Socioemotional wealth in the family farm

2015 ◽  
Vol 75 (3) ◽  
pp. 403-415 ◽  
Author(s):  
Jonathan B Dressler ◽  
Loren Tauer
Keyword(s):  
Family Member ◽  
Family Business ◽  
Research Literature ◽  
Lower Amount ◽  
Farm Income ◽  
Family Farm ◽  
Family Farms ◽  
Socioemotional Wealth ◽  
Content Type ◽  
The Family

Purpose – A family member may work for the family business even though the direct financial benefits he or she may receive in the form of a salary may be lower than what could be earned working for a non-family business. The lower amount may be accepted because of benefits of association with the family business. This psychic non-pecuniary return has been called socioemotional wealth in the family business research literature. The purpose of this paper is to propose a method to estimate socioemotional wealth and apply that technique to a group of family dairy farms to estimate socioemotional wealth for those family farms. Design/methodology/approach – A panel regression method was used to empirically allocate net farm income to the unpaid factors of equity, labor, and management provided by a family member in a family farm partnership. The estimated returns of labor plus management are compared to the market salary earned by farm managers who manage farms. The difference between the higher hired farm manager salary and what the family manager earns in the family farm from labor and management is an estimate of the non-pecuniary return the family member receives from managing the family farm as compared to managing the non-family farm. Findings – Differences in managers’ salary working for the non-family farm and the implied family manager financial compensation estimates indicate that family business managers’ non-pecuniary return from managing the family farm had an implied economic value averaging $22,026 per year over 1999-2008. Assuming that the manager would be indifferent between working for the family farm or the non-family farm if the sum of pecuniary and non-pecuniary returns were the same, the non-pecuniary annual benefits of $22,026 accrues in the form of socioemotional wealth associated as a member in the family business. Originality/value – Although the literature discusses how family members may accept a lower salary working for the family business than they could earn doing comparable work in a non-family business because of non-financial rewards they experience working for the family business, there have been no estimates of the value of this pecuniary benefit. The authors arrive at an estimate using a group of family dairy farm businesses that have multiple family managers.

Socioemotional wealth importance within family firm internal communication

2018 ◽  
Vol 8 (1) ◽  
pp. 22-37 ◽  
Author(s):  
Emily Marett ◽  
Laura Marler ◽  
Kent Marett
Keyword(s):  
Family Member ◽  
Family Business ◽  
Family Members ◽  
Family Firm ◽  
Internal Communication ◽  
Socioemotional Wealth ◽  
Content Type ◽  
Key Characteristics ◽  
The Family ◽  
Different Content

Purpose One of the key characteristics that distinguishes the family business from other firms is the importance of accruing and maintaining socioemotional wealth (SEW). Using an experimental design, this exploratory study investigates the communication practices of family business leaders responding to employees responsible for a business disruption. The purpose of this paper is to determine whether managers take action to protect SEW while responding to a crisis. Design/methodology/approach Three employees of a family firm participated in the experiment. A family member employee and a non-family employee were instructed to write a message informing a family member leader of a business disruption they created (infecting a computer with malware). The family member leader then received these messages and wrote a response to each employee. These responses were then content analyzed to determine whether messages expressed SEW importance and to see if SEW content differed based on the recipient’s familial status. Findings Content analysis of messages intended for family members and non-family employees indicated that messages intended for family members contain significantly different content associated with dimensions of Socioemotional Wealth Importance scale, particularly in terms of reinforcing family dominance, sustaining family continuity, and maintaining family enrichment. Originality/value This study is the first to examine crisis communication within the family firm and whether SEW endowment occurs via internal communication within the family firm. By utilizing an experiment, this study extends the SEW literature further by adding to the diversity of techniques utilized to study this topic.

Is socioemotional wealth being influenced by the intentions to pursue succession on incumbent owners? Empirical research on Mexican family business

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carlos Rafael Contreras-Lozano ◽  
Maria Virginia Flores-Ortiz ◽  
Ma. Del Carmen Alcalá-Álvarez
Keyword(s):  
Family Business ◽  
Structural Equation ◽  
Equation Modeling ◽  
Socioemotional Wealth ◽  
Content Type ◽  
The Social ◽  
The Family ◽  
Mexican Family ◽  
New Research ◽  
Structured Approach

