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Article
Publication date: 21 November 2016

Geoffrey Martin and Luis Gomez-Mejia

A growing volume of family firm literature has argued that the preservation of family socioemotional wealth takes precedence over the pursuit of financial goals. The…

Abstract

Purpose

A growing volume of family firm literature has argued that the preservation of family socioemotional wealth takes precedence over the pursuit of financial goals. The purpose of this paper is to develop a conceptual framework that builds knowledge regarding the two-way relationship between socioemotional and financial forms of wealth, to develop a more complete theory of wealth concerns that may inform family firm decision-making.

Design/methodology/approach

The authors conceptually examine contingencies affecting the relationship between financial and socioemotional wealth (in both causal directions).

Findings

The authors predict when one form of wealth (socioemotional/financial) is likely to dominate the other (financial/socioemotional) in the family firm’s strategic decisions.

Originality/value

The paper advances knowledge on the two-way relationship between socioemotional and financial forms of wealth providing a platform for further development in the nascent field of family business research, including our understanding of family firm decisions regarding control and influence over the family business, environmental policy, altruism toward family members, R&D, accounting choices and corporate diversification.

Details

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

Keywords

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Article
Publication date: 13 May 2019

Orlando Antonio Llanos-Contreras and Muayyad Jabri

The purpose of this paper is to determine how family and business priorities influence organisational decline and turnaround in a family business.

Abstract

Purpose

The purpose of this paper is to determine how family and business priorities influence organisational decline and turnaround in a family business.

Design/methodology/approach

Following critical realism as philosophical orientation, this research is based on an exploratory single case study.

Findings

This research identified specific socioemotional wealth priorities driving this organisation decline and turnaround. The study also determined how the family and business dynamic leads to decisions that first trigger the organisational decline and then explain the successful implementation of turnaround strategies.

Research limitation/implications

Findings of this research provide limited and contingent theoretical generalisation. Accordingly, replication and further quantitative research is required for a better understanding of this phenomenon.

Practical implications

Managers can benefit from this paper by noting which behaviour could lead to organisational decline and which factors could lead to a turnaround. Similarly, managers can learn about the importance of the alignment of socioemotional wealth priorities as a critical response factor to determine whether to follow exit strategies or turnaround (succession) actions.

Originality value

The study contributes to the organisational decline literature and family business literature. It advances the understanding of how family businesses should balance family and business priorities to avoid organisational decline and identify strategies successfully implemented for turning around.

Objetivo

El objetivo de este artículo es determinar cómo las prioridades familiares y del negocio influyen sobre la declinación y recuperación organizacional en una empresa familiar.

Diseño/Metodología/Enfoque

Se usa investigación cualitativa basada en caso único de estudio y realismo crítico como orientación filosófica.

Hallazgos

Esta investigación identifica prioridades socioemocionales específicas que explican la declinación y recuperación organizacional de una empresa familiar. Se determina como la dinámica familiar y empresarial lleva a tomar decisiones que primero desencadenan declinación organizacional y luego explican la implementación exitosa de estrategias para la recuperación organizacional de la empresa en cuestión.

Limitaciones

Los resultados dan soporte a una generalización teórica y contingente. En consecuencia, se requiere replicación y más investigación cuantitativa para una mejor comprensión de este fenómeno.

Implicaciones prácticas

los gerentes pueden beneficiarse de este artículo al identificar qué comportamiento podría conducir a la declinación de la organización y qué factores podrían conducir a su recuperación. Del mismo modo, los gerentes pueden aprender sobre como alinear prioridades socioemocionales y hacer de esto un factor crítico en la definición sobre implementar estrategias para continuar (sucesión) o dejar el negocio.

Originalidad/Valor

El estudio contribuye a la literatura sobre declinación organizacional y también a la literatura sobre Empresas Familiares. Avanza en la comprensión de cómo las empresas familiares deben equilibrar las prioridades familiares y del negocio para evitar el declive de la organización y da luces sobre estrategias implementadas con éxito en la recuperación organizacional de una empresa familiar.

