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Long‐Term Orientation and Intertemporal Choice in Family Firms
Abstract
A long‐term orientation (LTO) is often associated with family firms, but the LTO construct is underdeveloped. This paper sets forth a framework for studying LTO in family firms including developing three dimensions — futurity, continuity, and perseverance. It identifies LTO as a higher‐order heuristic that, in matters of intertemporal choice, provides a dominant logic for decisions and actions. Intertemporal choice refers to decisions with payoffs or outcomes that play out over time. Three mechanisms affecting intertemporal choices are identified — representation, self‐control, and anticipation. LTO and intertemporal choice are further examined and discussed in the context of family firms.
... Intergenerational transfer is associated with long-term planning with consideration of the coincidence of the previous and future generations involvement in the family business [44,45]. The literature shows that companies acting in accordance with social, environmental, and economic goals can create long-term value [46,47]. The basic conclusion is that family businesses are guided by a long-term plan [48] and deploy strategies that are designed to guarantee successful longevity. ...
... Sustainability is particularly important for family firms due to their propensity to pass the business on to the next generation [41,46,47] and the long-term business-related orientation of the firm [45,49].The literature indicates that other researchers tend to focus on issues related to the environment in the broadest sense [50,51]. Domanska [49] shows that this aspect is related to both environmentally oriented entrepreneurship and "green competence" [52]. ...
... The literature shows that companies operating according to the TBL goals incorporate values into their long-term plans [48]. Family businesses are motivated by a long-term plan [46] which implies the propensity to adopt strategies that can guarantee longevity and intentionally develop long-term investments. Broccardo et al. [64] reveal the difficulties of identifying the characteristics of family businesses that determine their commitment to sustainability due to the different study methods and the heterogeneity of samples. ...
Background: Previous research on sustainability has shown that several growing problems—environmental ones related to the uneven implementation of climate protection requirements worldwide; economic ones related to the instability of markets; and finally social ones perceived through the uneven distribution of wealth in different parts of the world (globally) and regions related to political and economic instability—particularly affect family firms because of their need for intergenerational continuity. Methods: The aim of our study is to enrich research by defining the factors that determine the maturity level of family firms in terms of sustainability. Given the scarcity of a general sustainability maturity model for family firms, we propose a model that allows for the comprehensive assessment of a family firm’s sustainability maturity. Results: This study examined the sustainability maturity of family firms and identified its determinants in this sector. The results show that family firms often reach the first level of sustainability maturity, but the highest level remains unattainable for them. The determining factor for a high level of sustainability maturity is the number of employees, while the main inhibiting factor is market experience. The overall conclusion leads us to believe that a high level of sustainability maturity can be achieved by a family-owned company with a manufacturing profile, a large payroll, and 30 years of operational experience. Conclusions: The overall findings lead us to conclude that a high level of sustainability maturity can be achieved by a family-owned company with a manufacturing profile, a large payroll, and 30 years of operational experience in the global market, where long-term decisions are made by experts.
... Family firms are pivotal to economies globally, intertwining the complexity of family dynamics with the rigors of business management (Burkart, Panunzi, and Shleifer 2003;Miroshnychenko et al. 2021). These enterprises often exhibit a long-term orientation with a longer time horizon compared to non-family firms (Diaz-Moriana et al. 2020;Lumpkin and Brigham 2011). Consequently, family firms are often characterized as more inclined to prioritize long-term objectives and strategies over solely focusing on short-term gains in comparison to non-family firms (Hernández-Perlines, Covin, and Ribeiro-Soriano 2021;Le Breton-Miller and Miller 2006;Sirmon and Hitt 2003;Wilson, Wright, and Scholes 2013). ...
... By doing that, we provide empirical evidence to justify and support the trade-offs highlighted in the literature, as we found that family firms tend to have more long-term investments and less short-term investments in comparison to non-family firms. Understanding temporal preferences in family family system (Lambrecht and Lievens 2008), and sustaining the family's legacy (Hammond, Pearson, and Holt 2016) that span from the past through the present and into the future (Lumpkin and Brigham 2011). ...
... Additionally, our theoretical approach contrasts with the LTO view (e.g. Lumpkin and Brigham 2011), which suggests that timesensitive decisions are shaped by temporal reference points encompassing the past, present, and future (Mosakowski and Early 2000). By contrast, our theory is less constrained by a focus on past and future temporal frames. ...
Investment time horizons (i.e. long-term and short term) remain under researched within the context of family versus non-family firms. This phenomenon also requires taking a closer look at the governance heterogeneity among family firms as it can lead to differences among family firms in terms of the temporal nature of the investments. Drawing upon a goal-based theoretical framework, we hypothesize that family firms are more likely to engage in long-term investments; and simultaneously , less likely to engage in short-term investments compared to non-family firms. We also hypothesize that the idiosyncratic investment time horizon in family business is primarily captured by de novo or “born as” family businesses, rather than family firms privatized and transformed from state-owned firms. A longitudinal analysis of 34,079 firm-year observations from 4,101 listed firms between 2007 and 2020 yields interesting findings with significant theoretical and practical implications.
... It has long been recognized that intertemporal choices between long-term and short-term alternatives are crucial to firm decision-making (Flammer & Bansal, 2017;Loewenstein & Thaler, 1989;Lumpkin & Brigham, 2011). Laverty (1996) suggested that a key factor for the success of all firms is to achieve a proper balance between long-term and short-term decisions, which Le Breton- Miller and Miller (2011) referred to as multitemporality. ...
... In the field of family business (FB), long-term orientation (LTO) as a temporal concept has garnered extensive attention in recent years (Gentry et al., 2016;Lumpkin & Brigham, 2011). Since an LTO tends to increase a firm's investment in innovation and foster strong relationships with stakeholders (Flammer & Bansal, 2017), most scholars believe an LTO will help family firms build competitive advantages and achieve economic and noneconomic goals (c.f., Chua et al., 1999;Hoffmann et al., 2016;Miller & Le Breton-Miller, 2005;Milton, 2008). ...
... Although both FBs and nonfamily businesses (NFBs) can have LTOs, significant distinctions emerge because of the ability and willingness of family firms to use their control over the firm to pursue idiosyncratic goals and strategies (De Massis et al., 2014). Currently, the belief reflected in the FB literature is that altruism toward future generations of family members and the intention to sustain the dominant coalition's vision for the firm across multiple generations of the family are among the primary motives for LTO among family firms (Chua et al., 1999;Lumpkin & Brigham, 2011). On the other hand, NFBs are likely to demonstrate a high level of LTO if they have economic motives related to the nature of their industry or executive compensation (Flammer & Bansal, 2017). ...
Long-term orientation has been proposed as one of the differences between family and nonfamily firms. Family business scholars base this difference theoretically on the incumbent generation’s altruism for the next generation and the intention for intrafamily succession. We point out that the applicable boundaries for these two theoretical bases are limited. We also point out misconceptions regarding what these two theoretical bases imply about the long-term oriented behavior of family businesses and discuss implications for empirical research and theory development.
... Time orientation significantly influences reasoning and decision-making (Lumpkin & Brigham, 2011;Nadkarni & Herrmann, 2010). CEOs with a long-term time orientation are more likely to be paid proportionally more for their performance because of their lower risk aversion (Graham et al., 2013). ...
... This applies too to their time orientation (Bluedorn & Martin, 2008;Nadkarni & Herrmann, 2010;Souitaris & Maestro, 2010). A CEO with a long-term orientation just naturally makes decisions in the context of an extended time horizon (Lumpkin & Brigham, 2011). He or she will, for example, emphasize establishing long-term stakeholder relationships and emphasize long-term effectiveness over current benefits (Bearden et al., 2006). ...
... He or she will, for example, emphasize establishing long-term stakeholder relationships and emphasize long-term effectiveness over current benefits (Bearden et al., 2006). Conducting CSR is one way firms engage with their stakeholders, but reputationbuilding in CSR is a long-term process (Dyer & Whetten, 2006;Lumpkin & Brigham, 2011;Sirmon & Hitt, 2003). That makes investing in building a reputation for responsibility more attractive to a CEO with a long-term orientation. ...
The relationship between a chief executive officer’s childhood experience of family decline and his or her firm’s social responsibility rating was explored using data on more than 1000 Chinese listed firms. Such childhood experience is shown to predict better CSR ratings. This may be because adversity in childhood shifts the cognitive map through accommodation process, and further fosters cognitive processing ability and a long-term orientation. Career variety and education level are shown to moderate the imprinting effect by altering its strength. Career variety weakens the relationship whereas education level strengthens it.
