The Influence of Executives’ Membership in the FB Owner-Family on Firm Growth – the Central Role of Individual Growth Intentions

Abstract

To date, no conclusive picture has been established with regard to the direction of the influence of family ownership on firm growth. This study uses the phenomenon of FB heterogeneity to explain the variations in family firms’ growth performance found across studies in the field of FB research. Specifically, it seeks to examine how top executives’ membership in the FB owner-family, as a key source of FB heterogeneity, influences FB growth. For this purpose, the conceptual framework developed in chapter 2 was adapted to incorporate executives’ family membership as the main independent and firm growth as the main dependent variable, and empirically tested on a sample of 401 top executives in German FBs. The results show that heterogeneity factors, such as executives’ family membership, have a significant impact on family firm growth and thus contribute to explaining the variations in growth among FBs. In line with the two base theories of the final empirical model, the upper echelon theory (UET) and the theory of planned behavior (TPB), this impact is of an indirect nature, because it is transmitted via the executive’s growth intentions and their underlying determinants. In particular, executives’ family membership has a negative effect on his subjective norms and a positive effect on his perceived behavioral control concerning the family firm’s growth. The final impact on an executive’s growth intentions and hence the family firm’s actual growth performance, however, is slightly negative. Implications of these findings and avenues for future research are discussed.