Context Of Family Firms Research Articles

Next generations of entrepreneurs: between independent new ventures and hierarchical family firms

This study explores the modes of exploitation of business opportunities among the next generation of entrepreneurs (NGEs) and how the family firm context influences the choice of mode. This is an area of limited knowledge. I argue that aside from adhering to existing family firms, NGEs also develop new ventures independent of their family firms. For this purpose, a multi-case study was conducted based on 15 Colombian entrepreneurs. These entrepreneurs were second and third-generation family firms, were involved within the FF or with their leaders, and demonstrated experience in exploiting business opportunities. The findings show that NGEs exploit business opportunities in their family firms, independently and simultaneously in both modes. NGEs that opt for the hierarchical mode experience cohesive family contexts and inclusive leadership focused on the family or the family firm. NGEs that opted for market mode by performing independent ventures were guided by leaders focused on entrepreneurship and who also promoted the formation of informal groups among NGEs. These results extend our comprehension of the influence of family firms in entrepreneurship and set the importance of fostering entrepreneurship among NGE to increase the opportunities to develop their interests without depending on the family firm.

Do female family managers affect corporate social responsibility in Chinese family firms?

ABSTRACT This study investigates the relationship between female family directorship and Corporate Social Responsibility (CSR) in the specific context of Chinese family firms. It explores the moderating influences of gender inequality, family ownership and economic policy uncertainty. Based on social role theory, we find that female family directorship is associated with a stronger commitment to external CSR engagement than to internal CSR. Moreover, gender inequality and family ownership attenuate the relationship between female family directorship and external CSR, while economic policy uncertainty enhances their impact on external CSR. Overall, we contribute to the literature at the intersection of family firms, female leadership, and corporate social responsibility.

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.

Digitalization as a facilitator of open innovation: Are family firms different?

This study analyzes the effect that a firm's level of digitalization has on its open innovation activities. Specifically, we argue that digitalization facilitates collaboration with a wider set of technology partners in the innovation process (i.e., breadth of technological collaboration). In addition, our arguments contend that certain socioemotional factors in the particular context of family firms may diminish this facilitating aspect. We test our ideas using panel data from a representative sample of Spanish manufacturing firms over the period 2007–2017. We find support for the positive association hypothesized between digitalization and the breadth of technological collaboration. Contrary to our expectations, however, the positive effect of digitalization is more pronounced among family firms. We discuss the implications for the open innovation and family business literatures.

Gender diversity and collaboration with universities: drivers of innovation in family firms

PurposeThis paper provides empirical evidence for how gender diversity in top management teams (TMTs) and collaboration with university and technological centres lead to innovation outcomes. The authors review past research on these concepts and illustrate their individual and joint effects on process innovation specifically in the unique context of family firms (FFs).Design/methodology/approachThe authors used a sample of 788 Spanish manufacturing family firms in 2016 and applied logistic regression models since the dependent variables are dummies.FindingsThe authors found a positive relationship between gender-diverse TMTs, process innovation and research and development (R&D)-based process innovation. Similarly, the collaboration with university technological centres is positively associated with higher innovation outcome of FFs. In addition, the authors also found that the presence of women in TMTs shapes the relationship between the collaboration with university technological centres and process innovation.Originality/valueThis paper contributes to the research on collaborative innovation in FFs by emphasizing the collaboration with university technological centres, an external partner often ignored by this stream of literature. This research also responds to the calls for further study of the effect of the heterogeneity of the TMTs on the innovation outcome of FFs, from the perspective of the resource-based view (RBV) of the firms.

Family-friendly work practices in family firms: A study investigating job satisfaction

We explore the accessibility of family-friendly work practices within the context of family firms versus non-family firms. Using social exchange as a theoretical framework, we explore the channel of the association between family-friendly work practices and job satisfaction through accessibility of family-friendly work practices (moderated by employee participation) and from accessibility of family-friendly work practices influencing job stress (moderated by trust in management). We also argue that in family firms, the moderated-mediation effects of the accessibility of family-friendly work practices on job satisfaction through influencing job stress can be greater in family firms than for non-family firms despite lower trust in management. We test and find support for our hypotheses using a dyadic, stacked model of 180 non-family firms representing 180 work practices related managers, and 888 employee respondents; and 265 family firms with 265 work practices related managers, and 1,144 employee respondents.