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Article
Publication date: 19 April 2013

Esra Memili, Kaustav Misra, Erick P.C. Chang and James J. Chrisman

The purpose of this paper is to use the socio‐emotional wealth perspective to examine how the level of family involvement reduces the propensity to use incentives to…

Abstract

Purpose

The purpose of this paper is to use the socio‐emotional wealth perspective to examine how the level of family involvement reduces the propensity to use incentives to non‐family managers in small to medium‐sized enterprises (SME) family firms.Design/methodology/approach – Primary data were collected from US firms. To evaluate the hypotheses, a logit model was employed on a final sample of 2,019 small family firms.

Findings

Results suggest that family influence and control and intra‐family transgenerational succession intentions are negatively related to the propensity to use incentives. Also, the interaction effects of family management and ownership reduce the propensity to use incentives.

Originality/value

The paper’s empirical findings imply that despite their potential economic benefits, family involvement reduces the probability that incentives will be offered to non‐family managers because such incentives are perceived to be inconsistent with the preservation of the family’s socioemotional wealth. Also, choices that reflect a preference for socioemotional wealth may not only be a function of decision framing and loss aversion but also by the size of the economic pay‐offs that might be available. The findings suggest that non‐family managers in SME family firms may be affected by a family’s preoccupation with its socioemotional endowments. Thus, the authors expect that this paper provides further avenues to explore the decisions about attaining non‐economic and economic goals and other strategic issues in family firms.

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Article
Publication date: 17 July 2020

Rocio Arteaga and Timur Uman

This study explores the family governance structures that family firms employ to manage family business tensions.

Abstract

Purpose

This study explores the family governance structures that family firms employ to manage family business tensions.

Design/methodology/approach

Building on socioemotional wealth perspective and adopting a narrative methodological approach, the study analyses nine unique narratives of representatives of three Swedish family firms.

Findings

The study illustrates how the hybrid arena created between formal and informal family meetings is used as a governance structure for mitigating tensions by reinforcing family relational ties.

Research limitations/implications

Based on the findings, this study suggests how reliance on hybrid arena informs the field of family business management and governance and suggests future research directions.

Practical implications

The findings of this study provide opportunities for family business practitioners, including owners, family members, family firm advisers and other stakeholders, to effectively manage family business tensions and foster socioemotional wealth.

Originality/value

In family firms, tensions can arise due to a desire for the preservation of socioemotional wealth. The authors show that these tensions may be managed by using informal and formal family meetings that create a hybrid arena where family members separate family and business issues and emotional and rational reactions, thereby avoiding negative emotions and creating a culture of harmony within the family.

Details

Baltic Journal of Management, vol. 15 no. 5
Type: Research Article
ISSN: 1746-5265

Keywords

Content available
Article
Publication date: 17 April 2020

Michael Kuttner, Birgit Feldbauer-Durstmüller and Christine Mitter

This paper provides a comprehensive view about corporate social responsibility (CSR) in Austrian family firms. In detail, the conceptual understanding, motives for…

Abstract

Purpose

This paper provides a comprehensive view about corporate social responsibility (CSR) in Austrian family firms. In detail, the conceptual understanding, motives for, institutionalisation, planning and the outcomes of CSR are investigated. The authors refer to socioemotional wealth and stewardship aspects as explanation approaches for CSR in family firms.

Design/methodology/approach

This study offers new insights into CSR in Austrian family firms based on qualitative data from 30 companies.

Findings

The findings demonstrate that despite numerous social, environmental and economic activities, referral to CSR is just in the beginning, indicating a lack of dissemination of the concept of CSR. The main motives for CSR engagement are image and reputation concerns, a strengthened regional embeddedness and employee-related improvements. Social CSR activities concerning employees and the close company surroundings dominate, whilst environmental CSR measures are often determined by the need for fulfilling the requirements of eco-certifications.

Originality/value

This paper contributes to the existing CSR literature by offering deeper insights into CSR in Austrian family firms (e.g. motives and outcomes of CSR), which are discussed under socioemotional wealth and stewardship aspects. Moreover, a broad range of implications for future research and corporate practice (e.g. family firms, owning family, policy) are discussed.

