Family Business Literature Research Articles

Family Involvement and Firm Performance: A Worldwide Study Unveiling Key Mechanisms

Prior literature establishes a link between family involvement and the firm financial performance. However, the mechanisms through which family involvement in a firm affects its financial performance in different institutional settings are largely unknown. Using an unbalanced panel of 3,322 listed firms from 32 countries over a 9-year period, we find that family involvement in ownership and management on average has negative effects on financial performance. Moreover, the negative effect of family ownership is less profound in countries with good institutional quality. We further find that R&D intensity partially mediates the negative relationship between family involvement and the firm financial performance, but the mediation effect is conditional on the degree of institutional quality in a country. These findings advance the family business, innovation, and institutional literature, and offer important implications for theory and practice.

Digital Product Innovation Within Family Firms: A Construal Level Perspective

Digital product innovation (DPI) is critical for the survival of firms, especially those operating in traditional industrial-age industries. While research has started to investigate digital innovation in family firms (FFs) considering them as a monolithic group, we still lack a more nuanced perspective that considers heterogeneity among FFs with respect to DPI and what drives such variance. Drawing on construal level theory to explain the risk behavior and goal time horizon of FF owner-managers, we propose and find that the presence of later family generations in control positively influences DPI in FFs, while the presence of a family CEO is detrimental to DPI. Furthermore, we propose that these relationships are moderated by the size of the top management team (TMT), finding that a larger TMT weakens the positive relationship between later generations in control and DPI. We base our analysis on a longitudinal sample of 103 FFs in the automotive, industrial engineering, and pharmaceutical sectors observed from 2013 to 2020. This first empirical study applying construal level theory to the family business literature has important implications for the FF digital innovation literature and for FF owner-managers interested in achieving DPI.

Understanding customer’s post-M&A intentions and behaviors: the role of the family business brand and previous reputation of the acquiring firm

Purpose Mergers and acquisitions (M&As) are a critical time for organizations and their consumers. For the company, there are many financial and non-financial risks. For customers, it requires deciding whether or not to continue the relationship that they had with the previous firm. This paper explores the extent to which communicating the family business (FB) brand, and the previous reputation of the acquirer affects customer perceptions and intentions after an M&A event.Design/methodology/approach Data for this study were collected from 159 Italian participants. We used a 2 (Communication of FB brand: Yes vs. No) by 3 (Reputation: positive, neutral, negative) between subjects’ experiment to test how the communication of the FB brand and the reputation of the acquirer affected perceived trustworthiness and service quality, and how this, in turn, influenced customer purchase intentions.Findings We find that communicating the FB brand does not influence consumer perceptions and intentions toward the acquired company. However, the previous reputation of the acquiring firm is critical in influencing consumer perceptions and intentions to buy.Originality/value Our study continues the growing research on M&A in family firms. It also increases our understanding of the boundary conditions of the FB brand effects, and the relevance that the previous reputation of a family firm can have in M&A scenarios. Finally, our study introduces the “Halo” and “Velcro” effects into the FB literature.

Preparing the successor through familial support and legitimacy: a multilevel framework

ABSTRACT This study investigates the interplay among parental support, familial legitimacy, and next-generation succession intentions in family businesses in different societal contexts. Building on attachment theory and insights from family business literature, the study underscores the influence of family at both the parental and societal levels in creating a nurturing environment that supports succession intentions. Using multilevel analyses, we show that a secure parental base of support empowers offspring to develop self-efficacy in participating in the family business (family business self-efficacy), which plays a central role in supporting succession intentions in family businesses. This relationship is strengthened by familial legitimacy – that is, how the societal values that surround family behaviours shape the relationships among parental support, self-efficacy in the family business, and succession intentions. The study provides a nuanced explanation for the family mechanisms and societal values that drive the succession intentions for family businesses’ next generations.