... Luger et al. (2018) argue that long-term perspectives are essential for dynamic ambidextrous strategies. Family firms' tendency to focus on succession and other long-term non-financial socioemotional goals can be advantageous in handling long-term strategies (Lumpkin & Brigham, 2011;Su & Daspit, 2022). Compared to firms with a shorter time horizon, firms with long-term orientations tend to be more motivated to build slack resources and establish long-term network relationships that can be used for exploratory initiatives (Lumpkin & Brigham, 2011;Miller et al., 2016). ...
... Family firms' tendency to focus on succession and other long-term non-financial socioemotional goals can be advantageous in handling long-term strategies (Lumpkin & Brigham, 2011;Su & Daspit, 2022). Compared to firms with a shorter time horizon, firms with long-term orientations tend to be more motivated to build slack resources and establish long-term network relationships that can be used for exploratory initiatives (Lumpkin & Brigham, 2011;Miller et al., 2016). ...
... Consistent with family firm research (Lumpkin & Brigham, 2011), SFG's owner-managers held a long-term perspective that led them to channel surplus resources into new ventures to foster lasting growth. ...
This qualitative, explorative case study presents a small and medium-sized enterprise (SME) in Norway that successfully pursued a dynamic ambidextrous growth strategy. The study applies a micro-foundation perspective and focuses on identifying and describing key internal drivers behind the group's ambidextrous strategy. The empirical findings underscore ambidextrous owner-managers' pivotal role in facilitating strategic realignment, structural adaptation, and knowledge management to enable the case group's long-term growth. This study contributes to the strategy literature by proposing a framework for theorizing how the identified key internal drivers can be employed to form a dynamic ambidextrous growth strategy in SMEs.
... In order to avoid external interference and minimize dilution of family control, family firms primarily rely on internal financing and debt (Baixauli-Soler et al. 2021;Jansen et al. 2022;Camisón et al. 2022). Additionally, family firms prioritize stronger relationships with stakeholders (Freeman et al. 2008;Gómez-Mejía et al. 2011;Lumpkin and Brigham 2011), including suppliers, with the aim of accumulating social capital (Godfrey 2005;Maloni et al. 2017). Consequently, they are more likely to favour trade credit compared to non-family firms. ...
... In line with the SEW approach, trade credit represents a preferred short-term external financing option for family firms (vis-à-vis non-family ones), surpassing even short-term bank debt. Preserving family control and embracing a long-term orientation (Lumpkin and Brigham 2011) will drive family firms toward utilizing trade credit to safeguard their socioemotional endowment. The SEW framework considers family control to be one of the central goals for family firms. ...
... The capacity for long-term orientation within family firms also facilitates the accumulation of social capital and reserves of goodwill, which acts as a safeguard against difficult times (Godfrey 2005). With a long-term focus, family firms place a priority on cultivating strong and enduring relationships with key stakeholders (Freeman et al. 2008;Gómez-Mejía et al. 2011), and also shape their broader investment strategy (Lumpkin and Brigham 2011). In particular, the long-term orientation of family firms leads to the establishment of long-term relationships with suppliers (Huybrechts et al. 2011;Maloni et al. 2017;Jansen et al. 2022Jansen et al. , 2024. ...
Building on the socioemotional wealth theory, this study examines the influence of family ownership and corporate social responsibility (CSR) on trade credit. We argue that the intention to preserve family control, the preference for long-lasting relationships, and the desire to accumulate social capital lead family firms to opt for trade credit. Family firms’ peculiarities are also expected to condition the CSR-trade credit link. In addition, we account for the fact that some CSR practices are particularly aimed at external stakeholders. Our analyses rely on a sample of European listed firms from 2008 to 2020 and our empirical evidence confirms a positive effect of family ownership and CSR on trade credit. Going a step further, our results highlight the moderating role of family ownership in the relationship between CSR and firm’s access to trade credit. In fact, the positive effect of CSR on trade credit seems to be exclusively attributable to family firms. We also report that CSR policies oriented towards external stakeholders are linked to greater use of trade credit, with family firms explaining the positive impact of external CSR.
... Owning families are often oriented towards protecting their socioemotional wealth (Berrone et al., 2012). This orientation foregrounds noneconomic goals, such as social and regional support (Le Breton-Miller & Miller, 2009) and sustainable, long-term, trusting relationships (Lumpkin & Brigham, 2011). Specifically, family firms are perceived as having strong regional ties (Binz et al., 2013;Krappe et al., 2011), long-term orientation (Jaufenthaler et al., 2023), persistence and stability (Krappe et al., 2011), and social responsibility (Binz et al., 2013;Carrigan & Buckley, 2008;Cruz et al., 2014). ...
... First, a fundamental condition for this prediction is that stakeholders have high expectations of the integrity of a family firm, higher than that of a non-family firm. As described in detail in our baseline hypothesis, family firms are highly valued for their integrity, largely due to the active involvement of owning families who often prioritize socio-emotional wealth such as supporting the community and developing long-term relationships (e.g., Gallucci et al., 2015;Le Breton-Miller & Miller, 2009;Lumpkin & Brigham, 2011). Known for their strong regional ties, stability and social responsibility, family firms are perceived as more authentic than their non-family counterparts (Lude & Prügl, 2018). ...
Research indicates that family firms often engender a sense of trustworthiness among stakeholders. However, little is known as to whether this trustworthiness is beneficial or detrimental to family firms in the face of an ethical scandal. Ethical transgressions can profoundly undermine stakeholders’ perceptions of a firm’s integrity and benevolence. Our research examines how stakeholders perceive and react to ethical transgressions committed by family firms, as compared to those committed by non-family firms. Drawing upon expectancy violations theory and social identity theory, we theorize that while family firms inherently enjoy a higher degree of trustworthiness, they suffer significantly more in the aftermath of an ethical transgression. Two scenario-based experimental studies support our theorizing, demonstrating that family firms experience a steeper decline in trustworthiness following an ethical transgression than do non-family firms. We uncover the psychological processes behind this finding, revealing that this vulnerability is attributed to heightened stakeholder expectations and pronounced identification with family firms. We empirically show that expectancy violations primarily diminish integrity perceptions, while identity threats degrade benevolence perceptions of family firms. This research broadens the understanding of ethics in family firms, highlighting how their initially perceived trustworthiness may become a double-edged sword during ethical crises.
... Miller and Le Breton-Miller (2014) argue, however, that family firms vary in their priorities and offer two key dimensions along which this variation takes place: temporality and social-orientation. They maintain that some family firms prioritize financial and vocational rewards for current family members, whereas others see the business as a foundation for generational careers, security, and reputation, and thus embrace and serve all stakeholders consistent with that mission (Cennamo et al., 2012;Lumpkin & Brigham, 2011;Payne et al., 2011;Simon, 2009). ...
... The relationship between performance and ethicality is a complex one, and our analysis does not lead to definite conclusions. It can be argued, for example, that highly ethical firms will attract loyal stakeholders who will support them for the long run, put forth their best efforts, and thereby enhance chances of firm survival and financial success (Lumpkin & Brigham, 2011). That might often be true. ...
Despite the important progress being made in the study of family business ethicality, there remains a lack of consensus in the findings and some ambiguity concerning the concept. We propose a new perspective on family firm ethicality by building on a modified socioemotional wealth perspective. We theorize why family firms are likely to manifest exceptionally ethical or equally unethical behavior during crises, arguing this to be caused by the close socioemotional connection between family owners and their firms, the decision-making discretion of these owners, and the secrecy with which they can act. We extend our framework to multiple stakeholders – employees, customers, and local, national, and global communities. Positive and negative examples are provided of firms confronting specific economic, human, and natural crises – demanding situations that reveal authentic ethicality when the pressure is on. We also introduce the notions of ethical heterogeneity, focus and coverage, and their moderators, arguing that the same family and firm may exhibit both ethical and unethical behavior depending on the crisis and stakeholders concerned. Propositions are provided throughout, and research implications are drawn.
... Additionally, GIs allow for a phased resource allocation, reducing the potential for significant sunk costs (Brouthers & Dikova, 2010). Overall, GIs seem to represent the safest entry mode to ensure long-term orientation and the easiest way to replicate the domestic strategy and vision abroad (Lumpkin & Brigham, 2011). Hence, GIs, acquisition of the equity and EA range from the ones characterized by more control and long-term oriented to the weakest ones. ...
