Heterogeneity Of Family Firms Research Articles

Corporate social responsibility (CSR) in Canadian family firms

PurposeThe purpose of this paper is to examine corporate social responsibility (CSR) activities in Canadian family firms.Design/methodology/approachThis paper is an empirical work using a sample of Canadian listed companies for eight years between 2010 and 2017.FindingsRelying on five measures for CSR, this paper finds that, compared with other listed firms, family listed firms have a higher level of CSR engagement. Further tests show that family-named family firms engage in more CSR activities; family firms with second largest shareholders engage in more CSR activities; and family firms affiliated with large business groups engage in more CSR activities. However, family firms whose family members are CEOs, presidents or board chairpersons engage in less CSR engagement.Originality/valueThis paper contributes to the current CSR literature by highlighting the importance of family firm heterogeneity in shaping a firm’s CSR practices. It focuses on four characteristics of Canadian family firms that are potentially connected to CSR, namely, family-named family firms; family firms with family members being CEOs, presidents or chairpersons; family firms with second largest shareholders and family firms affiliated with large business groups.

Innovation heterogeneity in family firms: Evidence from the date industry in Saudi Arabia

Researchers have argued that family firm innovation is paradoxical in nature, in that family firms often display less innovation than their nonfamily counterparts, yet they are able to be more innovative. The aim of this article is to unpack this paradox by exploring how differences in family firms’ ability (discretion and resources) and willingness (economic and noneconomic) affect their innovation activities. We adopt a qualitative, interpretive methodology based on four case studies of Saudi family firms operating in the indigenous date industry. Our findings emphasize the importance of having all four sources of ability and willingness in order for innovation to occur and how, when the new generation enters the business, the family firm’s innovation posture changes to either ‘lagging’ or ‘reviving’. By exploring innovation in the date sector in Saudi Arabia, we contribute to the ability–willingness paradox by distinguishing between the different sources of ability and willingness and add to an emerging narrative that acknowledges the integration of past knowledge with new innovative practices as an important and unique mechanism by which family firms can harness innovation.

Heterogeneity in family firms: contextualising the adoption of family governance mechanisms

PurposeThis research is aimed to better understand what characteristics of family firms create a context in which family governance systems are more frequently adopted.Design/methodology/approachWe analyse a sample of 490 Spanish family businesses using cluster analysis, and we identify four different types of family businesses whose characteristics are associated to the adoption of different family governance systems, i.e. family councils and family protocols. The comparison between clusters of the baseline parameters was performed using one-way analysis of variance (ANOVA) for parametric variables, the χ2 test for parametric variables and Kruskal-Wallis for nonparametric variables. By conducting between-profile analysis of covariance (ANCOVA), we tested for differences in the dependent variables (i.e. the existence of family councils and/or existence of family protocols) between the clusters, using cluster membership as the independent variable.FindingsTaking into account the characteristics of family firms in terms of ownership structure, management involvement, and family and organizational complexity, we identify four different contexts that create different communication needs and are related to the use of different family governance mechanisms. We characterize the different contexts or types of family firms as: founder-centric, protective, consensual and business-evolved. Our findings show that family protocols are associated to contexts with high family involvement in management and family complexity, while family councils are more frequent when there is a separation of managerial and ownership roles and there is a high organizational and family complexity.Research limitations/implicationsThe study highlights the value of social systems theory in order to explain the association between the characteristics of different firm types and contexts, and the use of family councils and family protocols to govern the relationship between the owner family and the business.Practical implicationsFamily governance mechanisms are widely recommended by practitioners and scholars. However, they are usually adopted only by a small percentage of family firms. This study helps to better understand what family governance systems may be more appropriate in different contexts and relativize the necessity of these governance mechanisms in function of the communication needs created within each context.Social implicationsThe improvement of family governance mechanisms helps to increase the likelihood of survival and durability of family firms. These firms contribute to more than 60% of employment in most developed countries. Consequently, good governance in family firms has social implications in terms of labour conditions and stability.Originality/valueMost family firms don't use family protocols or family councils to govern the relationship between the owner family and the firm. However, little is known about the reasons for this lack of structuration of the family-firm relationship. Using social systems theory, our research contributes to better understand the conditions in which business families are more prone to use structured forms to manage this relationship, as well as the reasons that may be constraining their adoption.