PurposeThe authors identify the theoretical constructions measuring the intentions to pursue succession as well as the socioemotional wealth theoretical framework, and the authors propose an objective of testing the relationships existing between them so as their importance giving evidence of their relevance.Design/methodology/approachIt is a research with a positivist philosophical position measuring in a quantitative way with a deductive and structured approach applied to 98 CEO owners of Mexican companies, using nonparametric methodologies the authors simulated subsamples with structural equation modeling in SmartPLS 3.3.2, the metrics on the model are described as a functionalist paradigm.FindingsDirectors' attitudes paired up with the intentions of succession are significantly related to the socioemotional aspect of the family business; although the theory proposes three aspects to measure these intentions, the social norm in this research has not been strong enough to be a predictor as an influence on the company's socioemotional wealth.Originality/valueThe authors found this a valuable paper for the complement of theory focused on purely manifesting aspects in family companies, because they identified theoretical and empirical relationships opening up guidelines for new research in socioemotional aspects in accordance with the entrepreneurs attitudes to achieve succession, the differentiation lies in measuring psychological aspects of the director's behavior toward succession and not to the succession per se as done in most research; also, the methodology of data analysis facilitates the reader to easily recognize the relationships between the proposed theoretical constructions, showing the detailed metrics development by researchers in the family business field.

The land is what matters: factors driving family farms to organic production in Poland

2019 ◽  
Vol 121 (6) ◽  
pp. 1354-1367
Author(s):  
Pawel Chmielinski ◽  
Aleksandra Pawlowska ◽  
Monika Bocian ◽  
Dariusz Osuch
Keyword(s):  
Organic Farming ◽  
Negative Impact ◽  
Positive Impact ◽  
Organic Production ◽  
Family Farm ◽  
Family Farms ◽  
Content Type ◽  
The Family ◽  
Significant Negative Impact ◽  
Direct Payments

PurposeThe purpose of this paper is to analyse tendency of farms to switch from conventional to organic production.Design/methodology/approachThe study used data on 6,229 individual farms, which in 2009–2016 continued to participate in the Polish FADN. Estimation of logit models allowed the authors to indicate, separately for each period in the years between 2009 and 2015, a set of characteristics influencing the decision of farms on the use of organic production.FindingsThe authors demonstrate that, first of all, land factors were of major importance when deciding on conversion to organic farming, with only the own land inputs (owned by the farm) having a positive impact on the transition of farms to organic production. But then the resource of the capital factor, identified with the assets owned by the farm, exercised a significant negative impact. Income derived from the family farm, although had a positive impact, did not significantly determine the farm’s decision on conversion to organic production. While support for agri-environmental purposes had a positive impact on the decision of farm to convert, the payments received under the direct payments affected this decision negatively. The tendency to start organic production is also conditioned regionally.Research limitations/implicationsThe data of this study are limited in size, and limited to the Polish context.Originality/valueThe research setting for this paper is original; the study takes part in the discussion about factors of conversion to organic farming, on example of Poland and is a voice in the discussion on effective support for the development of organic farming in the context of sustainable development.

Technological innovation and socioemotional wealth in family firm research

2018 ◽  
Vol 16 (3) ◽  
pp. 270-301 ◽  
Author(s):  
Rubén Martínez-Alonso ◽  
María J. Martínez-Romero ◽  
Alfonso A. Rojo-Ramírez
Keyword(s):  
Conceptual Framework ◽  
Technological Innovation ◽  
Family Business ◽  
Family Firms ◽  
Current Knowledge ◽  
Integrative Approach ◽  
Socioemotional Wealth ◽  
Content Type ◽  
The Family ◽  
New Research

Purpose There are currently two issues that generate growing interest among specialized scholars within the family business field: technological innovation (TI) and socioemotional wealth (SEW). While it is true that both topics are highly popular among researchers, the joint study of both perspectives is scarce. Thus, the purpose of this paper is to analyse the interrelationships between TI and SEW in the context of family firms. Design/methodology/approach This literature review systematically analyses the findings of 25 journal articles focusing on TI and SEW, published between 2012 and 2018. Findings The findings reveal an integrative approach, identifying different variables that relate TI and SEW. A conceptual framework is built in which these variables are incorporated into four categories (SEW, TI, moderating effects and performance). New lines of research emerge with the development of a conceptual model and the formulation of six propositions. Practical implications The conceptual framework can be useful as integrative summary of the factors that family business managers and directors should take into account to be successful in implementing innovative projects and strategies. Originality/value The study of TI from the SEW approach has emerged as a fruitful field of research in recent years, but the current knowledge of the role that SEW plays in family firms’ TI is still scarce. This paper contributes to the family business literature by offering a conceptual framework of the SEW–TI relationship and new research avenues that will provide a better comprehension for scholars and specialists for future investigations in the field.

scholarly journals No hard feelings? Non-succeeding siblings and their perceptions of justice in family firms

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ilse Matser ◽  
Jelle Bouma ◽  
Erik Veldhuizen
Keyword(s):  
Procedural Justice ◽  
Sibling Relationships ◽  
Family Farm ◽  
Central Research ◽  
Family Farms ◽  
Content Type ◽  
Business System ◽  
The Family ◽  
Succession Process ◽  
The Impact

