Non-family Businesses Research Articles

Absorptive capacity in family firms: a systematic literature review

AbstractTwo-thirds of all businesses worldwide are family firms. For these family firms, absorptive capacity (AC) is key to acquiring, assimilating, transforming, and exploiting new, external knowledge for purposes of value creation. In this study, we conduct a literature review to obtain an overview of the existing research on AC in family firms. Drawing on 27 articles, we show that because of the family members’ induced influence on the family firm, the findings from previous studies based on non-family businesses cannot be applied to family businesses. In fact, we demonstrate that this influence can even create ambiguous effects on the integration of AC into the firm. The results of our literature review indicate that on the one hand, family members promote the integration of external knowledge, that is, they utilize their family-specific resources. On the other hand, tapping on such family-specific resources can simultaneously cause family firms to isolate themselves and restrict the firm’s access to external knowledge. Our analysis also reveals that research on AC in family firms is mostly conducted on a conceptual level and that the few empirical studies usually draw on simple, one-dimensional constructs. Thus, we encourage more future empirical research to draw on the multidimensional constructs of AC and family influence.

Corporate social responsibility in family firms: Can corporate communication affect CSR performance?

Drawing on the stewardship theory (ST) and socio-emotional wealth (SEW) perspective, this study investigates the role of sustainable activities within family firms (FFs) and the effect of marketing strategic decisions in improving their corporate social responsibility performance. To achieve the research aims, we analysed a sample of 730 American and European listed companies from 2015 to 2020. The results show that family businesses are more socially responsible than non-family businesses due to the presence of stewards. However, strategic marketing decisions have unclear effects in achieving these outcomes. This study expands the literature on ST and SEW in FFs, integrating them with sustainable principles. We also contribute to the sustainability debate and marketing literature related to FFs.

Board diversity and corporate social performance in family firms. The moderating effect of the institutional and business environment

AbstractWe analyze the effect of structural and demographic board diversity on family firms' corporate social performance (CSP), taking into account certain institutional and business environment aspects. The sample consists of French, German, Italian, Spanish and Portuguese nonfinancial listed firms over the period 2014–2021. We compare family and nonfamily firms before focusing on family businesses. Findings show that CSP benefits from having female directors in family firms whilst independent directors increase CSP in nonfamily businesses. Family directors exert a negative effect on CSP in family firms. The enforcement of law makes the positive influence of board independence significant for family firms and of nondual CEOs for nonfamily companies. Within family firms, the negative effect of family directors is strengthened by the enforcement of law but lowered by the efficiency of the judicial system. Hostile business environment always lowers CSP and reduces female directors' positive influence for family firms.

Does the form of the enterprise matter? Preferences of EU and African customers when choosing the company type for a purchase

Customer loyalty and satisfaction are crucial for the success, prosperity and survival of a business. However, customers' preferences differ according to their attitudes towards products and services, as well as the culture and conditions in which they live, which can influence their preferences when choosing a business. More than 90% of all businesses are small and medium-sized enterprises, and about 50% of private businesses in Europe and 80% in Africa are family businesses. These businesses are considered the engine of economic development and growth and are instrumental in job creation. However, if these businesses were not favoured by their customers, they would have no chance to survive and fight poverty, which is typical of African countries. Our study, therefore, identifies and compares what type of company customers from developing countries (represented by the Mbulu region, Tanzania) prefer and whether their preferences are similar compared to respondents from more developed countries (represented by Liberec, Czech Republic). By testing several hypotheses, a dependency was found between customers' attitudes when choosing a company and their place of origin. African respondents prefer large non-family businesses to small or medium-sized family businesses, while European respondents prefer small or medium-sized family businesses.