Details

Journal of Family Business Management, vol. 11 no. 2
Type: Research Article
ISSN: 2043-6238

Keywords

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Article
Publication date: 21 November 2016

Cristina Cruz and Horacio Arredondo

This commentary elaborates further upon the work by Martin and Gomez-Mejia (this issue) about the two-way relationship between financial wealth and socioemotional wealth

Abstract

Purpose

This commentary elaborates further upon the work by Martin and Gomez-Mejia (this issue) about the two-way relationship between financial wealth and socioemotional wealth (SEW). This paper aims to provide a better understanding of the micro-foundations of the SEW approach, and how the research community could further develop it based on the SEW behavioral roots.

Design/methodology/approach

The paper explores recent refinements of the SEW approach, its underpinnings, limitations and potential. It undertook a review of the behavioral foundations of SEW, exploring the implications of those foundations in the interplay between SEW and financial wealth. It also examines aspects of SEW that are still under researched using behavioral lens, as well as some ideas about how the field could move forward.

Findings

The authors note that the SEW approach has become so widespread that some are wrongly using it just as an “umbrella term” to account for the non-economic utilities of family owners, forgoing its theoretical roots and implications. Drawing on its theoretical foundations, the authors theorize on the limitations of the SEW approach when wrongly used, and on its potential when properly applied. The main conclusion is that if the SEW approach aims at becoming a dominant paradigm in the family business field, then going back to its behavioral foundations is needed.

Research limitations/implications

The main conclusion is that if the SEW approach aims at becoming a dominant paradigm in the family business field, then going back to its behavioral foundations is needed.

Originality/value

Overall, this work calls for the use of a “back-to-the-basics” strategy, in which the field clearly understands the original purpose of the SEW perspective, as well as its limitations and potential to become a dominant paradigm in the family business field.

Details

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

Keywords

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Article
Publication date: 18 October 2018

Na Shen

The purpose of this paper is to enhance the existing socioemotional wealth (SEW) theory. Particularly, the current research proposes a dynamic SEW model using insights…

Abstract

Purpose

The purpose of this paper is to enhance the existing socioemotional wealth (SEW) theory. Particularly, the current research proposes a dynamic SEW model using insights from prospect theory. The application of the proposed dynamic SEW model leads to several propositions that will reveal the relationship amongst family business, transgenerational succession, business risks and diversification strategy.

Design/methodology/approach

This study is mainly a theoretical research. A dynamic SEW model is proposed in which the SEW is not static and can be increasing or decreasing. SEW is framed as a gain or loss under different scenarios, and the shift in reference point will change the framing or value of SEW.

Findings

The current research presents several interesting propositions based on the dynamic SEW model. Generally, family firms are less likely to diversify than non-family firms. However, when family firms face business risks, they are more likely to diversify than those that do not face business risks. Family firms with second generation involvement in management are more likely to diversify than those without second generation involvement. The dynamic SEW model can also be applied to analyse R&D and IPO underpricing for family firms.

Originality/value

This study builds a dynamic SEW model, which is totally new to the literature. The conceptual framework that reveals the relationships amongst family business, transgenerational succession, business risks and diversification strategy also contributes to the literature and has empirical implications to researchers, policy makers and family business owners.

Details

Cross Cultural & Strategic Management, vol. 25 no. 4
Type: Research Article
ISSN: 2059-5794

Keywords

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Article
Publication date: 5 May 2020

Qilin Hu and Mathew Hughes

Investigation of family firm radical innovation is burgeoning but far less prevalent than studies of family firm innovation in general. Concurrently, studies repeatedly…

Abstract

Purpose

Investigation of family firm radical innovation is burgeoning but far less prevalent than studies of family firm innovation in general. Concurrently, studies repeatedly report that family firms exhibit mostly conservative and incremental innovation rather than more radical ones. This is unfortunate because without radical innovation, family firms risk a competency trap in which long-term competitiveness is lost to more innovative rivals. This situation has led to urgent calls among scholars to explicitly acknowledge the heterogeneity of family firm innovation and to understand the conditions for family firm radical innovation.

Design/methodology/approach

A systematic review of 51 papers categorized into four scholarly conversations build the foundation for a critical discussion of each line of inquiry.

