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Does Family Involvement Increase Business Performance? Family-Longevity Goals’ Moderating Role in Chinese Family Firms
Abstract
Family involvement in management (FIM) attracts much scholarly attention in the field of family business but reveals conflicting performance implications. With the contradictions in mind, this paper raises and answers two research questions. First, how does FIM affect firm performance? Second, is the relationship between FIM and firm performance contingent on a firm's goals? To address these research questions, the study uses 158 family firms in China as a context in which to examine the role of family in business performance given the country's strong familial culture. Results show that while FIM has no direct effect on performance, a firm's family-longevity goals positively moderate the relationship between FIM and performance. Specifically, the relationship between FIM and performance is more positive when a firm's support for family-longevity goals is higher versus lower. The paper concludes with the implications of the results and the suggestions for future research.
... Ignoring family longevity goals in the family business studies can provide misleading findings. There are two competing theories followed in the family business studies; agency theory and stewardship theory which explain the connection among FIM and firm performance (Kim & Gao, 2013). Agency problems arise when the interest of principal and agent diverge or family manager's aspirations and goals clash with family business and owners (Bosse & Phillips, 2016). ...
... Many studies show that stewards are intrinsically motivated and their socio-emotional involvements in family business became of the reasons of collective good for their firms (Miller & Le Breton-Miller, 2006). In addition, family ties and emotions intrinsically motivate family managers regarding non-economic interest, which actually enlarge their stewardship stance and align their goals and interests (Kim & Gao, 2013). Abdullah, Shah, Iqbal and Gohar (2011) find out the effect of associated-firm's ownership on the performance of firms in Pakistan. ...
... However, confining the complexity and diversity of performance were ignored. Kim and Gao (2013) address this by using both financial (ROI, market share and sales growth) and non-financial measures namely operational efficiency and product/service quality for measuring performance of the firms. In the present study, we used this performance complexity with some modification as organizational culture and existing environment are different. ...
This study is designed to find out the effect of family long-term goals on family firms’ performance in the underdeveloped region of Pakistan. The study addressed two research questions: how does family participation in management affect the performance of family firms? Does there exist moderation between family long-term goals and family participation in management and the effect on the performance of the family firms? Data was collected from 137 very small and small family firms of the southern Punjab (Pakistan). We used partial least square regression to determine the moderating role of family longevity goal in firm performance. Results showed that there was no significant direct impact of family participation in management on firm performance. However, the effect of family longevity goals was significant and positive (0.20) on family firm’s performance. Relationship between performance of family firms and family participation in management (0.17) depends on family longevity goals implying that family firms can contribute better in business performance.
... Pieper et al. (2018) also state that family longevity goals (FLG) impacts strategy, family, and organization behaviour. Kim & Gao (2013) point out that FIM (family involvement in management) has no direct effect on performance, but a firm's family longevity goals positively moderate the relationship between FIM and performance. ...
... Since every member of family firms has their uniqueness, if they have stronger relationships with each other, it will result in higher family longevity goals because the family has succeeded in reconciling the differences and creating long-term common goals. The statement is supported by Kim and Gao (2013) pointing out that FLGs can be created by a sense of shared identity and connections among family members and encourage them to be very loyal and committed to the organizations. ...
... Thus, social capital's cognitive dimension is designed to achieve the objectives of the family business and improve its performance. In line with these statements, the hypothesis is formed: H 6 : Higher cognitive dimension has a positive and direct effect on family firm performance Family longevity goals influences how family managers behave and may be responsible for the inconsistent impacts of FIM on business performance in family firms (Kim & Gao, 2013). As previously mentioned, family longevity goals are the key determinants of outcomes such as the continuation of family involvement, firm survival and renewal, and financial performance. ...
The research was motivated to examine the impact of family, specifically in social capital on firm performances during the COVID-19 pandemic. The research used a quantitative approach and will be analysed by both descriptive and inferential statistics by obtaining questionnaires from the 89 research subjects with a Likert scale to create a whole picture of the social capital dimensions of 89 family firms and their family longevity goals (FLG) as well as their firm performances (FP). The research finds that social capital dimensions have a significant and positive impact on both family longevity goals and firm performance. Moreover, it is found that family longevity goals mediate the positive relationship between social capital dimensions and firm performances. It is also revealed that the impact of social capital dimensions is stronger in firms controlled by the second generation. It is suggested that future research include the external side of the social capital to have further understanding on its impact towards the performance of family business.
... Enduring commitment to value is a family's greatest strength in business ownership (Arnoff and Ward, 2000). Family-owned firms aim to preserve the family and are concerned about family needs, such as longevity, survival, and financial security (Kim and Gao, 2013). For example, Kim and Gao (2013) showed that when a firm's support for family longevity goals is higher, family involvement in management provides stronger performance. ...
... Family-owned firms aim to preserve the family and are concerned about family needs, such as longevity, survival, and financial security (Kim and Gao, 2013). For example, Kim and Gao (2013) showed that when a firm's support for family longevity goals is higher, family involvement in management provides stronger performance. ...
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.
... Di Taiwan, hampir 70 % perusahaan keluarga menempatkan setidak-tidaknya satu anggota keluarga dalam top management dan 85 % diantaranya menempatkan paling sedikit satu anggota keluarga dalam jabatan dewan direksi (Chu, 2011). Keikutsertaan keluarga dalam pengelolaan perusahaan keluarga menarik untuk diteliti karena masih menunjukkan implikasi kinerja perusahaan yang beragam (Kim & Gao, 2013). ...
... Poutziouris et al., (2015) yang melakukan penelitian pada bisnis keluarga yang tercatat di Bursa Saham London membuktikan bahwa keterlibatan keluarga dalam dewan direksi perusahaan meningkatkan kinerja perusahaan. Penelitian yang dilakukan di Cina menunjukkan bahwa dewan keluarga tidak berpengaruh langsung terhadap kinerja perusahaan (Kim & Gao, 2013). Jiang & Peng (2011) yang melakukan penelitian pada beberapa negara di Asean mengkonfirmasi bahwa CEO dari pihak keluarga meningkatkan kinerja perusahaan di Indonesia dan Taiwan, dan memperburuk kinerja perusahaan di Hongkong. ...
Family position on the board of directors strengthens family influence in corporate decision making This study examines the effect of family involvement on the board of directors on accounting performance in family firms in Indonesia in family firms which only place family members on the board of directors and family firms which place family members on the board of directors and commissioner. The number of companies studied were 122 family companies and the research period was from 2009-2018. Data were analyzed using the Generelized Method of Moments (GMM) estimation method. The results of the research conducted show that family involvement in the board of directors has a positive effect on the company's accounting performance in both groups of family companies. The effect of family involvement on the board of directors is greater in family companies that place family members on the board of directors and commissioners compared to family companies that place family members who only place family members on the board of directors. The findings of this study are important for the competent authorities in formulating family business governance policies.Posisi keluarga dalam dewan direksi memperkuat pengaruh keluarga dalam pengambilan keputusan perusahaan Penelitian ini menguji pengaruh keterlibatan keluarga dalam dewan direksi terhadap kinerja akuntansi pada perusahaan keluarga di Indonesia pada perusahaan keluarga yang hanya menempatkan anggota keluarga dalam dewan direksi dan perusahaan keluarga yang menempatkan anggota keluarga dalam dewan direksi dan komisaris. Jumlah perusahaan yang diteliti adalah 122 perusahaan keluarga dengan jumlah data selama 10 tahun. Data dianalisis dengan menggunakan metode estimasi Generelized Method of Moments (GMM). Hasil penelitian yang dilakukan menunjukkan bahwa keterlibtan keluarga dalam dewan direksi berpengaruh positif signifikan terhadap kinerja akuntansi perusahaan pada kedua kelompok perusahaan keluarga. Pengaruh keterlibtan keluarga dalam dewan direksi lebih besar pada perusahaan keluarga yang menempatkan anggota keluarga dalam dewan direksi dan komisaris dibandingkan dengan perusahaan keluarga yang menempatkan anggota keluarga yang hanya menempatkan anggota keluarga pada dewan direksi. Temuan penelitian ini penting bagi otoritas berwenang dalam merumuskan kebijakan tata kelola perusahaan keluarga dan investor untuk pengambilan keputusan investasi.
... Specifically, imprinting researchers have drawn attention to the importance of one's family as significant imprinters on adolescents' future behaviour and attitudes (Bandura, 1971;Y. Kim & Gao, 2013;Lupu, Spence, & Empson, 2018). Indeed, parents have consistently been found to be a primary influencer of their children's work-related values and expectations (Dekas & Baker, 2014;Johnson & Mortimer, 2015). In particular, imprinting theories describe that adolescents learn a lot about work through conversations and observations of their ...
... imprinter on organizations and individuals (Hofstede, 1980;Kim & Gao, 2010;Marquis & Tilscik, 2013;Simsek et al., 2015). According to an imprinting perspective, cultural heritage leaves an imprint on national values that are maintained through educational institutions, organizations, politics, traditions, and the media (Inglehart & Baker, 2000;Kim & Gao, 2013;Seidel, 2020;Shinkle & Kriauciunas, 2012;Stinchcombe, 1965). National values provide eraspecific institutional templates which guide organizational structures, designs, and systems, which persist even i1n the face of modernizing influences (Peng, 2004). ...
Since the publications of Bowen and Ostroff’s (2004) HRM system strength and Nishii and colleagues’ (2008) HR attributions, HRM process researchers have advanced a plethora of research that demonstrates the importance of well-communicated HRM systems for positive employee and organizational outcomes. However, researchers have contended that the antecedents of the HRM process (i.e., HRM system strength and HR attributions) are less understood.
To remedy this gap, a small but emerging body of research suggests that employees’ personal histories affect their assumptions and expectations about work and management, which ultimately influences how they currently understand and interpret HRM in their organization. Past experiences and associated presuppositions of HRM - referred to as ‘imprinting factors’ - can manifest in early childhood and/or adolescence. Following an
imprinting perspective, it is argued that individuals form career expectations during sensitive developmental periods (e.g., parent-child relationships, educational processes, and early social experiences) which shape their understanding and attributions of HRM in later life. Yet, this body of work is still in its nascency. Very little is known to what degree employees are influenced by their personal histories and upbringing. Even less is known about the organizational and cultural contextual factors that act as boundary conditions in these relationships. Given that imprinting factors can cause employees’ to understand and interpret HRM differently from what is intended by management, it is important to understand to what degree past experiences affect the HRM process, and how these effects can be actively managed. This thesis investigates the extent to which imprinting factors influence employees’ perceived HR strength and HR attributions. To this end, a series of three studies are presented:
1) a systematic review of the existing body of work, 2) an empirical examination of parental behaviours on perceived HR strength, and 3) an empirical examination of family motivation on HR attributions. In addition, multi-level contextual factors (i.e., HRM content and national values) are included as important boundary conditions in these models. The findings within this thesis contribute to the HRM process literature by the integration of an imprinting perspective with HRM process theories to offer a better understanding of the intrapersonal, non-work antecedents of perceived HR strength and HR attributions. Several avenues of research are presented which act as a platform for future scholarship. This thesis also has implications for HR professionals and managers who intend to design HRM systems for maximum effectiveness on positive employee outcomes.
