Dimensions Of Socioemotional Wealth Research Articles

Socioemotional Wealth and Tax Aggressiveness in Private Family Firms: The Role of the CEO’s Characteristics

Building on recent works calling for more tax research in the family business context, this study draws on the distinction between restricted and extended socioemotional wealth (SEW) to analyze how both SEW dimensions affect tax aggressiveness. Based on a sample of 201 private Belgian family firms, consistent findings from multiple regression analyses indicate that restricted SEW is positively related to tax aggressiveness, whereas extended SEW exerts a negative influence on tax aggressiveness. Our results also indicate that the family status of the CEO, CEO gender and CEO tenure moderate the relationship between both SEW dimensions and tax aggressiveness.

Beyond economic considerations: The role of socioemotional wealth in family firm foreign exit decisions

Previous research has delved into both economic and non-economic determinants influencing foreign exits, yet the role of socioemotional wealth (SEW) in this strategic decision of family firms has been underexplored. Our study addresses this oversight by examining three principal dimensions from the FIBER SEW framework: family control (F), binding social ties (B), and the renewal of family bonds (R). We utilise a probit model to analyse data from Chinese listed family multinational corporations spanning 2008 to 2019. Our analysis yields two primary insights. Firstly, the presence of family directors and international experience collectively diminish the probability of foreign exits. Secondly, our findings do not indicate gender differences among successors as influencing foreign exits. Notably, the association between poor performance and foreign exits becomes attenuated with an increase in the number of family directors and their international experience, and in scenarios involving male successors. These insights significantly enrich our theoretical comprehension of how SEW dimensions inform strategic decision-making regarding foreign exits in family enterprises.

Socioemotional Wealth and Financial Performance of
 Single-Family-Owned Food Processing Firms: Evidence from Tanzania

This study assessed how Socioemotional Wealth (SEW) influences the financial performance of single-family-owned firms in the same industry. Previous research on family firms has yielded conflicting results. Thus, this study fills a gap. Data is collected from firms' owners using a structured questionnaire. Family continuity, family prominence, and family enrichment are used to measure the SEW. The financial performance was subjectively assessed. Multiple regression analysis is used to examine the data obtained from 267 firms. The findings suggest that the three dimensions of SEW - family continuity, family enrichment and family prominence - significantly influence single-family-owned firms' financial performance (p = 0.00). This study adds context-specific insights, empirical facts, and a deeper understanding of family-owned firms' subjective financial performance to the SEW development literature—the discipline of SEW theory and its application benefit from its research and practice implications. Future research should examine how firm culture affects SEW-financial performance ties by employing a larger sample.

Women in the family business: self and family's influence on their perceptions of financial performance

PurposeThis study examines how women and men in family firms respond differently when asked about perceptions of financial performance. The study poses three research questions around this topic: Are there differences among female and male responses, do those perceptions change if men and women are leaders of the family business and does the family's socioemotional wealth (SEW) influence such responses.Design/methodology/approachThis study uses a quantitative research design to determine if financial performance perceptions of family firms differ based on the gender of the respondents and their leadership position, and second, if SEW's dimensions influence those perceptions, using data from the Successful Transgenerational Entrepreneurship Practices (STEP) survey in 2015.FindingsThe findings indicate that due to the lack of theory regarding gender as a social construct, empirical data collected for family business studies should take under consideration if respondents are women, men, leaders and the family influence in the family business when collecting data from surveys and asking for perceptions of financial performance. Results show that women in family businesses tend to have more positive perceptions of financial performance than men, but if women are leaders, those perceptions not only decrease but become negative. In addition, the family's socioemotional wealth (SEW) exacerbates those tendencies.Originality/valueThis study contributes to the literature by helping to understand the potential limitations of subjective measures of financial performance, as women increasingly become family business leaders. It also contributes to gender studies by demonstrating that there is a lack of gender theoretical perspectives specifically, gender roles, suggesting that differences in self-promotion and self-evaluation between men and women leaders of their family firms. Finally, this study adds to the study of SEW as a multidimensional construct by showing the different effects, or lack of them by each dimension and showing the strong effect of family continuity on the perception of financial performance.

How to build a brand-oriented family firm: The impact of socioemotional wealth (SEW) dimensions

Literature has recently increased its attention on brand management in family firms. Blurring boundaries between family and business, divergent interests of family and non-family members, or a peculiar strategic decision-making framework in which the family’s socioemotional wealth (SEW) may be prioritized make brand management particularly complex. We contribute to the literature through a pioneering study of the benefits of brand orientation for family firm performance, and by examining how the different SEW dimensions drive the adoption of a brand-oriented culture in this kind of firm. Empirical findings from a representative sample of 120 Chilean family firms reveal the positive impact on brand orientation of binding social ties, renewal of family bonds, and identification with the family firm, and confirm that brand orientation enhances performance. Brand orientation thus emerges as a key, yet hitherto neglected, mediating factor to reconcile SEW preservation with economic performance, which entails relevant theoretical and managerial implications.

