AMBIDEXTERITY IN FAMILY STARTUPS: INSIGHTS FROM REGULATORY FOCUS THEORY

Abstract

ABSTRACT Established family firms have been given a disproportionate importance in research compared to family startups. This is surprising, since family startups are drivers of economic growth. This study attempts to understand how family startups reconcile two seemingly contradictory forces at the startup level: exploitation and exploration, by drawing on Regulatory focus theory (Higgins, 1997, 1998). Regulatory focus drives the motivational force that guide people’s behaviors towards achieving end states related to advancement (promotion focus) or security (prevention focus). Promotion and prevention regulation foci have a situational component which depends on the context, and a chronic component which depends on individual characteristics. It is proposed that family startups (where all of the founders are family related) are more likely to exploit more and explore less than non-family startups. However, if the main founders (principals) are high in chronic promotion focus, family startups should become more ambidextrous than otherwise, which also leads to reduce their survival hazards comparatively. Implications for the effect of the founder’s chronic promotion focus in family startup’s competitive advantage and survival are derived. Keywords Regulatory Focus, Ambidexterity, Startups, Family Businesses, Exploitation, Exploration