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Management Insights From Great and Struggling Family Businesses
Abstract
The common perception of family-controlled businesses (FCBs) is that they are subject to stagnation, clannishness, cronyism and rash leadership. Yet many FCBs are highly successful. This paper is based on a study of 46 successful and 24 struggling FCBs to determine how they differed in their strategic, organisational and leadership priorities. It identifies four main priorities which it calls “the 4 Cs”: continuity, community, connections and command. Each of these priorities contains advantages, but they also have their downsides. While the successful FCBs effectively exploited the Cs, the unsuccessful companies manifested these priorities and practices less frequently, and fell victim to their negative aspects. Citing examples of FCBs, this paper offers an analysis of each of the 4C priorities and the lessons that can be applied to FCBs and non-family companies.
... The model by Miller & Le Breton-Miller (2005) incorporates business longevity practices expressed by CEOs of successful family businesses that allow understanding the longevity of the business. It is made up of four dimensions: (1) long-term business continuity, long-lasting companies remain linked to maintaining a clear and lasting vision and mission. ...
... Family CEOs have long tenures and job security, which allows them to make important decisions, balance tradition with innovation, and have a continuous learning environment (Miller & Le Breton-Miller, 2005). In other words, brands had the need to reinvent themselves to remain contemporary over time. ...
... The four dimensions were present, to varying degrees, in thriving family businesses to sustain competitive advantage and use them to drive leadership and organizational practices (Miller & Le Breton-Miller, 2005). ...
A personal brand is the synthesis of all the expectations, images and perceptions created in someone's mind when they see or hear a certain name. A person has a personal brand that performs to an agreed standard according to personal and professional characteristics. I This study aims to expand knowledge about the personal brand of CEOs in long- lived companies. The aim is to investigate how CEOs working in long- lived brands located in the Euroregion (Northern Portugal and Galicia) are managing their personal brand. Portugal and Galicia), are communicating their personal brand through storytelling on digital channels.
... A decision regarding automation implying negative consequences thus harms the family's relationship with employees and generates negative emotions in family members. FFs also strive to create and maintain a good family and firm image and reputation in the local community and over time: stakeholders must be constantly treated in a solicitous manner (Miller and Le Breton-Miller, 2005). Image and reputation are strongly linked to the family aim to create a solid firm for future generations (Cruz et al., 2014) and their preservation also creates a positive effect on family members' identities (Mahto et al., 2010). ...
... Finally, FFs strive to be recognised as an actor playing a positive role in the community (Miller and Le Breton-Miller, 2005;Cruz et al., 2014). The family wants to increase the welfare of others (e.g. ...
... Additionally, the discussion extended to the relationship with the local community, addressing commitments to support and develop it, reflecting a sense of social responsibility. Questions were based on previous literature (Watson and Clark, 1999;Miller and Le Breton-Miller, 2005;Berrone et al., 2010;Christensen-Salem et al., 2021). Throughout the interviews, supportive questions such as "What do you mean by that?" and "Could you please explain this in more detail?" ...
Purpose
The paper aims to explore how family involvement influences family firms (FF) decisions to innovate in automation (i.e. artificial intelligence, big data and robotics). Automation implies pronounced emotional significance within the shared societal consciousness, presenting specific intricacies that pose challenges to the strategic decision-making processes of FFs.
Design/methodology/approach
This study draws on the levels of ambivalence described in the literature and the FF archetypes (i.e. enmeshed FFs, balanced FFs and disengaged FFs), which are characterised by a different relationship between the family and the firm. Empirically, this study adopts a qualitative approach, conducting three case studies involving FFs that have registered patents in automation technologies.
Findings
A distinctive pattern emerged among the different FF archetypes in their approach to innovation in automation. Innovation in automation will be limited in enmeshed FFs (based on emotional concerns at the firm level), while it will be supported in balanced FFs (based on a balanced view between emotional concerns at the family level and economic aspects at the firm level) and in disengaged FFs (based on economic considerations at the firm level).
Originality/value
Our research, focussing on the strategic choice of family firms (FFs) to innovate in automation, fills an important gap and investigates an area with relatively scant research despite the current importance of automation. Additionally, we consider the ambivalence that characterises family firms, providing a nuanced understanding of how emotional dynamics within the family-business interface influence strategic decisions.
... Creating a flexible working environment (e.g., home office options) and an inclusive culture also contribute to employee satisfaction (Eddleston et al., 2012;Miller et al., 2008). As a result, employees have close, trustful, and familiar relationships with the owners, which are intended to ensure the long-term continuity of the FB (Le Breton -Miller & Miller, 2006;Miller & Le Breton-Miller, 2005). Stewardship over customers is based on close, lasting ties with customers and other stakeholders (e.g., suppliers or banks) (Arregle et al., 2007;Sirmon & Hitt, 2003). ...
... Personal relationships between family members, employees, and other stakeholders optimize mutual understanding and increase loyalty (Miller et al., 2008). This interpersonal behavior contributes to the long-term survival of FBs (Miller & Le Breton-Miller, 2005). ...
... Hence, in such situations, of which the COVID-19 crisis is a pertinent example, the stewardship culture of FBs reflected in commitment, trust, and loyalty may have a positive impact on strategic flexibility, i.e., the ability to actively seek out novel opportunities and effectively respond to potential threats within the competitive environment. Since a culture of trust spurs resilience (Cheese, 2016), and FBs are characterized by such a culture (Miller & Le Breton-Miller, 2005), they should exhibit high levels of resilience (Amann & Jaussaud, 2012;Amore et al., 2022;Czakon et al., 2023;Salvato et al., 2020). ...
Current crises pose uncertainties and threats to family businesses (FBs), demonstrating the importance of risk management (RM). Based on an explorative case study of nine Austrian medium-sized FBs, we examine the design of RM in FBs and how the COVID-19 crisis impacts their RM practices. The findings highlight that the medium-sized FBs analyzed generally rely on both formal and informal RM, and that these structures are strongly connected to their unique stewardship culture. In the wake of the COVID-19 crisis, formal RM gained increased relevance, prompting FBs to allocate additional resources for its professional upgrading. Likewise, when confronted with heightened risks during the COVID-19 crisis, informal practices such as family bonds and close ties to employees and customers are not only reinforced but also proven highly effective, resulting in increased loyalty. The COVID-19 crisis serves as a compelling illustration of how both informal and formal RM methods have grown in strength. The synergy between these RM methods enhances risk awareness within FBs, ultimately fostering resilience during unpredictable and uncertain times.
... Long-lived companies emphasize specific values by presenting mission statements. This is evident in overall corporate management, including employee behavior guidelines (Miller and Le Breton-Miller, 2005; Tà pies and Ferná ndez Moya, 2012). Miller and Le Breton-Miller (2005) identified value-driven staff as being essential for family business longevity. ...
... This is evident in overall corporate management, including employee behavior guidelines (Miller and Le Breton-Miller, 2005; Tà pies and Ferná ndez Moya, 2012). Miller and Le Breton-Miller (2005) identified value-driven staff as being essential for family business longevity. Yamaoka and Oe (2021) interviewed the owners of 10 Japanese family-owned firms that were over 300 years old. ...
Rapidly changing business environments and fierce competition are making it increasingly difficult for modern companies to maintain competitive advantage and accomplish business longevity. This study can fill the research gap in mission research and longevity research, and provides implications on what form and content of mission should be selected when determining the direction of a company’s corporate strategy. Although a company’s mission is a communication tool that represents the company’s strategic priorities and unique values, it has rarely been considered an important factor in business longevity. This study conducts a content analysis of the mission statements of 43 companies in the Henokiens Association to clarify the linkage between a company’s mission and business longevity and the configurations of long-lived firms’ missions. Our results show most long-lived firms have clear missions and perceptions of familism expansion. The firms’ past, present, and future additions to their concern for products, business growth, unique philosophy, and stakeholders are highlighted in their mission statements. Therefore, the main theoretical contribution of focusing on the corporate mission as a factor of business longevity in this study is not only a new approach to the longevity factor, but also the discovery of new values of the mission in strategic management research. The practical contribution of this study is that it reveals that companies seeking long-term competitive advantage in the market need to design, possess, and share a high-quality mission from a long-term perspective and instill the ideology of extended familyism. It can also provide hints about strategic priorities for small, family-run businesses facing threats to their survival.
... Therefore, socioemotional wealth has become a relevant topic to explain behaviors of family firms to preserve their business continuity (Araya-Castillo et al., 2021;Hernandez-Perlines et al., 2021). Continuity, control, community, and connections are renowned as four dimensions of socioemotional wealth proposed by Miller and Le Breton-Miller (2005). Meanwhile, five dimensions of socioemotional wealth are identified by Berrone et al. (2012), namely binding social ties, emotional attachment of family members, family control and influence, identification of family members with the firm, and renewal of family bonds to the firm through dynastic succession. ...