Knowledge management through information and communication technology investments: the story of Indian family firms

PurposeInformation and communication technologies (ICT) are indispensable tools for Knowledge Management (KM) practices in today’s knowledge-intensive and globally interconnected marketplace. This paper seeks to investigate the impact of family ownership on ICT investments in an emerging economy (EE) context.Design/methodology/approachThis empirical paper uses data from 300 large Indian listed firms with 2,650 observations in the period 2008–2017, to test its hypothesis.FindingsThe results indicate that family firms are not favourably inclined towards ICT investments for formalizing their KM practices. However, under certain contexts, such as higher foreign institutional ownership or business group affiliation, they are more willing to invest in ICT resources.Practical implicationsThis study establishes a nuanced understanding of how family firms approach ICT investments and KM practices. This research can help family owners/managers to commit sufficient resources on ICT projects.Originality/valueLiterature on KM has largely emanated from developed countries. This is one of the first papers from an EE context that studies the impact of family ownership on ICT investments and subsequent KM practices. In this way, this paper offers specific insights into the context of Indian family firms and offers some interesting findings that can contribute to the literature, policy and practice.

The effect of CEO entrepreneurial passion on family firm entrepreneurial orientation: does generational stage matter?

PurposeThe purpose of this study is to explore to what extent passionate family chief executive officers (CEOs) increase the entrepreneurial orientation (EO) of the family firm. More specifically, the authors investigate the impact of the family CEO’s entrepreneurial passion (EP) on the firm’s EO and explore whether the generational stage of the family CEO alters this relationship.Design/methodology/approachA multiple moderated regression model was used to test the hypothesized relationships, based on a unique sample of 140 private Belgian family firms. All respondent CEOs are members of the controlling family, meaning they are in a unique position to influence firm-level outcomes.FindingsThe results reveal a significant positive effect of a CEO’s EP on the family firm’s EO. The generational stage of the family CEO moderates the EP-EO relationship, so the positive effect is strongest in first-generation family CEOs and becomes negative in third- or later-generation CEOs.Originality/valueThis research builds on insights from imprinting and upper echelon theory to explore how the EP of the family CEO impacts the family firm’s EO. This study thereby contributes to research regarding the antecedents of EO and introduces the concept of EP in a family firm context. The present study further contributes to the literature on imprinting, as it empirically shows how the EP-EO relationship differs depending on the generational stage of the family CEO. In a family firm context, the generational stage acts as a contingency variable, determining the dominant theory (i.e. upper echelon or imprinting theory) in explaining the EP-EO relationship.

The adoption of codes of ethics in family businesses: theoretical profiles and empirical evaluation

PurposeThe aim of this paper is to theorize on and empirically extend the understanding of the adoption of codes of ethics within the context of family firms. The authors contend that in family firms the adoption of code of ethics is a process emerging from social interaction.Design/methodology/approachThrough a multiple case study design the authors analyze family firms that have not yet adopted a code of ethics and untangle the process that could potentially lead to that choice.FindingsThe authors’ main finding suggests that the institutional context impacts on the adoption of codes of ethics. Furthermore, in first generation the adoption of codes of ethics is hindered by the presence of the founder and the existence of strong family ties. In subsequent generations as founder centrality is reduced the owning-family considers more the possibility to adopt such codes to preserve the family's reputation in the local community.Research limitations/implicationsFirst multiple views also from external stakeholders could be added; second, an international perspective using cross-country cases could add more nuances on how cultural and institutional aspects shape the adoption of codes of ethics differently across national contexts.Practical implicationsThe authors’ findings inform family business owners on the importance of adopting code of ethics to support the formalization of the family value system.Originality/valueThe authors advance the debate on codes of ethics in family firms by disentangling the process through which those codes may be adopted to institutionalize and formalize the family values, history and tradition.