... In particular, the relationship between family ownership/ management and the performance of firms is still an open question, which has often been investigated empirically through balance sheet indicators, such as return on assets, return on equity, net profits, turnover and sales growth (e.g., Bachiller et al., 2015;Miller et al., 2014), their market value (Anderson et al., 2012;Filatotchev et al., 2011) or the subjective performance of firms (Kim & Gao, 2013;Miller et al., 2009) whilst rarely have productivity and efficiency issues been explicitly taken into account (Aiello et al., 2020;Barth et al., 2005;Cucculelli et al., 2014;Damiani et al., 2018;Herrero, 2011;Kahveci & Wolfs, 2019;Martikainen et al., 2009). ...
... Finally, we believe that some limitations of our study can be fruitful avenues of future research. Indeed, the influence of family involvement in management can be contingent on variables, which are lacking in our data sources, such as "situational or psychological factors specific to a firm" (Kim & Gao, 2013), as well as the level of family ownership (Martikainen et al., 2009). In other words, future research could assess whether the effect of family involvement in management is contingent on the goals and motivations of firms as well as the family stakes, which can either reinforce or weaken the incentives and capabilities of family managers to improve the efficiency of firms. ...
We investigate whether technical efficiency is affected by family involvement in management, considering a sample of small and medium sized firms (SMEs) operating in the traditional manufacturing sector. A positive and significant relationship between family management and efficiency is found when adopting one-step procedures based on Stochastic Frontier Analysis (SFA). Furthermore, according to our results, local social capital seems to moderate the influence of the family involvement on the performance of firms, corroborating the idea that trust and reputational assets associated with family ties can compensate for the lack of cooperative behaviour and social networks characterizing some communities where firms operate.
... Situational cues, e.g., emotional events, trigger judgment strategies and behavioral decision-making processes, translate into outcomes for the owner family and the family business (Labaki and D'Allura, 2021). Family involvement in ownership and management (Chua et al., 1999;Kim and Gao, 2013) seems to be of particular importance as, under high levels of managerial discretion, the impact of affect and the resulting affect-infused decision-making are especially strong (Hambrick and Mason, 1984;Li and Tang, 2010). This is especially important when making strategic decisions, such as filling top management positions in family businesses (D'Allura, 2019). ...
... In fact, it is "crucial to understand how psychological heuristics appear and develop" as a "preliminary step in considering family business' heterogeneity in strategy formulation and implementation" (Picone et al., 2021, p. 15). Family involvement in ownership and management (Chrisman et al., 2012;Kim and Gao, 2013) seems to be of specific importance, since under high levels of managerial discretion, the impact of affect and, consequently, heuristic decision-making is especially strong (Li and Tang, 2010;Hambrick and Mason, 1984). Chrisman et al. (2016) argued that regulatory conditions shape managerial discretion, which, to the best of the authors' knowledge, has not yet empirically been shown with regard to TMT selection. ...
Utilizing a qualitative research design based on 53 interviews with 19 Swiss family businesses, supplemented by 14 expert interviews, this study demonstrates that different family firm-specific elements of the process of selecting top management team (TMT) members alter affect infusion in family firms. These are the informal selection context, the involvement of informal advisors, and relationship-related evaluation criteria. The study moreover shows that the context-specific attitude (openness, defensiveness, readiness to delegate) of the family business decision-maker regulates affect infusion. Lastly, the study demonstrates that sabotage in the selection process can occur in high-affect infusion scenarios. Contributions and implications for future research are discussed.
... As a result, many businesses have begun to entrust women with leadership roles after observing the strategies they employ in business. Their success is even more noticeable when they receive support from their family which is typically provided through organizational assistance including financial support (Arregle, Hitt, Sirmon, & Very, 2007;Kim & Gao, 2013;Welsh et al., 2021). ...
The main objective of this research is to emphasize the significant role women hold in leading family businesses in transitional countries such as Kosovo, North Macedonia, and Albania. It aims to demonstrate how women’s leadership can positively influence business performance, economic advancement and social development in these regions where traditional gender norms are shifting. Additionally, this study explores how empowering women in leadership roles can foster innovation, strengthen resilience, and ensure long-term sustainability for family-owned businesses ultimately contributing to the broader economic progress of these transitioning economies. This research aims to analyze family support, cultural factors and the influence of education on the advancement of women in leadership positions with a particular focus on family businesses. In this empirical research, 490 women from the countries above were included and the sample was randomly selected due to a lack of formal data. The results of the analyses were presented through descriptive analysis, Pearson correlation, Ordinary Least Squares (OLS) and T-test. The results indicate that family support has already a significant impacted advancement. Similarly, cultural factors have a positive influence. These factors have changed and are no longer obstacles to women's advancement as in the past, although in some rural countries this is still seen as an obstacle. Another important factor is education where women prioritize before taking leadership positions and continue with various training even after taking positions to be fully prepared to achieve their business objectives.
... Cela peut un effet sur la performance. Cependant comme le soutiennent [59], la recherche sur l'impact de la participation de la famille dans la gestion ne sont pas concluantes. Selon les recherches, cette relation est positive ( [60], [61], [35], [49], [15], et [9]), négatif ( [17], [62], [63], [64], [65] et [66]), ou incertaine ( [67]). ...
Several studies have focused on the performance of women in entrepreneurship using the same measurement tools as those used to measure the performance of their male counterparts. However, many studies have shown the singularity of women's entrepreneurship, particularly with respect to the measurement of success. To bridge this gap, this paper aims to analyse the impact of factors specific to women entrepreneurs that determine their success in business. To achieve this objective, we used a sample of 142 women business owners, surveyed in three cities: Douala, Bafoussam and Yaounde. As estimation technique, we used a binary Logit model because of the dichotomous nature of the response to the question of whether a woman feels she has been successful or not. In order to reinforce the singular character of female entrepreneurship, we used two types of dependent variables: first, a so-called subjective variable, «Achieving flexibility between work and family lives» and an objective variable, «Annual income level». The results show that the model with «Achieving flexibility between work and family lives» as the dependent variable is better for predicting the success of women entrepreneurs than the model with «Annual income level» as the dependent variable. Moreover, these results show that globally; factors related to human capital are the key determinants of success for women entrepreneurs in Cameroon. RESUME: Plusieurs travaux ce sont intéressés à la performance des femmes en entrepreneuriat en recourant aux mêmes instruments de mesure que ceux utilisés dans la mesure de la performance chez leurs homologues hommes. Pourtant de nombreuses études ont montré la singularité de l'entrepreneuriat des femmes, notamment en ce qui concerne la mesure de la réussite. Pour combler ce gap, ce papier a pour objectif d'analyser l'impact des facteurs propres aux femmes entrepreneures qui déterminent leur réussite dans les affaires. En vue d'atteindre cet objectif, nous avons recouru à échantillon de 142 femmes propriétaires d'entreprise, interrogées dans trois villes: Douala, Bafoussam et Yaoundé. Nous avons utilisé comme technique d'estimation un modèle Logit binaire en raison du caractère dichotomique de la réponse à que question de savoir si une femme estime avoir réussi ou non. En vue de conforter le caractère singulier de l'entrepreneuriat féminin, nous avons utilisé deux types de variables dépendantes: d'abord une variable dite subjective, l'« équilibre vie social et vie familiale » et une variable dite objective, le « niveau de revenu annuel ». Les résultats montrent que le modèle avec comme variable dépendante l'« équilibre vie professionnelle et vie familiale » a meilleur pour pouvoir prédictif de la réussite des femmes entrepreneures que celui avec comme variable dépendante le « niveau de revenu annuel ». Par ailleurs, ces résultats montrent que globalement les facteurs liés au capital humain sont les déterminants clés de la réussite des femmes entrepreneures au Cameroun. MOTS-CLEFS: Entrepreneuriat, féminin, performance, facteurs, internes. Analyse des déterminants intrinsèques de la réussite des femmes entrepreneures au Cameroun
... We engage in the conversation about the performance implications of FIM (Gallucci et al., 2015;Kim and Gao, 2013;Kowalewski et al., 2010;Sciascia and Mazzola, 2008). There is a conundrum in the literature about whether FIM is beneficial for firm performance or not. ...
Purpose
Past research is mixed on family small and medium-sized enterprises’ (SMEs) use of external advisors and the limited empirical evidence is confined to developed markets. Drawing on the knowledge-based view of the firm, this research focuses on the “familiness” characteristic of SMEs and their use of external accountants as advisors in an emerging marketplace. Using internal resources for basic tasks is proposed to strengthen this relationship from a managerial cognition lens. Focusing also on SME internalization, this research probes the performance ramifications of using external accountants as advisors.
Design/methodology/approach
Hierarchical regression is used to test the hypotheses. The mediation hypothesis is tested by bootstrapping the indirect effect. The interaction hypothesis is visualized with simple slope analysis.
Findings
The results indicate that the familiness of SMEs is positively associated with the use of external advisors, and thereby, with high performance. SMEs with higher international exposure also use these external advisors to a greater degree. Family SMEs that have a focused use of internal resources for basic tasks benefit more from the use of external accountants for advising tasks.
Originality/value
This research sheds light on how family involvement in management influences firm performance, showing the moderating role of the use of internal advisors for basic tasks and the mediating role of the use of external accountants for advising. We add to the knowledge-based view by describing how family SMEs can utilize internal and external knowledge resources simultaneously.
... Marketing performance is defined as an effort to measure performance levels including sales volume, number of customers, profits and sales growth (Voss & Voss, 2000). According to Kim and Gao (2013), company performance indicators are profitability, revenue growth, job satisfaction, employee productivity and quality of services and products. In detailing the marketing performance, variable indicators are customer growth, sales growth, and market share. ...