... Advancing the blood-related privileges, longtenured family members are often less qualified and competent to lead the firm. They become intolerant to new challenges and ideas from non-family members (Bloom & van Reenen, 2007;Miller & Le Breton-Miller, 2005). Berrone et al. (2012) stated that emotional attachment among family members might potentially affect decision-makings and often regarded as equally essential as economic consideration which can damage the business development. ...
The outbreak of COVID-19 pandemic in early 2020 has inflicted serious financial distresses for most firms in multi-sectoral industries. Each of them was enforced to deal with the economic downturns by working more efficiently. In this case, family and non-family firms might perform differently to protect themselves from bankruptcy. This research aims to measure firm efficiency by employing a total of 52 entities listed on Indonesia Stock Exchange (IDX), 26 entities for each type of firms from 2019 to 2022, reflecting the times before, during, and after the pandemic. At the first stage, date envelopment analysis (DEA) with constant return-to-scale (CRS) input-oriented approach is employed to generate deterministic efficiency scores of each sample which the bias is then corrected using Simar and Wilson’s bootstrap technique. At the second stage, hypothesis testing is conducted to examine whether the difference in efficiency score between both types of firms is significant. The result shows that family and non-family firms do not perform differently during a 4-year of research period (p-value=0.136). Nevertheless, family firms exhibit a significant drop in 2020 (p-value=0.0061), where this condition reversed with a significant increase in 2021 (p-value=0.0002). Non-family firms perform more stably throughout the research years. Finally this research may contribute to the development of organization-related science, business, and strategic management. The way most family firms operate might reflect the socio-cultural attributes of a nation. There is no other similar study found since COVID-19 pandemic is still considered as a relatively new global health crisis.
... FFs face a dilemma: preserve SEW by avoiding risky investments like innovation or adopt innovation and preserve economic efficiency at the cost of a weaker SEW (Islam et al. 2022). FF risk aversion has been shown to influence their strategies and acts as a deterrent for innovation and growth (Miller and Le Breton-Miller 2005;Nieto, Santamaria, and Fernandez 2015). Some scholars have shown that although FFs do invest in R&D (and finance this decision), they are more likely to produce incremental rather than radical innovation, which is often less profitable (Nieto, Santamaria, and Fernandez 2015). ...
... This is in line with the previously-mentioned SEW approach to FFs. 12 On the other hand, it has been found that FFs can have a higher propensity to invest in innovation activities than their non-FFs counterparts because they are less focused on short-term results. The theoretical grounds come from the theory of 'patient capital' and from the longtermism of FFs (Miller and Le Breton-Miller 2005;Ward 1997;Zellweger 2007). Furthermore, following the arguments of the seminal work by Jensen and Meckling (1976), a positive association between innovation and family ownership derives from the low agency costs: since control and ownership are not separated in FFs, they are more prone to risks than non-FFs and, thus, are encouraged to invest in innovation. ...
This study focuses on the impact of ownership and the finance for innovation on the exports of micro and small family-owned firms (FFs) compared with nonfamily-owned firms (non-FFs) for 11 European Union countries from 2014 to 2020. The motivation for the study lies in the fact that when combining ownership and innovation, the net effect on exports is not always predictable. Although family ownership negatively affects exports, the gains from innovation are significantly higher for non-FFs than FFs when studying the extensive margin of exports. This implies that the innovation effect is not sufficient to close the export gap for FFs. Regarding the intensive margin of exports, the magnitude of the innovation effect does not differ by firm-type. Thus, FFs show a low intensive margin just because of their ownership. The results hold for different model specifications and individual countries. ARTICLE HISTORY
... As the family increases its presence in the company (with new members joining in or occupying positions of authority), family-centred goals become more salient (Cyert & March, 1963) and their adoption increasingly more complex (Chrisman et al., 2005;. While in general family firms have greater stocks of social capital and slack financial resources that support an economic long-term survival (Miller & Le Breton-Miller, 2005;Sirmon & Hitt, 2003;Tokarczyk et al., 2007), these resources also affect and interact with non-economic goals of the family firm such as SEW (Basco & Pérez Rodriguez, 2009;Chrisman et al., 2004;Gomez-Mejia et al., 2011;Stafford et al., 1999), constituting a paradox in goal systems. As such, the involvement of the family in the firm adds complexity to the management of the firm, as the dominant coalition of family members can implement their family goals as firm goals. ...
... Third, our research extends current debates on the need for family businesses to consider the inclusion of non-family talents in light of their business growth (e.g. Miller & Le Breton-Miller, 2005). Family goals are found to conflict with business growth goals particularly when non-family employees are involved in key decision-making roles (Vardaman et al., 2018). ...
Family firms are paradoxical by nature due to the interplay of two distinct goal systems: the family and the firm. These systems involve nested tensions that can create apparent paradoxes over time. Taking a rhetorical history lens, we explore how family firms can dynamically produce temporal equilibria between goal systems through the strategic use of history. Empirically, we investigate the emergence and development of two apparent paradoxes unfolding through the history of the growth of Alpha, an Italian family firm in the packaging industry. Our findings suggest that rhetorical history can alleviate the tensions emergent from the paradoxical goal systems of family businesses. Our research provides a unique contribution by revealing the emergence and agentic process of the co-construction of rhetorical history, which involves multiple agencies from both family and non-family employees. Moreover, such co-created rhetorical history can dynamically produce temporal equilibria in family business’s persistent paradoxical goal systems.
... Stavrou, Kassinis, and Filotheou 2007). Following this tradition, family firms foster talented and loyal employees to aid future prosperity (Miller, Le Breton-Miller, and Scholnick 2008) and are therefore concerned with retaining stable, trustful, and long-term relationships with them (Déniz and Suárez 2005;Miller and Le Breton-Miller 2005). In this vein, previous studies find that family firms conduct fewer employee layoffs than nonfamily firms (K. ...
... Le Breton-Miller and Miller 2006). Furthermore, the nurturing of a strong and long-lasting community of employees also helps the perpetuation of a positive family image and reputation among stakeholders (Dyer and Whetten 2006;Zellweger et al. 2013) and the enhancement of binding social ties within the family business and in the local context (Miller and Le Breton-Miller 2005). Positive identity, binding ties and emotional attachment have been identified as the crucial dimensions of SEW (Swab et al. 2020). ...
... 2.1 Employees' affective commitment and organizational ability to manage burnout in family firms under a pandemic scenario Family firms exhibit distinctive characteristics that contribute to the creation of a unique organizational climate, particularly advantageous in managing psychosocial risks on workers' health during external disruptions (Marshall and Schrank, 2020;Mahto et al., 2022;Llanos-Contreras et al., 2023). Their strong emphasis on family values, long-term orientation, and the cultivation of binding social ties create favorable working conditions for addressing external shocks (Miller and Le Breton-Miller, 2005). This environment proves beneficial in maintaining control over emotions, psychological risks, and employee satisfaction during disruptive events Bartik et al., 2020). ...
... This is in line with previous research indicating that family firms develop a more robust organizational climate (O'Regan and Quigley, 1993;Tabor et al., 2018), which is acknowledged as an important driver of employees' commitment. Family businesses promote a family-like work environment as part of their organizational culture, values, traditions, and identity (Miller and Le Breton-Miller, 2005;Cennamo et al., 2012;Llanos-Contreras et al., 2022b). Our findings shed additional light on these ideas. ...
Occupational health is one of the aspects significantly affected during crisis periods. It is essential to learn about the factors that improve organizational capacity in coping with such shocks. This study investigates how the working environment of a family business influences job satisfaction during crises. Conducting a survey with 516 employees at the peak of the pandemic, the research utilizes structural equation analysis, revealing that family business environments can mitigate burnout, enhance affective commitment, and consequently, boost job satisfaction. The study highlights the need to manage burnout and utilize resources, such as employee commitment, for family firms to sustain job satisfaction amidst disruptions. It deepens the comprehension of family businesses’ crisis response, emphasizing the significance of human resource commitment and management. The investigation illuminates the dynamic interplay between the work environment, employee well-being, and organizational resilience, providing valuable insights for both theoretical understanding and practical application.