Findings

The authors analyze 51 leading articles and identify four persistent theoretical positions: (1) RBV and capabilities, (2) agency and stewardship, (3) behavioral agency and socioemotional wealth, and (4) the ability and willingness paradox. The authors identify key research problems and research questions needing urgent scholarly and present a framework that captures their complementary and competing assumptions to enable rigorous future research.

Originality/value

To galvanize and spearhead future research efforts, this paper provides a critical analysis of our understanding of family firm radical innovation with a specific emphasis on the theoretical assumptions at the core of existing investigations and the eight most important research questions in need of answers.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 26 no. 6
Type: Research Article
ISSN: 1355-2554

Keywords

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Article
Publication date: 6 July 2021

Mohammad Fuad, Vinod Thakur and Ashutosh Kumar Sinha

From the socioemotional wealth (SEW) perspective, family firms prioritize non-financial goals and show risk averse behaviour towards conducting acquisitions. In this…

Abstract

Purpose

From the socioemotional wealth (SEW) perspective, family firms prioritize non-financial goals and show risk averse behaviour towards conducting acquisitions. In this paper, we study family firms' acquisitive behaviour while participating in CBA waves. Scholars have largely treated the cross border acquisition (CBA) wave and non-wave environments as homogeneous. We theorize that these two environments differ in their uncertainty and risk profiles on account of temporal clustering of acquisition deals. Accordingly, based on the SEW perspective, we examine the preference of family firms to participate in CBA waves.

Design/methodology/approach

The paper is based on CBAs conducted by Indian family firms between 2000 and 2018. These waves are identified by conducting a simulation based methodology.

Findings

Our findings suggest that foreign institutional ownership, firm age and acquisition relatedness moderate the relationship between family control and participation in CBA waves.

Originality/value

Our paper contributes towards the acquisitive behavior of family firms and their participation in CBA waves.

Details

Cross Cultural & Strategic Management, vol. 28 no. 4
Type: Research Article
ISSN: 2059-5794

Keywords

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Article
Publication date: 19 June 2017

Tarek El Masri, Matthäus Tekathen, Michel Magnan and Emilio Boulianne

Family firms possess dual identities, being the family and the business, which can be segmented and integrated to various degrees. This study examines whether and how…

Abstract

Purpose

Family firms possess dual identities, being the family and the business, which can be segmented and integrated to various degrees. This study examines whether and how management control technologies are calibrated to fit into the dual identities of family firms.

Design/methodology/approach

A qualitative study of 20 family firms was conducted using semi-structured, in-depth interviews with owner-managers, drawings of mental maps and publicly available information. The notion of calibration was developed and used, with its three components of graduation, purpose and reference, as an organizing device for the interpretive understanding of the management control usage and its relation to family firms’ dual identities.

Findings

The study finds that the use of calculative, family-centric and procedural management controls – in sum the pervasive use of management control technologies – are associated with a professionalization of the family firm, a foregrounding of the business identity and a reduction of the disadvantageous side of familiness. In comparison, the pragmatic and minimal use of management control technologies are found to be associated with an emphasis on family identity. It transpires as liberating, engendering trust and unfolding a familial environment.

Research limitations/implications

Because results are derived from a qualitative approach, they are not generalizable at an empirical level. By showing how the use of management control technologies is calibrated with reference to family firms’ dual identities, the paper reveals the perceived potency of control technologies to affect the identity of firms.

Practical implications

The study reveals how family firms perceive management control technologies as strengthening their business identity while weakening their family identity. Thereby, this study provides an account of how management control technologies are expected to change the identity of firms.

Originality/value

This paper contributes to the management control and family business literatures because it uncovers how management control technologies are calibrated in reference to family firms’ dual identities. It shows that calculative, family-centric and procedural management controls are used to professionalize the firm and strengthen its business identity as well as to reduce the negative effects of the family identity. The paper also illustrates how the liberating force of using pragmatic and minimal control technologies can serve to give prominence to the family identity.

Details

Qualitative Research in Accounting & Management, vol. 14 no. 2
Type: Research Article
ISSN: 1176-6093

Keywords

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