Family Involvement In Business Research Articles

Promoter share pledging and dividend payouts in India: does family involvement matters?

PurposeThis study aims to explore the relationship between promoter share pledging and the company’s dividend payout policy in India. Furthermore, this study also analyses the moderating impact of family involvement in business on the association between share pledging and dividend payout.Design/methodology/approachA sample of 236 companies from the S&P Bombay Stock Exchange Sensitive (BSE) 500 Index (2014–2023) has been analysed through fixed-effects panel data regression. For additional testing, robustness checks include alternative measures of dividend payout and promoter share pledging, as well as alternative methodologies such as Bayesian regression. Lastly, to address potential endogeneity, instrumental variables with a two-stage least squares (IV-2SLS) methodology have been implemented.FindingsUpholding the agency perspective, a significantly negative impact of promoter share pledging on corporate dividend payouts in India has been uncovered. Moreover, family involvement in business moderates this relationship, highlighting that the negative association between promoter share pledging and dividend payouts is more pronounced in family companies. The findings are consistent throughout the robustness testing.Originality/valueThe present study represents a pioneering endeavour to empirically analyse the link between promoter share pledging and dividend payouts in India. It enhances the theoretical underpinnings of the agency relationship, particularly by substantiating the existence of Type II agency conflicts between majority and minority shareholders. The findings of this research bear significant implications for investors, researchers and policymakers, particularly in light of the widespread prevalence of promoter-controlled entities in India.

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.

Relations of and between Family Business and Private Enterprise

In this paper, I draw from economic and organizational sociology to study a psychosocial dimension of modern entrepreneurial dynamics. Namely, I employ a mixed-methods approach to the study of family business members in the U.S and their corresponding economic attitudes about private enterprise as a superlative solution to economic problems. I incorporate quantitative cross tabulation analyses of multivariate relationships derived from data provided by the 2021 General Social Survey (GSS), as well as original qualitative interview data collected from family business members. Based on my findings, I argue role involvement in family business has a significant bearing towards generally positive views of private enterprise ideology. However, the relationship between family business involvement and belief in private enterprise is specified along lines of social class. I further argue how private enterprise belief is differentially associated with the lower and upper class of family business members, an important finding given the systematic impact family businesses can have on the economic fabric of American society.

Generations in Family Business: A Multifield Review and Future Research Agenda

The concept of generations has become increasingly important in the social science fields to explain diverse phenomena affecting organizations. This is especially true in the family business field where generations are considered a constitutive element. Nevertheless, there is still a limited understanding of generations and the implications of their involvement in family business. We review prior studies on generations by considering different social science fields, which we analyze according to a novel theoretical framework. Building on this framework, and placing particular emphasis on family firms, we identify important knowledge gaps that serve as a springboard for future research.

Does family involvement help small migrant businesses survive? A closer examination of family in migrant entrepreneurship

PurposeDrawing on the resource-based view, this study aims to examine how family involvement in migrant-founded small businesses gives rise to distinctive resources that help these businesses survive.Design/methodology/approachUsing microdata from the 2007 US survey of business owners (SBO), this study uses logit regression modeling to test the hypothesized relationships.FindingsResults show that small businesses founded by migrant entrepreneurs are less likely to survive and that family involvement weakens the negative relationship between founder migrant status and business survivability. In addition, the positive moderating effect associated with family involvement is further strengthened by the use of external/borrowing startup capital, thus migrant families founded small businesses with access to external capital have the highest probability of survival.Originality/valueThis study contributes to the literature on both migrant entrepreneurship and family business. This paper finds family involvement in the business, interacting with the founder’s migrant status, tends to create distinctive resource endowments that help to compensate for the resource constraints associated with migrant entrepreneurs. Such resource endowments may take the form of high levels of solidarity among migrant family members and the spanning role of the migrant kinship networks extended from the country of origin to the country of residence.