... According to SEW, families aim to protect their long-term knowledge and manage the transfer of both business and wealth to future offspring (Gomez-Mejia et al., 2007). To accomplish this objective, they are used to appoint a successor as proof of their will to preserve their dynasty (Lumpkin & Brigham, 2011). Consequently, they would likely manage the foreign investment with a low-risk profile, ensuring they maintain their bequest for the benefit of their future generations. ...
In the global economy, the international strategies of family firms, influenced by family ownership and management, remain underexplored. Bridging the family business and international business fields, we use the socioemotional wealth lens to examine 1,236 international expansions from 2007 to 2013. Categorizing firms into pure family, nearly pure family, borderline family, and non-family typologies, we assess the influence of internal (experience, knowledge) and external (country risk) factors on their entry modes. Results indicate that higher family involvement in ownership/management increases the preference for greenfield investments over acquisitions or equity alliances, a relationship further moderated by international experience and country risk. This study provides nuanced insights into the international behaviors of family firms.
... Research has shown that maintaining or increasing levels of EO over time is crucial for firms to accrue long-term performance benefits (Arcand, 2012;Lumpkin & Brigham, 2011). In the context of family businesses, the use of EO dimensions varies, and has greater significance for transgenerational EO. ...
... This suggests that while EO is beneficial for long-term management and performance, the importance of its dimensions may differ across family firms, thus EO is often associated with leaders and founders who strive to grow and diversify the business, and who pass on this mindset to future generations (Arcand, 2012). In first-generation family firms, the founder plays a vital role in shaping the firm's EO, as the founder with their vision, decisions, and actions directly influencing's vision, decisions, and actions directly influence the firm's approach to entrepreneurship (Lumpkin & Brigham, 2011). The family firms that promote EO among their members and employees are better equipped to face challenges and capitalize on new opportunities (David, 2009). ...
This research examines the relationship between the transmission of entrepreneurial orientation (EO) and socio-emotional wealth (SEW), and their implications for family firms' innovation. To achieve this, a single case study was conducted on a Spanish family business through interviews and document review. Data were analyzed using thematic and critical incident analysis. The findings of the case study underscore that the relationship between entrepreneurial orientation and socio-emotional wealth is intricate and has significant implications for innovation. The dynamic relationship between entrepreneurial orientation and socio-emotional wealth is characterized by a mutually reinforcing symbiosis, which contributes to ensure the long-term survival of the analyzed family business.
... Specifically, we argue that CEOs' endowment and risk-bearing patterns are shaped by whether they founded their firm. Entrepreneurship research consistently shows that founder CEOs are more focused on future outcomes, adopt longer investment horizons, and prioritize long-term benefits over short-term profits (Arthurs and Busenitz, 2003;Ling et al., 2007;Lumpkin and Brigham, 2011). This long-term orientation stems from their tenure, which accumulates as they develop a new venture into a publicly listed entity, helping them better assess the long-term consequences of their investments (Fattoum-Guedri et al., 2018;Miller and Le Breton-Miller, 2011;Nelson, 2003). ...
... Family firms, in particular, seem to develop unique resilience processes to deal with adversity (Conz et al., 2023;Hillmann, 2021), such as earthquakes (Salvato et al., 2020) or economic crises (Amann & Jaussaud, 2012;van Essen et al., 2015). Several traits may fuel their resilience, including their long-term orientation (Brigham et al., 2014;Le Breton-Miller & Miller, 2006;Lumpkin & Brigham, 2011;Zellweger, Nason, et al., 2012), social capital (Brewton et al., 2010;Danes et al., 2009;Mzid et al., 2019), religious values (Azouz et al., 2022), propensity to engage in alliances to source vital resources (Freixanet et al., 2024), entrepreneurial attitude (Conz et al., 2023), and their environment (Powley, 2009). That is, for an organization, resilience refers to "building and using its capability endowments to interact with the environment in a way that positively adjusts and maintains functioning prior to, during, and following adversity" (Williams et al., 2017, p. 741). ...
... Banyak bisnis keluarga yang masih terjebak dalam pola pikir tradisional yang lebih mengutamakan hasil jangka pendek dan keuntungan langsung, sehingga sulit untuk mengalokasikan sumber daya untuk investasi dalam teknologi baru yang mungkin memerlukan biaya yang tidak sedikit (Lumpkin & Brigham, 2011). Di sisi lain, ketidakpastian tentang pengembalian investasi dan keberlanjutan teknologi hijau juga menjadi tantangan tersendiri. ...
Kajian ini bertujuan untuk mengidentifikasi faktor-faktor yang mempengaruhi keberhasilan adopsi teknologi green economy, menganalisis dampaknya terhadap keberlanjutan bisnis, serta mengkaji peran nilai-nilai keluarga dalam mendukung transformasi ini. Metode library research digunakan dalam kajian ini, sebab memungkinkan untuk melakukan eksplorasi mendalam terhadap berbagai teori, konsep, dan temuan empiris yang telah ada, sehingga dapat membangun dasar argumentasi yang kuat serta menghasilkan sintesis yang komprehensif dari berbagai perspektif yang berbeda. Hasilnya menegaskan bahwa green economy adalah sebuah keharusan strategis yang menuntut bisnis keluarga untuk mentransformasi paradigma tradisional menuju keberlanjutan jangka panjang yang progresif. Generasi penerus, dengan visi global dan keberanian inovasi, menjadi aktor kunci dalam memperkenalkan teknologi hijau, menciptakan produk ramah lingkungan, dan mengintegrasikan nilai keberlanjutan ke dalam inti bisnis keluarga. Meskipun sering terjadi ketegangan dengan generasi lama yang lebih konservatif, kolaborasi lintas generasi menawarkan peluang untuk menciptakan sinergi antara stabilitas warisan dan inovasi masa depan. Jika dikelola dengan tepat, bisnis keluarga tidak hanya akan bertahan di tengah dinamika ekonomi modern, tetapi juga memimpin transformasi menuju ekonomi hijau yang adil, inklusif, dan berdampak positif bagi lingkungan dan masyarakat global.
... Dynamic capabilities are typically regarded as important strategic advantages that have been increasingly emphasized in family firms (Daspit et al., 2019;Jiao et al., 2019;Leonidou et al., 2023). Considering that family firms are prevalent worldwide, which are characterized by a long-term orientation due to excessive family ownership and management (Chien, 2010;Lumpkin and Brigham, 2011), identifying the determinants of dynamic capabilities in family businesses is of great importance. ...
Purpose
The purpose of this study is to examine how family influence affects dynamic capabilities in family firms. This study also aims to analyze whether knowledge scope and knowledge newness serve as moderating factors in this relationship.
Design/methodology/approach
This study examines the dynamic capabilities of family businesses listed in both the Shanghai and Shenzhen Stock Exchanges from 2009 to 2022. This study identifies businesses belonging to family firms based on family influence. In total, the sample covers 2,934 Chinese family firms accounting for 20,324 firm-year observations. Besides, this study identifies family firms by manually searching for annual reports that reveal the kinship of directors and executives, and other financial variables are collected from the China Stock Market Accounting Research Database.
Findings
This study empirically reveals that family influence is negatively associated with dynamic capabilities. Moreover, the effect of family influence on dynamic capabilities is weakened with more knowledge scope and knowledge newness.
Originality/value
The findings contribute to two streams of literature. First, this study extends the theoretical framework of dynamic capabilities from the perspective of socioemotional wealth theory. This study recognizes that family influence is negatively associated with dynamic capabilities. The results offer novel empirical evidence to better understand the dynamic capabilities of family businesses and make it valuable to expand the theoretical framework of dynamic capabilities. Second, this study contributes to the literature in the field of knowledge management. The results provide new findings on the positive moderating role of knowledge management, shedding light on embracing knowledge scope and newness, especially in family businesses with higher level of family engagement.
... They found the two-factor structure with the future LTO values labelled as planning, and the past LTO values labelled as tradition. Consistent with the theoretical conceptualisation of LTO, previous research demonstrated that people with a greater LTO were more frugal, less compulsive, more ethical, less indulging and more pro-environmental (Bearden et al. 2006;Halder et al. 2020;Lumpkin and Brigham 2011). ...