... On the one hand, some literature suggests that family firms offer employees a more stable work environment with higher levels of job security (e.g., Amato et al., 2021;Bjuggren 2015;Block et al., 2019;Block et al., 2018;Block, 2010;Stavrou et al., 2007). Following this tradition, family firms foster talented and loyal employees to aid future prosperity (Miller et al., 2008) and are therefore concerned with retaining stable, trustful, and long-term relationships with them (Deniz & Suarez, 2005;Miller & Le Breton-Miller, 2005). In this vein, previous studies find that family firms conduct fewer employee layoffs than nonfamily firms . ...
... SEW goals often favor strategies that emphasize cumulative, tacit knowledge that is developed and shared with employees and inspired by mutual trust, personal respect, and deep knowledge of business operations (e.g., Le Breton Miller & Miller, 2006). Furthermore, the nurturing of a strong and long-lasting community of employees also helps the perpetuation of a positive family image and reputation among stakeholders (Dyer & Whetten, 2006;Zellweger et al., 2013) and the enhancement of binding social ties within the family business and in the local context (Miller & Le Breton-Miller, 2005). ...
In this study, we seek to understand firm behavior during times of crisis, with a particular focus on family firms in different contexts. We theorize that family control mitigates (i.e., negatively moderates) the relationship between economic crisis and the layoff of employees, resulting in a higher propensity of family firms to retain their employees during a crisis compared to their nonfamily counterparts. Furthermore, taking a closer look at family firms, based on their location, we argue that family firms in rural regions are more likely to adopt measures leading to involuntary job turnover than family firms in urban areas due to a higher sensitivity to the loss of socioemotional wealth following a business closure. Relying on a panel dataset of Swedish private firms active in the period 2004–2012, our study contributes to a better understanding of family firms as employers in different contexts.
... Family business succession has garnered considerable attention from both researchers and managers in recent decades (Marques et al., 2022;Miller et al., 2003;Mokhber et al., 2017). While numerous studies have underscored the competitive advantages of family firms, such as their unique company culture (Chua et al., 1999;Marques et al., 2022;Miller & Le Breton-Miller, 2005;Rovelli et al., 2022), others have highlighted the challenges they face, including conflicts between family members and limited resources (Cabrera-Suárez et al., 2001). ...
Family businesses are increasingly recognized for their significance in the global economy, constituting a growing portion of companies worldwide and elevating the importance of this topic on governmental agendas. Unique challenges confront family firms, intertwining business decisions with familial repercussions. Among these challenges, the succession process emerges as a critical threat to their continuity. Inadequate solutions to the question of succession often lead to organizational failure, underscoring the urgency of addressing this issue. This study endeavors to construct an analysis model to support decision-makers throughout the succession journey, integrating a constructivist approach that merges cognitive mapping and interpretive structural modeling (ISM). This dual methodology facilitates the swift identification and analysis of factors crucial for smoother family business succession. The model development leverages insights from an expert panel and entails delineating cause-and-effect relationships among identified determinants and prioritizing these factors based on their significance. Subsequently, the model undergoes validation through a consolidation session with experts from the Associação de Empresas Familiares (i.e., Family Business Association in Portuguese), who assess its practical applicability. This includes perspectives from a Brazilian expert renowned for his understanding of family business dynamics within an emerging economy—Brazil. The insights gleaned from these sessions inform recommendations on implementing the tested procedures within real-life family enterprises, thereby contributing to the sustainability and longevity of these businesses.
... Family businesses constitute a significant and key segment of many nations around the world (Miller & Le Breton-Miller, 2005). Family enterprises dominate global business, generating 70-90% of the world's gross domestic product (GDP) (Maloni et al., 2017). ...
Theoretical background: Nowadays, the development of digital technologies, including e-service portals in the public procurement, is crucial for improving purchasing processes and expanding markets for companies, including family businesses. Understanding the factors influencing satisfaction with the use of e-procurement is important for optimizing these processes and improving work efficiency. In the context of public procurement, such studies are few. None of the publications found results of research combining the areas of business family, e-procurement, and user experience. This shows that there is a research gap related to the experiences of employees of family businesses and their interactions with e-procurement for public area, especially in the context of the impact of UX on the efficiency and satisfaction of procurement processes in the public sector. Purpose of the article: The main objective of the study, of which results are presented below, is to develop a model of key factors and the relationships between them that influence the efficiency of work in an e-procurement dedicated to public area. Despite the numerous benefits of using e-procurement, there are also many challenges and barriers that can affect the level of satisfaction of employees using these types of solutions, including in the procurement area. Understanding the factors that influence satisfaction and dissatisfaction with the use of e-procurement is crucial for improving procurement processes and work efficiency. In the application area, the research results can be helpful for creators and suppliers of e-procurement, enabling them to tailor their solution to the specific needs of family business employees. Research methods: In order to examine the factors of satisfaction with the use of e-procurement in the public area, a survey was conducted among contractors submitting offers in public procurement procedures. The online survey was sent to over 10,000 business entities, obtaining 406 correctly completed responses, including 109 from family businesses. The analysis of the obtained results allowed, among others, to identify satisfaction factors in the use of e-procurement. Main findings: In a study assessing the use of e-procurement in the public area, respondents rated their digital competences on average at 4.7 on a scale of 1–6, indicating high digital skills. Intuitiveness of use and ease of searching for advertisements turned out to be crucial for satisfaction with e-procurement, which emphasizes the importance of good UX practice in the design of these tools. Respondents also highly rated functions such as automatic encryption of offers and the ability to create an electronic signature, which affects the security and efficiency of purchasing processes. Surprisingly, training for users of e-procurement was considered less important, which may be due to the already high digital competences of the respondents.
... Executive members bring strategic insight for reinvesting retained earnings, informing capital allocation for growth (Miller & Le Breton-Miller, 2005). Their operational involvement aids in understanding retained earnings' subtle impacts. ...
The objective of this study was to examine the impact of corporate governance on the financial choices of non-financial companies operating in the Australian Securities Exchange. A purposive sampling technique was employed to select a total of 113 firms representing 14 sectors listed in the Australian Securities Exchange during the period from 2008 to 2021. The findings of the study revealed a positive and significant relationship between the size of the board, gender diversity among board members, board member affiliation and board compensation with the financial decisions of the corporations. Additionally, the study identified that the presence of experienced and non-executive board members had a negative and significant impact on internally generated funding. Furthermore, it was observed that board gender diversity, board size, board member affiliation and board compensation displayed a positive and significant association with debt financing, internally generated financing and equity financing. Most organisations displayed a preference for internal and debt financing over equity funding. Aligning governance with financial decisions enhances firms’ cost of capital. Governance quality affects capital market access, debt and equity costs. Effective governance leads to favourable financing terms.
... On the one hand, owing to their transgenerational horizons (Habbershon et al., 2003), family firms tend to be more community oriented, building long-lasting and trust-based reciprocal relationships with external parties and stakeholders (Cabrera-Suárez et al., 2011;Chrisman et al., 2009;De Massis et al., 2015;Miller & Le Breton-Miller, 2005). Furthermore, collaborative network orientation is positively associated with innovativeness (an EO dimension) in family firms (Sorenson et al., 2008). ...
We study the relationships between the input and network additionalities prompted by public support for innovation and entrepreneurial orientation and whether being a family business moderates these relationships. The results, based on a dataset of 115 Mexican firms, show that the changes generated by public support for innovation programmes encourage entrepreneurial orientation. Additionally, family firms have a differential ability to transform input and network additionalities into entrepreneurial orientation. This study contributes theoretically and practically by highlighting the positive effects of research and development support programmes on a firm’s entrepreneurial orientation. It also points out the need to consider family status when designing public policies, since our results reveal that family and non-family firms are not equally efficient in transforming resources into entrepreneurial orientation and that family firms that drive networking through the rules of the subsidy do not trigger the expected potential benefits.
... However, this literature does not further engage with the evolution of trust between the family and the external advisors across generations, which is surprising since, in essence, maintaining the family firm for future generations is a crucial goal for family firms (de Vries, 1993;Zellweger et al., 2012). Using this as a reference point, family members display a long-term orientation, such as a tendency to prioritize the long-range implications and impact of decisions and actions that come to fruition after an extended period (Lumpkin & Brigham, 2011;Miller & Le Breton-Miller, 2005). Therefore, the temporal aspect holds particular intrigue for the study of trust relationship with the realm of family firms, given their distinctive feature of being inherently oriented towards the long term (Miller & Le Breton-Miller, 2006). ...