PurposeFamily farms, in which business and family life are intricately interwoven, offer an interesting context for better understanding the interdependence between the family and business system. Many family farms struggle to survive, and the succession process is a key period in which the low returns on investment become evident but also the emotional attachment of the family to the farm and the willingness to transfer the business to the next generation. We take the perspective of non-succeeding siblings since they are crucial for a successful succession but their role and position in this process is far from clear. This study will help to increase our knowledge of how fairness is perceived by non-successors and of the impact of perceived (in)justice on the family business system.Design/methodology/approachTo analyze the effect on sibling relationships of an unequal outcome of the succession process, we choose the family farm context. We used interview data from multiple family members from several family farms in the Netherlands in different stages of succession. We utilized a framework based on justice theory to analyze perceptions of fairness among non-succeeding siblings. The central research question for this study is as follows: How do non-succeeding siblings perceive justice with regard to family firm succession?FindingsThe acceptance of the outcomes of the succession process by non-succeeding siblings is influenced by their perception of the fairness of the process itself and decisions made by the incumbent and successor with regard to these outcomes. It seems that stakeholders who occupy multiple roles with conflicting justice perspectives handle these contradictions with the help of an overarching goal—in this study, preserving the continuity of the family farm—and by prioritizing and adjusting the justice perspectives accordingly. The findings further show that both distributive justice and procedural justice are important and interact with each other.Originality/valueOur study contributes to the literature by applying the theoretical framework of distributive and procedural justice to the context of family farm succession. This helps us to understand the position of non-succeeding siblings and their role and position in the succession process, which is important because sibling relationships have a significant impact on family harmony, with potential consequences for the business as well.

Family business and value-added distribution: a socioemotional wealth approach

2017 ◽  
Vol 30 (1) ◽  
pp. 2-22 ◽  
Author(s):  
Jose Luis Gallizo ◽  
Cecilio Mar-Molinero ◽  
Jordi Moreno ◽  
Manuel Salvador
Keyword(s):  
Family Business ◽  
Value Added ◽  
Family Businesses ◽  
Management Style ◽  
Socioemotional Wealth ◽  
Content Type ◽  
Economic Agents ◽  
Share Prices ◽  
The Family ◽  
The Impact

Purpose Research has demonstrated that family businesses limit the goal of maximizing profits in exchange for maintaining control of the company and passing control to future generations. However, these decisions are not always shared by the stakeholders who are outside the family context, making tensions arise within the company that may affect profitability and the share prices of the family business. The purpose of this paper is to analyse the internal tensions in family businesses in the value-added (VA) distribution, and whether these tensions harm their performance as a result of the restrictions under which these companies operate. Design/methodology/approach A factor analysis has been used to measure the tension that results from VA distribution of a sample of 105 Spanish listed firms for the 2005-2012 period. A regression analysis has been used to study the impact of this tension on their share prices. Findings Results show that being a family business has a positive effect on the business tension factor and that returns and share prices are inversely related to tension factors. Thus, the authors conclude that the decision to maintain control over the family business threatens profitability and share prices. Social implications An analysis of distribution of VA in family businesses sheds light on whether or not the management in its decisions preserves its socioemotional wealth (SEW) generating tensions among its economic agents, affecting its profitability and continuity. This knowledge is important for company stakeholders and future investors. Originality/value This is the first study in which the value-added statement is used to analyse how the management style of firms, and especially family businesses, are seeking to preserve their SEW and internal tensions generated by them.

The relationship between socioemotional and financial wealth

2016 ◽  
Vol 14 (3) ◽  
pp. 215-233 ◽  
Author(s):  
Geoffrey Martin ◽  
Luis Gomez-Mejia
Keyword(s):  
Family Business ◽  
Family Firm ◽  
Corporate Diversification ◽  
Business Research ◽  
Strategic Decisions ◽  
Socioemotional Wealth ◽  
Content Type ◽  
The Family ◽  
The Relationship ◽  
Further Development

Purpose A growing volume of family firm literature has argued that the preservation of family socioemotional wealth takes precedence over the pursuit of financial goals. The purpose of this paper is to develop a conceptual framework that builds knowledge regarding the two-way relationship between socioemotional and financial forms of wealth, to develop a more complete theory of wealth concerns that may inform family firm decision-making. Design/methodology/approach The authors conceptually examine contingencies affecting the relationship between financial and socioemotional wealth (in both causal directions). Findings The authors predict when one form of wealth (socioemotional/financial) is likely to dominate the other (financial/socioemotional) in the family firm’s strategic decisions. Originality/value The paper advances knowledge on the two-way relationship between socioemotional and financial forms of wealth providing a platform for further development in the nascent field of family business research, including our understanding of family firm decisions regarding control and influence over the family business, environmental policy, altruism toward family members, R&D, accounting choices and corporate diversification.