Meaning and pleasure, albeit closely tied, are often distinguished in their temporality. The present research aims to deepen the understanding of temporality of meaning and pleasure by examining whether long‐term orientation (LTO) positively predicts the preference for meaning‐oriented behaviours but negatively predicts the preference for pleasure‐oriented behaviours. Four studies ( N = 1251) revealed supporting evidence for meaning but less consistent pattern for pleasure. Study 1 demonstrated that LTO was more consistently associated with the preference for meaningful activities (e.g., helping someone) than pleasurable activities (e.g., watching TV). Studies 2–3B further revealed that experimentally induced LTO increased the preference for meaningful activities while attenuating the preference for clearly pleasurable activities (e.g., getting drunk) only, indirectly through the LTO cultural values—tradition and planning. Our findings advance the understanding of how the pursuit of meaning and pleasure is mapped onto a wider scale of temporal orientation.
... Sirmon and Hitt (2003) identify distinctive resources specific to family businesses that distinguish them from non-family firms, while Habbershon and Williams (1999) and Habbershon et al. (2003) emphasise that the constant interaction between family and business -referred to as familiness -can create unique, hard-to-replicate capacities that contribute to the survival and growth of family businesses. Likewise, arguments closely aligned with the SEW approach, such as stronger long-term orientation (Lumpkin & Brigham, 2011), a heightened concern for reputation (Rousseau et al., 2018), a shared value system, or the emotional bonds between family members and employees (Gómez-Mejía et al., 2001), have been used to explain evidence that points to the superior performance of family firms compared to non-family firms (Naldi et al., 2013or Tsao et al., 2016. Conversely, studies addressing the limitations of family businesses argue that the interaction of family, business, and ownership can also lead to governance challenges that hinder efficiency. ...
Esta investigación tiene como objetivo estudiar el efecto de la propiedad familiar de la empresa y la separación entre propiedad y gestión, en el rendimiento empresarial medido en términos de creación de empleo. Para ello se comparan las diferencias entre empresas familiares y no familiares, así como entre aquellas empresas dirigidas por profesionales externos a la propiedad y aquellas en las que las tareas de dirección son asumidas por los propietarios. Aprovechando la estructura de panel de la muestra, el trabajo se completa con el estudio de la influencia del ciclo económico, en función de las distintas combinaciones de estructura de propiedad y gestión. Una de las principales conclusiones del estudio cuestiona que las empresas familiares superen de forma generalizada a las no familiares en términos de creación de empleo. Aunque esto se aplica a las empresas no profesionalizadas, que representan la mayoría de las empresas familiares, no se observa en las empresas profesionalizadas. Al diferenciar el efecto del ciclo económico en función de sus fases, se observa que, entre las empresas no profesionalizadas, no aparecen diferencias entre empresas familiares y no familiares tanto en la fase recesiva como en la de recuperación. Sin embargo, entre las empresas profesionalizadas, las familiares sufren más los efectos de la fase recesiva y muestran una mayor capacidad de recuperación del empleo en la fase de recuperación.
... LTO refers to a predisposition to value the enduring significance and consequences of decisions and activities. It is a multifaceted concept encompassing the dimensions of continuity, futurity, and perseverance (Salvato et al., 2010;Lumpkin & Brigham, 2011). In brief, continuity refers to the process of building on previous achievements and experiences (Salvato et al., 2010). ...
A total of 217 questionnaires were used to empirically test the mechanism and effect of long-term orientation and governance mode preference on dual innovation in family firms. The data analysis shows that family firms’ long-term orientation values have a positive effect on both contractual and relational governance modes, long-term orientation values have a significant positive effect on dual innovation, family firms’ contractual and relational governance have an inverted U-shaped effect on dual innovation, and slack resources have a positive moderating effect on the relationship between family firms’ long-term orientation values and exploratory innovation.
... Conversely, scholars argue that characteristics such as family owners' investment and commitment to the firm (e.g. Huang, Li, & Zhang, 2019), long-term economic horizon (Lumpkin & Brigham, 2011) and social capital endowment (Arrègle et al., 2007) positively influence stakeholder perceptions. ...
Asbtract
This study investigates when the reputation enhancing signals of family firms include early adoption of non‐financial disclosure. Drawing on signalling theory, we examine the effect of family ownership on the early adoption of non‐financial disclosure and the moderating role of contingency signals: founder chief executive officer (CEO) leadership and employee degrowth rate. We test our hypotheses with panel regressions on a dataset of Italian listed family firms over the period 2013–2017, years before the introduction of mandatory non‐financial reporting. The results reveal an inverted U‐shaped relationship between family ownership and early adoption of non‐financial disclosure, negatively moderated by the presence of a founder CEO and positively moderated by employee degrowth. We discuss the implications of our findings for theory and practice.
... Thus, we suggest that having a larger family is positively correlated with having the ability to manage risk. Furthermore, companies with higher family influence are more likely to foster reliable network connections with clients and other long-standing business associates due to (Duran et al., 2016) their considerable emphasize following tradition and sustaining solid, longlasting connections (Lumpkin & Brigham, 2011). The owning family may choose which company partners to collaborate with as increased family influence is also linked to corporate control and power-centricity in the hands of family owners. ...
Modern digital technology has enabled many businesses, includes family-run enterprises, to develop novel business strategies. We investigate how dynamic capacity functions as a mediator in the connection between creativity and social impact of the business model of the digital age (BMI), as well as the role of environmental dynamics moderator. We demonstrate the beneficial correlation between family damage and digital BMI through utilizing unique survey data from 1,444 Indonesian businesses with and without family damage, this study examines knowledge exploitation, risk management, and marketing capabilities. As a result of this, and in opposition to our assumptions, we recognize that positive relationships between the group's interests and its dynamic capabilities are strengthened by the environment. All of us bear significant ramifications for digital BMI research and family business innovation, both of which shed light on the dynamics of dynamic ecosystems in the digital economy.
... An optimistic view of family involvement is supported by claims that family shareholders have a strong incentive to monitor mangers, helping to weaken the classic principal-agent problem (agency problem I) (Jensen & Meckling, 1976), and thus enhancing firm performance . Studies also argue that family involvement engenders long-term orientation and better treatment of stakeholders (Le Breton Lumpkin & Brigham, 2011). On the other hand, other studies claim that family members, to maximize their own utility, expropriate shareholder wealth to the detriment of company performance and thus create a principal-principal problem (agency problem II) (Chen et al., 2021;Dharwadkar et al., 2000;Engel et al., 2015;Villalonga et al., 2015), especially in later generations (van Essen et al., 2015;Villalonga & Amit, 2006). ...
Traditionally, family firm studies have assumed there is a single family behind the firm. We challenge this assumption and argue that the distinction between multi-founding family firms and single-founding family firms matters. We theorize that multi-founding family firms, based on mutual monitoring among families, have corporate governance advantages (less principal–agent and principal–principal problems) in terms of reduced founder CEO entrenchment and a lower probability of descendent leadership. Furthermore, we argue that multi-founding family firms exhibit higher levels of innovation and performance. Based on U.S. firms during 2001 to 2010, we find robust support for our arguments.
... Second, we contribute to FF research in general by challenging the a priori assumption that FF owner-managers prioritize long-term goals when making decisions (Le Breton- Miller & Miller, 2006;Lumpkin & Brigham, 2011). Such a conversation, which is rooted in the transgenerational control intentions of FF owner-managers (Zellweger et al., 2012), has led to different conclusions with respect to FF innovation activities. ...
Digital product innovation (DPI) is critical for the survival of firms, especially those operating in traditional industrial-age industries. While research has started to investigate digital innovation in family firms (FFs) considering them as a monolithic group, we still lack a more nuanced perspective that considers heterogeneity among FFs with respect to DPI and what drives such variance. Drawing on construal level theory to explain the risk behavior and goal time horizon of FF owner-managers, we propose and find that the presence of later family generations in control positively influences DPI in FFs, while the presence of a family CEO is detrimental to DPI. Furthermore, we propose that these relationships are moderated by the size of the top management team (TMT), finding that a larger TMT weakens the positive relationship between later generations in control and DPI. We base our analysis on a longitudinal sample of 103 FFs in the automotive, industrial engineering, and pharmaceutical sectors observed from 2013 to 2020. This first empirical study applying construal level theory to the family business literature has important implications for the FF digital innovation literature and for FF owner-managers interested in achieving DPI.
... Over the past four decades of reform and opening, the family firm has made an essential contribution to China's economic development (Allen, Qian, & Qian, 2005;Du, Ma, & Li, 2022). For those family firms, achieving long-term sustainable development is an aspiration of family practitioners and a reasonable expectation from all walks of life (Burkart, Panunzi, & Shleifer, 2003;Lumpkin & Brigham, 2011). The pursuit of an "everlasting foundation" has become a crucial goal pursued by increasing family firms (Sharma, Salvato, & Reay, 2014;Du et al., 2022, Du, Ma, Li, & Ma, 2024. ...
