We take the perspective that considering the affective motives of dominant owners is essential to understanding business exit. Drawing on a refinement of behavioral agency theory, we argue that ...family-controlled firms are less likely than non-family-controlled firms to exit and tend to endure increased financial distress to avoid losses to the family’s socioemotional wealth (SEW) embodied in the firm. Yet, when confronted with different exit options and when performance heuristics suggest that exit is unavoidable, family firms are more likely to exit via merger, which we argue saves some SEW, although it is less satisfactory financially. In contrast, nonfamily firms are more likely to exit via sale or dissolution, options that are more prone to offer higher financial returns than mergers. Family and nonfamily firms thus show different orders of exit options. We find support for these arguments in a longitudinal matched sample of privately held firms.
How can family firms unlock their innovation potential? Despite the recent growth in research on family business innovation, existing literature has yielded controversial findings. Family firms are ...recognized as more conservative and steadfast to their tradition, however many of the most innovative firms worldwide are family businesses. This points to an apparent willingness-ability paradox in family business innovation. Drawing on family business innovation and family systems literature, we argue that family characteristics are an important yet overlooked driver of this paradoxical tension. We develop the construct of family business innovation posture, and identify a typology of four ideal types: Seasoner, Re-enactor, Digger, and Adventurer. Furthermore, we explore and illustrate with empirical data the necessary fit between the family business innovation posture and family-related dimensions to resolve the willingness-ability paradox. The article examines the implications of the typology for family business innovation research by exploring the effects of intra-family succession, outlining important directions for future research aimed at advancing current understanding of the role of the family in family business innovation, and providing practical insights for family business owners, managers, and consultants.
The purpose of this article is to review and systematize prior work on technological innovation in family firms and to open up an agenda to guide future research into this promising area. The study ...shows that family involvement has direct effects on innovation inputs (e.g., R&D expenditures), activities (e.g., leadership in new product development projects), and outputs (e.g., number of new products), as well as moderating effects on the relationships between these steps of technological innovation. The article uses theories applied in family business research (e.g., agency theory) to discuss opportunities for extending technological innovation frameworks by considering family involvement.
Digital technologies are increasingly affecting industries worldwide in many ways. Although the adoption of digital technologies by firms has been studied extensively from a technical point of view, ...previous research lacks insight into the managerial aspects of digital transformation, which, given the transformation's interdisciplinarity, might have substantial implications for information systems research. In particular, it is unclear how small and medium-sized family-controlled firms (known as family-owned Mittelstand firms) with resource constraints handle digital transformation. This paper addresses this gap by drawing on rich data from 127 semi-structured interviews in a multiple case study of 15 family-owned Mittelstand firms from Germany, Austria, and Switzerland. All of these firms are active in the manufacturing industry but vary in terms of their digital transformation progress. Based on within-case and cross-case pattern analysis, we propose that the digital transformation of Mittelstand firms is a process consisting of three stages, namely, process digitalisation, product and service digitalisation, and business model digitalisation, and we reveal triggers for each stage and the dynamic capabilities needed throughout this process. Moreover, we identify three combinations of enablers and barriers that support or hinder the development of dynamic capabilities and thus accelerate or impede the advancement of the digital transformation process.
Despite an extensive literature on the role of managerial capabilities in enhancing firm performance, relationships between socioemotional wealth, managerial capabilities, and performance in a family ...business context have not been investigated. This study relates FIBER dimensions (five characteristics of family firms commonly used in studies of family businesses) to socioemotional wealth, managerial capabilities, and firm performance, and empirically tests a mediated model using a sample of 150 small and medium-sized family businesses from the United Arab Emirates. The results illustrate that managerial capabilities mediate the relationships between three FIBER dimensions (identification of family members with the firm, binding social ties, and emotional attachment of family members) and performance.
Gender in management is a widely studied topic. Since business families are social units and gender-based discrimination is entrenched in the social system, family firms are more likely to be ...susceptible to gender issues. Therefore, gender in family business offers a unique disposition for systematic exploration and scholarly inquiry. Using bibliometric analysis tools, we map a broader canvas of literature on women in family businesses, incorporating the literature from other disciplines, such as sociology and social psychology, that address the fundamental issues affecting the involvement of women in the family business. We uncover the state of research on women in family businesses, try and understand the drivers influencing their involvement in the family business, how family business behaviours and outcomes are influenced by the family women discharging different roles and responsibilities in business, and draw up a comprehensive framework that scholars can use to find the gaps in the literature.
Positive and negative views of family firms and their performance abound. Although there have been explanations for this divergence based on conditions of governance and context, the institutional ...environment has been less thoroughly explored as a source of these differences. We argue that the blend of family and market institutional logics in the regional communities where firms operate can have an important impact on the governance arrangements and financial performance of family firms. Specifically, we find that family-intensive governance is more common where family logic predominates in a region, and does best when this logic remains at modest levels or is countered by market logic. We test and support these notions in a comprehensive sample of private family firms in Italy, an ideal context in which distinct historically-determined logics exists among its 20 regions.
•Positive and negative views of family firms are conditioned by the institutional context within a community.•Community level logics can shape stewardship and behavioral agency behavior in family firms.•Dominant family logics may invoke a family intensive model of governance whereby poor leadership compromises performance.•Better performance with family governance occurs under a balance between family and market logics.
Drawing on the transgenerational entrepreneurship perspective, we employ a multiple case study approach to investigate why multigenerational family firms innovate. The data collection process drew ...upon five in-depth cases comprising 42 semistructured interviews, 25 participant observations, and several thousand pages of historical data dating from 1916 to 2017. We find patterns on how the firms’ long-term view—embracing both the past and the future—influences the innovation motives of these firms. Specifically, we identify three innovation patterns: conserving, persisting and legacy-building. We introduce a set of propositions and a framework linking long-term orientation dimensions to innovation motives and innovation outcomes. Our research thus contributes to a more fine-grained understanding of innovation behavior in family firms.
This review examines how family businesses manage family-related conflicts that occur at three interfaces: family-business, family-ownership, and family-business-ownership. We find that work-family ...conflicts, conflicts of interest, and relationship conflicts are prevalent family-related conflicts. Four conflict management strategies are frequently used to deal with these conflicts: vacillation, domination, separation, and third-party intervention. The popularity of these strategies is influenced by some unique characteristics of family businesses, such as high emotional attachment among family members. By integrating insights from the broader conflict research, paradox and dialectic studies, we develop a research agenda targeted at better connecting family-related conflicts to conflict management strategies.
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