Do dissimilarities in the family involvement in family firms lead to different levels of indebtedness? Evidence from Spain

PurposeThis paper examines how differences in the family involvement in a family business can influence its level of indebtedness. Assuming the influence of family is not the same for all family firms, we consider each company as a combination of the family involvement in three dimensions of the business: ownership, management and governance structure.Design/methodology/approachUsing the partial least squares technique allows us to address the heterogeneity of family firms through an integral concept of family involvement in business that jointly considers the level of family participation in the ownership, management and governance structure of each firm.FindingsOur results demonstrate that the level of family involvement in a family firm, considering the heterogeneity existing within the family business group, directly influences its level of indebtedness. In addition, we find that family involvement in ownership and governance structures individually considered are positively related to the level of indebtedness of the family business.Originality/valueOur findings prove that some indebtedness patterns, which previous literature has described as common to all Spanish family businesses, may actually be valid only for specific family firms with a particular level of family involvement. In addition, the way of measuring family business heterogeneity through our integral concept of family involvement can be replicated by other authors because of the manageability of the items, thus contributing to an increased understanding of the effects of family involvement in firms' development.

A factor model of family involvement in a business: familiness manifested in ownership, management and operation

Family involvement in a business is usually conceptualised dichotomously, family business or not. This is overly simplistic in that involvement encompasses several kinds. To overcome this we pursue multi-dimensional modelling. Our questions are, first, can family involvement be conceptualised as a latent property indicated by ownership, management and operation; second, is operationalisation by a factor model similar across societies; and, third, can this model predict outcomes, perhaps better than the simplistic dichotomy? The research design is to factor analyse measures of kinds of family involvement in businesses randomly sampled in four countries. Findings are that family involvement can be modelled as a latent variable indicated by ownership, management and operation. Within each country, the factor loadings are all positive, but their magnitudes differ across countries. The latent variable predicts outcomes, like the dichotomy, and occasionally better. The originality of the article is a reconceptualisation of family involvement as a latent property with manifestations. The contribution is a model of involvement which is more realistic and revealing than the dichotomy.

A factor model of family involvement in a business: familiness manifested in ownership, management and operation

Family involvement in a business is usually conceptualised dichotomously, family business or not. This is overly simplistic in that involvement encompasses several kinds. To overcome this we pursue multi-dimensional modelling. Our questions are, first, can family involvement be conceptualised as a latent property indicated by ownership, management and operation; second, is operationalisation by a factor model similar across societies; and, third, can this model predict outcomes, perhaps better than the simplistic dichotomy? The research design is to factor analyse measures of kinds of family involvement in businesses randomly sampled in four countries. Findings are that family involvement can be modelled as a latent variable indicated by ownership, management and operation. Within each country, the factor loadings are all positive, but their magnitudes differ across countries. The latent variable predicts outcomes, like the dichotomy, and occasionally better. The originality of the article is a reconceptualisation of family involvement as a latent property with manifestations. The contribution is a model of involvement which is more realistic and revealing than the dichotomy.

Strategic entrepreneurship and performance: an institutional perspective on Indian family businesses

PurposeThere is a growing consensus that entrepreneurial activity is essentially a collective family endeavour, with some configuration of family involvement in business (FIB) working better than others. This paper aims to examine the effects of FIB on strategy and financial performance (FP), drawing from the institutional theory for the Indian family businesses.Design/methodology/approachThe sample comprises of 105 pharmaceutical companies listed on the Bombay Stock Exchange for FY2013–2017. A two-way random effects panel model was invoked to examine the relationship between FIB and strategy, as well as the intermediating effect that strategy has on the FIB-FP link.FindingsOn average, the family has a high ownership concentration, with the founders predominantly holding the chief executive officer (CEO) and chair positions. The econometric results highlight that the founder’s descendants adopt a conservative strategy. A significant positive moderating effect of strategy on FIB-FP link was observed for the descendants as the largest owners, CEO and board chair. The presence of a professional CEO and independent chair, however, leads to an intervening adverse impact on FP. The ownership-management-governance configurations highlight that some combinations of family and non-FIB leads to better performance than others.Originality/valueThe study provides a plausible explanation for the conflicting evidence on the direct FIB-FP relationship through the strategy intermediation. The institutional perspective emphasizing the identity and role family members play in terms of strategy provides an unconventional epistemological underpinning to the present research.