Managing family business tensions: the narrative of family history

2020 ◽  
Vol 15 (5) ◽  
pp. 669-686
Author(s):  
Rocio Arteaga ◽  
Timur Uman
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Methodological Approach ◽  
Family Members ◽  
Governance Structure ◽  
Future Research ◽  
Socioemotional Wealth ◽  
Content Type ◽  
Family Meetings ◽  
The Family

PurposeThis study explores the family governance structures that family firms employ to manage family business tensions.Design/methodology/approachBuilding on socioemotional wealth perspective and adopting a narrative methodological approach, the study analyses nine unique narratives of representatives of three Swedish family firms.FindingsThe study illustrates how the hybrid arena created between formal and informal family meetings is used as a governance structure for mitigating tensions by reinforcing family relational ties.Research limitations/implicationsBased on the findings, this study suggests how reliance on hybrid arena informs the field of family business management and governance and suggests future research directions.Practical implicationsThe findings of this study provide opportunities for family business practitioners, including owners, family members, family firm advisers and other stakeholders, to effectively manage family business tensions and foster socioemotional wealth.Originality/valueIn family firms, tensions can arise due to a desire for the preservation of socioemotional wealth. The authors show that these tensions may be managed by using informal and formal family meetings that create a hybrid arena where family members separate family and business issues and emotional and rational reactions, thereby avoiding negative emotions and creating a culture of harmony within the family.

scholarly journals The Survival of Family Farms: Socioemotional Wealth (SEW) and Factors Affecting Intention to Continue the Business

Agriculture ◽  
2021 ◽  
Vol 11 (6) ◽  
pp. 520
Author(s):  
Manel Plana-Farran ◽  
José Luis Gallizo
Keyword(s):  
Short Fiber ◽  
Sustainable Land Use ◽  
Family Farm ◽  
Family Farms ◽  
Socioemotional Wealth ◽  
Factors Affecting ◽  
The Family ◽  
Agricultural Schools ◽  
Environmental Goals ◽  
Intention To Continue

This article addresses the problem of succession in family farms in a context of generational change. Family businesses are characterized by their long-term orientation and by having a positive effect through environmental goals that remain in place generation after generation. The general increase in average age among farmers is seen as a barrier to more sustainable land use, and the survival of family farming therefore depends on the availability of a successor in the family. Socioemotional wealth (hereafter, SEW) is understood as the affective endowment of family members. This study adopts the SEW dimensions conceptually validated to analyse the effects of psychological and socioeconomic factors on potential successors’ intentions. The results of a survey administered to students attending agricultural schools in Catalonia show that intentions to assume the management and ownership of the family farm increase in line with individuals’ interest in creating their own business, their ability to take over the farm, and their emotional inclination to continue the family legacy. In addition, SEW was measured in relation to the potential successor and not the incumbent, as has typically been the case in previous work, bringing this important research subject as a principal actor. Finally, an empirical validation of a short FIBER scale, i.e., REI scale, was obtained that relates individuals’ intentions to succeed the family farm to the socioemotional wealth of business families, testing suitability of the REI scale as a measure of intention to succeed.

The effects of goals attainment on CEO-owner satisfaction and the role of family involvement

2019 ◽  
Vol 10 (2) ◽  
pp. 116-127
Author(s):  
Ondřej Machek ◽  
Jiří Hnilica
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Firm Value ◽  
Family Firms ◽  
Hierarchical Regression ◽  
Content Type ◽  
Business Goals ◽  
Growth Increase ◽  
The Family ◽  
Owner Satisfaction

Purpose The purpose of this paper is to examine how the satisfaction with economic and non-economic goals achievement is related to the overall satisfaction with the business of the CEO-owner, and whether family involvement moderates this relationship. Design/methodology/approach Based on a survey among 323 CEO-owners of family and non-family businesses operating in the Czech Republic, the authors employ the OLS hierarchical regression analysis and test the moderating effects of family involvement on the relationship between the satisfaction with different goals attainment and the overall satisfaction with the business. Findings The main finding is that family and non-family CEO-owner’s satisfaction does not differ significantly when economic goals (profit maximisation, sales growth, increase in market share or firm value) and firm-oriented non-economic goals (satisfaction of employees, corporate reputation) are being achieved; both classes of goals increase the overall satisfaction with the firm and the family involvement does not strengthen this relationship. However, when it comes to external non-economic goals related to the society or environment, there is a significant and positive moderating effect of family involvement. Originality/value The study contributes to the family business literature. First, to date, most of the studies focused on family business goals have been qualitative, thus not allowing for generalisation of findings. Second, there is a lack of evidence on the ways in which family firms integrate their financial and non-financial goals. Third, the authors contribute to the literature on the determinants of personal satisfaction with the business for CEOs, which has been the focus on a relatively scarce number of studies.

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