Rapid development in the perfume industry has been accompanied by accelerated digitalization, which was unexpected by most Micro, Small and Medium Enterprises (MSMEs). Many MSMEs in this sector experience problems with access and knowledge of digital technology, especially in digital marketing and e-payment. Most MSME players are still learning and are slow to adopt digitalization in their perfume business. This research aims to analyze the influence of digital marketing, e-payment and digital orientation on the performance of perfume MSMEs in West Java Province. A sample of 100 respondents, company owners or managers, was selected using stratified sampling. Data analysis uses Structural Equation Modeling (SEM) and Moderated Regression Analysis (MRA). The results show that digital marketing and digital orientation have a positive and significant effect on MSME performance, while e-payment does not have a significant effect. Digital orientation also negatively and insignificantly moderates the influence of digital marketing and e-payment on MSME performance. Perfume MSMEs are advised to consider the role of digital orientation and optimize digital marketing strategies to improve their business performance.
... Researchers can examine elements including innovation, strategic planning, and market flexibility (Kim & Gao, 2013). Holland (1981) studied the interaction between the constraints of family members who own and/or manage a family business and the competitive requirements of that business, but the literature often lacks focus on how these relationships affect a family business's performance. ...
In Bangladesh, family businesses play a significant role in the country's business landscape because so few private companies are set up as large-scale, non-family ownership firms. Thus, it is vital to comprehend family businesses in order to comprehend Bangladeshi company dynamics. In this paper, authors attempted to survey the existing research in the area of family business in Bangladesh. It was found that the area as a research is totally an open field and a lot of new research can be done in the said area. Although a good number of studies can be classified as focused on the SME (small and medium enterprise) domain, a major shortcoming of those SME studies is that the SMEs themselves vary greatly in terms of size, scope, and technology. Whereas most of the family businesses predominantly can be put in the SME category, the particular issue of family business and family dynamics is not very common in those studies. This paper suggests that a good amount of research or studies can be done focusing on family business constitution, family member's participation norm, recruitment and promotion norm, family business succession rules and succession planning, training for family business leadership and management, training for board and directorial supervision, and so on. Abstract-In Bangladesh, family businesses play a significant role in the country's business landscape because so few private companies are set up as large-scale, non-family ownership firms. Thus, it is vital to comprehend family businesses in order to comprehend Bangladeshi company dynamics. In this paper, authors attempted to survey the existing research in the area of family business in Bangladesh. It was found that the area as a research is totally an open field and a lot of new research can be done in the said area. Although a good number of studies can be classified as focused on the SME (small and medium enterprise) domain, a major shortcoming of those SME studies is that the SMEs themselves vary greatly in terms of size, scope, and technology. Whereas most of the family businesses predominantly can be put in the SME category, the particular issue of family business and family dynamics is not very common in those studies. This paper suggests that a good amount of research or studies can be done focusing on family business constitution, family member's participation norm, recruitment and promotion norm, family business succession rules and succession planning, training for family business leadership and management, training for board and directorial supervision, and so on.
... The ambiguity from productivity studies confirms that the relationship between family involvement and firm performance is complex, nonlinear and multifaceted (Barth et al., 2005;Miller et al., 2007). Importantly, to understand this relationship, it is also necessary to consider that FFs pursue both economic and non-economic goals more than non-FFs (Kim and Gao, 2013;Steier, 2003), and there is no consensus regarding how FFs' peculiarities affect productivity. Indeed, some arguments are in favour of a positive family ownership effect (Anderson and Reeb, 2003;Barbera and Moores, 2013;Miller et al., 2007), but several considerations oppose this conclusion. ...
Purpose
The purpose of this study is to investigate whether and how inter-firm cooperation and firm age moderate the relationship between family ownership and productivity.
Design/methodology/approach
We first estimate the total factor productivity (TFP) of a large sample of Italian firms observed over the period 2010–2018 and then apply a Poisson random effects model.
Findings
TFP is, on average, higher for non-family firms (non-FFs) than for FF. Furthermore, inter-organizational cooperation and firm age mitigate the negative effect of family ownership. In detail, it is found that belonging to a network acts as a moderator in different ways according to firm age. Indeed, young FFs underperform non-FF peers, although the TFP gap decreases with age. In contrast, the benefits of a formal network are high for older FFs, suggesting that an age-related learning process is at work.
Practical implications
The study provides evidence that FFs can outperform non-FFs when they move away from Socio-Emotional Wealth-centered reference points and exploit knowledge flows arising from high levels of social capital. In the case of mature FFs, networking is a driver of TFP, allowing them to acquire external resources. Since FFs often do not have sufficient in-house knowledge and resources, they must be aware of the value of business cooperation. While preserving the familiar identity of small companies, networks grant FFs the competitive and scale advantages of being large.
Originality/value
Despite the wide but ambiguous body of research on the performance gap between FFs and non-FFs, little is known about the role of FFs’ heterogeneity. This study has proven successful in detecting age as a factor in heterogeneity, specifically to explain the network effect on the link between ownership and TFP. Based on a representative sample, the study provides a solid framework for FFs, policymakers and academic research on family-owned companies.
... Due to the resource status of common ownership, family businesses may not easily implement interest transfer behaviors in the process of value flow. In contrast, when considering the resource advantages of common ownership, long-term investment in innovation is more conducive to the long-term prosperity and intergenerational inheritance of family businesses (Kim and Gao 2013;Zellweger et al. 2012). Therefore, common ownership promotes the innovation of family businesses by intervening in the value flow of family businesses after succession. ...
Intergenerational succession often leads to insufficient innovation in family firms, but there is still no consensus on how common ownership affects this situation. Therefore, from the perspective of value cocreation, this study explores the mechanisms through which common ownership influences the innovation of family firms after succession, focusing on two aspects: motivation and behavior. Using unbalanced panel data of 167 Chinese listed family firms that underwent succession between 2004 and 2021, we empirically investigate the way in which common ownership impacts corporate innovation and the mediating role of value proposition motivation and value flow behavior. Our findings indicate that common ownership contributes positively to corporate innovation and that its influence is exerted through value proposition optimization and value flow intervention, providing empirical evidence for the study of the economic consequences of common ownership. Furthermore, we explore the mediating role of specific value proposition motivations and value flow behaviors in the impact of common ownership on corporate innovation. This research suggests that family business succession activities should be examined in the context of a more complete network of corporate relationships and provides insights into how common ownership influences corporate behavior in value cocreation.
... SEW has been shown to have a significant effect on strategic decisions [19], [54], [93]. Furthermore, the literature establishes that the focus on family goals driven by SEW fosters risk aversion, which, in turn, influences family firms' strategic behaviors toward activities, such as BITA [21], [31], [46], which, in turn, can affect firm performance [28], [94], [95], [96], [97]. ...
This paper examines the performance effects of business IT alignment in the context of family firms. Using a unique survey-based dataset of 954 European family firms, this study provides empirical support for the prediction that business IT alignment is associated with family firms' performance. However, this result is weaker in family firms that prioritize family goals.
... Researchers of family companies suggest, that the specificity of a family business favors the presence of women in business (Hollander & Bukowitz, 1990) and offers them independence and access to potentially better positions (Salganicoff, 1990) including leadership and management (Kim & Gao, 2013). In addition, working in a family business also means more flexibility in working hours and schedules, as well as greater safety at work (Salganicoff, 1990) and opportunities for development and advancement (Lyman, 1991). ...
Theoretical background: The family enterprises are regarded as the backbone of every economy. In Poland, it is estimated that more than 60% of small and medium-sized enterprises are family businesses. Taking into account the particularities of the Polish economy in connection with the period of political transformation after 1989, the majority of family firms are in the hands of the founding families respectively the first generation. The question of the succession process is of great importance for all family companies, but especially for Polish family businesses, since in the former communist system no private property could be passed on to future generations. The Polish entrepreneurial families therefore do not have enough practical succession experience. Moreover, the Polish society is still characterized by a conservative world view or female view, which means that the majority of entrepreneurs choose the eldest son as their potential successor. Purpose of the article: The aim of the study is to present the history of daughters successors in Polish family businesses in institutional context of transforming economy. The research follows the qualitative paradigm to find context sensitive data on female successors in family businesses in Poland. Research methods: The research was designed and conducted according to the qualitative paradigm as this is the best way to understand the social realities of the actors involved. The research material was collected through semi-structured interviews with three daughters-successors in Polish family firms. The authors conducted with each female successor two interviews – a total of six interviews. The interviews last on average 1.5 hours. The longest last 2.5 hours. The interviews took place at the companies’ headquarters. The interviewed persons were women from family-owned businesses. Main findings: Taking into account the data collected, it can be assumed that the education of the next generation in the entrepreneurial families has a direct influence on the probability of a takeover. The study indirectly showed that society’s attitude towards working women in Poland has changed. This survey can make an important contribution to the understanding of the dynamics that prevail in Polish family-run companies. These findings can in turn help to develop recommendations or guidelines for those business in the succession process.
... Researchers can examine elements including innovation, strategic planning, and market flexibility (Kim & Gao, 2013). Holland (1981) studied the interaction between the constraints of family members who own and/or manage a family business and the competitive requirements of that business, but the literature often lacks focus on how these relationships affect a family business's performance. ...
In Bangladesh, family businesses play a significant role in the country's business landscape because so few private companies are set up as large-scale, non-family ownership firms. Thus, it is vital to comprehend family businesses in order to comprehend Bangladeshi company dynamics. In this paper, authors attempted to survey the existing research in the area of family business in Bangladesh. It was found that the area as a research is totally an open field and a lot of new research can be done in the said area. Although a good number of studies can be classified as focused on the SME (small and medium enterprise) domain, a major shortcoming of those SME studies is that the SMEs themselves vary greatly in terms of size, scope, and technology. Whereas most of the family businesses can be predominantly put in the SME category, the particular issue of family business and family dynamics is not very common in those studies. This paper suggests that a good amount of research or studies can be done focusing on family business constitution, family members' participation norm, recruitment and promotion norm, family business succession rules and succession planning, training for family business leadership and management, training for board and directorial supervision, and so on.
... Ou seja, a interação da família na gestão é um fator determinante que a diferencia das empresas não familiares. Kim & Gao (2013) acreditam que os membros da família são um importante recurso humano, social, financeiro e físico. Por isso, a empresa familiar se distingue dos outros tipos de organizações, uma vez, que há de forma inerente a motivação pela continuidade, ancorada no ambiente empresarial e familiar (Flores Jr & Grisci, 2012). ...