Evaluating the moderating impact of family on the relationship between board independence and corporate social responsibility using propensity score matching

Purpose: Owing to the voluntary nature of CSR activities, the decision to participate or not could be affected by the motives of corporate directors. The purpose of this research was to investigate whether family involvement in business moderates the relationship between board independence and sustainability performance of firms. Design/methodology/approach: Firstly, propensity score matching is employed to control for the problem of potential endogeneity in the sample by generating a matched sample. Later, regression analysis is conducted on this matched sample to check for the moderating impact of family-led firms on the relation between board independence and CSR performance (CSRP) of firms. Findings/results: We document about Chinese firms with independent boards exhibiting socially responsible behaviour which shows that they serve in a monitoring capacity over the management on behalf of rest of the stakeholders. Moreover, our results show that the role of independent directors is compromised in establishing effective monitoring in family-led firms. Practical implications: Our results would help regulating agencies in designing regulatory programs by guiding them in developing customized policies for different governance and ownership systems in place. Our findings recommend that in a bid to attain improved sustainability performance, diversified shareholding may be favoured or requisite codes may be framed to enhance the social performance of firms having concentrated ownership. Originality/value: This work essentially clears the varying results in literature with regard to the relationship of board characteristics and firms’ CSRP.

Family firms’ sustainable longevity: the role of family involvement in business and innovation capability

PurposeThe objective of this research is to investigate the influence of family involvement in business and innovation capability on sustainable longevity of family firms.Design/methodology/approachData collected from 553 executives of 200 family firms that survived to the second generation and beyond was analyzed using partial least square (PLS) approach of structural equation modeling (SEM) to test the hypotheses and validate the model.FindingsThe results provided evidence of the significant influence of family involvement in business on sustainable longevity of family firms and partial mediation of innovation capability between family involvement in business and corporate sustainable longevity.Research limitations/implicationsThe sample included family firms owned and governed by the owner family. The future researchers may focus on professionally managed or publicly listed family firms.Practical implicationsThe path to family firms' sustainable longevity goes through innovation capability apart from effective family control, succession, commitment to the business and family enrichment. That requires the family firm to be proactive in innovation capability.Originality/valueFamily firms are the dominant form of business representing around 80% of global business structure that strives for survival and consistently pursues sustainable longevity strategies. In the current globally competitive environment, innovation capability has become a matter of life and death for any firm. Based on the transaction cost economics (TCE) theory of family firms, this study proposes an integrative model of sustainable longevity for family firms.

Family SMEs’ survival: the role of owner family and corporate social responsibility

PurposeThe purpose of this paper is to examine the impact of owner family involvement in business on sustainable survival of family small-to-medium enterprises (SMEs) and to empirically validate the intervening role of corporate social responsibility (CSR).Design/methodology/approachThe authors analyze data from 489 owner and nonowner executives of 150 family SMEs using PLS-SEM (Partial Least Square–Structural Equation Modeling).FindingsThe authors found evidence that family involvement in business positively impacts the sustainable survival of family SMEs while corporate social responsibility partially mediates this relationship. Apart from effective family involvement in business, active involvement in social causes enhances a firm's ability to survive longer.Research limitations/implicationsThis study was conducted in a geographic context and data were collected from family-managed and controlled firms. Further research is needed to generalize the findings to all types of family firms in the global context. In an Islamic society, family firms need to invest in social causes, human development, and environmental sustainability through zakat, sadaqat, and donations.Practical implicationsThe findings imply that family firms require stakeholder-centric competitive strategies and socially responsible behavior along with effective family control, commitment, enrichment, and successful succession since the path to sustainable survival goes through CSR.Originality/valueSurvival is the biggest challenge facing family SMEs forcing them to achieve the ability to sustain longer. Rooted in transaction cost economics (TCE) theory of the family firm and stakeholder theory, this paper validates an integrative model for family SMEs' sustainable survival.

Impact of family involvement on strategy and CEO compensation

PurposeAs widely known and well established, strategic decision-making at family firms is an interface between business interests and family considerations. The purpose of this paper is to understand the underlying basis of decision-making in setting corporate strategy and designing chief executive officer (CEO) compensation at founder- vis-à-vis descendant-led family firms in the Indian pharmaceutical sector.Design/methodology/approachA sample of 106 BSE-listed pharmaceutical companies have been studied over the period 2012–2017 resulting in a total of 636 firm-year observations. Impact of family involvement in business (FIB) on corporate strategy and CEO compensation has been analysed by constructing multivariate panel data regression models. To deal with the problem of endogeneity, Arellano-Bond (1991) dynamic panel data estimation procedure has moreover been conducted.FindingsSupporting stewardship theory, founder-owned and governed firms have been found to favour “growth” strategy and distribute “conservative” executive pay, thereby exerting a positive moderating impact on the strategy-compensation linkage. On the contrary, descendants/second-generation entrepreneurs have put forth a “conservative” stance for growth and innovation, and have rather been observed to favour a “liberal” compensation policy, thereby showcasing the application of behavioural agency theory.Originality/valueThe research is a novel attempt to unravel the interaction between corporate strategy and CEO compensation in a family firm backdrop carried out in the context of an emerging economy. The study, moreover, adopted an all-encompassing definition of FIB (ownership, management and governance).