This study delves into the evolving dynamics of the trust relationship between the family and its external advisors across generations in family firms, a crucial, yet underexplored topic in the family firm literature. Anchored in the resource‐based view, family firms leverage external advisors to compensate for internal resource deficits. Employing a qualitative multiple case study approach, our research unveils the nuanced evolution of trust between the family and these external advisors across generations. The findings reveal a distinctive trust evolution, transitioning from interpersonal trust in the first generation to a more sophisticated reliance on the advisor's competencies and trust in the processes of the advisor's firm in subsequent generations. This transformation in the trust relationship is marked by a shift from emotionally charged relationships to more business‐oriented relationships, openness becoming less self‐evident but more calculated, neutrality assuming importance where it was initially absent, and competence being subjected to critical assessment rather than presumed. With this, our study makes a notable contribution to the family firm literature by providing a dynamic perspective on the trust relationship between the family and its external advisors. It also addresses whether family firm decision makers prioritize interpersonal trust in the advisor over trust in competencies or the system, providing valuable insights for practitioners and scholars alike. Overall, this study enriches our understanding of the sustained and evolving nature of trust as a critical resource for competitive advantage in family firms.
... The specific attributes of FBs, therefore, serve as contingency factors, and concerted efforts are required to safeguard their liquidity, ensure financial coverage and foster resilience during volatile times (Miller & Le Breton-Miller, 2005). For a better understanding of the literature review, an index of the most significant articles is included in Table 8. ...
Purpose
The study aspires to enhance comprehension of the intricate interplay between supply chain management (SCM) and resilience in family businesses, thereby offering valuable insights to managers and policymakers endeavouring to foster resilience in uncertain environments.
Design/methodology/approach
Commencing from the premise that family businesses (FBs) prioritize the preservation of socio-emotional wealth (SEW) when formulating strategic decisions, this study endeavours to advance understanding of supply chain practices adopted by FBs and their direct impact on resilience during crisis situations or economically challenging periods. Through an exploratory case study of nine FBs, the present research reveals four pivotal strategies in SCM that contribute to their resilience: (i) reorganization of inventory management; (ii) cultivating close relationships with suppliers; (iii) emphasizing product quality and customer retention; and (iv) implementing cost reduction measures to bolster resilience. The aim of the study is to provide an in-depth understanding of the intricate interplay between SCM and resilience in FBs, thereby offering valuable insights to managers and policymakers endeavouring to foster resilience in uncertain environments.
Findings
Our approach offers a theoretical framework for SCM aligned with prior research on the interplay between characteristics of family businesses and resilience strategies. Furthermore, this paper illustrates how factors such as the emphasis on high-quality products and services by family businesses contribute to achieving non-economic objectives that owners adopt to reconcile family and business needs, creating intrinsic added value for the company. It reveals various challenges in SCM, including inventory organization changes, supplier closures and the significance of customer retention. Family businesses are implementing product and technology enhancements and leveraging digitization to enhance supply chain processes.
Originality/value
This paper contributes significantly to the field of FBs by highlighting the crucial role of SCM in enhancing business resilience during crises. It empirically examines how the SEW characteristics of FBs influence the reconfiguration of their supply chains to enhance resilience, presenting a theoretical model for this context. Our theoretical framework employs an SEW perspective to elucidate how FBs respond to the challenges posed by the COVID-19 pandemic by adapting their SCM processes to safeguard their social and emotional legitimacy, organizational visibility and reputation. These adaptations gain particular relevance during crises or turbulent conditions, potentially leading to alterations in how FBs formulate their supply chain strategies and manage supply chain-related processes.
... On the other hand, whereas nonfamily firms generally select chief executive officers (CEOs) who can maximize financial performance, family firms are likely to nominate a leader who can manage both financial and nonfinancial objectives (Basco & Calabrò, 2017). Moreover, family businesses are known for valuing a sense of community among their employees (Miller & Le Breton-Miller, 2005;Querbach et al., 2022) and this accords well with a transformative leadership style (Arnold, 2017). As women are expected to be highly inclusive in their decision-making and to stimulate employees' creativity, a transformational leadership style might be seen as more consistent with their gender role. ...
... Moreover, the scope of our inquiry is limited. Although we found that many family firms do not appear to embrace stewardship of the natural environment, their pro-social conduct may take other forms such as community involvement and charity, high-quality offerings, and stable employment in times of crisis and politically risky environments (Arregle et al., 2007;Bennedsen et al., 2019;Gomez-Mejia et al., 2023;Miller & Le Breton-Miller, 2005a). Indeed, perhaps there is a trade-off among these different efforts at corporate social responsibility. ...
Plain English Summary
Environmental management practices have been playing an increasingly prominent role in business strategy. However, in facing climate change and global warming, family firms, with their idiosyncratic characteristics, may react in unique ways. We have conducted an international study of 1690 family and nonfamily firms from 2007 to 2014 and found that environmental management practices vary substantially across different types of family firms, which tend to be over-represented among groups with both the poorest and most superior outcomes. We argue that family firm managers and consultants should consider strengthening the environmental pillar of strategy to keep up with competitors and become “green champions.” Moreover, regulators should consider family governance tendencies in establishing more stringent environmental policies and regulations, particularly in low-income countries and problematic concentrated industries. Investors too must pay attention to firm ownership and ownership structure in evaluating environmentally related business opportunities.
... Therefore, firms with high family ownership tend to proactively cultivate T A B L E 8 The heterogeneity test between the second and founding generation. strong ESG performance, as it aligns with the sustainable development values of the majority of shareholders and leads to greater stakeholder recognition (Miller & Le Breton-Miller, 2005). Additionally, high family ownership fosters a corporate culture characterized by loyalty and stability, which subsequently diminishes managers' incentives to engage in opportunistic behavior driven by personal interests. ...
In recent decades, environmental, social, and governance (ESG) factors have received increasing attention in the literature of corporate internationalization. While prior studies have extensively examined how ESG initiatives implemented in the host country enhance corporate international performance, less attention has been paid to the facilitating role of previously accumulated ESG performance in the internationalization process. Drawing on a sample of 2083 unique publicly listed Chinese firms from 2010 to 2019, we explore whether and how ESG performance promotes corporate outward foreign direct investment (OFDI). Our findings indicate a positive association between corporate ESG performance and both the propensity and scale of OFDI. We also identify financial constraints and corporate reputation as two mechanisms through which ESG performance influences OFDI. Our additional analysis suggests that the reputation‐strengthening mechanism of ESG performance is more pronounced for family firms, whereas no significant difference is observed between family and nonfamily firms in terms of the financial mechanism. These findings have important implications for managers and policymakers seeking to promote sustainable development and internationalization.
... The last form of relationship is clientship. The family business literature argues that family businesses are deeply embedded in their community and play a critical role in the community (Miller and Le Breton-Miller, 2005;Miller et al., 2009). Family business scholars have found that this form of community engagement supports the family in enhancing their socioemotional wealth (Cennamo et al., 2012), obtaining economic benefits (Surroca et al., 2010), improving reputation (Arag on-Correa and gaining legitimacy (Cennamo et al., 2009) and community leadership (Fitzgerald et al., 2010). ...
Purpose
Drawing on indigenous theory of Ibn Khaldun, the rise and fall of States, this paper explores the agency of women entrepreneurs in family business in Bahrain and the underlying enablers in supporting and facilitating the exercise of this agency. This study attempts to move beyond the Western-centric studies to reflect and bring to light the unique institutional settings of the Gulf States.
Design/methodology/approach
The research builds on a rich qualitative single case of a family business based in Bahrain. The single case study methodology was motivated by the potential for generating rich contextual insights. Such an approach is particularly valuable to gain a more holistic and deeper understanding of the contextualized phenomenon and its complexity.
Findings
In this study the authors show how women entrepreneurs take two different paths to enter and become involved in the family business, the barriers they are subjected to and the active role they play in dismantling the challenges to the extent that they become the main mediators between the family business and central institutions in society.
Originality/value
By incorporating indigenous theory with Western family business concepts, the study extends existing understanding of women entrepreneurs in family business by underscoring the agency that women entrepreneurs have in “doing context” and the role that women play in strengthening common cause and destiny within the family and the business by building and drawing on different forms of loyalty.
... For example, to preserve the social and emotional capital of their sold company, family CEOs are willing to put the company's economic success at risk to avoid taking intelligent business risks (Gómez-Mejía et al. 2007). Maintaining socio-emotional goals includes retaining control over the operations of the family business, selecting new family leaders, expanding corporate resources and avoiding financial commitment to speculative investment endeavours (Gomez-Mejia et al. 2011;Miller and Le Breton-Miller 2005;Miller et al. 2011;Miller et al. 2013). Consequently, family CEOs with controlling rights are more inclined to reinforce these socio-emotional wealth goals than non-family CEOs without controlling rights who are not concerned about preserving the profits and interests of the owner. ...