Fair play in family firms: examining the perceived justice of performance management systems

PurposeThis study examines the intricate relationship between family influence and perceived justice in performance management systems within family firms. Recognizing the unique dynamics that family ownership brings to human resource practices, the research aims to delineate how family presence affects both the process and the perception of fairness in performance evaluations.Design/methodology/approachUsing a conceptual framework, the research adopts a dual-method approach, combining a comprehensive literature review with theoretical modeling. The study synthesizes existing research and theoretical insights to explore the effects of family influence on the perceived fairness of performance management practices.FindingsThe findings reveal that family influence profoundly shapes fairness perceptions in performance management, impacting family and non-family employees. It affects systems' design, implementation and reception, with mechanisms including resource distribution and criteria alignment. Specifically, family influence molds fairness perceptions within the performance management process, enhancing organizational performance and fostering trust in family businesses, thus supporting sustainable growth.Originality/valueThis study contributes to the family business and human resource management literature by providing a nuanced understanding of how family dynamics influence perceptions of justice in performance management. It underscores the dual role of family influence in enhancing and complicating fairness perceptions, thus offering a balanced view that can inform academic research and practical HR management in family firms.

Balancing work and family when family is work: a reconceptualization of work–family integration, burnout and detachment in family business

PurposeBuilding from calls for greater interdisciplinary research in interpreting family business phenomena, we integrate research on work–family conflict, detachment and burnout from both organizational and family studies. Using the characteristic work–family integration of family business settings as a backdrop we develop theoretical arguments that emphasize the reconciliatory role of interdisciplinary perspectives to explain the ostensibly contradictory findings in extant research. The diminishing barriers separating work and life spheres occurring in most global industries illustrate the importance of conceiving the study of work–life phenomena through recursive, rather than linear, logics and emphasizing the relevance of family business research in providing a contextual foundation for interdisciplinary discussions.Design/methodology/approachThis theoretical paper integrates perspectives from the literatures on organizational behavior and family systems theory to form six propositions on the relationship between work–life integration and the antecedents and consequences of burnout and psychological detachment.FindingsThis paper explores the nuances that overlapping work and family roles might be a source of both harmony and discord in family firms. In doing so, our research contributes to the growing relationship between family systems theory and family business research, and creates the foundation for future empirical studies on the psychological dynamics that underlie work–family integration.Originality/valueThis research advances a novel perspective on the interactions between work–family integration and burnout and detachment, and does so by noting that the way the family business literature treats work–family integration may apply to any employee that experiences tension between these different spheres of their identity.

Bisnis Keluarga

This article presents how the factors affecting family owned and managed businesses are examined and related to how the business literature develops. In addition, it discusses important patterns in the current literature and new directions regarding family business for future study. This study identifies the main research topics and methodical approaches in a systematic literature review to understand the family business. Insights about behind the historic changes and current directions and trends of family business literature are also identified. The findings of this study argue that the main cause of challenges in running a family business is sourced from managing the relationship between family interests and business interests. The key success factors are strong leadership and building a culture that accepts continuous change.

THE RECEPTIVENESS PUZZLE: UNDERSTANDING WHY SMALL FAMILY BUSINESSES STRUGGLE WITH ACTIVITY-BASED COSTING ADOPTION

This study examines the challenges associated with the adoption of activity-based costing (ABC) in a small family business in a less developed country. Through a case study of PT XYZ, a logistic company, the study found that technical factors, including unpredictable customer requests, varying duration of activities, and uncertainty around distance and fuel consumption for each truck, make adopting the ABC method challenging. Organizational factors, such as a top-down hierarchy and the negative perception of the owner affecting the rest of the hierarchy, also contribute to the non-acceptance of ABC. Additionally, key agents within the company did not demonstrate enthusiasm toward changes. The cultural and contextual factors and unique characteristics of small family businesses further make them less receptive to adopting new ideas or changes, including the ABC method. This study offers practical implications for introducing changes, such as improving data collection processes, establishing better communication channels with family business owners, and seeking external expertise or advice from professionals with experience in family business management. The study expands the current discussion on ABC implementation and contributes to the family business literature by linking family business characteristics with the adoption of the ABC method.