O presente trabalho tem como objetivo analisar o valor de mercado através do desempenho financeiro de empresas familiares e não familiares brasileiras, listadas na BM&FBovespa, por meio de variáveis de desempenho (giro do ativo, ROA, ROE, margem líquida, alavancagem, endividamento, EBITDA) e as variáveis de controle (tamanho e payout), com análises de correlações de Pearson e regressões lineares múltiplas com dados em painel. A pesquisa resultou em uma amostra com 958 observações, as informações foram obtidas nos demonstrativos financeiros anuais de 2014 a 2019, extraídas do banco de dados da Economática. Os resultados confirmam que em média o giro do ativo, ROA, ROE, margem líquida, alavancagem, endividamento, EBITDA, tamanho e payout, são diferentes entre as empresas familiares e não familiares. Os resultados sugeriram também que o giro do ativo, alavancagem, tamanho EBITDA, payout, margem líquida e ROA são, de modo geral, os indicadores com maior influência sobre o valor de mercado das empresas brasileiras, enquanto ROE e endividamento não se mostraram relevantes para a formação de preço das ações das empresas. Constatou-se ainda através da Dummy familiar, que a forma de gestão também influencia no preço da ação, de forma positiva, ao contrário do que se esperava e da correlação de Pearson. Isso pode ter sido gerado pela mudança dos indicadores nas empresas familiares que passaram a desempenhar de forma melhor ao longo do tempo.
... Past studies present mixed results on the relationship between family involvement and firm performance, with several finding a positive relationship (e.g., Muñoz-Bullón, Sanchez-Bueno, & De Massis, 2019), others finding a negative relationship (Cirillo, Mussolino, Romano, & Viganò, 2017), and more no relationship (e.g., Kim & Gao, 2013). Additionally, Hatak, Kautonen, Fink, and Kansikas (2016) find a Ushaped relationship. ...
... Developing the success of family business has serious implications, not only from the family members and business partners, but also from the development of country's economic condition (Buang et al., 2013). Kim and Gao (2013) identified that interactions between family, business, and family members forms a systemic and constituencies conditions that affect the performance of family business in the long run. According to Handler (1990) with an understanding of the importance of studies on family business, a number of literatures concentrate on family involvement in ownership, governance, and management of succession process (in Joo, 2016). ...
Research Objective: To analyze the effect of entrepreneurial orientation towards the business success of second and third generation family businesses in Indonesia. Methodology/ Research Approach: This study used a cross-sectional, correlation research design. The survey was conducted to 153 medium-scale family businesses that have run for 5-50 years and categorized as middle-scale business ran by the second and/ or third generation family. Hypothesis testing was done via a multiple regression using SPSS. Findings: there is a significant effect between entrepreneurship orientation, which is the independent variable of this study, that covers three indicators namely innovation, proactive, and risk-taking abilities. Innovative and proactive have a significant and positive effect, while risk-taking ability has a significant and negative effect on the success of family businesses in Indonesia. Research limitation/ implication: This study investigates strategies that family businesses use, in terms of entrepreneurial orientation. The limitations of this study are: Bias in assessment perspective of fellow families and the scale of the family business only focus on second and third-generation middle-scale family business. The implication of this research is to create an entrepreneurial orientation culture in family businesses that tend to be lacking innovative, proactive, and risk-taking behaviors, considering the amount of interference and involvement of family members in the management of their family businesses. Practical implication: It is hoped that the second and the third-generation family members show a better perspective exploration in seeing whether entrepreneurial orientation has been implemented and has an impact in creating business success. Thus, family businesses are expected to scale-up their businesses into large-scale companies, and at the same time, survive the succession phase of the next generation. Originality/ value: This study offers an analysis of a unique entrepreneurial orientation, given the personality, family, ownership, and management system in family businesses in Indonesia are different from other countries. Besides, there are influences of technological advances that may interfere family businesses, particularly the family system, in Indonesia
... Mishra & McConaughy (1999) found that lower level of debt in family firms is driven by founding family peculiarities rather than by the level of managerial ownership. Kim and Gao (2013) state that involvement of family in firm is a key characteristic differentiating family from nonfamily firms. Gottardo & Moisello (2016) explain the differences in leverage between family and nonfamily firms depend on some firm's characteristics, i.e. multiple family members on the supervisory board od commisioner, board of director or management, and ownership dispersion. ...
This research aims to examine how female family echelons (the presence female family on commisioner or director) effect on leverage. Sample use in research are 1374 firms years observation from nonbank and nonfinancial sector actived trade on Indonesia Stock Exchange over 2011 to 2015. Using regression of fixed effect model, this finding suggest that family firm are less leverage than nonfamily firm. Proportion of family ownership, family commisioner and family director insignificant affect on leverage, however, relationship between family ownership and leverage are significantly nonlinear (U-shape). Female family echelons effect on leverage. Family firms more risk averse than nonfamily firm due to involvement women on family echelons.
... Kinerja perusahaan yakni hasil yang diperoleh oleh suatu organisasi baik organisasi tersebut bersifat profit oriented maupun non-profit oriented yang dihasilkan dalam satu periode waktu (Gozali & Nugraha, 2022) kinerja pemasaran didefinisikan sebagai usaha pengukuran tingkat kinerja meliputi volume penjualan, jumlah pelanggan, keuntungan dan pertumbuhan penjualan (Voss & Voss, 2000;Fitria et al., 2016;Bachri et al., 2016). Kim & Gao (2013), indikator kinerja perusahaan adalah profitability, pertumbuhan pendapatan, kepuasan kerja, produktivitas karyawan dan kualitas jasa dan produk. Pelham (2000) menrinci indikator variabel kinerja pemasaran adalah pertumbuhan pelanggan, pertumbuhan penjualan, dan porsi pasar. ...
This study examined the effect of digital marketing on marketing performance, and examined the mediating effect of product innovation variable. The sample in this study was 160 entrepreneurs of SME business in Lhokseumawe City who focused on the field of fashion. The analytical tool used is path analysis using the SEM (Structural Equation Modeling) with AMOS. The results showed that digital marketing had a positive and significant effect on marketing performance and the product innovation mediated between the digital marketing variable and the marketing performance.
... Most studies on the efficiency of the functioning of family businesses use traditional financial measures (Williams, 2018), and the specificity of family businesses often requires the application of other evaluation methods which will enable the holistic view of the endeavors of family businesses and their performance (Kim & Gao, 2013, Williams et al., 2019. Chua et al. (2018) pinpoint that the assessment of the performance of the family business significantly depends on how objectives and results are measured. ...
Efficient management at family businesses, like all other enterprises, requires the use of appropriate methods and tools. However, in many cases, the people managing these entities do not have any formal business education and often follow their intuition and act on experience gained over the years. The purpose of this article is to determine the extent to which select management methods and tools are used in Polish family businesses and to examine their impact on the effectiveness of achieving various objectives. A survey was conducted on a group of 182 managers of family businesses from Poland, who were asked about the effectiveness of achieving goals and the methods and tools used in management. The goals have been aggregated into three main groups: family goals, business goals, and a mix of family and business goals. Then, using statistical methods, the impact of the selected management methods and tools on the effectiveness of these three groups of objectives was examined. The conducted analysis has shown that family businesses in Poland make little use of professional management methods and tools and are rather limited to the intuitive use of the simplest methods, which they often cannot even professionally name. The research results indicate that the use of these methods only partially influences the effectiveness of achieving the set goals, and this impact can be observed in all three groups. In view of the above, the basic task of the broader family business environment is to improve the knowledge of professional management methods and tools among family business managers. From the scientific point of view, further research in this area is also necessary because little use of management methods and tools, especially those more
... In contrast to ROE measurement, there was no significant influence between family ownership and company performance. (2017) and Kim & Gao (2013) shows that the insignificant relationship of family ownership is because the company involves only family member which it can not reflect a complex company where the family is no longer the solo owner. ...
Family ownership and political connections have made significant contributions to company in Indonesia. Hence, firms registered on the Indonesia Stock Exchange (IDX) were tested as samples with firm performance as a measurement. The purpose of this article is to research the role of family ownership and founders on board on firm performance with political connections as a moderating variable. The sample data used in this research are quantitative data with 492 registered firms on IDX for the period of 2015 to 2019. The analysis results show that family ownership influences firm performance positively. However, founders on board have insignificant relation with firm performance. Meanwhile, political connections do not moderate the relationship between family ownership and founders on board with firm performance.
... Second, the dysfunctional manager agent market is one reason for executive pay comparison behaviors in China, whereas this is not apparent in Poland. China has a strong family culture but lacks a stable external labor market (Kim and Gao, 2013). Indeed, Li (2003) studied family firms in economically developed areas of eastern coastal China and found that agency market failures were widespread. ...
Although there is a large volume of literature on executive compensation, few of these studies have focused on executive pay comparisons and even fewer on the antecedents of executive pay comparisons. This paper fills this gap in executive pay comparison literature by beginning with executive pay comparison behaviors, and then the elements that influence executive pay comparison behaviors are discussed. A questionnaire survey found that executive pay comparison behaviors exist in both China and Poland. Furthermore, the findings show that the factors influencing executive pay comparison behaviors are different in the two countries. In China, there is a significant relationship between executive pay comparison behaviors and the dysfunctional agent market, herd mentality. And in Poland, there is a significant relationship between executive pay comparison behaviors and the ineffectiveness of government intervention, herd mentality. The implications of the study are also discussed.
... Research by Leung, Richardson and Jaggi (2014) show that the appointment of an independent director in the directors of a family company does not affect the company's performance. Kim and Gao (2013) found that the long-term goals of the company bridge the relationship between family management and company performance. ...
This paper analyzes the influence of corporate governance and corporate strategy on the performance of family owned or controlled firms listed on the Indonesia Stock Exchange. The Corporate Governance proxy is Family Ownership and Independent Commissioner, and Corporate Strategy proxies are Diversification and Compensation Strategy of Directors. This study uses a sample of 70 companies that are family owned or controlled companies listed on the Indonesia Stock Exchange (IDX) from 2014 to 2018. Data analysis was performed using multiple linear regression methods. The results of this study indicate that family ownership has a significant negative effect on company performance (ROE). While diversification and compensation strategy of directors have no effect, firm performance is measured by ROE.