Do Dynamic Capabilities and Digital Transformation Improve Business Resilience during the COVID-19 Pandemic? Insights from Beekeeping MSMEs in Indonesia

This study investigated the influence of Dynamic Capabilities (DC) and Digital Transformation (DT) on Business Resilience During the COVID-19 Pandemic. Using cross-sectional data from 388 micro, small, and medium enterprises (MSMEs) of beekeeping in Indonesia. Furthermore, the data were analyzed by Structural Equation Model (SEM) analysis and executed by SmartPLS 3.0 software. The main results of this study indicate that DC plays an important role in improving MSMEs’ DT. However, the essential role of DT on firm resilience only happened for micro, small, and medium firms of family businesses. However, DT has an insignificant effect on firm resilience in small nonfamily businesses. Yet, the effect of DC on firm resilience is mediated by DT. Nevertheless, our empirical findings indicate heterogeneous effects among micro, small, and medium firms. Based on the study’s findings, we suggested that the policy implication in developing beekeeping firms should be more specific based on the firm scale. The results of this study can be generalized to the national level to inform decision-making regarding the intangible assets of MSME livestock products in developing countries. The findings are also relevant to other livestock products, which tend to be dynamic during a crisis.

Responding to unexpected crises: The roles of slack resources and entrepreneurial attitude to build resilience.

This study explores how entrepreneurial firms responded to - and displayed resilience in - coping with the uncertainty generated by an unexpected crisis. We examine how entrepreneurs leveraged slack resources to build organizational resilience and, thanks to their entrepreneurial attitude, could eventually turn adversities into opportunities. Through a multiple case study, four key entrepreneurial responses emerge about the type of slack resources (business or family) and extent of entrepreneurial attitude (favourable or unfavourable) leveraged: "waiting while seeding", "keeping business as usual", "striving to resist" and "surfing the pandemic". Slack resources, both business and family, can enable the absorption of a shock, contributing to building absorptive resilience,or the adaptation to the shock, contributing to building adaptive resilience. Yet, they are not sufficient to turn adversities into opportunities because firms also require a favourable entrepreneurial attitude to activate slack. Plain English Summary How entrepreneurial firms respond to - and display resilience in - coping with a crisis's uncertainty varies according to the entrepreneurial attitude of the entrepreneur and the typology of slack resource leveraged. We find that these firms responded to the Covid 19 crisis either through: "waiting while seeding", "keeping business as usual", "striving to resist" or "surfing the pandemic". The four responses differ in the type of slack resources - business or family - and extent of entrepreneurial attitude - favourable or unfavourable - leveraged. Slack resources, both business and family, are not sufficient to turn adversities into opportunities because firms require a favourable entrepreneurial attitude to activate slack. The study contributes to business practice by showing that both family and non-family businesses to thrive in the "new normal" era will have to develop the entrepreneurial resources of the team. Policymakers must be attentive to how firms' accumulated resources are deployed during times of crisis and foster the capture of opportunities out of the storm.

Family Business Literature Overview: Towards Achieving Family Business Growth

Businesses which are predominantly owned and managed by a family are commonly referred to as family businesses. This study’s objectives are to examine the definition and characteristics of family businesses, evaluation of the uniqueness and theoretical framework of family businesses literature and the nature of family business growth. Family businesses are unique from non-family businesses, in how they grow, financial strength, wealth safeguarding and their risk appetite. The most rational perspective is what might be used to emphasize the uniqueness of family businesses and how it connects to stakeholder management’s standpoint. Family businesses have become a significant and vital segment of a country’s economy through their contribution to job creation, poverty alleviation and sustainable development. Family-owned businesses in industrialised economies, on average, outpace other types of businesses, with family-owned businesses involving 80–90% of all businesses in North America and provide jobs for between 50 and 75 percent of the world’s labour force. Evidence from sub –Saharan Africa suggests that more than 90% of businesses which are not owned by the governments are family businesses. Growing a family business is not a one-sided process because it can depend on current business and family concerns. A successful organization and the creation of additional employment possibilities for its members from one generation to the next are both possible outcomes of family company growth. However, some family businesses purposefully avoid expanding out of concern for losing control of the enterprise. The literature review has shown that family businesses grow more slowly than non-family businesses on average due to lack of incorporating new entrants leading to lack of new ideas which is detrimental to a company growth. Other factors for the slower growth of family businesses in comparison to non-family businesses include their traditional strategies, insufficient financial strength, safeguarding of their wealth and risk appetite with a tendency toward risk aversion. According to the studies done in Sweden family businesses, the results from the literature review have also shown that family businesses grow much more slowly than non-family businesses do in both urban and rural areas.