In family firms the role of CEO is highly significant with reference to devise strategic decisions and deciding if it is feasible to invest in innovation input. This study aims to investigate the behaviour analyses of the diverse types of CEOs in family firms towards innovations. This study also analyzes the moderating role of managerial ability in the nexus of CEO types and innovation input. The data are obtained from Chinese A-share listed family firms from Accounting Research and China Stock Exchange in 2012–2020 and analysed using ordinary least squares regression. Tobit and probit regressions are also employed to confirm the results. Results indicate that non-family and family CEOs (with no controlling rights) show identical behaviour concerning their lower intentions to promote innovations in R&D projects than family CEOs with actual controlling rights. In addition, family CEOs with actual controlling rights exert a positive effect on R&D, indicating that they are more willing to invest in innovative projects. Moreover, we observe the significant moderating role of managerial ability in the nexus of CEO types and innovation activities. We find that high managerial ability alters the behaviour of different CEOs. With the moderation of managerial ability, non-family and family CEOs (without actual controlling rights) also show willingness to invest in innovative projects and without managerial ability, CEOs’ willingness to make innovations decline. This study is a pioneer work that investigates the impact of diverse types of CEOs to unlock notable insights regarding the R&D investment behaviour of Chinese family firms with moderating role of managerial ability. This study is useful to all parties involved with the company, including employees, clients, suppliers and customers. The results of this study can also assist board members in selecting and recruiting non-family CEOs or keeping family CEOs (with or without actual controlling rights).
... According to Miller and Le Breton-Miller (2005), family enterprises have historically been characterised by centralised leadership structures in which knowledge and authority are centred on a single dominant leader. However, family firms are progressively using more collaborative leadership models (J€ arvel€ a et al., 2020). ...
Purpose
Family businesses have a dual objective of profit making and providing opportunities for family members. This duality leads to a conflict that may bring poor team work and communication, which is difficult to reconcile. Thus, the study looked into how the performance of family enterprises is affected by family dynamics. Additionally, it examines the relationship's ability to be mediated by effective leadership.
Design/methodology/approach
The study adopted a quantitative, explanatory research approach. The study population was family-owned enterprises in KwaZulu-Natal's South Durban Basin, of which 236 were chosen using a snowball and convenience sampling technique. Data was analysed using various descriptive and inferential statistical techniques, namely, multiple regression and the standard deviation.
Findings
The finding of the study shows that family dynamics significantly influenced business performance both directly and indirectly through effective leadership. Besides, the family firms with larger employee sizes have better effective leadership that positively contributes to the business performance.
Research limitations/implications
The study recommends that family businesses should train their members to ensure leadership effectiveness.
Originality/value
This study is unique in that it was conducted in Black Townships and focusses mainly on businesses owned by families of Indian descent that need to prepare for leadership/ownership. It also contributes to academic literature on family dynamics and will encourage families to recognise the importance of strong leadership in controlling family dynamics to improve business success.
... The significant heterogeneity inside family firms and the family owners' interest in safeguarding the control of the company remains one of the main characteristics to differentiate the family business from non-family one (Berrone, Cruz, and Gomez-Mejia 2012;Thiele 2017). Moreover, family firms prefer to be independent financially (Miller and Le Breton-Miller 2005). To maintain the control of the family owners, family firms preserve a significant level of equity ownership (Mullins and Schoar 2016). ...
This study examines how family firms adjust their leverage towards optimal leverage. We use the dynamic system generalized method of moments (GMM) for analysis. The findings reveal that South Asian family firms adjust about 24% towards target leverage using market leverage and about 28% while using book leverage. The findings further suggest that growth opportunities, GDP growth rate, distance, lending rate, term spread, and short-term interest rate increase the speed of adjustment towards the target leverage. On the contrary, profitability and differential between the T-bills rate and the bank rate decrease the speed of adjustment.
... Likewise, in tandem with threshold theory, we use stewardship theory principles to hypothesize founder exit decision-making at high firm performance scenarios. Specifically, we draw from the work of Miller and colleagues (Miller et al., 2008;Miller & Le Breton-Miller, 2005), who have described three principles-continuity, community, and connections-that guide the stewardship behavior of founders who are committed to sustaining the mission and longevity of their firms. We extend the observations made by these scholars in the family business realm (see Bacq & Lumpkin, 2014) to the social entrepreneurship setting owing to the similarities in founder motives such as concerns for mission or firm continuity and collective good. ...
Using three theory-based performance criteria as decision attributes, we conducted a conjoint analysis experiment with 105 social venture founder-CEOs to examine their decisions to exit their firms voluntarily. Multilevel regression analysis of founders’ choices revealed that various exit preferences were chosen that did not support theoretical prescriptions. While achieving desired social impact was the main influence on founder exit choices, the heterogeneity of exit preferences led us to parcel them into four distinct groups: idealists, traditionalists, realists, and pragmatists. We discuss our contributions to the entrepreneurial exit and social entrepreneurship research literature and list the implications of our results for practice.
This chapter contributes to strategic management studies in family firms by focusing on innovation strategies as drivers to guarantee firm survival across generations. Specifically, built on the construct of family business innovation posture and based on the content analysis of 10 small and medium family firm narratives, this chapter identifies the figure of the father as the cornerstone in whom innovation strategies have their origin and their evolution as firm-driven, family-driven, and/or market-driven. The chapter proposes a model that highlights the dimensions of family heterogeneity and provides new insights into the relationship between the role of the father figure and three drivers related to family business innovation: product and production quality, past knowledge, and risk-taking propensity.
Purpose
This paper aims to examine the relationships between how family owners perceive different aspects of proximity to their territory of origin and the location-related decisions of family business portfolios.
Design/methodology/approach
By using the data collected from 112 family business portfolios (FBP), the authors carry out an empirical analysis to test the proposed hypotheses. The results are robust across a battery of robustness analyses performed by the authors.
Findings
The analysis reveals a heterogeneous relationship between the different dimensions of proximity and the maintenance and location of portfolio business units. Specifically, we reveal that entrepreneurial families’ social and institutional proximities to their founding territory have a positive influence on their decisions related to investing and maintaining their business portfolio.
Originality/value
These findings open the black box of how business decisions are affected by how business owners perceive their contexts, providing new insights into how corporate decisions in understudied business organisations, business groups, are shaped by the ownership’s proximity to territories.
Krisen sind besonders herausfordernde Ereignisse, die mitunter die Existenz von Familienunternehmen gefährden. In der vorliegenden explorativen, qualitativen Studie wird untersucht, ob ein Zusammenhang zwischen Nachhaltigkeit und Resilienz in Familienunternehmen besteht, wie dieser ausgestaltet ist und inwieweit dieser durch die Besonderheiten von Familienunternehmen beeinflusst wird. Der Zusammenhang zwischen Nachhaltigkeit und Resilienz wird anhand der Interdependenz zwischen der langfristigen Orientierung, der Produkte, der Stakeholder-Beziehungen und der Flexibilität der untersuchten Familienunternehmen aufgezeigt. So werden durch die langfristige Ausrichtung der Familienunternehmen Investitionen in nachhaltige Produkte getätigt. Durch deren Verkauf fließen finanzielle Mittel zu, welche durch Thesaurierung für die Bewältigung zukünftiger Herausforderungen bereitgestellt werden und so die Resilienz fördern. Ferner wird anhand des „Socioemotional Wealth“ (SEW) dargelegt, dass unterschiedliche Aspekte die Nachhaltigkeit und Resilienz beeinflussen – so erhöhen bspw. die vertrauensvollen Stakeholder-Beziehungen die Mitarbeiterbindung und -akquise, wirken sich positiv auf die Vermeidung von Lieferengpässen aus und sichern Umsät-ze von loyalen Stammkunden während Krisenzeiten. Des Weiteren verdeutlichen die Ergebnisse, dass Nachhaltigkeit in Familienunternehmen als Treiber der Resilienz dient und zur Bewältigung von externen Krisen beitragen kann.
This paper aims to demonstrate the relevance of customer relationship research in the context of family businesses, to structure existing literature, and to identify promising areas for further research. By conducting a scoping review of relevant peer-reviewed journal articles published from 2005 to 2021 and adhering to the Prisma protocol for enhanced transparency and quality, this paper underscores the pivotal role of customer relationship management in the success of family businesses, emphasizing a tendency towards conservative and traditional approaches. The owner-manager involvement, especially in the BtoB segment, is recognized as a distinct advantage, urging an exploration of specific strategies for managing customer relationships in both B to C and B to B sectors. Also, social capital is deemed crucial, extending its significance beyond customers to suppliers and employees, focusing on the influence of generational transitions on stakeholder relations. The imperative for deliberate relationship strategies during successions is emphasized. Moreover, the significance of customer orientation for success, impacting satisfaction, loyalty, and overall performance, highlights the necessity for empirical studies to gain nuanced insights. Additionally, consumer behavior towards family businesses, shaped by the communication of familial identity, underscores the need for further research on diverse communication approaches. Lastly, acknowledging the positive impact of corporate social responsibility practices on loyalty and reputation in family businesses underscores the call for context-specific investigations, taking into account corporate social responsibility reporting regulations across countries.