Purpose
Industrial robots are of great significance to the long-term development of family firms. Drawing on the lens of the principal–principal conflict, this paper aims to investigate the influence of family non-executive directors on robot adoption in Chinese family firms.
Design/methodology/approach
This paper selects the family firms in China from 2011 to 2019 as the sample. Furthermore, the authors manually collected the family non-executive directors and constructed the robot adoption variable utilizing data sourced from the International Federation of Robotics. In brief, this paper constructs a comprehensive framework of the mechanisms and additional tests pertaining to the influence of family non-executive directors on robot adoption.
Findings
This paper finds that family non-executive directors can promote robot adoption in family firms. The underlying mechanism analysis shows that family non-executive directors promote robot adoption by exerting financial and human effects. This paper further finds that the characteristics of family non-executive directors, such as kinship, differential shareholding and excessive directors, affect the role of family non-executive directors. Finally, robot adoption can improve future performance, and the promotional effect is more evident when family members are non-executive directors.
Originality/value
This paper contributes to the related literature from the following two aspects. Firstly, this paper decomposes the types of family directors to understand the role of family non-executive directors, which challenges the assumption that family board members are homogeneous in family firms. Second, this paper expands the research on the factors that influence robot adoption in emerging economies from the micro-enterprise level. In addition, the findings in this paper have managerial implications for family firms to optimize their strategic decisions with the help of the mode of board right allocation.
... One group of studies has discussed how actors' different future horizons affect their ability to cope with environmental change. For example, Nadkarni et al. (2016) suggested that a focus on the short term might enable flexibility and facilitate adaptation to changing environmental conditions (see also Lumpkin & Brigham, 2011;Wang & Bansal, 2012) but might also lead to temporal myopia. In contrast, focusing on long-term horizons can enhance actors' potential for foresight but might hamper their ability to adapt to short-term changes in the environment (Levinthal & March, 1993;Nadkarni et al., 2016). ...
Purpose
Based on punctuated equilibrium theory and time orientation theory, we investigated the decision-making tendency and regularity of top managers’ short-term orientation regarding the leap between exploration and exploitation under uncertain situations.
Design/methodology/approach
This study conducted an empirical analysis based on a sample of 547 A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2010 to 2018, utilizing fixed effects models.
Findings
The results show that top managers’ short-term orientation is negatively related to the leap between exploration and exploitation. Economic policy uncertainty plays a positive moderating role between the two. Further heterogeneity analysis shows that in high-tech industries and enterprises with high financing constraints, the positive moderating effect of economic policy uncertainty on the relationship between top managers’ short-term orientation and the leap between exploration and exploitation is more pronounced.
Practical implications
This study has important implications for optimizing the selection of top managers and the formulation of government economic policies in a rapidly changing business environment.
Originality/value
This study introduces the personality trait of short-term orientation, which deserves special attention, into research on the leap between exploration and exploitation, enriching the relevant research on top managers’ decision-making tendencies in the context of economic policy uncertainty and expanding the application scenarios of time orientation theory and punctuated equilibrium theory.
Based on the time-oriented theory, this research uses panel data of publicly listed enterprises in the Shanghai and Shenzhen Stock Exchanges of China spanning from 2010 to 2023 to empirically analyze how managerial myopia affects digital innovation. The research indicates that the myopic behaviour of managers substantially hinders the digital innovation efforts of enterprises. Myopic managers are more prone to deviate from strategies initially beneficial for the enterprise’s long-term growth, often manifested through decreased investment in research and development. This shift in resource allocation can impede the progress of digital innovation through reallocation mechanisms. To a certain extent, intense market competition mitigates the negative impact of managerial myopia on digital innovation. Conversely, government subsidies may exacerbate the detrimental effects of myopic managers on digital innovation. Additionally, the perception of economic policy uncertainty can also alleviate the restraint imposed by managerial myopia on digital innovation. These results can optimize the internal governance mechanism of enterprises, helping to overcome the managerial myopia and promote long-term innovation and development.
Purpose
This research aims to understand how qualitative, non-market family business characteristics influence business performance in the context of a disruptive environmental change created by Covid-19 global economy lockdowns in the period of Spring/Fall 2020. Drawing on the Resource-Based-View (RBV), the authors postulate the influence of unique family firm characteristics on performance outcomes.
Design/methodology/approach
The authors analyze a sample of 2,344 family businesses from around the globe using cluster analysis, and identify three different types of family businesses whose characteristics are linked to differences in financial performance (change in revenues during Covid lockdowns) and social performance (change in employment in the same time). The survey data was collected between June 2020 and October 2020 and it captured family businesses of all sizes and from a vast range of industry sectors around the globe. The comparison between clusters of the baseline parameters was performed using one-way analysis of variance (ANOVA) for parametric variables. By conducting between-profile analysis of covariance (ANCOVA), the authors tested for differences in the dependent variables (i.e. change in revenues and change in employment) between the clusters, using cluster membership as the independent variable.
Findings
Considering the characteristics of family firms in terms of the level of involvement of family members (Herrero and Hughes 2019), and directive leadership capturing the top-down recovery effort adapted from Krause et al . (2022) and Faraj and Xiao (2006), the authors identify four different types of family firms that appeared during the initial phase of the pandemic. The findings suggest that different contexts lead to disparate outcomes in terms of financial performance, as measured by revenue changes, as well as social performance and measured by employment change. Results show that a directive leader may contribute to decreased revenue and employment losses, while family involvement in the absence of a directive leader may exacerbate these negative outcomes.
Practical implications
Specifying qualitative, non-market characteristics of family firms that likely contribute to more favorable business outcomes in an event of a significant environmental disruption is likely to be instructive to family firm practitioners, as well as owners and managers of family enterprises.
Originality/value
While research on organizational resilience in the context of family enterprises has gained momentum, the influence of organizational factors on family firm performance outcomes during a crisis is still an area requiring detailed investigation. Global economy disruptions created by Covid-19 pandemic provided for a unique context to investigate these effects. In addition to studying financial performance outcomes, this research also investigates changes in employment, an important measure of social performance of a firm. This research provides evidence that a directive leader can have a positive effect on the financial performance and employment retention of a firm, while family involvement, especially in the absence of a directive leader, might have a negative effect.
This article analyses how family firms, which constitute India’s dominant ownership category, compare with nonfamily firms in ESG (Environmental, Social, and Governance) goals adoption. To account for heterogeneity within family firms, we investigate the standalone family firms (SFFs) separately from a family business group affiliated firms (FBGFs). Results show that nonfamily firms perform better than family firms in overall ESG and E parameters. Within family firms, FBGFs perform better than the SFFs on S parameters. Our analysis urges the policymakers to create awareness, provide a roadmap, nudge the family firms, and promote action toward being ESG-conscious.
Purpose
This study investigates whether managerial short-termism affects the expected default probability for a sample of Chinese-listed firms.
Design/methodology/approach
We employ textual analysis and machine learning techniques to measure managerial myopia. The study conducts ordinary least squares (OLS) regression on a sample of 33,164 firm-year observations of Chinese A-share listed firms from 2001 to 2021 to test the hypotheses. We further conduct mediation tests, moderating analysis, textual features analysis, and analysis of actual default firms. To address endogeneity issues, we employ change regression, entropy-balanced/PSM/closest assets matching analysis, two-stage least square (2SLS) regression, two-stage residual intervention method, and alternative estimation methods such as firm fixed effect (FFE), double cluster, and Fama and MacBeth (1973) regression.
Findings
First, there is a positive and statistically significant relationship between managerial myopia and expected default probability. Second, the mediation tests indicate that managerial myopia increases the expected default probability through operational risk and opportunistic agency channels. Third, the cross-sectional tests reveal that the positive association is less pronounced for firms with effective internal control systems, higher audit quality, and more financial analyst coverage.
Originality
Prior research has explored the impact of managers' demographic characteristics on a range of corporate organizational outcomes; however, there have been limited studies on the influence of managerial myopia on corporate financial risks. This study advances the literature on the determinants of default probability. It contributes to the limited and emerging studies on the role of managerial myopia by being the first to examine the effect of managerial myopia on the expected default probability.
Purpose
The purpose of this research is to offer an updated picture of the academic state-of-art of the literature about risk management in family businesses. Furthermore, the study aims to outline possible future stream of research, being a helpful resource for future scholars.
