vital to the global economy as one of the primary drivers of global GDP growth and source of new employment. Policy makers can benefit from the findings of this study to customize policies that take into cognizance the importance of SEW owners of family firms and the fact that some of these SEW goals actually benefit the firm in terms of enhanced commitment to the enterprise and consequently superior firm performance.

Originality/value

The role of family commitment as a mediator between SEW and firm performance has not been dominant in the literature. By providing a finer-grained understanding of how family commitment accounts for the relationship between family-centric non-economic goals such as SEW and firm-centric goals such as business performance, the study presents a theoretical link between sociomemotional wealth and financial wealth in the context of private family firms.

Details

Journal of Family Business Management, vol. 9 no. 4
Type: Research Article
ISSN: 2043-6238

Keywords

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Article
Publication date: 29 April 2021

Mohammad Rezaur Razzak, Suaad Jassem, Alima Akter and Syed Abdulla Al Mamun

The purpose of this research is to examine the interplay between family commitment as a family-centric resource and professionalization of the organization as a…

Abstract

Purpose

The purpose of this research is to examine the interplay between family commitment as a family-centric resource and professionalization of the organization as a firm-centric resource to determine how the two phenomenon come together to enhance business performance in the context of privately held family firms.

Design/methodology/approach

Deploying the theoretical lens offered by the resource-based view, a conceptual link is developed between family commitment to the firm and firm performance with the potential moderating influence of firm professionalization. The hypotheses are tested using data collected from 357 privately held medium-to-large family-owned manufacturing companies in Bangladesh. The data are analyzed through structural equation modeling using SmartPLS (v.3.2).

Findings

The data analysis suggests that in absence of the moderator; professionalization, family commitment has a positive and significant association with firm performance. While in the presence of the moderator the above relationship is substantially stronger. The findings indicate that when family-specific resources and firm-specific resources are synchronized, it enhances performance of the family firm and puts it on a strong economic footing toward a more sustainable future.

Research limitations/implications

Cross-sectional nature of the study exposes it to the specter of common method bias despite the fact that procedural remedies were initiated to minimize the impact of such occurrence. Furthermore, data were collected from a single individual in each organization. Therefore, a longitudinal study with data obtained from multiple individuals at different levels of the organization would possibly yield more robust findings.

Practical implications

Leaders of family firms may find pertinent clues from the outcome of this study. Particularly, the confluence of family commitment to the firm as a family-specific resource and professionalization as a firm-specific resource can be valuable, rare, difficult to imitate and substitute source of competitive advantage for the family business organization.

Social implications

Survival of family businesses is vital to the global economy as one of the primary drivers of global gross domestic product growth and source of new employment. Policymakers can benefit from the findings of this study to customize policies to nurture growth of family enterprises and incentivize family firms to adopt professionalization through better governance and transparent managerial procedures.

Originality/value

A nuanced understanding of how family commitment and firm professionalization combine to significantly improve performance of family firms has not been dominant in the literature. Therefore, findings of this study carry special theoretical implications, because it suggests that both family-specific features and firm-specific features are necessary for enhanced levels of firm-centric business outcomes such as economic performance.

Details

Journal of Small Business and Enterprise Development, vol. 28 no. 5
Type: Research Article
ISSN: 1462-6004

Keywords

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Article
Publication date: 2 March 2021

Mohammad Rezaur Razzak, Golam Mostafa Khan and Salem AlAbri

This study investigates the influence of inclusion of nonfamily employees in family firms on their intellectual, social and affective engagement at the workplace…

Abstract

Purpose

This study investigates the influence of inclusion of nonfamily employees in family firms on their intellectual, social and affective engagement at the workplace. Furthermore, the framework proposed in the study considers the possible moderating influence of procedural justice in the above relationships.

Design/methodology/approach

A conceptual framework is developed with the support of the self-determination theory (SDT) and the social exchange theory. The study tests a set of hypotheses using survey data from 654 nonfamily employees working in private family firms in Malaysia.

Findings

The results reveal that inclusion has a positive and significant relationship with intellectual, social and affective engagement. While procedural justice moderates the association between inclusion and intellectual and affective engagement, it does not moderate the relationship between inclusion and social engagement.

Research limitations/implications

The outcome of this study presents a nuanced understanding on how perceptions of inclusion of nonfamily employees by the dominant work group (DWG) (i.e. employees related to the firm owners) lead to positive firm-centric behavior among nonfamily employees.

Practical implications

The study provides clues to family firm managers for creating a work environment where nonfamily employees perceive a sense of belongingness while their uniqueness is appreciated in order to be more engaged at the workplace.

Social implications

Little is known about how diversity created within family firms by inclusion of nonfamily employees impacts organizations. The outcome of this study may reinforce the positive effects of inclusiveness in any social context.

Originality/value

Diversity researchers have studied the influence of inclusion in areas related to sociology and psychology. However, there appears to be a dearth of studies in terms of how nonfamily employees would behave in family firms when they perceive a sense of inclusion in an organization dominated by employees who are related to the owners of the firm. Hence, this study appears to shed new light on how inclusion of nonfamily employees in family firms influences their behavior.