Purpose – Based on the resource orchestration perspective, this paper aims to examine whether family firms are more efficient in their collaboration for innovation process than non-family firms, considering different types of collaboration for innovation depending on the kind of partner.
Methodology – This study empirically develops and tests the hypotheses based on a panel data sample of 14,937 firm-year observations from 1,867 Spanish manufacturing firms over the period 2007-2014, performing a Propensity Score Matching (PSM)-based analysis.
Findings – Results reveal that family firms outperform non-family firms, despite less collaboration and innovation inputs, thereby extending the ongoing debate surrounding the innovation efficiency of family firms. Family firms obtained better results through vertical collaborations for innovation, both in terms of product and process innovations. For horizontal collaborations, family firms only outperform their non-family counterparts in process innovation. When collaborating with universities and other research centres, there are no significant differences in the innovation outcomes between the two groups.
Originality – Recent literature points out that more research is needed to know when, how and under what circumstances family firms show superior innovative efficiency. This work empirically proves that family firms outperform non-family firms in collaboration for innovation. However, not all collaboration partners help family firms to reach this superior innovative efficiency. Family firms obtained better results just through vertical and horizontal collaborations.
This paper aims to demonstrate the relevance of customer relationship research in the context of family businesses, to structure existing literature, and to identify promising areas for further research. By conducting a scoping review of relevant peer-reviewed journal articles published from 2005 to 2021 and adhering to the Prisma protocol for enhanced transparency and quality, this paper underscores the pivotal role of customer relationship management in the success of family businesses, emphasizing a tendency towards conservative and traditional approaches. The owner-manager involvement, especially in the BtoB segment, is recognized as a distinct advantage, urging an exploration of specific strategies for managing customer relationships in both B to C and B to B sectors. Also, social capital is deemed crucial, extending its significance beyond customers to suppliers and employees, focusing on the influence of generational transitions on stakeholder relations. The imperative for deliberate relationship strategies during successions is emphasized. Moreover, the significance of customer orientation for success, impacting satisfaction, loyalty, and overall performance, highlights the necessity for empirical studies to gain nuanced insights. Additionally, consumer behavior towards family businesses, shaped by the communication of familial identity, underscores the need for further research on diverse communication approaches. Lastly, acknowledging the positive impact of corporate social responsibility practices on loyalty and reputation in family businesses underscores the call for context-specific investigations, taking into account corporate social responsibility reporting regulations across countries.
RESUME L´objectif de cette recherche est de déterminer les styles parentaux qui ont existé entre le prédécesseur et le successeur et de vérifier s´ils favorisent la pérennité ou la faillite de ces entreprises au Cameroun. Pour y parvenir, une méthodologie qualitative casuistique a été adoptée. A partir de la base de données du Groupement Interpatronal du Cameroun (GICAM) et de nos contacts personnels, 7 entreprises familiales ayant vécu un transfert intergénérationnel ont été sélectionnées par convenance. Les résultats de l´analyse de contenu des 13 entretiens semi-directifs réalisés montrent l´existence de quatre types de relations entre prédécesseurs et successeurs dans les entreprises familiales étudiées: il s´agit des relations d´interdépendance, de confiance ou d´intimité, des relations de dépendance, des relations d´indépendance et des relations d´hypocrisie. Il en ressort que les entreprises dans lesquelles le prédécesseur entretenait des relations d´interdépendance ou de confiance et d´intimité avec son successeur sont plus aptes à assurer leur continuité que les autres. De plus, on observe que la principale cause du désengagement de la plupart des prédécesseurs reste leur décès et lorsque le successeur a longtemps travaillé avec le prédécesseur, la pérennité de l´entreprise est mieux assurée. ABSTRACT The objective of this research is to determine the type of parental style that has characterized the relationship between predecessors and successors and their effect on the sustainability of family businesses. To meet this objective, a multiple case study strategy has been adopted. Based on the database of "Groupement Interpatronal du Cameroun" (GICAM) and our personal network, 7 family businesses in which intergenerational transfer has already taken place have been selected. The contents´ analysis from 13 semi-directive interviews reveals the existence of four types of relationships: the interdependent relationship, the dependent relationship, the independent relationship and the hypocrite relationship. Also, it was noted that most withdrawals of predecessors from their company were caused by their death and when successors have worked with the predecessor for long, the survival of the family business is more guaranteed.
Family businesses, owing to their unique blend of family dynamics and business operations, often face distinctive hurdles that can significantly impact their sustainability and growth. This qualitative study delves into the multifaceted challenges that confront family business leaders, as seen through the eyes of family business owners, which is a missing aspect in the extant literature database. Through in-depth interviews and thematic analysis, this study aims to shed light on the key challenges family business leaders encounter. The findings of the study reveal that the family business leaders have challenges related to the succession planning, financial management, conflict resolution, communication breakdown, governance, HRM, and the evolving business environment in the day-to-day business operation. These findings further echoed the need for a personalized approach and support systems to face the challenges and to be successful in the long run. These results not only contribute to the existing literature related to the management of family business, but also provide a very practical use to the practitioners in increasing the strength of both the family and business while operating within the context with such complexity.
This paper aims to empirically examine the moderating role of the social disclosure aspect in determining the performance-based CEO pay. Further, we have also tested whether women directors on board and academic qualification of CEOs reinforce the effect of social scores while ascertaining the pay–performance relationship. Taking 67 companies listed in NSE Nifty 100 ESG Index spanning six years from 2014 to 2019, the PCSE model is applied as a baseline methodology. Our findings are also robust to results obtained in propensity score matching and two-step system GMM model methods. The results indicate that although overall ESG disclosures are consistently significant, the social disclosure scores can affect the compensation paid to the CEOs only in the case of gender-diverse boards. The pay– performance relationship remains unaffected by CEO’s academic degree, but is significant to the ownership structure and certain social-oriented policies employed by the firm.
Purpose
The study explores the relationship between the breadth of external pressures facing leaders of small and medium-sized enterprises (SMEs) and the entrepreneurial stance they adopt for their firm, that is, entrepreneurial orientation (EO).
Design/methodology/approach
Blending attention theory with EO literature, we argue that increasing breadth of external pressures will challenge leaders' attentions with implications for how they seek innovation, risk-taking and bold acts. We highlight an inflection point after which a negative relationship between the breadth of external pressure and EO will turn positive. We use data from a survey of 125 small-sized wineries in France to test this and capture a range of 15 external pressures on entrepreneurs.
Findings
The main tests and additional robustness tests provide support. It is the breadth of external pressures – as opposed to intensity of any one specific form of pressure – that plays a fundamental role in shaping leaders' adoption of EO in small enterprises over and above internal characteristics.
Research limitations/implications
While the results may be context-dependent, they provide support for an attention-based view of entrepreneurial responses by leaders of SMEs under pressure.
Practical implications
SME leaders and entrepreneurs should be aware of how their attention is challenged by breadth of pressures from external sources, as this can influence the EO they adopt for their SME.
Originality/value
This nonlinear perspective on external pressures influencing the EO of small firms has not been taken in the EO literature to date, despite some recent work that considers only a small range of external pressures.
In this paper, we study the relationship between family ownership and corporate alliance intensity. Theoretically, we propose that the tendency of family firms to pursue socioemotional wealth objectives exacerbates the level of information asymmetry they display vis‐à‐vis other firms, reducing their attractiveness as alliance partners. Based on a panel of US firms, we find that family firms join fewer alliances than non‐family firms. In line with our arguments, we also find that analyst and media coverage, and the presence of dedicated institutional investors mitigate the negative relationship between family ownership and alliance intensity. By highlighting the role of family ownership in alliances, we provide new insights into the debate on the ability of family firms to develop. Moreover, we contribute to research on the antecedents of alliances by introducing the role of owners’ attributes and identifying a set of mechanisms that mitigate the informational hazards that family firms present to prospective partners.
Purpose
While the relationship between non-family CEOs and corporate innovation in China has been widely studied, the results remain inconclusive. This study explores the relationship between non-family CEOs and corporate innovation in the context of intergenerational succession. It considers the background and background characteristics of non-family CEOs in an attempt to provide a theoretical foundation for human resource management and innovative strategic management that can be applied in the transformation of family companies.