Corporate governance in the largest family firms in Latin America

PurposeThe aim of this study is to explore and understand corporate governance patterns in family firms across Latin America. This is in response to several calls in the academic literature urging for more empirical studies in corporate governance in developing regions.Design/methodology/approachFollowing a configurative perspective, a hierarchical cluster analysis is applied to a sample of the 155 largest Latin American family firms.FindingsThe authors identify three main corporate governance configurations across Latin American countries. First, the exported governance model resembles many characteristics of Anglo-American and Continental Europe governance patterns of public listed control, having independence from the board of directors, and mainly hiring non-family management. Second, the super-familial governance model describes private ownership where one or multiple families control both the board of directors and the top-management team. Finally, the hybrid governance model is the largest cluster identified in the sample and combines governance characteristics of both of the foregoing configurations. This configuration exhibits ownership structured through public offerings of shares combined with leadership of the board of directors by a family member as well as moderate family influence on the board and management.Originality/valueThis is the first study to investigate corporate governance in the largest listed and privately-owned family firms in Latin America. The article extends the conversation on family firm heterogeneity and contributes to the configurative approach in the family business field by offering a cross-country perspective and identifying meaningful taxonomies that are applicable beyond national boundaries.

Familiness, socio-emotional goals and the internationalization of French family SMEs

This paper analyzes the role of the owning family’s socio-emotional goals in explaining the level of exports in family small and medium enterprises (SMEs), while investigating the influence of family business essence as an antecedent of socio-emotional goals. A survey studying 46 French family SMEs and a model using partial least squares structural equation modeling reveal that two out of the five hypothesized socio-emotional goals exert an influence on exports intensity (one being positive and the other negative), while family business essence positively and significantly impacts four of the socio-emotional goals pursued by family owners. A positive relationship between the power and experience components of the familiness construct (F-PEC Scale), then between experience and the family business essence is also evidenced. The study helps to integrate previous empirical results regarding family business internationalization by combining the constructs of familiness and socio-emotional goals (the five dimensions of the latter being evaluated simultaneously) to provide a better explanation of the level of exports in family SMEs. It also addresses the issue of family firm heterogeneity by evidencing the role of family SMEs’ ownership structure, experience, and culture in shaping the various socio-emotional goals pursued by family business owners.

TMT diversity and innovation ambidexterity in family firms

PurposeFamily firms that simultaneously engage in multiple levels of innovation – incremental and radical – are likely to enjoy performance advantages across generations. The purpose of this paper is to research under which management conditions (i.e. top management team (TMT) diversity in terms of generational or non-family involvement) family firms are more likely to achieve innovation ambidexterity. Also, the paper addresses the mediating role of open innovation (OI) breadth in this relationship.Design/methodology/approachA large cross-sectional sample of 335 small- and medium-sized family firms is used. The hypotheses were tested in a mediation model. The relationship between TMT diversity and ambidexterity is measured using a binominal regression analysis, the one between TMT diversity and OI breadth using a Tobit model.FindingsDrawing on the family firm upper echelon perspective, the results indicate that TMT diversity induced through external managers and multiple generations is positively related to innovation ambidexterity. As the mediation analysis reveals, the relationship can be explained by the higher propensity of diverse TMTs to get involved in OI breadth. The findings add to the discussion on family firm heterogeneity and its influence on different kinds of innovation.Originality/valueSo far, few studies have been concerned with ambidextrous family firms. Contrary to their reputation, this study identifies family firms as radical as well as open innovators. As such, this research takes account not only of the heterogeneity of family firms, but also of the heterogeneity of family firm innovation.

Family Firm Behavior From a Psychological Perspective

The heterogeneity of family firms and their simultaneous pursuit of financial and nonfinancial goals is well established in the literature. However, causal factors underlying the variance in the goals, behaviors, and performance of family firms remain unclear. To help fill this gap, the articles in this special issue point to psychological aspects of individuals and families that underpin family firm behaviors and outcomes. Building on the theme of psychological influences, this introductory article discusses how the integration of five areas of psychology can accelerate our understanding of the causes and consequences of individual and group behaviors in family firms.

Tax avoidance in different firm types and the role of nonfamily involvement in private family firms

This study simultaneously distinguishes between private family firms, private nonfamily firms, public family firms, and public nonfamily firms. We show that private family firms avoid taxes less than public family firms and public nonfamily firms; however, we do not find a difference between private family firms and private nonfamily firms. Therefore, building on family firm heterogeneity, our results indicate that tax avoidance in private family firms differs depending on the involvement of nonfamily owners and/or managers. We find that private family firms that are wholly owned and managed by family members indeed avoid taxes less than private nonfamily firms.

