Abstract
In this paper we use new venture creation in Indian family firms to explore the family firm as an inter-institutional system. We argue that in societies where the traditional family dominates social and economic life, the relationship between the two institutions, the firm and the family, is managed via inter-institutional logics. These inter-institutional logics help reconcile the tensions that often arise in the family firms during strategic decision making. We use archival and interview data on 36 new ventures in eight Indian family firms to identify these logics. Our analysis shows that the interaction between firm and family institutional logics in Indian family firms generates four sub-logics: economic, expertise, reputation and attachment. These four logics are used to frame and screen new venture opportunities and justify resource allocation.
Highlights
In this paper we use new venture creation in Indian family firms to explore the family firm as an inter-institutional system
The second perspective on the same issue is rooted in the so called Bvarieties of capitalism^ perspective (Carney, Gedajlovic, & Yang, 2009; Hall & Soskice, 2001). This perspective rejects the inevitable separation of decision-making powers between family and management proposed by the convergence thesis, and argues instead that strategic decision making in traditional family firms is shaped by an intimate, and ongoing, interaction between the family as an institution that is embedded in the local sociocultural environment, and the firm as an institution that responds to market imperatives that are national or even international (Alesina & Giuliano, 2015)
More precisely inter-institutional, perspective that adopts a varieties of capitalism perspective on the dual role that the family occupies in a traditional family firm raises the question that we wish to address in this paper: How does the family in a traditional society make strategic decisions while at the same time meeting the norms and expectations that are intrinsic to the family as an institution and the firm as an institution? The theoretical perspective that we use to answer this question is the general theory of inter-institutional systems as originally formulated by Friedland and Alford (1991), and further developed by Leaptrott (2005), Greenwood, Diaz, Xiao Li, and Lorente (2010), and Miller, Le Breton-Miller, and Lester (2011)
Summary
In this paper we use new venture creation in Indian family firms to explore the family firm as an inter-institutional system. We argue that in societies where the traditional family dominates social and economic life, the relationship between the two institutions, the firm and the family, is managed via inter-institutional logics. The second perspective on the same issue is rooted in the so called Bvarieties of capitalism^ perspective (Carney, Gedajlovic, & Yang, 2009; Hall & Soskice, 2001) This perspective rejects the inevitable separation of decision-making powers between family and management proposed by the convergence thesis, and argues instead that strategic decision making in traditional family firms is shaped by an intimate, and ongoing, interaction between the family as an institution that is embedded in the local sociocultural environment, and the firm as an institution that responds to market imperatives that are national or even international (Alesina & Giuliano, 2015). Our focus is on examining logics which influence decision to allocate or not to allocate resources to a new venture based on the case that family members make for the venture
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