Design/methodology/approach
The authors develop, then test, a series of hypotheses using an econometric analysis of a large sample of Chinese listed family firms. To control for endogeneity problems, such as missing variables in the model and the selectivity bias of the sample, propensity score matching (PSM) model is applied to analyze the panel data of 452 listed family firms from 2009–2019.
Findings
This study first validates the mechanism by which non-family CEO background characteristics affect innovation performance in family firms. It then reveals the varying moderating effects of two stages of intergenerational succession (i.e. later-generation participation in management and later-generation take-over management) that influence the relationship between non-family CEOs and corporate innovation.
Originality/value
The study's findings based on upper echelon and imprinting theory complement and extend existing research by revealing the impact of non-family CEOs from different backgrounds, and also identifying the role of intergenerational succession in the relationship between non-family CEO background characteristics and innovation performance.
Purpose
The aim of this paper is to analyse the role of communities of practice (CoP) as knowledge-sharing tools in family small and medium-sized enterprises (SMEs). In this context, CoPs that jointly involve family and non-family members are expected to act as knowledge-sharing tools.
Design/methodology/approach
This paper employs a multiple case study methodology, analysing the cases of six small companies in different sectors and countries over a period of 8 years. Both primary and secondary data are used.
Findings
The results show the role CoPs play in involving family and non-family members in empowering knowledge-sharing initiatives. A CoP's role in knowledge sharing depends on the presence (or lack) of a family leader, the leadership approach, the degree of cohesion around shared approaches and values within the CoP, and the presence of multiple generations at work.
Originality/value
This paper contributes to the literature on knowledge sharing in family businesses, by exploring for the first time the role of the CoP as a knowledge-sharing tool, depending on families' involvement in the CoP.
Using proxy data on all Fortune-500 firms during 1994–2000, we find that family ownership creates value only when the founder serves as CEO of the family firm or as Chairman with a hired CEO. Dual share classes, pyramids, and voting agreements reduce the founder's premium. When descendants serve as CEOs, firm value is destroyed. Our findings suggest that the classic owner-manager conflict in nonfamily firms is more costly than the conflict between family and nonfamily shareholders in founder-CEO firms. However, the conflict between family and nonfamily shareholders in descendant-CEO firms is more costly than the owner-manager conflict in nonfamily firms.
We examine the mechanisms used to limit expropriation of firm wealth by large shareholders among S&P 500 firms with founding-family ownership. Consistent with agency theory, we find that the most valuable public firms are those in which independent directors balance family board representation. In contrast, in firms with continued founding-family ownership and relatively few independent directors, firm performance is significantly worse than in non-family firms. We also find that a moderate family board presence provides substantial benefits to the firm. Additional tests suggest that families often seek to minimize the presence of independent directors, while outside shareholders seek independent director representation. These findings highlight the importance of independent directors in mitigating conflicts between shareholder groups and imply that the interests of minority investors are best protected when, through independent directors, they have power relative to family shareholders. We argue that expanding the discussion beyond manager-shareholder conflicts to include conflicts between shareholder groups provides a richer setting in which to explore corporate governance and the balance of power in U.S. firms.
Does owner management necessarily eliminate the agency costs of ownership? Drawing on agency literature and on the economic theory of the household, we argue that private ownership and owner management expose privately held, owner-managed firms to agency threats ignored by Jensen's and Meckling's (1976) agency model. Private ownership and owner management not only reduce the effectiveness of external control mechanisms, they also expose firms to a "self-control" problem created by incentives that cause owners to take actions which "harm themselves as well as those around them" (Jensen 1994, p. 43). Thus, shareholders have incentive to invest resources in curbing both managerialand owner opportunism. We extend this thesis to the domain of the family firm. After developing hypotheses which describe how family dynamics and, specifically, altruism, exacerbate agency problems experienced by these privately held, owner-managed firms, we use data obtained from a large-scale survey of family businesses to field test our hypotheses and find evidence which suggests support for our proposed theory. Finally, we discuss the implications of our theory for research on family and other types of privately held, owner-managed firms.
This paper analyzes data on 461 large U.S. industrial corporations to determine the factors that led large firms to participate in the wave of diversifying acquisitions that peaked in the late 1960s. We elaborate and test a class theory of corporate acquisitions, maintaining that firms pursued acquisitions in this period when they were commanded by well-networked challengers who were central in elite social networks but relatively marginal with respect to social status, isolated from the resistance of established elites, and free from control of owning families. We also consider a wide range of factors highlighted by alternative accounts of acquisition likelihood, including resource dependence, institutional pressures, and principal-agent conflicts. The results provide support for our main theoretical arguments, even when controls related to alternative explanations are taken into account.
This research focuses on creating a theory of the "organizational advantage," a new concept identified within business and management. Using social capital research as a foundation for this theory, three of the study's objectives are identified: 1) incorporate different aspects of social capital to identify three common dimensions; 2) explain the role of each dimension in the process of creating and exchanging knowledge; and 3) maintain the belief that organizations are capable of creating extraordinary amounts of social capital on all three dimensions. Additionally, the relationship between social capital and intellectual capital is explored, as is the impact of this relationship upon a firm's perceived organizational advantage. In order for exchange and combination of resources to occur as a means of creating value, the research identifies three necessary conditions, including the opportunity for exchange and combination to occur, the expectation that exchange and combination generates value, and the motivation that exchange and combination in some way will be productive. This research further identifies a fourth condition, combination capability, as a significant factor in value creation. Due to social capital's influence upon the conditions needed for exchange and combination, social capital aids in the creation of intellectual capital. The research further hypothesizes that a firm's ability to create and utilize social capital contributes to performance differences among firms. Several limitations are identified, including omission of the negative impact of social capital upon a firm and the costs associated with creating and preserving a firm's social capital. The findings of the study are generalized to other institutional situations, and areas for future research are identified. (AKP)
Recent research indicates that founding families have substantial stakes in roughly one-third of the largest U.S. companies and, in these firms, control nearly twenty percent of all board seats. Burkart, Panunzi, and Shleifer (2003) suggest that a key element in the desirability of family ownership is the ability to limit the family's expropriation of minority shareholders. Consistent with this notion, we find that the most valuable public firms are those in which independent directors balance family board representation. In contrast, in firms with continued founding family ownership and relatively few independent directors, firm performance is significantly worse than in non-family firms. We also document that moderate family board presence provides substantial benefits to the firm. Additional tests suggest that families often seek to minimize the presence of independent directors, while outside shareholders seek independent director representation. These findings highlight the importance of independent directors in mitigating shareholder-shareholder conflicts and suggest that considering shareholder-shareholder conflicts provides a richer setting in which to explore corporate governance. Note: A list of the firms classified as family and non-family firms is available from the authors.
We investigate the relation between founding-family ownership and firm performance. We find that family ownership is both prevalent and substantial; families are present in one-third of the S&P 500 and account for 18 percent of outstanding equity. Contrary to our conjecture, we find family firms perform better than nonfamily firms. Additional analysis reveals that the relation between family holdings and firm performance is nonlinear and that when family members serve as CEO, performance is better than with outside CEOs. Overall, our results are "inconsistent" with the hypothesis that minority shareholders are adversely affected by family ownership, suggesting that family ownership is an effective organizational structure. Copyright 2003 by the American Finance Association.
This article disentangles the incentive and entrenchment effects of large ownership. Using data for 1,301 publicly traded corporations in eight East Asian economies, we find that firm value increases with the cash-flow ownership of the largest shareholder, consistent with a positive incentive effect. But firm value falls when the control rights of the largest shareholder exceed its cash-flow ownership, consistent with an entrenchment effect. Given that concentrated corporate ownership is predominant in most countries, these findings have relevance for corporate governance across the world. Copyright The American Finance Association 2002.
Scholars of the theory of the firm have begun to emphasize the sources and conditions of what has been described as “the organizational advantage,” rather than focus on the causes and consequences of market failure. Typically, researchers see such organizational advantage as accruing from the particular capabilities organizations have for creating and sharing knowledge. In this article we seek to contribute to this body of work by developing the following arguments: (1) social capital facilitates the creation of new intellectual capital; (2) organizations, as institutional settings, are conducive to the development of high levels of social capital; and (3) it is because of their more dense social capital that firms, within certain limits, have an advantage over markets in creating and sharing intellectual capital. We present a model that incorporates this overall argument in the form of a series of hypothesized relationships between different dimensions of social capital and the main mechanisms and processes necessary for the creation of intellectual capital.
