Implicit Theories of Family Firm Ownership and Heterogeneity of Family Firm Risk Taking

Abstract

A firm’s proactive risk taking is essential to sustaining a firm. Ownership structure is an important variable that purportedly determines risk taking. In relation to the most common ownership form around the world, existing literature suggests that family firms take less risk than non-family firms. However, family firms may differ in their risk preferences. To understand the drivers of family firm heterogeneity in risk taking, we leverage research on implicit theories to propose that family owners’ entity and incremental implicit theory orientations may influence risk taking. We then further consider several some key internal and external contingencies likely to influence the extent to which some family firms are likely to pursue risk taking based on their implicit theories.