Familiness and Business Strategy: Unraveling the Moderating Effect of Familiness on Performance in Family Firms

Existing literature has examined several viewpoints in the field of family business research. Nevertheless, the correlation between strategy and performance in family enterprises has not been extensively studied. Furthermore, the extent to which family influence impacts the link between strategy and performance is not well-defined. The distinguishing factor between family businesses and non-family businesses is the concept of familiness, which refers to the unique qualities and talents that stem from family influence. The current body of research focuses on examining the moderating influence of familiness on the link between strategy and performance in family businesses. This study focuses on examining the impact of business strategy on the development of exceptional performance in family firms. Additionally, it investigates if familiness has a moderating function in this connection. This study aims to conduct an empirical analysis of the connection between strategy and performance in family-owned businesses. Additionally, it seeks to investigate the influence of familiness as a moderating factor in this relationship. The research population consists of individuals who own or manage family businesses. A total of 203 owners/managers were chosen using a simple random sample method from the family businesses located in Multan. Data were obtained using a cross-sectional survey, and the hypothetico-deductive technique was employed in the research design. Partial least squares structural equation modeling (PLS-SEM) was utilized for assessing data. The research findings suggest a direct correlation between familiness and the performance of family businesses. The results also reveal that familiness moderates the association between family business strategy and family company performance. The findings of this research have crucial significance for family company owners/managers by underlining the fact that family business strategy’s influence on family business performance may be strengthened by concentrating on the aspects of familiness; power, experience, and culture. This research also contributes to the family business literature by evaluating the moderating influence of familiness on the strategy-performance relationship in a family company setting.

I want to break free: Successor Emancipation in Family Business

Family business successors live at the nexus of past, present and future, nourished and inspired by past legacies while also craving to build a brand-new future. The senior generation is generally the guardian of firm continuity in charge of preserving past achievements, whereas the next generation might dream about introducing change and innovation within the current landscape of the family firm. Yet these attempts too often trigger resistance and anxiety in the senior generation, who might respond with increasing control and suspicion to any tentative of challenging the status quo such as transforming current products, services, business models, or organizational structures. Successors operate at the intersection of these opposite forces of conservatism and reform, and one of their major issues is that they need to handle them effectively, that is without jeopardizing family relations and harmony nor losing themselves into the process. Unless they succeed in doing so, succession failure might follow. By combining two different streams of literature grounded in distinct disciplines, namely succession literature in family business and emancipation literature in entrepreneurship, we reveal successor emancipation as a novel explanation of why successions fail and offer some practical advice on how to handle these tensions in intra-family succession.
 Received: 10 May 2023 Accepted: 28 Jun 2023

Microfoundations in Family Firm Research: A Review and Agenda for Theoretically Driven Future Inquiry

Microfoundations research, generally conceptualized as explaining macro concepts and relationships in terms of micro-level behaviors and interactions, has been argued as critical to knowledge-building. Thus, we reviewed the family business literature to assess the state of microfoundations knowledge. Results indicate most research does not examine all microfoundational links. In addition, much of the research lacks a theoretical foundation. To provide structure to guide future inquiry, we offer theoretically-driven directions for family business research for each microfoundation link. This will help prevent microfoundations knowledge from developing in a disjointed manner, and allow future research to build more systematically.

The evolution of the field of family business research over a decade (2012–2022)

The continuous challenges to which family firms are subjected have led research in this field to focus on various aspects, thus generating a large and heterogeneous body of literature. This paper describes the evolution, status, and trends in family business literature over the decade 2012–2022 and also identifies gaps that may require further investigation. In that regard, new opportunities for additional analyses are also determined. To this end, a bibliometric study has been carried out based on a collection of articles from the Business Source Premier, Web of Science, and Scopus databases, yielding a total of 4064 articles. We analyze the main indicators of activity in family business research over the aforementioned period. The most productive authors and institutions, leading journals, and main research topics of these publications are reflected in this analysis. Likewise, the relationships between the most frequent co-authorships within the field are mapped, as well as the connections between co-words in published articles. In addition, the 10 most influential works published during those 10 years and changes in trends related to the most popular topics, in contrast to previous years, are also highlighted.

Sustainable and entrepreneurial: a path to performance improvements for family firms?