This paper reports the results of a study of total quality management (TQM) adoption practices in family-owned manufacturing firms. Family-owned firms were found more often than other firms to be total “non adopters” of TQM. The study clearly demonstrates that highest family owned firm performance levels are associated with a more holistic and complete TQM adoption pattern.
Drawing on data based on the entire population of Spanish newspapers over 27 years (1966-93), this study shows that firm performance and business risk are much stronger predictors of chief executive tenure when a firm's owners and its executive have family ties and that the organizational consequences of CEO dismissal are more favorable when the replaced CEO is a member of the family owning the firm. The study also demonstrates that executives operating under weakly relational (less ambiguous) contracts are held more accountable for firm performance and business risk outcomes, even under nonfamily contracting.
We claim that there is a link between corporate control structure and managers’ strategy towards unrelated mergers and risk diversification. Companies with greater ownership concentration are less diversified. Evidence also shows that corporate diversification generally results in value loss while focussing is value increasing. This highlights the potentially detrimental effect of agency problems on corporate strategy. Copyright © 1999 John Wiley & Sons, Ltd.
Greater managerial ownership in family firms need not mitigate agency problems, especially when each family controls a group of publicly traded and private firms, as is the case in most countries. Such structures give rise to their own set of agency problems, as managers act for the controlling family, but not for shareholders in general. For example, to avoid what we call “creative self-destruction,” a family might quash innovation in one firm to protect its obsolete investment in another. At present, we do not know whether these agency problems are more or less serious impediments to general prosperity than those afflicting widely held firms.
Family firms play an important role in today's global economy. However, limited empirical research has identified factors that spur these firms' internationalization. Highlighting the altruism that pervades family firms, this exploratory study examines the individual and interactive effects of family ownership and involvement on subsequent internationalization of a firm's operations. Results from the analyses of 409 U.S. manufacturing firms show that family ownership and involvement in the firm as well as the interaction of this ownership with family involvement are significantly and positively associated with internationalization. The implications of the findings for research and managerial practice are discussed.
Surprisingly, the majority of U.S. family firms offer employed family members short- and long-term performance-based incentive pay. We draw on the household economics and altruism literatures to explain why family firms might feel compelled to do so and develop theory that predicts when this practice will be beneficial. Results based on data obtained from 883 family firms show that altruism, as reflected by the parents' estate and share transfer intentions, moderates the effect of these pay incentives as our theory predicts. As such, this article helps explain both how altruism influences agency relationships in family firms and why business practice in family firms differs from those found in other types of firms.
Diversity has become an important issue at all levels of the company from the boardroom to the back office. It is increasingly apparent that diversity is vital to productivity, with academic research indicating an important link between diverse top management team (TMT) composition and corporate performance. However, the nature of this link remains elusive, as there is little accessible research that can help top teams to evaluate how diversity impacts on their strategic capacity. This paper seeks to fill this gap by developing a conceptual framework, illustrated with case examples, to explain the relationships between TMT diversity and TMT collective action. As collective action is difficult to attain from top teams that are high in diversity, six practical processes are developed from this framework for establishing and exploiting top team strategic capacity. The paper concludes by outlining the theoretical implications of the framework.It is the range of skills and attributes acquired through a diversity of experiences and backgrounds that combine to create a cohesive and effective board.1
Managing for the Long Run
- D Miller
- I Le Breton-Miller
D. Miller and I. Le Breton-Miller, Managing for the Long Run, Harvard Business School Press, Boston
(2005).
Board composition: Balancing Family Influence in S&P 500 firms Disentangling the incentive and entrenchment effects of large shareholdings Agency relationships in family firms: Theory and evidence
- R C Anderson
- D A Reeb
- S Chandler
- S Claessens
- J Djankov
- L Fan
- Lang
R. C. Anderson and D. Reeb, Board composition: Balancing Family Influence in S&P 500 firms, Administrative Science Quarterly 49, 209e237 (2004); A. Chandler, (op. cit.); S. Claessens, S. Djankov, J. Fan and
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family firms: Theory and evidence, Organization Science 12, 99e116 (2001); W. S. Schulze, M. Lubatkin and
R. Dino, Toward a theory of agency and altruism in family business, Journal of Business Venturing 18,
473e490 (2003).
TQM adoption practices in the family owned business Does corporate ownership structure affect corporate diversification Ownership involvement and international expansion: An empirical test of the stewardship theory among family firms
- A Chandler
- E Ellington
- Deane Amihud
- B S A Lev
- Zahra
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practices in the family owned business, Family Business Review 9, 5e14 (1996); Y. Amihud and B. Lev,
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1063e1069 (1999); S. A. Zahra, Ownership involvement and international expansion: An empirical test
of the stewardship theory among family firms, Journal of Business Venturing 18(4), 495e512 (2003).
Founding family ownership and firm performance: Evidence from the S&P 500 Villalonga and R. Amit, How do family ownership, management and control affect firm value, Working Paper, Department of Finance
- R C Anderson
- D Reeb
R. C. Anderson and D. Reeb, Founding family ownership and firm performance: Evidence from the S&P
500, Journal of Finance 58, 1301e1328 (2003); B. Villalonga and R. Amit, How do family ownership,
management and control affect firm value, Working Paper, Department of Finance, Harvard Business
School (2004); Joseph Weber, et al., Family Inc., Business Week (November 10, 2003).
An Introduction to Cybernetics The Social Psychology of Organizing
- K Weick
See also the discussion of requisite variety by W. R. Ashby, An Introduction to Cybernetics, Chapman & Hall
(1956); and K. Weick, The Social Psychology of Organizing, Addison-Wesley, p189.
Agency problems in large family business groups The role of family ties in agency contracts Palmer and B. Barber, Challengers, elites and owning families: A social class theory of corporate acquisitions
- R Morck
- B Yeung
- L Gomez-Mejia
- M Nunez-Nickel
- I Gutierrez
R. Morck and B. Yeung, Agency problems in large family business groups, Entrepreneurship Theory and
Practice, (in press); L. Gomez-Mejia, M. Nunez-Nickel and I. Gutierrez, The role of family ties in agency
contracts, Academy of Management Journal 44, 81e95 (2001); D. Palmer and B. Barber, Challengers, elites
and owning families: A social class theory of corporate acquisitions, Administrative Science Quarterly 46,
87e120 (2001).
- Joseph Weber
Joseph Weber, et al., Family Inc., Business Week (November 10, 2003).
The Trust, Little Brown
- S Tifft
- A Jones
S. Tifft and A. Jones, The Trust, Little Brown, Boston, (1999) p779.
His areas of research interest are strategy, organisation design and change and family business. He has published more than 120 articles in journals such as Management Science He has published six books, most recently Managing for the Long Run with
Danny Miller is currently Research Professor of Strategic Management at HEC Montreal and Chair in Strategy and
Family Enterprise at the University of Alberta. His areas of research interest are strategy, organisation design and
change and family business. He has published more than 120 articles in journals such as Management Science,
Strategic Management Journal, Academy of Management Journal, Academy of Management Review, Administrative
Science Quarterly and Quarterly Journal of Economics. He has published six books, most recently Managing for the
Long Run with Isabelle Le Breton-Miller, Harvard Business School Press (2005). Danny.Miller@hec.ca.
How do family ownership, management and control affect firm value, Working Paper, Department of Finance
- B Villalonga
- R Amit
B. Villalonga and R. Amit, How do family ownership,
management and control affect firm value, Working Paper, Department of Finance, Harvard Business
School (2004);
- E Ellington
- R Deane
E. Ellington and R. Deane, TQM adoption
practices in the family owned business, Family Business Review 9, 5e14 (1996);
See also the discussion of requisite variety by W. R. Ashby, An Introduction to Cybernetics
- K Weick
See also the discussion of requisite variety by W. R. Ashby, An Introduction to Cybernetics, Chapman & Hall
(1956); and K. Weick, The Social Psychology of Organizing, Addison-Wesley, p189.
He has published six books, most recently Managing for the Long Run with Isabelle Le Breton-Miller
Danny Miller is currently Research Professor of Strategic Management at HEC Montreal and Chair in Strategy and
Family Enterprise at the University of Alberta. His areas of research interest are strategy, organisation design and
change and family business. He has published more than 120 articles in journals such as Management Science,
Strategic Management Journal, Academy of Management Journal, Academy of Management Review, Administrative
Science Quarterly and Quarterly Journal of Economics. He has published six books, most recently Managing for the
Long Run with Isabelle Le Breton-Miller, Harvard Business School Press (2005). Danny.Miller@hec.ca.
Social capital, intellectual capital and the organizational advantage
- Naphiet
Ownership involvement and international expansion: An empirical test of the stewardship theory among family firms
- Zahra