Design/methodology/approach
Research using an integrative view, encompassing both bibliometric analysis and manual review has been conducted. The data were collected from Scopus and Web of Science databases.
Findings
The key findings highlight that family businesses, despite their importance to the global economy, often neglect risk management, exposing themselves to significant risk factors. The analysis shows an increase in scientific production on this topic in recent years but emphasizes the need for further research, especially in different cultural contexts and with both quantitative and qualitative methods. The document also suggests that both informal and formal risk management practices should be studied more thoroughly to better understand the interaction between social capital and governance structures in family businesses.
Research limitations/implications
The study’s limitations include reliance on two databases and English-language articles only. Additionally, excluding non-peer-reviewed materials and narrow keyword selection may have impacted the findings.
Originality/value
This study offers an updated view of the literature of the last years highlighting the latest trends. The article offers suggestions for future research to guide investigations into currently under-represented areas.
Purpose
This study examines the relationship between entrepreneurial alertness, long-term and short-term focus and sustainable entrepreneurship in the context of young family firms. Additionally, we investigate how family management and long-term/short-term focus moderate the relationship between entrepreneurial alertness and sustainable entrepreneurship. Our findings contribute to a deeper understanding of the factors influencing sustainable entrepreneurship in family firms.
Design/methodology/approach
This quantitative study investigated 707 young family firms in Portugal. Structural equation modeling (SEM) was employed to analyze the data and test the proposed hypotheses.
Findings
The results indicate a positive relationship between young family firms’ entrepreneurial alertness and sustainable entrepreneurship. Also relevant is that long-term focus is positively related to sustainable entrepreneurship, while short-term focus shows a negative relationship, challenging the temporal ambidexterity of new ventures. Conversely, two moderating effects were found: family management weakens and short-term focus strengthens the relationship between entrepreneurial alertness and sustainable entrepreneurship.
Originality/value
As far as we know, this study is the first one to explore the link between the entrepreneurial alertness of young family firms and sustainable entrepreneurship. It is also the first study to explore the contradictory impacts of both long-term focus and short-term focus on sustainable entrepreneurship.
Purpose
Addressing users’ migration is a prerequisite for the sustainable development of the sharing economy. Ethical concerns that may lead to users’ migration are frequent in sharing economy platforms. Therefore, this study explores whether the long-term governance of sharing economy platforms can effectively mitigate users’ migration caused by ethical concerns.
Design/methodology/approach
Using a questionnaire survey of 549 participants, this study investigated the mechanism of users’ migration and governance strategies in the platform ecosystem based on trust theory.
Findings
The results indicate that users’ ethical concerns regarding the platform ecosystem significantly and positively influence their migration. Furthermore, users’ continued trust played a significant mediating role in the relationship between ethical concerns and users’ migration. The results also showed that future orientation and resilience significantly moderated the impact of users’ ethical concerns on their continued trust, thereby weakening this effect.
Practical implications
The author clarified the relationship between ethical concerns and users’ migration, identified the underlying mechanisms and provided guidance on how to mitigate migration behavior. However, users’ migration is influenced by various factors beyond ethical concerns. In addition to some factors that lead to migration, other factors make users stay on the platform. Future research should integrate multiple factors.
Originality/value
This study reveals the mechanism of action between users’ migration and ethical concerns in the platform ecosystem and sheds light on the output of long-term orientation practices of the platform.
There is growing interest in comprehending how cultural traits affect firms' behaviour. In this paper, we examine the effect of managerial long‐term orientation (LTO), an intrinsic cultural trait, on the firms' foreign direct investment (FDI) decisions. Our empirical analysis indicates that the LTO plays a positive role in firms' FDI decisions and the results remain robust when subjected to a variety of robustness tests. To address potential endogeneity concerns, we employ the CEOs' early‐life disaster experience as an instrumental variable. Further examination reveals that financing costs act as a mechanism through which the LTO influences firms' FDI. Finally, heterogeneity analysis indicates that the positive effect of LTO on OFDI is more pronounced for greenfield relative to brownfield FDI, for small‐size firms relative to large‐size firms and for private firms relative to state‐owned firms.
CSR is crucial for family businesses, including hotels, which are a significant employer globally. The COVID-19 pandemic has impacted the hospitality sector, leading to digital transformation and contactless technology adoption in European hotels. To maintain competitiveness, European family-owned hotels should implement sustainable practices, enhance digital connectivity, provide health and well-being amenities, invest in employee training, and adopt contactless technologies. A thorough review of secondary research is conducted to find out the CSR practices implied by European Family businesses hotels. It is concluded that incorporating artificial intelligence and machine learning into CSR efforts can strengthen commitment to sustainability and social responsibility. Further the hotel industry, which holds a market share of over 50% in Europe, is expected to grow at a CAGR of 7.0% between 2022 and 2023.
This paper examines the impact of management myopia on the investment behavior of green investors using A‐share listed companies from 2004 to 2020 in China. The research reveals that management myopia significantly inhibits the investment behavior of green investors. Through corporate reputation and the development of green technologies, management myopia affects the investment intentions of green investors. Environmental project subsidies do not mitigate the negative impact of management myopia on green investment intentions. Interestingly, compared to environmentally friendly projects categorized under “profit‐related” and “reward” headings, subsidies in the form of environmental project grants exacerbate the inhibitory effect of management myopia on green investment.
This paper examines the impact of culture norms on the digital transformation of Chinese listed family firms. We show that clan culture is negatively associated with firms' digital transformation degree. Exploring possible mechanisms through the logic of restricted socioemotional wealth theory, we find that clan culture inhibits digital transformation by increasing firms' risk aversion to restricted SEW loss. Further, the negative impact is stronger when the family exhibits a higher tendency to avoid such risk, and will ultimately harm firm future performance and value. The results indicate that external informal institution is an important antecedent of firms' disruptive innovation strategy.
Drawing on social capital theory, we analysis the influence of CEO's professional connections on the green innovation of SMEs. Using data from Chinese manufacturing SMEs, we find that CEO's professional connections can promote green innovation in SMEs. This finding still holds through several endogeneity and robustness tests. We find that this positive relationship is strengthened when the firm faces a more intense industry environment and when the CEO is chairman of the board. By testing the mechanism, we further find that alleviating financing constraints, improving information transparency, and promoting long‐term orientation play a key role in this positive relationship. These findings advance the research process on social capital theory and corporate green innovation and provide important insights into the green innovation practices in SMEs.
This paper challenges the prevalent notion that family-owned firms are more risk averse than publicly owned firms. Using behavioral theory, we argue that for family firms, the primary reference point is the loss of their socioemotional wealth, and to avoid those losses, family firms are willing to accept a significant risk to their performance; yet at the same time, they avoid risky business decisions that might aggravate that risk. Thus, we propose that the predictions of behavioral theory differ depending on family ownership. We confirm our hypotheses using a population of 1,237 family-owned olive oil mills in Southern Spain who faced the choice during a 54-year period of becoming a member of a cooperative, a decision associated with loss of family control but lower business risk, or remaining independent, which preserves the family's socioemotional wealth but greatly increases its performance hazard. As shown in this study, family firms may be risk willing and risk averse at the same time.
This paper explores how founders influence strategic management in the family business. The authors suggest it is essential to consider the central influence of a family firm's founder on the top management group and on the firm's strategic values, goals, and behavior. They further posit that a founder can be expected to shape the family firm's interactions with the external environment. The authors explore the central role that a founder plays in a family business from a social network perspective and establish the basis for the founder centrality concept. Further, they develop a framework and propositions from which the founder's influence on strategic behavior and performance may be studied.
The present study develops a process model of succession involving steps undertaken to prepare the family business for succession. The model examined multiple spheres of influence, including individual, group (family), organizational, and critical resource providers, as well as investigating the moderating effects of generational differences. Tests of this model used responses from a nationwide survey of family business owner/managers. The results support research expectations that various factors, especially family influence, positively affect the extent of succession planning. Further evidence is provided indicating that generation moderates revealed relationships.
This paper examines the extent to which conflict across generations of family firms is due to the effects of two independent variables—generation and generational shadow. The presence of a generational shadow was indicated by whether either or both of the parents continued to influence the company once the next generation assumed control. Hypotheses predicted nonlinear trends in conflict and interactions between generation and generational shadow. Using data from a national telephone survey of over 1,000 family business owners, the results of an ANOVA test confirmed that the presence of generational shadow, in particular, that of the founder, increases organizational conflict.