A values-based analysis of bifurcation bias and its impact on family firm internationalization

Recent analysis of family firm internationalization has shown that international performance can suffer when family owners or managers engage in an unwarranted, strict separation between two ‘generic categories’ of resources in their strategic decision-making. On the one hand, there are resources perceived as ‘being part of the family in the long run’, and therefore unique and worthy of nurturing. On the other hand, there are resources perceived as ‘with the family only for the short run’, and therefore having commodity-type status and being fungible. The concept of bifurcation bias describes this frequently observed, affect-based phenomenon of separating all resources utilized by the firm into two categories. Bifurcation bias has been argued to be particularly damaging in the context of internationalization, whereby accurate assessment and complex recombination of resources is critical. In this paper, we extend the analysis of bifurcation bias in family firms. We examine how the personal values of family firm owners and non-family members, as well as the dominant cultural values in the relevant, surrounding societies (both home and host), can influence the magnitude and dysfunctional effects of this phenomenon. Infusing values-based analysis into assessing how bifurcation bias plays out in family firms, can improve our understanding of family firm heterogeneity, has implications for empirical research, and may help invalidate some overgeneralized narratives in research on family-firm international behaviour.

Family Firm Values Explaining Family Firm Heterogeneity

Family firm heterogeneity results in reduced predictability of firm behavior as well as inconsistent results regarding research on family firm behavior. We argue that family firm heterogeneity is based, among other factors, on values heterogeneity. In order to lay the ground for future research, we develop a taxonomy of family firms based on values. Using values theory, we identify six value categories, resulting in five family firm types with five distinct value profiles. Second, we posit family firm values profiles are distinct to the group of family firms as nonfamily firms do not display similar value profiles.

Capturing Family Firm Heterogeneity: How Taxonomies and Typologies Can Help the Field Move Forward

Capturing Family Firm Heterogeneity: How Taxonomies and Typologies Can Help the Field Move Forward

Family Firm Heterogeneity and Tax Aggressiveness: A Mixed Gamble Approach

AbstractFew studies try to understand how the unique preferences of family firms affect tax strategies, and how family firm heterogeneity drives variation in tax activities. Drawing on the mixed gamble approach, this study examines the tax aggressiveness of different types of family firms, considering how various sources of heterogeneity alter the perception of potential gains and losses to socioemotional and financial wealth. Based on a panel dataset of 242 private family firms for the period 2012–2014, this study shows that strong family‐owned firms, family firms with a family CFO, family‐founder firms, and family‐named firms display lower levels of tax aggressiveness. These findings demonstrate that family firm heterogeneity is a crucial factor in the mixed gamble calculus of tax aggressiveness.

A Typology of Family Firms: An Investigation of Entrepreneurial Orientation and Performance

Drawing on family firm heterogeneity research, we develop a typology of family firms using differences in family influence and firm life cycle. We offer hypotheses regarding the relationships between the different firm types and two important outcomes: Entrepreneurial orientation (EO) and performance. Applying latent profile analysis to a sample of 684 Spanish and Portuguese family firms using variables related to family influence (i.e., ownership, family CEO) and firm life cycle (i.e., generational management, size, and presence of board of directors), we find four family firm types, which differentially affect EO and performance. Implications of our findings for EO, family firm performance, and the development of family firm typologies are discussed.

Recruitment practices under scrutiny: A latent-profile analysis of family firms’ approaches to recruit non-family employees

Recruitment of qualified non-family employees is a challenge for many family firms. Job seekers from outside may be wary of the family firm employment practice and the family themselves may have an informal approach to finding employees which often relies on word of mouth and produces a limited pool of talent. In this study we investigate adopted recruitment practices and the factors behind recruiting non-family workforce as we seek common elements, explanations and outcomes. Applying latent-profile analysis to the recruiting practices of 259 family firms we explore sets of adopted recruitment practices, their respective predictors, including socioemotional wealth, and potential outcomes. These analyses reveal five latent classes: (1) reduced recruitment; (2) online high cost recruitment; (3) full scope recruitment; (4) offline informal recruitment; and (5) formal high cost recruitment. In sum, our findings suggest that substantial differences in family firms’ approaches to recruitment exist, providing further evidence for the heterogeneity of family firms. Finally, findings are discussed with regard to limitations and implications for future research.

Family Firm Heterogeneity and Tax Avoidance: The Role of the Founder

Family business research suggests that the population of family firms cannot be regarded as a homogenous group. Therefore, with respect to tax avoidance, we analyze the role of the founder as one dimension of family firm heterogeneity. Specifically, we consider socioemotional wealth loss aversion and find that founders may affect the level of tax avoidance not only when they have direct influence (i.e., serving as CEO) but also when they possess solely indirect influence (i.e., having substantial ownership or a seat on the board). Overall, our results suggest that founders remain attached to their firms despite giving up executive positions.