... At this level, researchers describe how external forces (e.g. technological, economic, and social) leave imprints on organisations that are maintained through educational institutions, national values, organisations, politics, traditions, and the media (Inglehart & Baker, 2000;Kim & Gao, 2013;Seidel, 2020;Shinkle & Kriauciunas, 2012;Stinchcombe, 1965). National institutions provide era-specific templates which guide organisational structures, designs, and systems, which persist even in the face of modernizing influences (Peng, 2004). ...
Human resource (HR) process research refers to the way HR practices are communicated in organisations, including the way these HR practices are understood (i.e. perceived HR strength) and attributed (i.e. HR attributions) by employees. Previous research has mainly focused on the outcomes of the HR process, while research that examines both antecedents and employee outcomes is relatively rare. This is especially the case for imprinting factors, defined as the hereditary and family-related influences, non-work contextual factors, and cultural values that may affect the way employees understand and attribute HR in their organisation. To further explore this relatively new area of research, this paper provides a systematic review of 19 empirical studies that investigate the role of imprinting factors in HR process research. Through the application of an imprinting framework with HR content and HR process theories, this review is orientated around the development of an integrative conceptual framework that elaborates on how, when, and to what degree imprinting factors influence the effect of bundles of HR practices on perceived HR strength and HR attributions and, as a consequence, employee outcomes. We conclude our review with several research directions that act as a platform for future scholarship.
... Managerial capabilities enable top managers to deploy firms' resources in ways that lead to organisational success (Sirmon et al., 2007). Similarly, a firm's competitiveness depends on its managers' ability to develop, create and access assets that cumulatively create a differentiated store of resources (Kim and Gao, 2013;Helfat and Martin, 2015). Previous research shows that managerial capabilities condition the adoption of business models (Pucci et al., 2017), competitive strategies (Agyapong et al., 2016) and growth strategies (Graves and Thomas, 2006;Barbero et al., 2011). ...
Purpose
This paper investigates whether board composition, a family chief executive officer (CEO) and the firm's managerial capabilities affect proactive tax management in family small and medium-sized enterprises (SMEs). The main statement is that the professionalisation of corporate government and management practices explains the difference in tax avoidance behaviour in closely held family SMEs.
Design/methodology/approach
Using the 2012 Spanish thin-capitalisation rule as a quasi-experiment, the authors estimate panel regressions with firm fixed effects and robust standard errors. This model represents a triple difference-in-differences combined with propensity score matching (PSM-DID).
Findings
Analysis shows that having a high proportion of non-family board members and a high endowment of managerial capabilities lead to tax liability optimisation in family SMEs. Conversely, familial boards and family SMEs with low managerial capabilities lack enough expertise to weigh the costs of tax avoidance over the benefits, resulting in a reluctance to engage in tax optimisation behaviours. Alike, results show no significant relation between CEO's family affiliation and tax management behaviour.
Practical implications
When implementing fiscal policies, the specific needs of family SMEs should be considered, and how these needs interact with corporate governance and managerial mechanisms. Moreover, policymakers need a deeper understanding of family SMEs in order to develop policies appropriate to their characteristics. A more comprehensive knowledge of how family firm heterogeneity affects corporate decisions, such as indebtedness and fiscal decisions, may improve public policies.
Originality/value
This study addresses the issue of tax behaviour in family SMEs in a particular event that implies a specific logic to weigh the pros and cons of each alternative: reducing debt or paying more taxes. This study’s conclusions are based on a model that deals with potential endogeneity problems, which avoids bias in the findings.
... The family's financial position also influences the choices of women entrepreneurs, to support their ventures financially, particularly when their family has a strong financial base (Akehurst et al., 2012;Kim and Gao, 2013). In contrast, poor families may face financial difficulties in attempting to support their women entrepreneurs. ...
This study examines the impact of the COVID-19 pandemic on women entrepreneurs in Pakistan’s informal sector based on perceived sales increase/decrease and satisfaction with sales. The coronavirus (COVID-19) pandemic has had profound economic effects, putting women entrepreneurs at considerable risk of losing income and sales growth as a result. Women reporting sales increases and sales satisfaction tended to be older, have lower education levels, have larger households, be married, own a home, have a supportive family and report an average family financial position. The impact of family support on sales variables depended on the size of the household. The type of business was also affected during the pandemic. This study is unique because it focuses on the impact of the pandemic at the household level where women have taken on increased responsibilities for work and family beyond those in ‘normal’ times. The household level of analysis is critical for understanding the dynamics of women’s informal, home-based businesses in the family context. Findings suggest the resilience, agility and multiplier effects of women entrepreneurs in the face of cultural, economic, social and institutional constraints encountered during the pandemic.
Despite the core role small and medium-sized enterprises (SMEs) play in driving economic development and job creation across both developed and developing nations, the growth of SMEs has continued to decline especially in Nigeria. Therefore, this study examined the effect of entrepreneurial leadership and learning orientation components on SMEs growth in South-West Nigeria. Survey research design was adopted for this study. The population comprised 149,317 owners/managers of SMEs in South-West Nigeria. A sample size of 498 was determined using Cochran formula. Simple random sampling technique and a validated questionnaire was adopted for data collection. Cronbach's alpha reliability coefficients for the constructs ranged from 0.702 to 0.829. Findings from partial least squares structural equation modeling revealed that entrepreneurial leadership and learning orientation components had positive and significant effect on the growth of SMEs in 2 2 South-West Nigeria (Adj R = 0.934; F = 0.497; SRMR = 0.050, NFI = 0.767, p < 0.05). SMEs should synergistically integrate entrepreneurial, visionary leadership with a strong commitment to continuous learning and knowledge acquisition, fostering an adaptable, opportunity-oriented culture aligned for capitalizing on emerging trends and propelling sustained growth trajectories in dynamic competitive markets.
This article studies the non-linear relation between family ownership and firm performance (FP) in the Indian context by taking firms listed on NSE 500. The sample firms are investigated for 11 years, 2011–2021. The article also tries to study the impact of various categories of external block holders on the performance of Indian family firms due to their capacity to pressure management and monitor their actions. The study results show a U-shaped relation between family ownership and Indian family firms’ performance, as depicted by ROA and TQ. The findings further suggest that two prominent kinds of outside block holders that have been observed to be related to greater performance in family firms are government and foreign institutional shareholders. Thus, it can be assumed that these external block holders’ greater monitoring ability is linked with reduced agency costs and increased FP. The study is unique in finding out the influence of the ownership and governance mechanisms in the sample of Indian family firms on their performance.
What do we know about stock-listed family businesses and longevity? How much has research revealed so far? What are the key points of connection for this study? This chapter leads the reader through the current field of research on survival for both family firms that are stock-listed and those that are not. It also introduces the starting point of the present study. The current standard of knowledge based on previous investigation ignites the spark of curiosity and inspires deeper research.
1 L’implication de la famille influence-t-elle les exportations dans la PME familiale ? La littérature semble conforter cette thèse même si le sens et l’intensité de cet impact restent controversés. Pour concilier les points de vus divergents, notre recherche tente d’évaluer le rôle de l’orientation internationale du dirigeant comme variable modératrice de la relation entre l’influence familiale et les exportations au sein de la PME. Inscrite dans une démarche hypothético-déductive, l’étude se base sur les données d’un échantillon de 125 PME familiales. Les résultats montrent que si l’influence positive de l’orientation internationale sur l’exportation est corroborée, son rôle modérateur semble se limiter à une seule facette de la notion d’implication familiale à savoir l’implication managériale. Par ailleurs, l’implication managériale de la famille propriétaire semble influencer négativement l’exportation alors que certains résultats militent pour un effet favorable de l’implication patrimoniale de la famille propriétaire.
Purpose
Using a dynamic capability view, this study examined the relationships between big data analytics capability (BDAC), entrepreneurial orientation (EO) and sustainable supply chain performance (SSCP) by exploring the moderating role of trust among supply chain partners.
Design/methodology/approach
Questionnaires were collected from 300 manufacturing organizations using snow sampling. The moderating connections and direct relationships were examined using Hays' process macro and structural equation modeling.
Findings
BDAC was positively related to EO and SSCP. When supply chain partners experienced low levels of trust, an increase in BDAC did not enhance SSCP. As trust increased, the relationship between BDAC and SSCP became more positive, underpinning the moderating effects of trust. Moreover, trust did not moderate the relationship between BDAC and EO. The moderating effect of trust on the relationship between EO and SSCP showed a positive relationship between EO and SSCP when trust was low; however, the relationship became negative when trust was high.
Practical implications
Developing technology alone may not be sufficient, as supply chain managers need to establish a strong business relationship based on mutual trust. However, they also need to be aware of the dangers of high levels of trust because these may negatively affect performance. Therefore, supply chain managers need to achieve an optimal level of trust that is neither excessive nor insufficient.
Originality/value
Advances in technology and entrepreneurial drive for supply chain sustainability make it pertinent to examine trust levels among supply chain partners and the varying impact on BDAC, EO and SSCP. The current study shows the negative aspects of too much trust among supply chain partners.
Purpose
Drawing on the dynamic capability view, this study aims to examine the relationships between big data analytics capability (BDAC) and sustainable supply chain performance (SSCP) by exploring the mediating effects of knowledge development (KD) in terms of knowledge acquisition, information distribution, shared meaning and achieved memory.
Design/methodology/approach
Data were collected by questionnaire survey from 300 manufacturing organizations. Structural equation modeling was used to test the research hypotheses.
Findings
It was found that all the dimensions of KD were positively related to BDAC and SSCP. Although no direct association was established between BDAC and SSCP, the empirical findings indicated that all the dimensions of KD fully mediated the relationship between BDAC and SSCP. This highlights that organizations need to harness KD because developing BDAC alone may not be sufficient.
Originality/value
No previous research has explored how KD dimensions such as knowledge acquisition, information distribution, shared meaning and achieved memory mediate the relationship between BDAC and SSCP. This paper addresses this gap in the literature and contributes to the existing debate to better understand the conditions in which BDAC affects SSCP. Pointers for future research are also identified.
Purpose
Drawing on the dynamic capability view (DCV), the current study aims to examine the mediating effects of entrepreneurial orientation (EO), in terms of innovativeness, proactiveness and risk taking, on the relationships between big data analytics (BDA) capability and sustainable supply chain performance (SSCP).
Design/methodology/approach
Data were collected by questionnaire survey from 300 manufacturing organizations. Structural equation modeling (SEM) was used to test the hypotheses.
Findings
The findings showed that innovativeness and proactiveness fully mediated the link between BDA capability and SSCP. However, risk taking only partially mediated the relationship between BDA capability and SSCP. There was also a negative relationship between BDA and risk taking.