Selling Brownies or Formal Education: A Breakpoint for Entrepreneurial Learning in Family Firms

Purpose- The purpose of this study is understanding the entrepreneurial learning in family firms, from a process perspective and focused on next generation family members (NGFM), who were exposed to entrepreneurial learning processes in their family firms. While the relationship between family firms and entrepreneurship has captured a lot of research interest, the processes that entail the transfer of entrepreneurial knowledge and skills between family members have received less attention. This paper contributes to fill this gap by analyzing the learning experiences and relationship with previous generations that originated entrepreneurial learning in next generations. Design/methodology/approach – This study is based on 24 Colombian cases of NGFM, who were diverse in terms of ages, entrepreneurial achievements, and connections to the family firms. Findings – Entrepreneurial learning is a continuous and incremental process with multiple mechanisms to learn, which are defined by the previous generation. There is a temporal dimension associated with life stages, which defines the type of mechanisms more useful to learn about entrepreneurship. Early involvement is a key factor for entrepreneurial learning, but it requires further comprehension than what current literature has reached. Originality/Value – By applying the process perspective of entrepreneurial learning to the context of family firms, the study identifies unique dynamics to transfer entrepreneurial knowledge and skills among generations, which help understanding the diversity of entrepreneurial performance of these firms.

Dissecting the effect of family business exposure on entrepreneurial implementation intention

PurposeScholars have typically examined family business exposure as an aggregate variable. However, it is probable that this trend oversimplifies the complexity of family exposure and its nuanced influence on entrepreneurial behaviour. Thus, to extend the theoretical boundary, this inquiry investigates distinct dimensions of family exposure in Nigeria while drawing on the theory of planned behaviour.Design/methodology/approachData were collected from five public universities in Nigeria. A sample of 1,314 respondents was analysed using a partial least squares structural equation modelling approach to determine the influence of alternate family business exposures.FindingsThe results show that entrepreneurial exposure in the forms of parent, family member and work involvement have salient and distinctive influences on implementation intention to the extent that entrepreneurial self-efficacy, attitudes and subjective norms are uniquely impacted.Originality/valueThis study offers novel insights on the predictors of entrepreneurial implementation intention through the distinctive effects of (1) family member exposure, (2) parent exposure and (3) work involvement exposure among students in the family firm context.

Corporate social responsibility and earnings quality in family firms

PurposeThe purpose of this paper is to investigate the relationship between corporate social responsibility and earnings quality, specifically in family firms.Design/methodology/approachBased on a sample of French-listed firms from the period 2005 to 2016, the authors use the instrumental variable approach based on a two-stage least-squares (2SLS) estimator.FindingsThe results show that Corporate Social Responsibility (CSR) performance is positively associated with the relevance and faithful representation of earnings. This means that companies that commit to CSR activities are more likely to provide high earnings quality. The results also show that the positive association between CSR performance and earnings quality is more prevalent in family firms suggesting that socially responsible family firms are willing to preserve their socio-emotional wealth by disclosing high quality earnings.Research limitations/implicationsThe results suggest that French firms commit to CSR to satisfy the interests of their stakeholders by disclosing high-quality information supporting the conflict resolution view of CSR. The findings also support the socio-emotional wealth perspective and suggest that family firms that engage in CSR activities provide a rich informational environment through high earnings quality.Practical implicationsThis study’s findings can be thus useful to investors for their portfolio management decisions by enabling them to identify the profile of companies with high earnings quality. These results may also help standard-setters and capital-market regulators improve market transparency by introducing new requirements to encourage investing in CSR.Originality/valueThis study extends the research on the relationship between CSR and earnings quality by focusing on two fundamental characteristics including relevance and faithful representation. This paper focuses on the effect of CSR on earnings quality in the specific context of family firms. This study offers then a better understanding of whether socially responsible family firms communicate stronger or weaker earnings quality than non-family firms based on the agency and socio-emotional wealth perspectives.