The role of cooperation agreements in the internationalization of Spanish winery and olive oil family firms

PurposeThis study aims to identify the mediating role of cooperation agreements in the relationship between family involvement in international firms and their level of international commitment.Design/methodology/approachThe study focuses on Spanish international wine and olive oil companies that have varying levels of family involvement. The final sample consists of 263 companies. SmartPLS was used to perform the analysis.FindingsA higher level of family involvement in business implies greater difficulties with cooperation agreements. Additionally, family involvement is negatively associated with the firm’s level of international commitment, and the perceived difficulties of cooperation agreements mediate this relationship.Practical implicationsThis study is of interest to business managers with different levels of family involvement. The study clarifies their perceptions of cooperation agreements and international business commitment. Managers of firms with a high level of family involvement should emphasize the multiple benefits of cooperation agreements for international strategy performance rather than the drawbacks of cooperation. Additionally, through cooperation, companies can learn about destination markets, which may help them to focus their resources effectively in those markets.Originality/valueThis study contributes to the literature on the internationalization strategies of family businesses. This study is the first to address the mediating role of cooperation agreements in the relationship between family involvement and international commitment.

Business model innovation in family firms: dynamic capabilities and the moderating role of socioemotional wealth

Today’s dynamic environment demands firms to adapt their business models as a new source of competitive advantage. This poses significant challenges to firms that are locked in their long-established structures, like family firms. We quantitatively test (n = 154) how dynamic capabilities (DC) affect business model innovation (BMI) in family firms and how this relationship is moderated by socioemotional wealth (SEW). DCs are essential for all types of firms to exploit opportunities and respond to technological changes in general. For family firms, they are particular important due to the desire to succeed for future generations. Given that family involvement in business creates idiosyncratic motivations and long-term characteristics that considerably affect the firm’s behavior, we state that their SEW endowment may influence the relationship between DCs and BMI. Measuring the constructs independently, our findings reveal strong sensing and seizing as well as transforming capabilities as relevant antecedents of BMI and stress upon the positive moderating role of SEW for the relationship between reflecting and BMI.

Going on or going home? The impact of new venture creation progress on work-to-family conflict

PurposeThe purpose of this paper is to examine whether, how and when new venture creation progress (NVCP) affects work-to-family conflict (WFC) by introducing coping behavior strategies as mediators, entrepreneurs’ prior experience and family involvement in business as moderators.Design/methodology/approachThis study performs multivariate regression analysis based on a sample of 260 nascent entrepreneurs from the Chinese Panel Study of Entrepreneurial Dynamics.FindingsThis study reveals that an entrepreneur’s WFC tends to increase along with the growth of the new venture. Specifically, NVCP impels entrepreneurs to adopt reactive role behavior strategy and meet both entrepreneurial and family demands; meanwhile, NVCP propels entrepreneurs to adopt prioritizing entrepreneurship behavior strategy for the increasing work demands, thus leading to more WFC; the mediation effect of prioritizing entrepreneurship behaviors is stronger than that of reactive role behaviors, which leads to an overall positive main effect. Moreover, the preceding mediating paths are moderated by entrepreneurs’ prior experience and family involvement.Research limitations/implicationsFirst, the authors have investigated how NVCP influenced WFC. However, the authors did not extend the research to the possible effect of WFC on entrepreneurial performance. Second, in the work-family-conflict literature, unmarried and those without children are often excluded since their private life demands differ significantly from parents’ demands. Although the authors control for marital status in the model, the number of children is still left uncontrolled. Furthermore, the authors only used the first two waves of data, leading to a potential selection bias. In addition, the Chinese context may have influenced the generalizability of the results in a complex manner.Practical implicationsThis paper indicates that reactive role behavior strategy will decrease WFC, while prioritizing entrepreneurship behavior strategy will increase WFC. Therefore, the authors suggest entrepreneurs adopt more reactive strategy to reduce WFC. Besides, both prior experience and family involvement strengthen the relationship between NVCP and prioritizing entrepreneurship behavior strategy, thereby leading to more WFC. Therefore, entrepreneurs with prior experience and family involvement should pay more attention to their roles in family. Furthermore, entrepreneurs with family involvement can try to segment the entrepreneurship-family boundary psychologically. For example, entrepreneurs can avoid business talking with families but show concerns for them at rest time.Social implicationsWFC has been found negatively related to individual health and well-being. And entrepreneurs experienced even more WFC than employees in established organizations. Therefore, it is of great importance to focus on the topic of reducing entrepreneurs’ WFC. This research indicates that entrepreneurs can experience less WFC by choosing reactive role behavior strategy. Prior experience and family involvement can induce them to be more attached to new venture creation. This research provides practical suggestions and reminders for entrepreneurs.Originality/valueThis mediated moderation model elaborates whether, how and when NVCP affects WFC, thereby contributing to the knowledge of entrepreneurship-family interface and enlightening nascent entrepreneurs about balancing their start-up responsibilities with their family life.