Research limitations/implications
Given that the current study focused on the manufacturing sector, future research is needed to compare different sectors and cultural contexts. Further exploration is also needed into the dimension of risk taking in terms of the role of risk taking in linking BDA capability with SSCP in different cultural settings.
Practical implications
Technology may not increase the risk taking capability. Organizations may be creative and proactive but may remain risk averse despite having access to big data. Organizations need a more balanced approach to dynamically integrate and reconfigure the organizations' BDA and EO capabilities in order to enhance SSCP.
Originality/value
The role of EO in mediating the relationship between BDA capability and SSCP has not been studied before. The current study aimed to address the gap and contribute to the existing debate on better understanding the factors that are needed by organizations to effectively employ technology to enhance SSCP. Untapped areas for future research are also identified.
Purpose
This study explores whether the unique organizational form of family firms helps to mitigate the negative effects caused by the announcement of product recalls.
Design/methodology/approach
The authors use an event study, for a sample of 2,576 product recalls in the United States (US) automobile industry, between January 2010 and June 2021.
Findings
The authors found that stock market's reaction to a product recall announcement is less negative for family firms. This superior performance is partially driven by the family firms' long-term investment horizons and higher strategic emphasis on product quality. However, the relationship between family ownership and cumulative abnormal returns around product recall announcements is nonlinear as the impact of family ownership starts by being positive but becomes negative for higher levels of family ownership. The authors also find that family firm's chief executive officer (CEO) and managerial ownership influence positively the stock market reaction to product recall announcements.
Practical implications
This work has several implications for family firms' management as well as for investors and financial analysts. First, as higher managerial ownership is associated with a greater emphasis on product quality, decreasing stock market losses when a product recall occurs, family firms should consider increasing equity-based compensation. Second, as there seems to exist an optimal proportion of family ownership, family firms should consider the risks of increasing too much their ownership share. Third, investors and financial analysts can use the results in the study to help them in their investment and trading decisions in the stock market.
Originality/value
The authors extend the knowledge of product recalls by studying the under-researched role of the flexible, internally focused culture of family businesses on the stock market reaction to product recalls.
A growing number of private Chinese media companies have reached an economic scale comparable to established Western media conglomerates, providing fertile ground for revisiting and revising media theories developed in the Western context. This article makes theoretical and practical contributions by showcasing the potential and plight of Wanda Group (Wanda). In particular, it examines the extent to which Castells’ network theory of power (1998 Castells, M. (1998). End of millennium: The information age. Blackwell Publishers. [Google Scholar], 2016 Castells, M. (2016). A sociology of power: My intellectual journey. Annual Review of Sociology, 42, 1–19. https://doi.org/10.1146/annurev-soc-081715-074158[Crossref], [Web of Science ®] , [Google Scholar]) can be applied to a non-Western political economy. We use publicly available financial documents and an archive of more than 3,000 newspaper articles to examine how Wanda builds, exercises, and loses its switching power. While highlighting the primacy of the switcher as described by Castells, we demonstrate Wanda’s switching power is fragile, and its exercise remains constrained and contingent on the extent to which the company aligns with the interests of the Chinese state.
Purpose
From an agency perspective, the authors investigate whether family ownership and control configurations are systematically associated with a firm's choice of auditor and audit fees. Agency theory is an economic theory that purposes the existence of a contract between two parties, principals and agents. Auditor choice and audit fees by family firms provide interesting insights given the unique nature of the agency problems faced by such firms.
Design/methodology/approach
The authors employ Big-4 auditors (PWC, KPMG, E&Y and Deloitte) as a proxy for high quality auditor (Big N) for the auditor choice model. For the audit fee model, the dependent variable is the natural logarithm of audit fees (LnAF). The authors use two measures for family firm as explanatory variables: (1) a dummy variable (FAM_Control), which equals one if the firm is classified as a family firm and (2) FAM_Ownership, which is an indicator variable with a value of one if a firm has family members who hold CEO position, occupy board seats, or hold at least 10% of the firm's equity. Data of Chinese listed firms from 2011 to 2021 are used. The authors adopt the Heckman (1979) two-stage model to mitigate the potential endogeneity issue involved in the selection of Big-N auditors.
Findings
The findings suggest that compared with non-family firms, Chinese family firms have a less tendency to employ Big-4 auditors due to less severe agency problems between owners and managers. Additionally, Chinese family firms sustain higher audit fees than non-family firms. Similar to the prior literature, however, Chinese family firms audited by Big-4 auditors incur lower audit fees than family firms audited by non-Big-4 auditors in this study. In contrast to young-family firms, old-family firms are less likely to pick top-tier auditors and sustain lower audit fees. Consistent and robust results are found from endogeneity tests and sensitivity analyses.
Originality/value
The empirical evidence provides a unique insight, for accounting practitioners, policymakers, family owners and other capital market participants concerning the diverse effects of various family ownership and control features on selecting high-quality auditors and audit fees. This study advances the understanding, showing that a lower demand for audit quality occurs in Chinese family firms as they encounter less severe Type I agency problems. However, the more severe Type II agency problems in Chinese family firms sustain higher audit fees due to higher audit risk and greater audit effort.
Purpose
It is acknowledged that the firm and the family interact in the family firm system and that family identity can influence family business brand communication through affecting stakeholders' perception, raising a question of whether the firm can implement its effect on the communication of family business brands via family identity. To address this question, this research investigates how firm revenue influences family business branding via family harmony.
Design/methodology/approach
Data for this research were gathered from a survey of 327 Chinese family firms.
Findings
The results show that family harmony fully mediates the relationship between firm revenue and family business branding.
Originality/value
This study is the first to demonstrate that the firm has an indirect effect on family business branding via family identity, a contribution to family business brand literature. The findings also offer insights into the relationship between firm performance and family business branding. Additionally, this project has implications for research on family harmony in the family business.
Entrepreneurial motivations, especially opportunity-based entrepreneurship, have attracted increasing research attention due to their high potential for promoting national competitiveness, yet few studies explicitly examine their determinants or impacts on new venture performance at the microlevel in emerging economies. Drawing on social network theory and institutional theory, this study distinguishes the impacts of business and political ties on opportunity-based entrepreneurship and their effect on new venture performance in different institutional environments. The empirical findings from multilevel datasets from China reveal that business ties have a stronger positive effect on opportunity-based entrepreneurship than political ties. Opportunity-based entrepreneurship has a stronger positive effect on new venture performance than necessity-based entrepreneurship, and these effects depend on government fiscal transparency. Overall, entrepreneurs’ opportunity-seeking motivation mediates the relationship between business ties and new venture performance.
The customer engagement (CE) concept has been presented to encourage active customer contribution to the firm that can add value to both firms and customers. While this concept is now part of a rich body of knowledge in the marketing strategy literature, research in the family business stream has not paid attention to it. Building on the CE concept, while integrating the familiness concept from the family business research, we advance a conceptual framework to establish CE in family firms. This study uses a methodological triangulation approach (i.e., a combination of literature review, popular press articles, and managerial insights from interviews) as the study approach to develop the framework. Using grounded theory to analyze the data collected through the triangulation approach, this study identifies the relevant factors that are used in the framework. Specifically, we propose that firm-related factors (i.e., adaptive marketing capabilities, and regenerative capability) employed by the family firm can lead to the creation of a positive family firm experience, a new concept we introduce in this study. Particularly, we propose that the firm-related factors have a diminishing positive effect on the family firm experience. We also identify moderators (i.e., vision disharmony, role overlap, and ethnicity) that influence the diminishing positive relationship between firm-related factors and family firm experience. Further, we also propose that the spillover in family firm conflict moderates the influence of family firm experience on satisfaction and emotional attachment, ultimately leading to CE. Based on this framework, we advance research propositions that discuss the creation of positive family firm experiences and identify areas for future research.
Dominant family control reduces Type I agency conflicts because of monitoring efficiencies, while increasing Type II agency conflicts because of the family’s voting power. Additionally, Type II agency conflicts could be exacerbated if the family agents managed the firm solely for the family’s benefit. The two different types of agency conflicts were examined in a sample of 499 public Indian family businesses during the years 2006 to 2015. Family-controlled and non-family-managed firms appeared to be optimally configured to minimize both types of agency conflicts. The absence of management control appeared to alleviate some of the dissipative agency conflict effects of dominant family ownership.
We studied the impact of family ownership and management on Indian family firm performance by using a sample of companies listed on the National Stock Exchange of India (NSE) 500 from 2011–2020. The findings using panel data analysis demonstrate that family ownership positively impacts the accounting (ROA) and market (Tobin’s q) measures of firm performance in our sample. Further, there is empirical evidence that family management is positively associated with firm performance using ROA but negatively related to TQ with the study showing that founder-managed firms outperform descendent or professionally managed family firms in the Indian context. The study is unique in understanding the ways in which family businesses perform, behave and add value to the shareholders by analysing a dataset of listed companies for ten years.
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.
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.
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.
Schumpeter’s conjecture that large monopolistic firms were the key source of innovation in modern industrial economies has been the underpinning for much work on the topic of innovation. In this review paper we consciously move beyond the Schumpeterian tradition of focusing on firm size and market structure as the primary determinants of innovation to identify a broader set of innovation determinants that have been investigated by the management literature. We make a distinction between innovative efforts and innovative output and for each of these outcomes we group the determinants of innovation into four broad headings—industry structure, firm characteristics, intra‐organizational attributes, and institutional influences. We examine four aspects of the industrial structure and how they influence innovation: the horizontal market structure which reflects the influence of competition and collaboration, as well as the role of buyers, suppliers and complementors. Under the rubric of firm characteristics, we consider the many externally observable attributes of a firm such as its size, scope, access to external sources of knowledge such as through alliances, and performance. Under the heading of intra‐organizational attributes we look at the inside of the firm, the firm’s organizational structure and processes, corporate governance arrangements including compensation and incentive structures, the backgrounds of managers, and organizational search processes. Finally, we consider two significant sets of institutional influences, the supply of science (wherein we also examine the nature and degree of science–industry relationships), and the appropriability regime. In each setting we try to structure the existing literature to identify the core theoretical mechanisms as well as empirical support for those mechanisms. We explicitly focus on the management literature in this area recognizing that the work of economists is being summarized in other such reviews. However, we have consciously tried to use terminology and organizing structures that should be familiar to both economists and management scholars and hope to encourage greater conversation and cross‐fertilization between these two groups. To facilitate this outcome we especially emphasize some areas where management literature has developed the most (e.g., alliances and networks) but then integrate the literature in these areas within the broader rubric of work in the economics tradition.