BestAmong the Worst or Worst Among the Best? Socioemotional Wealth and Risk-Performance Returns for Family and Non-family Firms Under Financial Distress

A firm’s proactive engagement in risk, which has been deeply intertwined with the entrepreneurship literature, is essential to sustaining a firm’s long-term competitive advantage. Drawing on BAM’s mixed gamble logic in a family firm context, the present study offers a theoretical framework examining how firm risk returns differ in the contexts of distressed (the worst) and nondistressed (the best) family and nonfamily firms. We predict that family control moderates the risk taking-performance relationship. That is, compared with nonfamily firms, a mixed gamble featuring the prospect of socioemotional and financial losses leads family firms to extract higher financial returns from risk taking when in financial distress, but lower financial returns when they are not in financial distress. Our theoretical expectations are supported using a matched sample of Swedish firms.

The Mediating Role of Knowledge Creation Processes in the Relationship Between Social Media and Open Innovation

The purpose of the study is to empirically examine the role of absorptive capacity, as a set of knowledge creation processes, in the relationship between social media and open innovation in the family firm context. In addition, the study analyses the impact of social media use as an antecedent of open innovation in the firms. The examined sample was composed by 113 responding family firms in Spain. The model was estimated through PLS-SEM with smartPLS software 3.3.3. Results confirm the key role played by absorptive capacity in the relationship between social media use and open innovation, proving also how social media use appears as a relevant enabler of open innovation practices. Moreover, findings support the importance of social media use for acquiring external information and knowledge which in turn can help family firms to gain more innovative opportunities. Our paper suggests that managers of family firms should foster an appropriate culture of learning in their firms and provide specific training to develop the staff ability to acquire, integrate and use information captured by digital platforms. Social media has totally transformed the way firms relate to the market and provides a useful tool to collect external knowledge and information. These tools are used by family firms as a new form to connect and collaborate with different stakeholders, so they have the potential to enhance open innovation activities. However, empirical research on the topic remains scarce and is challenging for managers to benefit from all the potential that social media can bring in fostering innovation and to develop dynamic capacities of knowledge management in the family firm context. This work sheds light on this topic.

Marketing and family firms: Theoretical roots, research trajectories, and themes

Marketing in a family firm context has been increasingly researched over the past years. This study reviews 104 publications at the intersection of marketing and family firms to identify their theoretical roots, research trajectories, and themes and to propose new research avenues. For this, we integrated three bibliometric analyses: co-citation analysis, historical direct citation analysis, and co-occurrence analysis. We also conducted a qualitative review to further examine the obtained quantitative results. The findings show that the theoretical roots in the marketing and family firm research domain are characterized by two groups of cited references: those representing the earlier (before 2010) and later (after 2012) periods. The two main research trajectories identified are developed under the influence of two pioneering studies. Moreover, five distinct research themes are identified: brand and image, resources and performance, reputation, market orientation, and marketing strategy of family firms. Our results also highlight avenues for further research.

Family managers' propensity towards mergers and acquisitions: the role of performance feedback

PurposeDrawing on upper echelons theory (UET) and arguments from behavioral theory of the firm, this paper aims to contribute to the debate on family involvement-performance relationship, by considering the mediating role of the propensity towards merger and acquisition (M&A) and the moderating role of performance feedback.Design/methodology/approachThe hypotheses are tested by applying a moderated mediation analysis on a sample of 111 German family firms. First, a mediation model is run to verify the mediation role of the propensity towards M&A; then, to evaluate the magnitude of the mediation at different values of the moderator (performance feedback), conditional indirect effects are tested using normal-theory standard errors and bootstrapping procedure.FindingsThe main findings suggest that a higher percentage of family members sitting in TMT is related to better performance and that this effect is mediated by the propensity towards M&A. Furthermore, findings also show that a higher percentage of family managers is positively related to the propensity towards M&A and, in turn, exerts a positive effect of firm performance, especially when performance feedback is negative.Practical implicationsThe paper suggests to family firms' managers that when performance feedback is negative, a riskier behavior, such as M&A, could represent a way to improve firm performance.Originality/valueThe paper provides a full application of UET to the context of family firms, offers the point of view of TMT, instead of that of ownership, to study the propensity towards M&A in family firms and goes beyond the rational view to explain family managers' risk-taking behaviors.

