Abstract
This study focuses on the moderating role of socioemotional wealth (SEW) within family-owned small and medium-sized enterprises (SMEs) by examining whether and to what extent a dynastic succession event influences postsuccession performance. Based on data drawn from 344 German family-owned SMEs and relying on a direct multidimensional scale to account for the heterogeneity in owning families’ affective endowment, our key finding is that firms with high SEW after a succession event generate higher postsuccession performance than their counterparts with low SEW. Focusing on individual SEW dimensions, we find that the renewal of family bonds though dynastic succession and the identification of family members with the firm are the key drivers that affect postsuccession performance. In sum, our study identifies SEW – and its components – to be substantial factors determining whether a succession event will improve or undermine a family-owned SME’s financial performance after succession. For practitioners, our study also provides valuable information on whether and how family-owned SMEs can draw on SEW as a strategic tool to ensure the firm’s long-term success.
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