Details

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

Keywords

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Article
Publication date: 13 June 2019

Mohammad Rezaur Razzak, Raida Abu Bakar and Norizah Mustamil

The purpose of this paper is to determine the elements of family-centric non-economic goals, such as socioemotional wealth (SEW) of family business owners, that drive…

Abstract

Purpose

The purpose of this paper is to determine the elements of family-centric non-economic goals, such as socioemotional wealth (SEW) of family business owners, that drive family commitment. The empirical study further tests whether such relationships are impacted by the aspect of ownership, that is, who controls the firm: founder generation or subsequent generation of owner managers.

Design/methodology/approach

Deploying the SEW and stakeholder theories, this study proposes a conceptual link between soecioemotional wealth dimensions and family commitment. The study is based on a survey of 357 private family firms in Bangladesh involved in manufacturing ready-made garments. The respondents are all in senior-level management positions in their respective firms and are members of the dominant owning family.

Findings

Prior to considering the moderating effect of controlling generation, the results indicate that four out of five FIBER dimensions of SEW affect family commitment, except for binding social ties. The study also finds that when a comparison is made between the founder generation and the subsequent generation of family firm managers, it is the latter that manifests significantly higher levels of family commitment when the focus is on the two FIBER dimensions of SEW: binding social ties and identification of family members with the firm.

Research limitations/implications

Although the cross-sectional nature of the study exposes the study to the specter of common method bias, procedural remedies were initiated to minimize the likelihood. Furthermore, data were collected from a single key informant in each organization. Therefore, both a longitudinal study and corroborating data from more than one individual in each firm would possibly provide a more robust picture.

Practical implications

Key decision makers from within the family who wish to see their subsequent generation remain engaged and committed to the family firm may find cues from the fact that focusing on binding social ties and identification of family members with the firm play an important role in ensuring continued commitment to the business by their successors.

Social implications

Family businesses are recognized to be vital contributors to most societies around the globe, both as employment generators as well as catalysts of economic activities. Hence, policy makers may derive pertinent information from the study in adopting policies to nurture and ensure survival and continuity of family-owned businesses, by understanding how family-centric non-economic goals impact family’s desire to commit resources, time and effort to the enterprise from generation to generation.

Originality/value

Determining the factors that drive continued engagement and commitment of family members to the business enterprise is a phenomenon that needs to be better understood in order to ensure continuity and survival of family enterprises across generations. This study attempts to provide a more nuanced understanding of how different components of family-centric goals, such as SEW, impact family commitment. The study contributes to theory building by providing a conceptual link that demonstrates the components of SEW that are most pertinent in terms of ensuring higher levels of family commitment to the family-owned business.

Details

Journal of Family Business Management, vol. 9 no. 4
Type: Research Article
ISSN: 2043-6238

Keywords

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Article
Publication date: 12 June 2019

Mohammad Rezaur Razzak, Raida Abu Bakar and Norizah Mustamil

Socioemotional wealth (SEW) has emerged as a defining concept that distinguishes family-owned business organizations from businesses that are not exclusively controlled by…

Abstract

Purpose

Socioemotional wealth (SEW) has emerged as a defining concept that distinguishes family-owned business organizations from businesses that are not exclusively controlled by family coalitions. This empirical study expands the literature by presenting a more nuanced understanding of how individual dimensions of socioemotional wealth interacts with firm performance outcomes. Deploying the stakeholder theory, the purpose of this study is to propose a research model linking the five dimensions of SEW with firm performance to propose and test a set of hypotheses.

Design/methodology/approach

To test the hypotheses, data were collected through a survey of 357 medium-to-large private family firms in Bangladesh that were involved in export-oriented production of ready-made garments. Based on structural equation modeling, the data were analyzed using SmartPLS.

Findings

The results indicate that out of the five dimensions of SEW, three dimensions – family identification, emotional attachment and renewal of bonds through dynastic succession – have a positive and significant impact on firm performance. On the other hand, family control and influence have a significant but negative impact on firm performance. The only exception is in the case of binding social ties, which indicate a non-significant relationship.

Research limitations/implications

By attempting to provide a clearer and predictable link between family-centric non-economic goals and firm-centric business goals, the study contributes to theory building and attempts to address the conflict in the literature in the study of family involvement in management and performance of the business enterprise.

Practical implications

For industry practitioners and family business owners, it could provide guidance on which family-centric goals would maximize benefits to the firm and address the family-based utilities. Future strategic plans aimed at growth and sustainability of family firms can derive important clues from the findings of this study and design actionable goals that leverage those dimensions of socioemotional wealth that have a positive impact on firm performance.

Social implications

Social implications of ensuring survival of family businesses are significant because of their role as one of the largest sources of employment generation in most societies. Policymakers and regulatory authorities would be able to frame customized initiatives to foster growth and sustainability of family enterprises that have such large impact on the economy.

Originality/value

Theoretical contribution of the study comes from a more nuanced understanding of relationships between the individual dimension of SEW and firm performance, which will delineate a more consistent and predictable link between family-centric goals and firm-level outcomes. From the perspective of practical contribution, this may provide useful guidelines to industry practitioners and policymakers to frame initiatives that enable growth and sustainability of family firms that are typically the largest employment generators in most economies.

Details

Journal of Entrepreneurship in Emerging Economies, vol. 11 no. 3
Type: Research Article
ISSN: 2053-4604

Keywords

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