Stakeholder theory has been a popular heuristic for describing the management environment for years, but it has not attained full theoretical status. Our aim in this article is to contribute to a theory of stakeholder identification and salience based on stakeholders possessing one or more of three relationship attributes: power, legitimacy, and urgency. By combining these attributes, we generate a typology of stakeholders, propositions concerning their salience to managers of the firm, and research and management implications.
This study of the complete life-spans of eight naturally-occurring teams began with the unexpected finding that several project groups, studied for another purpose, did not accomplish their work by progressing gradually through a universal series of stages, as traditional group development models would predict. Instead, teams progressed in a pattern of "punctuated equilibrium" through alternating inertia and revolution in the behaviors and themes through which they approached their work. The findings also suggested that groups' progress was triggered more by members' awareness of time and deadlines than by completion of an absolute amount of work in a specific developmental stage. The paper proposes a new model of group development that encompasses the timing and mechanisms of change as well as groups' dynamic relations with their contexts. Implications for theory, research, and practice are drawn.
Long-term orientation (LTO) is a salient aspect of national culture values and as such influences consumers’ decisionmaking
processes. This article describes the development and validation of measures to assess LTO. Scale development procedures resulted
in a two-factor, eight-item scale that reflects the tradition and planning aspects of LTO. A program of studies involving
more than 2,000 respondents in four countries demonstrated the psychometric properties of the measures, their discriminant
and convergent validities, and the relationship of the measures to other important theoretical concepts (e.g., consumer frugality,
compulsive buying, and ethical values). The measures are applicable for investigating individual differences in LTO both within
and across cultures.
In this chapter we investigate the role of family-specific factors in facilitating or constraining business exit in family firms. Family business literature seems to have an implicit bias toward continuity and persistence in the founder's business. This is explained by heavy emotional involvement and development of path-dependent core competences over generations. However, several long-lived family firms were able to successfully exit the founder's business. Exit allowed them to free significant strategic resources, which were later reinvested in exploiting novel entrepreneurial opportunities. Our aim is to investigate the process of exit from the founder's business in family firms, to explain both triggers and obstacles to decommitment and de-escalation. We address this issue through the study of the Italian Falck Group's exit from the steel industry in the 1990s, followed by successful startup of a renewable energy business. By carefully triangulating different data sources and different voices within and outside the controlling family, we develop a framework describing family-specific facilitators and inhibitors of business exit, and subsequent startup of a new business. Three types of family-specific factors emerge as relevant in shaping a family firm's likelihood and speed of exit from a failing business: family-related psychological triggers and obstacles to business exit; family-specific components of the structural de-escalation context; family responses to ensuing de-escalation and exit needs. The emerging framework offers a more nuanced interpretation of decommitment activities in family firms, pointing to the differential role family-specific factors may play as facilitators or inhibitors of business exit. We also suggest how these family-specific results may contribute to a deeper understanding of exit in nonfamily firms. Our results also have practical implications for family business entrepreneurial management. Actively managing the different determinants of exit choices that emerged from our study will set the stage for de-escalation from a failing course of action – a dynamic capability all family firms should learn and practice if they intend to transfer their entrepreneurial orientation to next generations.
The number of family businesses has increased in Argentina. Family businesses have traditionally been described according to their size and ownership. We propose an alternative model which takes account of psycho-social variables as they permeate legal, administrative/accounting, technological/commercial variables. A case study of a fourth generation, family tobacco distribution firm is presented, highlighting the roles of these different variables and the importance of the family life script for understanding the progress of the firm. A major issue arising out of our work, and illustrated in the case study, is linked to the fact that around 70% of founders of family firms resist the delegation of power and the preparation of a succession plan. Other problems exist in relation to resistance to change regarding training and professionalization of the companies.
Marketing managers must know the time orientation of a customer to select and use marketing tools that correspond to the time horizons of the customer. Insufficient understanding of a customer's time orientation can lead to problems, such as attempting a relationship marketing when transaction marketing is more appropriate. The author suggests that long-term orientation in a buyer/seller relationship is a function of two main factors: mutual dependence and the extent to which they trust one another. Dependence and trust are related to environmental uncertainty, transaction-specific investments, reputation, and satisfaction in a buyer/seller relationship. The framework presented here is tested with 124 retail buyers and 52 vendors supplying to those retailers. The results indicate that trust and dependence play key roles in determining the long-term orientation of both retail buyers and their vendors. The results also indicate that both similarities and differences exist across retailers and vendors with respect to the effects of several variables on long-term orientation, dependence, and trust.
Using a game theoretic approach and integrating research on managerial succession, family businesses, and transaction cost economics, we examine how the degree of idiosyncrasy of a family business and the ability of the family's offspring affect succession. Contrary to the popular belief that successors to family businesses are often offspring because of nepotism, we propose an economic rationale that this is due to the appropriation risk and the agency paradox that family businesses encounter in engaging agents.
Many decisions are based on beliefs concerning the likelihood of uncertain events such as the outcome of an election, the guilt of a defendant, or the future value of the dollar. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. In general, the heuristics are quite useful, but sometimes they lead to severe and systematic errors. The subjective assessment of probability resembles the subjective assessment of physical quantities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. However, the reliance on this rule leads to systematic errors in the estimation of distance. This chapter describes three heuristics that are employed in making judgments under uncertainty. The first is representativeness, which is usually employed when people are asked to judge the probability that an object or event belongs to a class or event. The second is the availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development, and the third is adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available.
Risk and risk behavior form an important segment of the entrepreneurship literature. Entrepreneurial risk behavior has been studied with both trait and cognitive approaches, but the findings do not adequately explain either how entrepreneurs differ from non-entrepreneurs, or how different types of entrepreneurs can be specified in terms of their risk behavior. This paper is an attempt to address these issues by introducing two temporal attributes that we consider significant for understanding risk behavior, given that risk is inherently embedded in time. First, we suggest the notion of risk horizon, differentiating short-range risk from long-range risk. Second, we examine the risk behavior of entrepreneurs in terms of their individual future orientation, in tandem with their risk propensity. We propose a temporal framework that seeks to explain, at once, the different types of risk behavior among entrepreneurs as well as the distinction between entrepreneurs and non-entrepreneurs. The framework is also applied to networking and alliancing activities of entrepreneurs. Finally, a number of propositions are developed to facilitate empirical testing of the insights implicit in the temporal framework of entrepreneurial risk behavior.
Understanding what motivates entrepreneurs to start and sustain their ventures has been a critical factor in understanding the complete entrepreneurial process. Since goal-directed behavior is a vital element in the research on entrepreneurial motivation, this study attempted to investigate the existence of a set of goals which motivate entrepreneurs to sustain their business development efforts. To accomplish this effort, auestionnaire developed from the literature was utilized to identify the existence of 16 possible goals. A four-factor structure of goal statements was identified on the basis of the responses from 234 entrepreneurs. Factors included Extrinsic Rewards, Independence/Autonomy, Intrinsic Rewards, and Family Security. The implications of the existence of these factors as motivators for sustained ownership are discussed.
It is generally accepted that a family's involvement in the business makes the family business unique; but the literature continues to have difficulty defining the family business. We argue for a distinction between theoretical and operational definitions. A theoretical definition must identify the esence that distinguishes the family business from other businesses. It is the standard against which operational definitions must be measured. We propose a theoretical definition based on behavior as the essence of a family business. Our conceptual analysis shows that most of the operational definitions based on the components of family involvement overlap with our theoretical definition. Our empirical results suggest, however, that the components of family involvement typically used in operational definitions are weak predictors of intentions and, therefore, are not always reliable for distinguishing family businesses from non-family ones.
Stakeholder theory has been a popular heuristic for describing the management environment for years, but it has not attained full theoretical status. Our aim in this article is to contribute to a theory of stakeholder identification and salience based on stakeholders possessing one or more of three relationship attributes: power, legitimacy, and urgency. By combining these attributes, we generate a typology of stakeholders, propositions concerning their salience to managers of the firm, and research and management implications.
A profile of 231 Washington state family businesses is presented. This article focuses on the business strategies of these firms, analyzing the relationship between strategy, performance, and business practices. Firms categorized as Prospector firms reported more gains in their current market position than all other strategic types. These firms were more likely to value an effective management and employee team and to develop new quality products and services and career development plans for non-family employees. Implications for family businesses are discussed.