CEO risk preferences in family firms: Combining socioemotional wealth and gender identity perspectives

Challenging the established notion that women at the top are consistently risk averse, this study combines insights from social identity and socioemotional wealth (SEW) perspectives to propose a novel view of risk preferences by women and men CEOs in family businesses. It reframes risk preferences as behavioral responses by gender and family (managerial) role expectations relative to social aspirations. An empirical test of Italian firms provides support for the hypothesized effects. For firms above social aspirations, women family CEOs take more risk as performance declines than their men family counterparts; this gap in risk preferences attenuates for men/women nonfamily CEOs. For firms below social aspirations, these effects are reversed. This study contributes to research on gender identity and risk-taking in family firms by showing that women and men do not always behave according to gender stereotypes. Rather, due to malleability of gender identity, they enact differing risk behaviors across contexts. In addition, it advances SEW theory by unpacking the effects of distinct SEW dimensions on firm risk by gender identity.

Examining Heterogeneous Configurations of Socioemotional Wealth in Family Firms Through the Formalization of Corporate Social Responsibility Strategy

Family firms purportedly use different socioemotional wealth (SEW) reference points in choosing strategies, yet empirical research continues to use family involvement as a proxy for SEW. This study uses a configurational approach to examine how the multidimensionality of SEW may be used to explain the firm’s chosen strategy. We use psychometric measures of the various SEW dimensions proposed by Berrone et al. to explain the formalization of corporate social responsibility (CSR) strategy as an example. We identify various SEW configurations to understand why family firms exhibit a preference for more formal or informal CSR strategies.

Socioemotional wealth and family firm performance: A meta-analytic integration

We study conflicting arguments and empirical findings of the socioemotional wealth (SEW)-family firm performance relationship using meta-analysis. We add to the debate by questioning: First, how do major managerial decisions (strategic choices, corporate governance, and non-family stakeholder orientation) play a mediating role in the SEW performance link? Second, how do specific five SEW dimensions act as moderating variables in the SEW-performance link? We show a positive relationship between SEW and performance. Hence there is no evidence that the pursuit of family SEW occurs at the expense of financial utility. Furthermore, we find that major managerial decisions mediate the SEW-performance relation.

Sacrifice, Protect, and Hope for the Best: Family Ownership, Turnaround Moves, and Crisis Survival

A critical yet unanswered question for family-owned firms in a survival-threatening crisis is which turnaround moves to employ and for what reasons. Building on noneconomic goals associated with family ownership and related socioemotional wealth (SEW) considerations, we theorize that the higher the degree of family ownership, the more likely family owners are to sacrifice normative SEW dimensions and to protect instrumental SEW dimensions. This then affects which operational, portfolio, financial, and managerial turnaround moves are likely to be employed, and ultimately, the odds of insolvency. Analyzing a unique sample of responses from 209 bank turnaround managers generally confirms our theorizing.

Involvement of multiple generations in management and internationalization of family firms in Spain: the moderating effect of SEW dimensions

PurposeThe study aims to analyze for the Spanish context the influence of the involvement of several generations in the firm's management on family firm internationalization. The authors also respond to the call in the literature to consider the influence of SEW on family firm internationalizations by analyzing the moderating effect of the importance family managers attach to each of the socioemotional wealth (SEW) dimensions – enrichment, continuity and prominence on the relationship between multiple generations involved in management and family firm internationalization.Design/methodology/approachThe information was obtained by means of a questionnaire sent to the CEOs of family businesses. The authors’ sample consists of 147 Spanish family firms.FindingsThe authors find that the involvement of multiple generations in management is positively related to the internationalization of family firms. Furthermore, the importance that family CEOs attribute to the enrichment dimension of SEW reduces the intensity of the effect of the involvement of several generations in management on family firm internationalization.Originality/valueThe authors’ results, for the Spanish context, complement previous studies (Meneses et al., 2014) showing that the entry of new generations into the family business opens a window of opportunity for the internationalization of the family business. Furthermore, their study shows that the diverse family objectives by CEOs can have different, even conflicting effects on the internationalization decision. These results suggest that the enrichment dimension, which focuses on the short-term family goals may restrain the internationalization of the family business. However, continuity and prominence dimensions, which are related with long term family objectives and jointly enable the fulfillment of nonfamily stakeholders’ objectives, do not influence the internationalization of the family firms analyzed.

The Moderating Role of Socioemotional Wealth on Postsuccession Performance in SME Family Firms

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.