This study endeavors to reconcile the limited, mixed findings related to entrepreneurship and corporate social responsibility in the family firm context. Specifically, the relationships between entrepreneurial orientation (EO), sustainable investments in environmental and societal initiatives, and the interaction of EO and sustainable investments with family firm performance are evaluated. Data were collected through in-person interviews of 151 top managers of automobile and motorcycle dealerships. Secondary data were collected from ReferenceUSA to confirm the veracity of the primary performance data. Multiple linear regression models were used to evaluate the hypothesized relationships. The results indicate family firms realize higher performance with an EO by being proactive, innovative, and risk-taking. Moreover, sustainable investments are associated with higher family firm performance by either increasing revenues or decreasing costs. EO does not significantly accentuate the positive relationship between sustainable investments and performance. The observed interaction was contrary to expectations with EO acting as a substitute for sustainable investments; firms with an EO use a variety of initiatives, including but not limited to society and the environment, to improve performance. These findings advance the family business literature on entrepreneurship and corporate social responsibility theory by establishing EO and socially responsible, sustainable investments as antecedents of family firm performance while also analyzing the EO-sustainable investment interaction.

The Impact of COVID-19 on the Internationalization Performance of Family Businesses: Evidence from Portugal

Drawing on the internationalization and family business literature, this preliminary and exploratory study examines the impact of the COVID-19 pandemic on the internationalization performance of family firms. To the best of our knowledge, this is the first study to analyze the impact of COVID-19 on the internationalization strategy of Portuguese family firms. Using a questionnaire survey of private family firms, this paper adopts a quantitative approach. Our analysis of data from a single survey of 127 family firms shows that these firms mostly use the Uppsala model of internationalization. The results indicate that COVID-19 has a very negative and statistically significant impact on the different components of the internationalization performance of family businesses. This study contributes significantly to a better understanding of the impact of uncertainty caused by epidemiological scenarios on the strategy and performance of family firms.

Family governance structures in family businesses: A systematic literature review and future research agenda

ABSTRACTFamily governance as a research field has recently attracted scholarly attention. The article aims to contribute to family business literature by consolidating the extant research on family governance. Our systematic literature review comprises 52 articles on family governance in 24 peer-reviewed journals between 1993 and 2023. The findings reveal family complexity as one of the preeminent reasons to adopt family governance structures. The study further identifies that the adoption of family governance structures by family businesses results in family and business-related transformation and leads to various economic and non-economic benefits. Finally, we suggest potential avenues for conducting future research.

Does second‐generation involvement promote family firm environmental investment? The China experience

AbstractFamily firms not only play an important role in economic growth but should also be held partly responsible for environmental degradation. Employing normative stakeholder theory and analyzing unique Chinese survey data via stepwise regression models, our findings indicate that second‐generation successors did not significantly impact family firms' environmental investment. However, among second‐generation successors, we find that successors with international experience positively impacted environmental investment. The propensity score matching (PSM) and two‐stage least squares estimation (2SLS) approaches confirm our results. As an interdisciplinary study, our research is of great value to the environmental responsibility and family business literature.

Relationship between different resource and capability configurations and competitiveness – comparative study of Hungarian family and nonfamily firms

PurposeThe purpose of this paper is to identify different types of resource and capability configurations among Hungarian family and nonfamily firms and explore which compositions can be considered competitive. In a rivalrous, dynamic world, understanding which sets of resources and capabilities lead to a higher level of competitiveness is vital.Design/methodology/approachThis paper is based on a quantitative competitiveness survey carried out between November 2018 and July 2019 in Hungary. The authors used the Firm Competitiveness Index (FCI) to measure competitiveness and the resource-based view (RBV) approach to understand which configurations of resources and capabilities are responsible for a higher level of competitiveness based on 32 variables. An exploratory factor and cluster analysis were conducted to analyze the ownership's effect on firm competitiveness. The final sample size contained 111 companies, of which 53 were identified as family and 58 as nonfamily firms.FindingsFactor analysis reveals five factors determining resources and capabilities: “operational,” “leadership,” “knowledge management,” “transformation” and “networking.” Based on these factors, the cluster analysis identified five groups in terms of types of family and nonfamily firms: “Lagging capabilities,” “Knowledge-based leadership,” “Innovativeness and transformation-oriented management,” “Relationship-oriented management” and “Business operation-oriented management.” Results show that nonfamily businesses focus on operational and leadership capabilities, reaching a higher FCI than family businesses, which are likely to invest more in their networking, transformation and knowledge management capabilities.Originality/valueBy defining the different configurations family and nonfamily firms rely on to reach competitiveness, the paper applies an essential element to the Hungarian and Middle Eastern European contexts of family business research. The findings contribute to developing family business literature and point out specific resources and capabilities family firms should focus on to shift toward reaching a higher level of professionalization and competitiveness. The characterization of different types of competitiveness comparing family and nonfamily firms enables the firms to assess customized implications.