Porovnanie motivácie zamestnancov v rodinnom a nerodinnom podniku

The identification of differences in managers' approach to motivation, ways of motivating employees and their application in selected family and non-family businesses is the problem addressed in this contribution. The main goal of the contribution is to bring a proposal for improving the motivation of employees in these two companies, considering their nature. We will fill its essence with sub-objectives, which include the analysis of the current state of motivation in both types of companies, the identification of differences in the approach of managers and their mutual comparison, and last but not least, the proposal of a solution. The methods used include: questionnaire survey, analysis, synthesis and comparison. The benefit of the contribution is the proposal of solutions that can improve motivation in family and non-family businesses.

Corporate museums as heritage vehicles: A comparative analysis between family and non-family businesses

The heritage marketing strategy often calls for the employment of a corporate museum to represent the firm's history in the eyes of internal and external observers. However, to date there has been no attempt to identify the distinctive values underlying the use of corporate museums by family firms - as opposed to non-family firms - for nurturing customers' understanding and appreciation of the company and its products. This paper aims to address this gap and investigate the identity values that drive the establishment of corporate museums by family firms and non-family firms. Using a comparative case-study (CCS) approach, the paper examines the values underlying two examples of corporate museums promoted by two different firms, one with a high level and one with a low level of family control. The study reveals differing distinctive values between family and non-family corporate museums.

Artificial intelligence in small and medium-sized family firms: An empirical study on the impact of family influence.

Artificial intelligence (AI) is one of the most important technologies of the future (Crew, 2020). So far, however, AI has been insufficiently deployed. This applies not only to family businesses, but especially to them. In terms of decision-making, these companies have a number of specific characteristics which mean that they find AI less relevant and may also be skeptical. The article discusses specifics of AI use in family businesses on the basis of a German empirical study. The paper shows that family businesses use AI less frequently and are also less open to the technology than non-family businesses. Socioemotional wealth (SEW) (Gómez-Mejia et al., 2007) serves as the theoretical basis. Based on the SEW, it is argued that although family businesses are aware of the need to apply new theories, they have so far underestimated the potentials and tend to be rather skeptical about applying these technologies. This view is supported by the empirical study. In addition, some differences between small and medium-sized enterprises (SMEs) and large companies are also discussed in the paper.

How are family businesses involved in the organizational network of the Communist Party of China: the perspective of organizational sociology

Embedding its own branches in private enterprises is the governance strategy that the Communist Party of China (CPC) controls the grassroots society. This study proposes a framework by incorporating the socioemotional wealth theory into neo-institutionalism to explain how are family businesses involved in the organizational network of the CPC. Findings reveal that there is an organizational isomorphism that the coverage of party organizations expanded from non-family businesses to family businesses. Furthermore, family businesses are not likely to establish party organizations when coercive pressures are low. However, this resistance strategy sharply disappears when coercive pressures are high, and joining state-backed industry associations and mimicking others’ practice both are also positive factors motivating family businesses to establish party organizations, which means that the coercive, normative and mimetic mechanisms jointly shape the organizational isomorphism. This study contributes to the literature of neo-institutionalism and sheds new light on the state-society relationship in China.