The Role of Socioemotional Wealth in Entrepreneurial Persistence Decisions for Family Businesses

Many factors may influence entrepreneurial persistence in various contexts. For example, scholars find that family business entrepreneurs are more persistent than other entrepreneurs. However, the reasons why they are more persistent are not as well known. Utilizing a conjoint experiment with 64 entrepreneurs and 376 decisions, this paper examines the influence of socioemotional wealth (SEW) on persistence decisions in a family business context. The results of the Hierarchical Linear Modelling show that the expected financial returns, expected non-financial benefits, expected switching costs, and probability of expected outcomes influence entrepreneurial persistence decisions. Further, family business entrepreneurs with higher levels of SEW focus more on non-financial benefits when facing alternative opportunities. This study also provided empirical evidence for different dimensions of SEW. The results show that the emotional attachment of family members and the renewal of family bonds to the firm are effective indicators, which provide a direct measurement of SEW. The findings of this study increase scholarly understanding of both entrepreneurial persistence literature founded in threshold theory and SEW literature.

PRESERVING THE SOCIO-EMOTIONAL WEALTH OF THE FAMILY BUSINESS: LOOKING BEYOND THE PANDEMIC OF COVID-19

Family businesses are one of the most popular form of economic organizations, known for their agility and resilience to the external environment. Despite this, many family businesses have faced enormous challenges related to the covid-19 crisis, straining the emotional and physical well-being of family members as well as non-family employees. In this research work, we focus on how the pressures of the crisis influence the non-economic goals of family firms, in particular their ability to preserve their socio-emotional wealth. Based on the five dimensions of socio-emotional wealth. We found that the ability to adapt to these new circumstances has become essential to preserve their socio-emotional wealth and this can be done through good communication, transparency, maintaining positive emotions, developing trusting relationships and anticipating sudden successions.

Role of socioemotional wealth (SEW) in the internationalisation of family firms

PurposeFamily firms' desire to preserve and uphold socioemotional wealth (SEW) makes their internationalisation a complex phenomenon. Despite the significance of SEW in guiding family firms' internationalisation decisions, the literature in the underlying research stream is still scant and inconclusive. Thus, the purpose of the study is to gain preliminary insights about various dimensions of SEW and its impact on family firms' degree of internationalisation.Design/methodology/approachThe study employs the multi-case study research design. The multidimensional SEW scale developed by Berrone et al. (2012) is used to calculate the SEW scores for four prominent Indian family businesses through the content analysis of Chairman's Statements for a period of 13 years (2007–08 to 2019–20). Further, the study examines the relationship between SEW and family firms' degree of internationalisation through two non-parametric tests: Somers' D and Kendall-Theil regression.FindingsThe results reveal the prevalence of various dimensions of SEW in family businesses. They also indicate that different FIBER dimensions are prioritised differently in family businesses. Finally, the authors observe that there exists a negative relationship between SEW and internationalisation of family businesses, indicating that SEW hinders the internationalisation of family firms.Research limitations/implicationsThe study lends to the readers, the understanding that SEW plays a significant role in the internationalisation of family firms; thus, some modification might be needed in the existing international business theories in order to explain the role of peculiar family characteristics in the internationalisation decisions of family firms. Further, since SEW hinders the internationalisation of family firms, it raises a question for researchers and family business leaders: Do family firms need to work on their socioemotional ties to avoid making suboptimal decisions?Originality/valueThe study is a response to the call by Cleary et al. (2019) to utilise the results of content analysis of SEW in determining its impact on the family firms' external events. Majority of the studies are still using univariate measures (e.g. percentage of family ownership) to capture SEW. However, this study attempts to calculate the SEW scores of the family firms along these FIBER dimensions through content analysis. This helps in scrupulously capturing the impact of SEW in the internationalisation of family firms.

Influence of socioemotional wealth on non-family managers’ risk taking and product innovation in family businesses

PurposeThere is a growing interest in understanding family firms’ strategic behavior using the socioemotional wealth (SEW) perspective. This study explores how family SEW dimensions influence non-family managers’ attitudes toward risk in the context of product innovation. This study also examines whether managerial risk-taking mediates the relationship between SEW and product innovation.Design/methodology/approachThe study uses a sample of 150 family firms in the United Arab Emirates and collects data from family owners and non-family managers via self-administered questionnaires. The study uses SmartPLS structural equation modeling to test the conceptual model and the proposed hypotheses.FindingsThe results indicate that multidimensional SEW influences non-family managers’ risk-taking behavior in different magnitudes and directions, thus impacting firms’ product innovation. Moreover, risk-taking partially mediates the relationship between SEW dimensions and product innovation.Originality/valueWhile product innovation could be seen as a loss scenario for family firms due to the potential loss of SEW, growth, continuity and reputation outweighed the desire to maintain control for the firms in this sample. Thus, these firms encourage non-family managers to take risks in product innovation.