Why some are more equal: Family firm heterogeneity and the effect on management’s attention to CSR

AbstractResearch at the family firm–Corporate Social Responsibility (CSR) nexus lacks agreement about whether family firms are more or less socially responsible than their non‐family counterparts, which leads discussion relating to the bright and dark side of socioemotional wealth (SEW). We add to this ongoing debate in two different ways. First, we build on family firm heterogeneity and argue for a gray side to SEW, located between the bright and dark sides that is dependent upon the kind of family firm ownership. Second, we assume that prior research on a diverse set of CSR behaviors may, to some extent, explain the contradicting results; thus, we propose going back a step and focusing on management’s attention to CSR as an important antecedent of CSR behavior. By analyzing the letters to the shareholders of German HDAX firms from 2003 to 2012, this study finds that family ownership positively affects management’s attention to CSR, mainly driven by founders and family foundations. The research adds to our understanding of the family firm–CSR nexus by scrutinizing the role SEW plays in management’s attention to CSR when it comes to family firm heterogeneity.

Family dynamics and gender perspective influencing copreneurship practices

PurposeThe purpose of this paper is to understand the family dynamics factors and gender roles influencing the functioning of copreneurial business practices, to propose a conceptual framework based on these factors/roles.Design/methodology/approachFor this purpose, a qualitative approach was adopted, through the analysis of seven businesses created by copreneurial couples in an emerging economy – Brazil. Data were obtained from an open interview with each member of the selected couples who are in charge of firm management.FindingsThe empirical evidence obtained shows that the most important factors for successful copreneurial family businesses are professionalization, dividing the couple’s tasks and business management. Trust, communication, flexibility and common goals are other essential relational-based factors for the good functioning of this type of family business and stability in the personal relationship.Practical implicationsIt is clear that professionalization and the separation of positions and functions are fundamental for a balance between business management and the couple’s marital life. When couples are in harmony and considering factors such as trust, communication and flexibility (relational-based factors), the firm’s life-cycle and business success become real and more effective.Originality/valueFrom the family dynamics factors and gender roles, this study focused on one of the most important and integrated family firm relationships, copreneurial couples. As there is little research on the heterogeneity of family firms runs specifically by copreneurial couples, this study is particularly important and innovative in the context of a developing economy, such as Brazil. Based on empirical evidence, this study was proposed an integrative and holistic framework that shows the functioning of copreneurial businesses practices.

Factors affecting family firms’ communication behaviour: a cross-cultural study

This study explores heterogeneity in family firms’ communication behaviour across cultures. The authors propose that variations in the background of family firms, including culture, industry, public or private status, and age, influence their propensity to reference their family identity on their corporate web communications. Websites have become an increasingly important medium of marketing communications in today’s interconnected world. Yet, limited research has been done to understand firms’ web communication behaviour. Based on a study of 432 family firms from 41 countries across the world, this research empirically demonstrates that family firms which are from collectivist cultures and publicly traded are significantly less likely to reference their family identity in online marketing communications compared to their counterparts. In addition, the research shows that there is an inverted-U curvilinear relationship between a family firm’s age and the likelihood of referencing their family background. Contributions and implications of the research and findings are discussed.

Governance, Pride, and Multi-Generational Involvement on Innovativeness: A Family Firm Study

This study investigates how innovativeness within multi-generational family firms is affected by business family governance, and how this relationship is moderated by different generational involvement and variance in family pride. Drawing from 321 family firms, our findings contribute to agency theory, while enhancing our understanding of multi-generational entrepreneurship and family firm heterogeneity. Specifically, we find that the founding family generation involvement and family pride have a positive impact on the family governance to firm innovativeness relationship, while non-founding generation involvement with high business family governance and low family pride negatively moderates this relationship.

Family firm heterogeneity and CEO compensation in Continental Europe

CEO compensation in family firms is affected by certain corporate governance characteristics, such as the generational stage of the firm (founder or descendant-controlled firms), the level of family involvement on the board of directors (lone or multiple family members sitting on the board) and the family status of the CEO (family or professional CEO).In this paper, we argue that moderating effects arise among these dimensions of heterogeneity. The results show that in firms owned by descendants, the presence of multiple family members is beneficial in lowering family CEO compensation, while the opposite is true in the presence of the founder. Moreover, within founder and descendant firms, the number of family representatives on the board exerts a strong influence on the compensation of family CEOs, whereas it does not affect the compensation of professional CEOs. The results also show that in certain family clusters, CEO compensation is higher than in nonfamily firms, thereby emphasizing that when comparing CEO compensation in family and nonfamily firms, it is important to consider the intersections among the heterogeneity dimensions of the governance of family firms.The findings of the paper contribute to the literature on the governance of family firms by showing that certain family firm types are more effective than others in keeping CEO compensation under control.