Finding the right successor to a well-loved founder or president is often the most difficult task an organization can face--and the challenge can be even greater for family-run businesses. Succeeding Generations explores leadership transitions in family businesses, offering a clear-eyed assessment of the different options, from direct succession to building partnerships between siblings and cousins. Family-owned companies may dominate the worldwide business landscape, yet surprisingly few are successfully passed down from one generation to the next, and fewer still reach the third generation intact. Author Ivan Lansberg, an organizational psychologist who grew up in a family business, examines the reasons behind this high failure rate and reveals the factors that contribute to long-term success. He offers practical advice on how to mentor successors, how to set up a systematic selection process, and how to make the best use of the board of directors during times of transition. With a wealth of examples from companies in the United States, Europe, and Latin America, Succeeding Generations provides a thoughtful and comprehensive look at the sensitive dynamics of leadership succession in family businesses.
Marketing managers must know the time orientation of a customer to select and use marketing tools that correspond to the time horizons of the customer. Insufficient understanding of a customer's time orientation can lead to problems, such as attempting a relationship marketing when transaction marketing is more appropriate. The author suggests that long-term orientation in a buyer/seller relationship is a function of two main factors: mutual dependence and the extent to which they trust one another. Dependence and trust are related to environmental uncertainty, transaction-specific investments, reputation, and satisfaction in a buyer/seller relationship. The framework presented here is tested with 124 retail buyers and 52 vendors supplying to those retailers. The results indicate that trust and dependence play key roles in determining the long-term orientation of both retail buyers and their vendors. The results also indicate that both similarities and differences exist across retailers and vendors with respect to the effects of several variables on long-term orientation, dependence, and trust.
Concepts of time vary dramatically across individuals and cultures. We draw from work in anthropology, psychology, sociology, and management to identify five time dimensions that guide our review and discussion of dynamic strategic management research. Although strategy researchers incorporate time in many ways, they generally ignore a subjective view of time and the temporal perceptions of actors in their models. We conclude by suggesting how strategy researchers and practitioners can incorporate an unambiguous and multifaceted view of time explicitly into their work.
In many crucial decisions, the course of action that is most desirable over the long run is not the best course of action in the short term. This is the dilemma addressed by the ongoing debate over economic "short-termism," sparked by contentions that U.S. firms are losing to overseas competitors because U.S. management is unwilling or unable to invest in the long run. I argue that the debate has suffered from a limited focus; to address this problem, I present a framework that addresses organizational and individual as well as economic perspectives. I offer a review of concepts, analysis, and evidence, and I suggest a cross-discipline, multilevel research agenda for advancing understanding of this vital topic.
We examine a number of situations in which people do not appear to discount money flows at the market rate of interest or any other single discount rate. Discount rates observed in both laboratory and field decision-making environments are shown to depend on the magnitude and sign of what is being discounted, on the time delay, on whether the choice is cast in terms of speed-up or delay, on the way in which a choice is framed, and on whether future benefits or costs induce savoring or dread.
Using a game theoretic approach and integrating research on managerial succession, family businesses, and transaction cost economics, we examine how the degree of idiosyncrasy of a family business and the ability of the family's offspring affect succession. Contrary to the popular belief that successors to family businesses are often offspring because of nepotism, we propose an economic rationale that this is due to the appropriation risk and the agency paradox that family businesses encounter in engaging agents.
A profile of 231 Washington state family businesses is presented. This article focuses on the business strategies of these firms, analyzing the relationship between strategy, performance, and business practices. Firms categorized as Prospector firms reported more gains in their current market position than all other strategic types. These firms were more likely to value an effective management and employee team and to develop new quality products and services and career development plans for non-family employees. Implications for family businesses are discussed.
This article examines and expands the concept of continuity and asserts that family businesses and consultants retain a unidimensional definition of continuity in which success is attained only when family and business remain together. It suggests that this thinking is stale—muddied by an idealized version of the family business—and argues that continuity should be defined as the preservation of one or more essential, unique core elements that in turn implicate a set of tradeoffs or elements that may be sacrificed. Continuity approached in this way, where the pursuit of any dimension will have both gains and losses, will inevitably enrich both the client and consultant.
Under which conditions can professional knowledge and values be integrated successfully into the organization and management of a family firm?
This paper uses the theory of planned behavior to hypothesize the influence of the incumbent's desire to keep the business in the family, the family's commitment to the business, and the propensity of a trusted successor to take over on the extent to which family firms engage in succession planning activities. We test these hypotheses using data collected from presidents in 118 family firms. The results show that the propensity of a trusted successor to take over significantly affects the incidence of all succession-planning-related activities. Succession planning may, then, be the result of push by the successor more than of pull by the incumbent. Such a view has negative implications for the succession process that the family firms in our sample follow.
The authors examine the relationship between the life cycles of fathers and sons who work together, concluding that the quality of the work relationship varies as a function of their respective life stages. The intersection of their individual developmental paths can have positive or negative effects on the nature of the work relationship, on the resolution of such problem issues as succession, and on productivity.
Long-term orientation (LTO), defined as the tendency to prioritize the long-range implications and impact of decisions and actions that come to fruition after an extended time period, is a common characteristic of many family businesses. Prior research is equivocal regarding whether an LTO contributes to or detracts from family firm outcomes. Of particular interest is the extent to which family business can be entrepreneurial given an LTO. Drawing on the concept of entrepreneurial orientation (EO), propositions that relate long- and short-term management time horizons of family firms to five dimensions of EO (innovativeness, proactiveness, risk taking, competitive aggressiveness and autonomy) are developed. Specifically, we propose that an LTO will be positively associated with innovativeness, proactiveness, and autonomy but negatively associated with risk taking and competitive aggressiveness. We also address the long- and short-term implications of EO on the performance of family firms, and identify issues to consider in future research into the EO–LTO relationship.
This paper briefly reviews some history of the concept of dominant logic, and then elaborates some of the ways in which the authors have further developed this concept in recent years. Discussion focuses on the dominant logic as a filter, on the dominant logic as a level of strategic analysis, on the unlearning (forgetting) curve, on the dominant logic as an emergent property of organizations as complex adaptive systems, and on the relationship between organizational stability and the dominant logic. Throughout emphasis is given to the inherent nonlinear nature of organizations and the mental models that they create.
The major patterns of self-regulatory failure are reviewed. Underregulation occurs because of deficient standards, inadequate monitoring, or inadequate strength. Misregulation occurs because of false assumptions or misdirected efforts, especially an unwarranted emphasis on emotion. The evidence supports a strength (limited resource) model of self-regulation and suggests that people often acquiesce in losing control. Loss of control of attention, failure of transcendence, and various lapse-activated causes all contribute to regulatory failure.
People have self-control problems: We pursue immediate gratification in a way that we ourselves do not appreciate in the long run. Only recently have economists considered the behavioral and welfare implications of such time-inconsistent preferences. This paper outlines a simple formal model of self-control problems, applies this model to some specific economic applications, and discusses some general lessons and open questions in the economic analysis of immediate gratification. We emphasize the importance of the timing of the rewards and costs of an activity, as well as a person's awareness of future self-control problems. We identify situations where knowing about self-control problems helps a person and situations where it hurts her, and also identify situations where even mild self-control problems can severely damage a person. In the process, we describe specific implications of self-control problems for addiction, incentive theory, and consumer choice and marketing. Copyright © 2000 John Wiley & Sons, Ltd.
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.
Family firms that can leverage entrepreneurial experience and knowledge can shape local economic development. Practitioners concerned with fostering enterprise sustainability need to be aware that family firms cite contrasting goals, resource profiles and requirements. Family firms are not a homogeneous entity. The ‘targeting’ of support to ‘types’ of family firms could enable practitioners to satisfy their wealth creation and social inclusion objectives. To stimulate increased critical reflection, insights from agency and stewardship theories were drawn upon to illustrate six conceptualized ‘types’ of private firms based on company ownership and management structures as well as company objectives. Cross-sectional survey evidence was gathered from key informants in family firms in the UK. An agglomerative hierarchical QUICK CLUSTER analysis identified seven empirical ‘types’ of family firms. Four out of the six conceptualized ‘types’ were validated by the exploratory empirical taxonomy. Implications for policy-makers and practitioners as well as researchers are discussed.
This article reviews the literature on family business from a strategic management perspective. In general, this literature is dominated by descriptive articles that typically focus on family relationships. However, the literature does not usually address how these relationships affect the performance of a family business. Taking a strategic management perspective, we outline a new set of objectives for family-business research. We also identify some of the key issues and gaps that should be explored in future studies if research is to contribute to improving the management practices and performance of family firms.