Determinants of Dividend Payout in Unlisted Spanish Family and Non-Family Firms

The present study analyzes dividends paid in unlisted family and non-family businesses, exploring factors that lead to higher or lower dividend payments. Data from 612 Spanish companies during 12 consecutive years was analyzed. This study indicates that family businesses, as a result of the greater proximity of the family to the business, pay lower dividends. However, we found evidence of higher dividends paid in pyramid structures, susceptible to higher agency costs, both in family and non-family businesses. In family businesses, this can be explained by their aim to maintain levels of trust with minority interests, and in non-family businesses by the purpose to mitigate conflicts of interest as a consequence of greater autonomy of subsidiaries. The evidence obtained adds value to the investigation, which has generally been focused on listed companies. Considering that unlisted companies use the dividend policy to align divergent interests, especially in more fragile governance structures, the results contribute to reduce the gap in research, and have practical implications for companies and investors.

To be (family) or not to be (family): the familiness effect over brand authenticity posts on social media and consumer engagement relationship

PurposeThis paper aims to explore the impact of brand authenticity dimensions (i.e. aesthetic, symbolism, heritage, originality, quality commitment and virtue) on consumer engagement in the context of social media. This study answers to the need of scholars to understand consumer behaviour towards family and non-family firms’ brand authenticity constructs and for practitioners to find the correct levers to increase consumer engagement.Design/methodology/approachTop 10 European family firms with a retrievable Facebook (FB) page from the Global Family Business Index have been selected. Then, the study analysed family firms’ social media consumer engagement versus their non-family business direct competitors on a sample of 21.664 FB posts over a four-year period, leveraging multi-group analysis.FindingsThe results outline that three out of six brand authenticity dimensions posted on FB are statistically arousing more interactions respect to non-authenticity-related contents when posted by family firms. However, there are no statistically significant findings when brand authenticity content is posted by the non-family competitors.Practical implicationsThis research is helpful for practitioners and entrepreneurs who might want to strengthen their social media brand strategies. With this regard, the study provides insights on which elements of brand authenticity are perceived by consumers as more engaging and which levers to use when communicating the familiness of the company.Originality/valueTo the best of authors’ knowledge, this is one of the earliest studies crosscutting the family business and brand authenticity literature streams to conduct an empirical analysis based on official FB data with a data set of over 20,000 observations. Moreover, this study assesses that not every dimension of the brand authenticity construct is relevant in the context of social media and that its effectiveness depends on the firms’ familiness.

Entrepreneurial Orientation as a Determinant of Sustainable Performance in Polish Family and Non-Family Organizations

The paper investigates the relationship between entrepreneurial orientation and sustainable firm performance with the mediating role of innovation output in family and non-family businesses in the post-transition economy. In order to analyze these relationships, quantitative research on a sample of 322 Polish organizations was conducted. The research results show a few differences between family and non-family businesses concerning the influence of entrepreneurial orientation on innovativeness and sustainable organizational performance. Moreover, the study reveals the critical role of the proactiveness dimension in shaping long-term firm performance.

Non-financial information reporting of Polish family and non-family companies. A comparative analysis

Purpose: According to the principles of the Socioemotional Wealth concept, family firms are particularly attentive to the non-financial aspects of their businesses, as this dimension is closely identified with the owners’ families and their reputation. This research aims to identify the approaches maintained by Polish family firms towards their non-financial information reporting in comparison with their non-family counter-parts and examine the quality of the information presented. Methodology/approach: For the theoretical part, the source literature analysis meth-od and the descriptive analysis method were used. The selection of the sample compa-nies was made using a matched-pair analysis. To assess the quality of the ESG disclo-sures, content analysis and the research design developed by Hąbek and Wolniak (2016) were applied. Findings: Our empirical study supports the initial assumption that family firms’ ESG disclosures are better quality than their non-family counterparts. This applies to both the relevance and credibility of information. The availability of non-financial infor-mation to external stakeholders has been rated low for both family and non-family busi-nesses. Research limitations/implications: The study is limited to one country; hence the suggestion that similar research be conducted in other countries in the CEE region. This will make it possible to assess whether, in economies that have undergone a pro-cess of transformation and where family entrepreneurship has a much shorter history than in developed countries, family businesses also undertake and promote CSR activi-ties to a greater extent than non-family firms. The study only focused on listed compa-nies; to strengthen the findings, further research would need to include entities from the SME sector, which dominates most economies. Originality/value: Quality assessment of non-financial reporting is a rarely addressed topic in the literature on non-financial reporting and family businesses. To the best of our knowledge, this is the first study to focus on the Polish market.