Drivers of Intra-family Conflict and Employee Outcomes in Family Firms

Family business are prone to organisational conflicts in general and intra-family conflicts specifically. Drawing arguments from literature on family businesses, organisational behaviour, top management teams and goal setting, this research identifies socio-emotional wealth (SEW) related goal setting and employee bonds to predecessor generations as salient antecedents of intra-family conflict and demonstrates how such conflicts impact non-family employees. Using dyadic survey data, we provide evidence that internal and external dimensions of SEW attenuate and drive intra-family conflict. Employee preferences for predecessor generations are a further driver of intra-family conflict. In turn, intra-family conflict yields negative organisational consequences as it lowers non-family employee job satisfaction and indirectly increases turnover intentions of these employees. The findings of this research contribute to our understanding of intra-family conflicts and SEW related outcomes in family firms. The findings lay the ground for important theoretical and practical implications.

The Survival of Family Farms: Socioemotional Wealth (SEW) and Factors Affecting Intention to Continue the Business

This article addresses the problem of succession in family farms in a context of generational change. Family businesses are characterized by their long-term orientation and by having a positive effect through environmental goals that remain in place generation after generation. The general increase in average age among farmers is seen as a barrier to more sustainable land use, and the survival of family farming therefore depends on the availability of a successor in the family. Socioemotional wealth (hereafter, SEW) is understood as the affective endowment of family members. This study adopts the SEW dimensions conceptually validated to analyse the effects of psychological and socioeconomic factors on potential successors’ intentions. The results of a survey administered to students attending agricultural schools in Catalonia show that intentions to assume the management and ownership of the family farm increase in line with individuals’ interest in creating their own business, their ability to take over the farm, and their emotional inclination to continue the family legacy. In addition, SEW was measured in relation to the potential successor and not the incumbent, as has typically been the case in previous work, bringing this important research subject as a principal actor. Finally, an empirical validation of a short FIBER scale, i.e., REI scale, was obtained that relates individuals’ intentions to succeed the family farm to the socioemotional wealth of business families, testing suitability of the REI scale as a measure of intention to succeed.

Family firms going international: Integrating corporate identity‐building processes and socioemotional wealth dimensions

AbstractThis study aims to improve understanding of how identity‐building processes shape corporate identity and how dimensions of socioemotional wealth affect internationalization pathways in a family firm. The paper uses an in‐depth case study of an Italian family firm internationally recognized as excellent in its industry. We developed an integrative theoretical model, combining socioemotional wealth frameworks and elements of the corporate identity mix. This enabled us to incorporate more theoretical knowledge from the field of international management into the domain of family business research. The latent construct of socioemotional wealth provides an in‐depth understanding of the multidimensional nature of corporate identity‐building processes and shows the intertwined nature of corporate identity and the “affective endowment” in the development of internationalization strategies.

The Impact of Socioemotional Wealth on Corporate Reporting Readability in a Multinational Family-Controlled Firm

Extant research suggests that the most significant elements of a family firm’s socioemotional wealth (SEW) can drive financial reporting decisions. This paper explores this empirically by analyzing corporate disclosures of a case organization – Guinness, a multinational family brewing firm – over an extended period. We identify the presence of the SEW dimensions in the firm’s corporate disclosures and explore the relationship between the most salient SEW dimension (family identity) and readability, measured by the Bog index. The analysis finds a positive association between family identity and readability in the period when the firm under study can be defined as a family firm. Other SEW dimensions do not appear to have an influence on readability. In addition, at the end of the period of study, when the firm under study ceased to be a family firm, the SEW dimensions failed to have an effect on readability.

The relationship between the socio-emotional wealth dimensions and earnings management by thresholds: evidence from French family companies

The objective of this study is to investigate the relationship between a two socio-emotional wealth dimensions, (i.e., family control and influence and the transgenerational sustainability), and the family managers' willingness to manipulate earnings level to meet or beat zero threshold. Based on an initial sample including all listed firms on CAC All-Tradable during 2014 to 2016, we extracted a final sub-sample composed of 124 observations of suspected family-firms. We developed two proxies for family control and influence dimension, i.e., the proportion of family board directors and the appointment of a family CEO. We proxied the family interest to preserve the transgenerational sustainability by the firm belonging to the founding generation. We found positive relationship between the proportion of family board directors, the generation to which a family firm belongs and earnings management to avoid loss reporting using real activities. The relationship strengthens after the fiscal year end as all variables measuring the family attachment to the SEW dimensions are significant determinant of discretionary accruals to reach zero threshold.