Corporate governance and family business: a perspective article

PurposeThe governance of family businesses has attracted considerable scrutiny among scholars and practitioners. This paper explores influences that have defined corporate governance practices in family firms in the last century and reflects on the possible direction of research and practice in the next century.Design/methodology/approachThis manuscript undertakes a literature review of past and recent literature investigating corporate governance practices within family businesses.FindingsThe evolution of corporate governance in the family business literature is underpinned by centralised decision-making structures, the need to overcome fundamental corporate governance challenges, the increasing relevance of family governance models and the recognition and adoption of contemporary trends in the corporate governance space. The review also suggests that corporate governance and family business research in the next century will be dominated by technology-based governance, sustainable governance, globalisation and the validation for multi-board structures, greater attention to succession planning and diversity, and channelling significant resources to innovation.Originality/valueThe paper synthesises developments in the corporate governance–family business literature and proposes a future perspective.

The role of emotional labor and display latitude in preserving socioemotional wealth in family businesses

Research on emotions is gaining momentum in the family business literature. However, the literature remains unclear on the psychological foundations of how managing one’s emotions can contribute to socioemotional wealth goals in a family business. We contribute to the study on emotions in the family business literature by linking the ‘Socioemotional Wealth’ (hereafter ‘SEW’) perspective with the ‘Emotional Labor’ concept to elaborate on the microfoundations of SEW. Following an interpretive qualitative methodology, abductive data analysis was conducted using thematic analysis techniques with over fifteen hours of interview material collected from family business owners/members. Results indicated that family members’ perception of SEW objectives and their emotional labor are linked and that this relationship has utility in the preservation of SEW. We also found that, when exercised inappropriately, latitude in emotional displays, also known as ‘display latitude’, could potentially deplete SEW. Our findings extend the family business literature on emotion management and contribute to our understanding of the emotions-related mechanisms associated with SEW preservation and depletion in family firms. Our results have practical implications for family businesses regarding the need for family members to strike a balance between emotional labor and display latitude for the sake of preserving SEW.

Managers' emotion-regulation capabilities and family firm innovativeness: a dynamic managerial capability view

PurposeWhile previous studies have proved the significance of family firm innovativeness (FFI), the question of how the emotion-regulation capabilities of family business managers affect FFI still remains open. This paper aims to examine the impact of the emotion-regulation capabilities of family business managers on FFI moderated by the family involvement in business management.Design/methodology/approachThe present study is based on a quantitative research design. Data were collected with the help of a telephone survey. Overall, 192 family firms were surveyed, and the results were analysed using structural equation modelling (SEM).FindingsThe findings indicate that managers' emotion-regulation capabilities (independent variable) positively impact FFI (dependent variable). The research results also indicate that having more family members involved in the business (moderating variable) can lead to better innovation outcomes, assuming these family managers have sufficient emotion-regulating capabilities.Research limitations/implicationsThe research context could be broadened by differentiating between the industries in which family firms operate. This could aid a better understanding of the challenges, opportunities and market trends in different sectors. Future research might also include more diverse countries with deep family business traditions, strengthening the robustness of the findings across more varied contexts.Originality/valueUsing a multi-level perspective, this study contributes to the dynamic managerial capabilities and family business literature by showing that, in an environment where familial relationships can affect working relationships, the ability of managers to control their emotions and others' emotions can be a critical managerial resource that impacts FFI.