Breaking with the Past to Face the Future? Organizational path dependence in family businesses

This study adopts a qualitative approach in order to determine why and how the idiosyncrasies of family business influence path formation and path-breaking (and their outcomes) in strategically persistent family businesses. Findings are based on an analysis of six in-depth case studies of family businesses from Switzerland’s textile industry, including interviews with family and nonfamily firm members, archival data and expert interviews. The study finds that idiosyncrasies rooted in power hierarchy, chronicle orientation, and network embeddedness spur self-reinforcing mechanisms – in particular expectation effects and learning and investment effects – in path formation. However, at a later stage, they may become drivers of path-breaking. The study contributes to research on organizational path dependence by illuminating the role of power hierarchies in path formation and breaking. Path-breaking requires certain shifts in formal and informal power hierarchies; such shifts of power happen not only with respect to individual family members but also between family subgroups and nonfamily members. The study further identifies different strategic outcomes of path-dependent processes: protecting by renewing, pivoting and perfecting. While protecting by renewing and pivoting encompass path-breaking, perfecting occurs within the framework of a strategic path by leveraging incremental changes. In the case of protecting by renewing, businesses develop new revenue streams detached from the previous core business; these are partly used to subsidize the remains of the previous core business, thereby accepting inefficiencies for parts of the business. Pivoting refers to changing the business model without accepting inefficiencies. Implications for family and nonfamily businesses are discussed.

Digitalization and entrepreneurial firms' resilience to pandemic crises: Evidence from COVID-19 and the German Mittelstand

While stressing the relevance of context, the organizational resilience literature has so far not extensively examined resilience in times of healthcare crises such as the ongoing COVID-19 pandemic. The Parasite Stress Theory of Values suggests that such pandemic crises have detrimental impacts on entrepreneurial activity due to social distancing and its effects on interaction, collaboration, and innovation. However, alternatives to personal contact now available thanks to digitalization, have not yet been examined. We expect entrepreneurial firms with more digitalized business models to show higher resilience to pandemic crises, especially those highly affected by globalization and more for non-family businesses than for family businesses. Based on a survey of German Mittelstand firms in the midst of the crisis induced by COVID-19, our findings broadly support our expectations and thus help qualify the Parasite Stress Theory of Values and contribute to a better understanding of organizational resilience in times of pandemic crises.

Entrepreneurial behaviors that shape performance in small family and non-family hotels during times of crisis

Recent economic and public health crises have posed important challenges to family businesses – particularly those in the hospitality sector. While sustaining a business, performance becomes critical; there is insufficient knowledge on the use of entrepreneurial behaviors in mitigating the impact of a crisis by family businesses. To help fill this gap, this study explores the configurations of entrepreneurial behaviors that lead to improved performance in small firms under crisis market conditions – particularly, risk-taking, innovativeness, proactiveness, flexibility, and digitalization. This study employs fuzzy-set qualitative comparative analysis (fsQCA). The sample consists of 117 one- and two-star Polish hotels that are comprised of both family and non-family businesses. The data was collected in November and December 2021. The results confirm the core role of risk-taking, proactiveness, and flexibility in increasing the performance of these small firms. However, performance outcomes depend on the configurations of the firms; differences between family and non-family businesses stood out. In family hotels, risk-taking is accompanied by flexibility as a core factor, and digitalization does not play an important role in achieving higher performance. Overall, these results contribute to the literature on organizational entrepreneurship (especially entrepreneurial orientation) as well as family business crisis management in the tourism sector. These findings offer implications for managers by indicating combinations of entrepreneurial behaviors that can help foster business performance.