This article addresses some fundamental methodological issues confronting management researchers undertaking research in China. Among other things, it considers the following: cultural factors that might impact on what is a researchable question; sampling issues; difficulties in developing valid research instruments; problems pertaining to data collection; and the challenges of data interpretation. While the issues are by no means unique to China, there are a number of matters that require special attention in the Chinese context. Failure to consider such methodological problems might potentially call into question the findings of otherwise important management studies. Specific recommendations are provided as to how these challenges can be successfully dealt with.
Twenty-five years of economic reform has propelled China to the center of the world's economic stage. Based on current trends, in the foreseeable future China is likely to become the largest economy in the world. China's dramatic growth may be envied by other developing economies, but for management scholars it presents an exciting intellectual puzzle. In this paper we describe the empirical context of China today, review contemporary research on Chinese management and organizations, and describe the nine papers in this special issue of Organization Science. The papers provide a close examination of how massive corporate transformation in China has influenced interfirm relationships, affected opportunity structures and social processes, and modified individual behaviors within firms. We identify the many paradoxes in this intellectual terrain and present a guide to the challenging research agenda ahead. We recommend that scholars of organizations think deeply about China as a context and consider China as an empirical setting where the boundaries of existing knowledge on organizations can be extended.
This article examines the relationship between altruism and agency costs in family business through an in-depth case study of a family firm. We found that altruism reduced agency costs in the early stages of the business, but that agency problems increased as the venture became larger and more established. Moreover, we suggest that altruistic behavior need not be confined to family and close kin, but may extend through networks of distant kin and ethnic ties. We thus present a more complex view of the agency relationship in family business than is often portrayed in the existing literature.
Research on the performance of family firms is growing, but results are mixed, especially for nonlisted companies. Thus, on the basis of the co-presence of benefits and disadvantages of family involvement in ownership and management, we explored the presence of nonlinear effects of these two variables on performance. We run regression analyses on data drawn from 620 privately held family firms in Italy: A negative quadratic relationship between family involvement in management and performance was found, but we did not find any association between family involvement in ownership and performance. Our results suggest that in privately held firms the positive effects that previous literature associates with the presence of family managers do not appear strong enough to compensate for the disadvantages deriving from a nonmonetary goal orientation, nor do they compensate for the costs deriving from the need to solve conflicts between family managers and the impossibility of enlarging the company's social and intellectual capital through the employment of nonfamily managers. Moreover, the quadratic nature of the relationship calls for greater attention to be paid to these effects by family business owners, especially in those cases where family involvement in management is high.
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the 'separation and control' issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears the costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.
This study assesses the impact of business ideology and national culture on work values of managers in the United States, Russia, Japan, and China. The convergence/divergence/crossvergence framework is used to discuss the findings. Implications for international businesses are drawn regarding the applicability of multilocal or global strategies for corporate culture.
As China emerges as a major player on the international business scene, it is becoming increasing important for Western businesses to understand the work values and behaviors of the people in this large and regionally diverse country. Thus, the focus of this study is to identify work value differences across the 6 regions of China. In the process of developing these comparisons, we identify region-clusters based on the infrastructure characteristics of the regions. Then, in order to present the findings in a manner that is meaningful to Western business, we developed our comparisons using a cosmopolitan-local orientation to illustrate the degree of compatibility of values in the various regions with Western values. One result was the identification of the emerging Cosmopolitan Chinese manager.
This paper analyzes the survival of organizations in which decision agents do not bear a major share of the wealth effects of their decisions. This is what the literature on large corporations calls separation of 'ownership' and 'control.' Such separation of decision and risk bearing functions is also common to organizations like large professional partnerships, financial mutuals and nonprofits. We contend that separation of decision and risk bearing functions survives in these organizations in part because of the benefits of specialization of management and risk bearing but also because of an effective common approach to controlling the implied agency problems. In particular, the contract structures of all these organizations separate the ratification and monitoring of decisions from the initiation and implementation of the decisions.
Why does the vast majority of business school research either ignore, or at best, gloss over the role of family in owning or managing business enterprises? This paper addresses this question and contemplates how the gap might be remedied. It begins by reviewing recent definitional work on the family firm in order to chart the parameters of the family business construct. It then proceeds to describe the nature of, and interaction patterns that have evolved between family firms, privately held corporations, faculties of business, and business school researchers seeking job security offered by tenure. The paper concludes by offering recommendations for addressing the family business research lacuna. The first recommendation focuses on rethinking the grounding assumptions that have undergirded much traditional organizational research. The second suggestion deals with methodological issues and recommends the patient nurture of long-term, mutually beneficial linkages with family firms that might facilitate in-depth longitudinal inquiry.
In this paper we draw on recent progress in the theory of (1) property rights, (2) agency, and (3) finance to develop a theory of ownership structure for the firm.1 In addition to tying together elements of the theory of each of these three areas, our analysis casts new light on and has implications for a variety of issues in the professional and popular literature, such as the definition of the firm, the “separation of ownership and control,” the “social responsibility” of business, the definition of a “corporate objective function,” the determination of an optimal capital structure, the specification of the content of credit agreements, the theory of organizations, and the supply side of the completeness-of-markets problem.
Recent thinking about top management has been influenced by alternative models of man.1 Economic approaches to governance such as agency theory tend to assume some form of homo-economicus, which depict subordinates as individualistic, opportunistic, and self-serving. Alternatively, sociological and psychological approaches to governance such as stewardship theory depict subordinates as collectivists, pro-organizational, and trustworthy. Through this research, we attempt to reconcile the differences between these assumptions by proposing a model based upon the subordinate's psychological attributes and the organization's situational characteristics.
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This study examines the management of human resources in two Chinese cultural settings, namely mainland China and Taiwan. It compares and contrasts the similarities and differences of human resource management (HRM) policies and practices in the two economies. The main conclusions assess the impact of changing cultural, political and economic norms on HRM in the respective settings and their likely future developments.
This article investigates the influence of family involvement on firm performance in an emerging market economy. Using a panel of 217 Polish companies from 1997 to 2005, the authors find an inverted U-shaped relationship between the share of family ownership and firm performance. The data also reveal that firms with family CEOs are likely to outperform their counterparts that have nonfamily CEOs. The results take into account the endogeneity of family ownership and are robust to a number of specification checks.
The purpose was to present a family capital typology based on Sustainable Family Business Theory II and to document its relative contribution to short-term firm achievements and long-term sustainability using National Family Business Survey panel data. Family capital was defined as total owning-family resources composed of human, social, and financial capital. Family capital significantly contributed to firm achievements and sustainability. In the short term, all family capital types explained 13.5% of gross revenue variance and 4% of owner’s success perception variance. In the long term, all family capital types explained 26.7% of gross revenue variance and 11.6% of owner’s success perception variance.
Firms are too often unsuccessful due to poor strategy implementation, even when they have developed a sound strategy. Executives searching for guidance on implementing strategy are faced with a dilemma: some researchers argue that explicitly articulating strategy to organization members leads to organizational inertia; others say that strategy must be explicitly articulated for a coordinated implementation effort. We introduce structural centralization as a third variable that may be helpful in resolving this dilemma. We argue that, for more decentralized firms, explicit articulation of strategy may improve performance by increasing the likelihood of coordinated and motivated strategy implementation. Strategy articulation is not necessary, however, for coordinated implementation in centralized firms. The empirical results of our field study of 95 US manufacturing firms generally support this contingency view. Our results also indicate, however, a curvilinear explicitness–performance relationship. Very high and very low explicitness are associated with higher performance, while moderate explicitness is linked to lower performance. These results have important implications for both researchers and practitioners, in part because they help to integrate the previously contradictory viewpoints.
With the rapid development of organizational change and globalization in China, most Chinese firms are preparing themselves for doing business across regions and going global through effective strategic entrepreneurship and human resource management (HRM). This study examines the relationship between two general HRM practices, strategic entrepreneurship and organizational performance, in order to build up a cross-regional HRM strategy model. Participants in the study constituted 103 firms from 11 different cities and provinces. In each company, three types of surveys were distributed: an HRM practice survey (career development and performance management), a strategic entrepreneurship survey and an organizational performance survey among two human resource (HR) managers, two–three executives and two–three members of top management teams, respectively. Altogether 606 managers and executives participated from across regions in China. The results showed that performance management was positively related to organizational performance and such relationship was stronger when adaptive capability, one dimension of strategic entrepreneurship, was higher. The performance management–organizational performance relationship was also found to vary across regions. Moreover, two other dimensions of strategic entrepreneurship, proactive change and risk anticipation, were found to have effects on organizational performance. The implications of the findings are discussed.
Communism has lost its capacity to inspire the Chinese. But what will replace it? And what should replace it? Clearly, there is a need for a new moral foundation for political rule in China, and the government has moved closer to an official embrace of Confucianism. The Olympics highlighted Confucian themes, quoting the Analects of Confucius at the opening ceremony, and downplayed any references to China’s experiment with communism. Cadres at the newly built Communist Party School in Shanghai proudly tell visitors that the main building is modeled on a Confucian scholar’s desk. Abroad, the government has been promoting Confucianism via branches of the Confucius Institute, a Chinese language and culture center similar to France’s Alliance Française and Germany’s Goethe Institute.
The dual-concern conflict model argues that choice of conflict strategies are based on two concerns: concern for interests or goals of self and other. This article argues that the dual-concern model may only partially account for choice of conflict management strategies in Chinese family businesses, particularly in families that are strongly influenced by Confucianism. The article uses Confucian values and norms, which are an ancient set of guidelines for social interaction, as the basis for introducing additional concerns to explain choice of conflict strategies in Chinese family businesses: concern for relationships, interpersonal norms, and collective interests. Two sets of moderating variables are introduced based on the unique features of Confucian ideology. They include differences in age, status, and gender between conflicting parties, and types of conflict – normative or personal goal related, and task or relationship. Propositions summarize the major arguments.
This study investigates three important issues in a family business: (1) Whether there is a significant difference, relative to their goals and attitudes, between owners of businesses with family participation and owners of businesses without family participation; (2) whether owners of businesses with family participation perceive higher levels of business-family conflict than owners of businesses without family participation; and (3) whether owners of businesses with family participation view business-family conflict as a significant impediment to their business performance. We conducted a survey of 231 small business owners in midsize cities in the northeastern and midwestern United States. Of the total sample, 118 are businesses in which two or more family members are employed. This study examines both the reported conflict and the positives of family-member involvement. The findings indicate that there is no overall difference in business-related goals between the two groups, but that owners of businesses with family participation do experience significantly more business-family conflict. The study also concludes that this conflict is generally well managed and does not interfere with business objectives. In fact, the authors conclude that owners of businesses with family participation see the involvement of family members as a positive. Managerial implications and research suggestions are also discussed.