Bribery in Family Firm: An Ability-Willingness Paradox

Bribery researches recognize that bribery activities are highly contextual on firm natures. However, bribery in family firm context is still less explored. Drawing on socioemotional wealth (SEW) tradition, we propose an ability-willingness paradox for family firm bribery decision-making: restricted SEW focus provides family firms privacy and secrecy advantages and greater bribery ability; while extended SEW focus motivates family firms to preserve reputation and less willingness to bribe. Considering both the demand and supply side factors of bribery, we propose and examine an inversed U-shaped main effect between family management and bribery, as well as two moderation factors concerning family firms’ political connection and province-level anti-corruption investigation. Evidence from Chinese listed firm context supports the above framework. Our findings provide more nuanced and contextual insights to answer why or why not firms bribe; meanwhile, we unveil the paradoxical mechanism of SEW sub-dimensions as well as the risk of abusing family-specific privacy and secrecy advantages.

Entrepreneurial intention-action gap in family firms: bifurcation bias and the board of directors as an economizing mechanism

This study investigates under which conditions entrepreneurial intentions will transform into entrepreneurial actions in a family firm context. Although entrepreneurial intentions are often a good predictor for entrepreneurial activity, intentions will not always lead to the expected action. We aim to explain this intention-behavior gap in family firms by investigating the moderating role of bifurcation bias, defined as the de facto asymmetric treatment of family vs. nonfamily assets. Our results support the argument that bifurcation bias in family firms hinders the smooth transition of entrepreneurial intentions into entrepreneurial actions. Nevertheless, results also support the notion that the appointment of outside directors in the board could serve as an economizing mechanism for bifurcation biased family firms to transform entrepreneurial intentions into entrepreneurial actions.

Decoding relationships in organizational learning process: Perspectives from an emerging economy

Despite its direct impact on corporate longevity, there is no established theory of organizational learning yet. Coupled with the lack of empirical studies that use novel approaches for studying organizational learning, led us to propose a relationship‐based perspective rooted in social network analysis for better understanding the underlying social processes in learning. We chose the context of family firms for studying organizational learning because family firms provide an appropriate context to investigate the relationships between people in the learning process. A richly detailed single‐case methodology, which is often utilized for social network analysis, was deemed appropriate for our study. We collected data from the members of the management team of a second‐generation family business. The socio‐centric (whole‐network) approach in social network analysis was used for collecting participant responses. The data were entered into a social network analysis program called UCINET to calculate the network measures for learning subprocesses. The author complemented the analysis using UCINET with interviews to develop a detailed description of the case. The assessment of the relational characteristics via social network analysis helped to clarify sources of path dependence in family businesses. Mapping information flow made it possible to predict whose knowledge will account for a substantial amount of an organization's learning accounted for by various subprocesses. Based on works that have already been done on organizational learning and social network analysis, our findings cast new light on research that has examined the effects of relational properties on the extent of organizational learning in family firms.

Entrepreneurial Orientation and Family Firm Performance: The Moderating Role of TMT Identity-Based and Knowledge-Based Faultlines

Research has shown that entrepreneurial orientation (EO) is positively associated with performance, but several context-specific features and contingencies affect this relationship. Accordingly, this article focuses on the specific context of family firms (FFs) and introduces top management team (TMT) faultlines as moderators. The main findings, obtained on a sample of 111 medium- and large-sized FFs, suggest that strong identity-based faultlines (IBFs) negatively moderate the EO–FF performance relationship, even within TMTs that are comprised only of family members, which are often viewed as homogeneous teams. Conversely, strong knowledge-based faultlines (KBFs) amplify the positive effect of EO on FF performance.