Analysis of the Influence of the Moment the Internationalization Process Begins on the Internationalization Intensity of Family and Nonfamily Businesses: An Approach Using a Tobit Model

The specific characteristics of family businesses as well as the internationalization path followed can influence the intensity of the internationalization process. Many studies have analyzed how family character can influence the internationalization process of family businesses, and the results obtained have not been conclusive. Nevertheless, previous research has not sufficiently addressed the influence that the moment of initiation of the internationalization process has on the levels of internationalization achieved. Based on the behavioral agency model, the unique set of business resources (familiness), and the socioemotional wealth (SEW) perspective, this study examines, the internationalization intensity of family and nonfamily businesses in two defined groups (early internationalization and internationalization from the local market). Likewise, the effect that the entry of the second generation has on the internationalization of these companies is analyzed. To perform this analysis, Tobit regression models are estimated from a data set of panel data from the Spanish Survey on Business Strategies for small and medium-sized Spanish family businesses from 2005 to 2016, finding that family ownership and management have a negative influence on the intensity of exports, regardless of the path of internationalization followed, and that the entry of new generations has a positive relationship with the level of internationalization of these businesses. Finally, implications of the findings for research and management are discussed.

Comparative analysis of the role of strategic orientation, strategic performance metric focus and strategic audacity in driving firm performance: family businesses vs nonfamily businesses

PurposeAs family and nonfamily businesses differ in how they do business, the focus of this manuscript is on understanding how strategy-level models can be misinterpreted if family involvement is not considered. Thus, in this manuscript, the focus is on understanding the extent to which strategic orientations (market orientation and technology orientation, which reflect strategic approach), strategic performance metric focus (financial-based, optimization-based and market-based, which reflect strategy evaluations) and strategic audacity (which reflects boldness in envisioning and delivering strategic outcomes) play a role in driving firm performance – in family businesses vs nonfamily businesses. Understanding how these drivers impact performance differently in family vs nonfamily businesses enables companies to better direct their strategic efforts.Design/methodology/approachAfter presenting theoretical concepts, authors use regression analysis on a sample of companies in a developing European Union (EU) country (n = 282) to evaluate the impact of strategic orientation, strategic performance metric focus and strategic audacity on firm performance separately in three samples: the full sample (consisting of both family and nonfamily-owned firms), sample of family businesses and the sample of nonfamily businesses.FindingsThe role of strategic orientation, strategic audacity and focal goals in driving firm performance differs depending on the company type (family vs nonfamily). In the case of nonfamily businesses, strategic audacity and technology orientation with the focus on efficiencies and markets are driving firm performance. In the case of family businesses, both market and technology orientation are important drivers of performance; the focus on financial and market indicators of performance is positively impacting performance, while the focus on efficiency indicators is diminishing the performance of family businesses. Thus, results show that of the performance drivers for family businesses, some are insignificant (strategic audacity), while some even have a negative impact (focus on optimization-based measures of performance) on family businesses' performance. Moreover, results show that some of the drivers of performance in case of family businesses (market orientation and focus on financial-based measures of performance) are not drivers of outstanding performance in the case of nonfamily businesses.Practical implicationsBest practices differ for family vs nonfamily businesses. In case of family businesses, comparing them to nonfamily businesses, market orientation and the focus on financial-based measures of performance have a greater impact on firm performance, while, at the same time, family businesses should refrain focusing on pursuing optimization-based measures of performance as such pursuit drives down their performance. Understanding the drivers of performance specific to family businesses will enable such firms to better navigate contexts characterized by ambiguity and uncertainty.Originality/valueThe manuscript evaluates how models, generally researched in the overall firm metrics, differ between family businesses and nonfamily businesses, thus delivering new insights into the important marketing concepts.