Philosophy of Economics and Management: Youth Participation in Family Business and National Economy

The aim of the present paper is to reconcile a philosophical reflection on the role of the family as a communitarian entity in the business environment based on the individualistic principle and practical research aimed at identifying young people’s attitudes towards their involvement in family business. Respondents of the research were students of the final years of secondary schools, tertiary professional schools and vocational schools in the Liberec Region. The family is treated from the ethical point of view as well as in terms of political and economic philosophy as a suitable environment to shape economic attitudes in young people that are not restricted to a merely ‘economist’ form of rationality and as able to play an important part in a properly working state economy. The practical research shows that a young person’s intention to work in the family business depends on whether they are involved in it already during their studies.

The impact of family involvement in business on capital structure decisions: a literature review

Family-controlled firms are a unique form of business because of the special nature of its ownership structure, management style, and financing needs. Moreover, these firms face difficulty in achieving a balanced mix of available financing alternatives (i.e., debt and equity), and this mix has a direct impact on the firms’ profitability, risk, and value. Therefore, the purpose of this study is to review the literature on how family involvement in business via ownership, management, and control affects capital structure decisions. The review showed that in a comparison with nonfamily businesses, family-controlled firms on average have higher debt levels. Additionally, family ownership is positively associated with debt financing, and the participation of family members in a firm’s top management leads to an increase in the firm’s overall debt level. Insights generated from the current study highlight the critical influence of family involvement in business on key financial policies such as capital structure decisions.

Toward a Typology of Family Firm Corporate Entrepreneurship

Family involvement in business creates idiosyncrasies in firm behavior that promote long‐term, often transgenerational, strategic logics that ostensibly align with the motivations and outcomes of corporate entrepreneurship. Interestingly, extant research provides only minimal insight into the heterogeneous nature of corporate entrepreneurship orientations pursued by family firms. To better understand this heterogeneity, we develop a typology of corporate entrepreneurship in family firms providing a reconciliatory approach to this literary diversity and suggest that the varied corporate entrepreneurship orientations of family firms are impacted by the duality of a family's distinct intention to pursue transgenerational succession and capabilities to acquire external knowledge.

Toward a Typology of Family Firm Corporate Entrepreneurship

Family involvement in business creates idiosyncrasies in firm behavior that promote long‐term, often transgenerational, strategic logics that ostensibly align with the motivations and outcomes of corporate entrepreneurship. Interestingly, extant research provides only minimal insight into the heterogeneous nature of corporate entrepreneurship orientations pursued by family firms. To better understand this heterogeneity, we bridge arguments within the family business literature to develop a typology of corporate entrepreneurship in family firms. Our findings provide a reconciliatory approach to this literary diversity and suggest that the varied corporate entrepreneurship orientations of family firms are impacted by the duality of a family's distinct intention to pursue transgenerational succession and the firm's unique capabilities to acquire external knowledge—calling into question the antecedents, modes, and outcomes underlying the strategic impetus of family firms to engage in corporate entrepreneurship.