A series of workshops were held in Scotland to help family business managers identify and overcome obstacles to success. Core themes that emerged were family values, responsiveness to change, and family dynamics. The findings suggest that family enterprises have unique developmental characteristics with implications for economic and business development frameworks such as those in Scotland, which do not differentiate family businesses. A model is presented to analyze and categorize family enterprises in order to illustrate the issues facing family enterprises. The model provides insights into the source and effect of family values and family dynamics on the business and fosters business growth and development.
The controversial findings of both high and low performance for family-controlled public firms offer a unique context in which to study the moderating role of high-performance work systems (HPWS) on founding-family ownership effects. In a sample of Taiwan-based public firms, founding-family ownership was found not to be associated with firm performance. However, when the level of HPWS facing family ownership was accounted for, the results showed that the relationship between founding-family ownership and firm performance is significantly negative for companies with lower levels of HPWS but is significantly positive for companies with higher levels of HPWS.
There is a continuing debate regarding the extent to which organizations are culture-free or culture bound. A recent article suggests that while cultural factors are important in the growth of organizations, they are less important in terms of structural characteristics. This same article also suggests that Japanese and Chinese organizations share the same basic Confucian culture. We argue here that the Chinese and Japanese cultural traditions have major differences and that these play out in terms of important differences in organizational structure and operations.
The four managerial values of power distance, uncertainty avoidance, masculinity, and individualism measured by self-reports from 350 managerial trainees in the People's Republic of China (PRC) and Hong Kong provided the database for this research. The results indicate support for the convergence theory proposition that managerial values converge with increased industrialism. Further analysis revealed that it was the younger PRC managerial trainees who had values that were closest to those of Hong Kong managers of all ages.
This study of managerial ideology focuses on the question of legitimacy and attempts to reconstruct the way in which the role of the chief executive is perceived in the context of Overseas Chinese economic cultures. The location of the study is Hong Kong, Taiwan and Singapore and those studied were 72 chief executives in Chinese business organizations. Three determinants of present-day beliefs are traced to the socio-historical legacy of China, and these are identified as paternalism personalism and a defensiveness derived from insecurity. The workings of their influence are traced via perceptions of the self, of relationships, of organization, and of society at large, to explain how executives rationalize their behaviour and their roles.
Agency theory argues that shareholder interests require protection by separation of incumbency of rôles of board chair and CEO. Stewardship theory argues shareholder interests are maximised by shared incumbency of these rôles. Results of an empirical test fail to support agency theory and provide some support for stewardship theory.
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.
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.
Agency theory is an important, yet controversial, theory. This paper reviews agency theory, its contributions to organization theory, and the extant empirical work and develops testable propositions. The conclusions are that agency theory (a) offers unique insight into in- formation systems, outcome uncertainty, incentives, and risk and (b) is an empirically valid perspective, particularly when coupled with complementary perspectives. The principal recommendation is to in- corporate an agency perspective in studies of the many problems having a cooperative structure. One day Deng Xiaoping decided to take his grandson to visit Mao. "Call me granduncle," Mao offered warmly. "Oh, I certainly couldn't do that, Chairman Mao," the awe-struck child replied. "Why don't you give him an apple?" suggested Deng. No sooner had Mao done so than the boy happily chirped, "Oh thank you, Granduncle." "You see," said Deng, "what in- centives can achieve." ("Capitalism," 1984, p. 62)
The purpose of this study is to identify factors affecting the formalization of human resource management (HRM) practices in family firms. Our study of 205 family firms in the People's Republic of China suggests that firm size shows a significant, positive relationship to HRM formality, while firm location shows no effect. With resource advantages, large firms are able to adopt more formal and sophisticated HRM practices that enable them to gain legitimacy and social acceptance as well as coordinate and control their expanding workforce and complexity effectively. In contrast, informal HRM of small firms not only enables them to manage their resource constraints but allows much needed flexibility to respond to the country's ever-changing business environment. The lack of location effect, however, appears to demonstrate that the adoption and diffusion of formal HRM practices will likely take some time to manifest even in the more industrialized regions of the country, given the unique historical and cultural heritage deeply embedded in the minds of the Chinese and Chinese firms. The findings of this study clearly demonstrate the mixed influences on HRM of traditional Confucian values and the market ethic underpinning the constantly changing social and economic milieux of China.
This study examines the challenges facing China's increasingly complex labour-management relations system vis-a-vis the new economic, political and social environment it faces and how it is adapting to the new concept of the ‘harmonious society’ – to which the new Chinese leadership now aspires. The contribution concludes that the changes in the labour-management relations system reflect the impact of globalization on enterprise diversity as well as the increasing important position of trade unions to coordinate labour relations and protect worker's rights and interests. There will be another ‘Long-March’ needed for both party/state and other civil groups in China to reach a new social equilibrium.
Attention has been drawn recently to the differences which exist between family and non‐family firms, but Ward indicates that there are different types of family firms. More specifically, as Dunn puts it, “in some families it is evident that the business serves the family, as opposed to the family serves the business”. For some families in business, economic rationality dominates decision making, yet for others a “family first” ethos is to the fore, while a third group recognises the need to respond to economic and family considerations. In this paper firms which pay attention to both family and business are not investigated. However, Ward’s model of the characteristics of family firms is discussed and data based on a Scottish and Irish sample of 234 firms which put family first when business and family objectives clash, and 830 firms which focus on business objectives, are presented. Results suggest that the former exhibit several of the characteristics defined by Ward. This suggests that a considerable number of family firms may be lifestyle – as opposed to growth‐oriented businesses. These results have major implications for policy makers. If a substantial number of family firms differ from rational economic ventures by their methods of operation, then policy makers should be flexible with regard to the methods of intervention required to support this important section of the SME community. Policy issues in connection with family firms in Britain are considered in the light of our findings.
Examines the strategic postures, competitive tactics, and organization structures of small manufacturing firms that are associated with high performance in both hostile and benign environments. Hostile environments have such characteristics as difficult business climates, intense competition, and few opportunities, making such environments difficult for smaller, resource poor firms, and such environments are increasingly common in manufacturing. Two hypotheses suggest that the relationships between the organization structure and strategic posture can be determined by the level of hostility in the environment. Data were collected via surveys sent to single-industry, independently owned firms in western Pennsylvania, of which 161 responses were analyzed from among those in business for at least five years. Findings indicate that: (1) small firms with organic structures perform best in hostile environments, while small firms with mechanistic structures perform best in more benign environments; and (2) entrepreneurial firms perform better in hostile environments, while small conservative firms perform best in more benign environments. (SFL)
This article examines Confucian values and their effect on family business succession. Several implications are drawn. One of these is that Confucianism places family business in a social context in which the interpersonal relationships inside and outside the business family are subject to a variety of environmental influences. Examining family firms in their social context provides more complete understanding of the dynamics underlying choices and activities in family firms. 2006 Family Firm Institute, Inc.
Agency theory argues that firm performance will be greater when firm ownership and firm control are closely linked. This study examines that premise by comparing the performance of firms that are family-owned and family-managed with a group that is professionally managed. Previous research on the relation between firm governance and performance has focused primarily on the largest firms, ignoring the more prevalent organizational form -- the family owned and operated firms. A survey was administered to a sample of smaller manufacturing firms in Indiana. The 186 responding firms were then categorized as family owned and managed or professionally managed (however owned). The survey examined hypotheses related to firm size, firm age and growth strategies of the family firms vs. the professionally managed firms. Also examined were firm performance and the use of internal control procedures. Differences in structure, process and strategy were found between the two groups. There is some evidence of better performance for the family firm. Each firm of governance has associated costs; these costs need further examination.
The research regarding the characteristics of family firm governance are mixed, with some studies suggesting the presence of benefits of concentrated ownership and others suggesting increased conflict among family employees.To better understand the functioning of family businesses, both the positive and negative aspects of family firm governance must be explored. Initially, the background information on the characteristics of public firms is discussed, as is the agency of private owner-managed firms.The agency issues of these firms are then compared and contrasted to the agency issues at controlling-owner family firms.Both the negative aspects and the positive aspects of parental altruism are discussed.The impact of the stage of ownership is also examined, including the effects of sibling ownership and cousin consortium. Based on this information, several propositions are presented.The main thesis focuses upon the distinctive governing characteristics of family firms--i.e., family firms are a combination of the characteristics of private ownership, owner-management, and altruism. The implications of the propositions are discussed, limitations, and areas for future research are presented. (AKP)
The study examined the main and interaction effects of size and firm type on a variety of informal and formal training programs in small and medium-sized enterprises (SMEs). Samples of 448 family and 470 nonfamily SMEs were separated into four size groups and differences were assessed using multivariate analyses of variance. The results point to prevalence of informal training for all sizes and an increase in adoption of formal, structured, and development-oriented training with increasing firm size (especially for firms with 20-99 employees). This pattern was evident for nonfamily but not for family firms. For family firms, formal training programs increased significantly during the critical growth phase only (20-49 employees). Gaps in employee training between the two types of firms were greatest at 50-99 employees but narrowed thereafter at 100-199 employees. The approach to employee training in family SMEs is in consonance with their slower growth, informal management styles, limited financial resources, and greater emphasis on efficiency compared with nonfamily SMEs.
Family businesses (FBs) play a key role in the world's economies. Unfortunately, the current literature surfaces disparate understandings and conclusions concerning their conduct and performance. Much of that literature falls under two insightful perspectives, agency theory and stewardship theory, that conflict quite directly. The agency view, based in economics, maintains that families will pursue utility for themselves to the detriment of their public shareholders. By contrast, stewardship proponents, arguing from a psychological perspective, suggest that family owners will invest deeply in their enterprise, to the benefit of all. This study synthesizes the literature on each of these perspectives to derive core motivational assumptions and expected organizational outcomes. Then, by employing a third sociological perspective, it proposes to reconcile these opposing views by considering the social embeddedness of firms and their key actors within the institution of the family for different types of public family enterprises. It will argue that there is a need for such integration in order to better understand and permit accurate, context-based predictions across various kinds of family businesses and family business situations.