Familiness and Business Strategy: Unraveling the Moderating Effect of Familiness on Performance in Family Firms

Abstract

Existing literature has examined several viewpoints in the field of family business research. Nevertheless, the correlation between strategy and performance in family enterprises has not been extensively studied. Furthermore, the extent to which family influence impacts the link between strategy and performance is not well-defined. The distinguishing factor between family businesses and non-family businesses is the concept of familiness, which refers to the unique qualities and talents that stem from family influence. The current body of research focuses on examining the moderating influence of familiness on the link between strategy and performance in family businesses. This study focuses on examining the impact of business strategy on the development of exceptional performance in family firms. Additionally, it investigates if familiness has a moderating function in this connection. This study aims to conduct an empirical analysis of the connection between strategy and performance in family-owned businesses. Additionally, it seeks to investigate the influence of familiness as a moderating factor in this relationship. The research population consists of individuals who own or manage family businesses. A total of 203 owners/managers were chosen using a simple random sample method from the family businesses located in Multan. Data were obtained using a cross-sectional survey, and the hypothetico-deductive technique was employed in the research design. Partial least squares structural equation modeling (PLS-SEM) was utilized for assessing data. The research findings suggest a direct correlation between familiness and the performance of family businesses. The results also reveal that familiness moderates the association between family business strategy and family company performance. The findings of this research have crucial significance for family company owners/managers by underlining the fact that family business strategy’s influence on family business performance may be strengthened by concentrating on the aspects of familiness; power, experience, and culture. This research also contributes to the family business literature by evaluating the moderating influence of familiness on the strategy-performance relationship in a family company setting.