Entrepreneurial Risk Taking of Private Family Firms

2012 ◽  
Vol 26 (2) ◽  
pp. 161-179 ◽  
Author(s):  
Jolien Huybrechts ◽  
Wim Voordeckers ◽  
Nadine Lybaert
Keyword(s):  
Risk Taking ◽  
Family Firms ◽  
Empirical Support ◽  
Positive Influence ◽  
Psychological Ownership ◽  
Ceo Tenure ◽  
New Findings ◽  
The Family ◽  
Risk Taking Behavior

This article aims to increase our understanding of family firms’ entrepreneurial risk-taking behavior by looking at the differences between family and nonfamily firms and by studying variations among family firms. We find empirical support for a positive influence of a nonfamily CEO on the family firm’s level of entrepreneurial risk taking during the initial years of his or her CEO tenure and a leveling out of entrepreneurial risk taking as the CEO tenure of the nonfamily CEO is extended. We build on the concept of psychological ownership to explain these new findings.

scholarly journals Family Involvement in the Firm and Exports in the Family SME: Is the Manager’s International Orientation Influential?

2015 ◽  
Vol 7 (3) ◽  
pp. 69-99 ◽  
Author(s):  
Sami Basly
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Positive Influence ◽  
International Orientation ◽  
The Family ◽  
Sample Data ◽  
Family Smes ◽  
Family Involvement In Management ◽  
The Relationship

AbstractDoes the family involvement affect exports in the family firm? The literature seems to support this view even if the direction and magnitude of this impact remains controversial. Drawing on the perspectives of agency [Chrisman et al. 2004; Schulze et al. 2001] and stewardship as applied to family firms [Davis, Schoorman and Donaldson 1997] and also on socio-emotional wealth perspective [Gómez-Mejía et al. 2007], this study seeks to contribute to this debate by studying the influence of family involvement on the SME exports intensity. To reconcile the divergent views, our research attempts to assess the role of the manager’s international orientation as a variable moderating the relationship between family involvement and exports in SMEs. Based on a hypothetical-deductive approach, the study uses a sample data of 125 family SMEs obtained through a questionnaire. The results show that even if the positive influence of the manager’s international orientation is corroborated, its moderating role seems to be limited to only one facet of the construct of family involvement i.e. involvement in management. Moreover, owning-family involvement in management seems to negatively influence exports while some results argue for a positive effect of the family involvement in ownership on exports.

scholarly journals Entrepreneurial orientation, competitive advantage and strategic knowledge management capability in Malaysian family firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md Imtiaz Mostafiz ◽  
Mathew Hughes ◽  
Murali Sambasivan
Keyword(s):  
Knowledge Management ◽  
Firm Performance ◽  
Risk Taking ◽  
Family Firms ◽  
Family Firm ◽  
Content Type ◽  
The Family ◽  
And Performance ◽  
The Relationship ◽  
Strategic Knowledge Management

Purpose The purpose of this study is to test the thesis that the family firm’s success hinges on effective strategic knowledge management (SKM) capability coupled with an entrepreneurial orientation (EO). Contingency theory holds that entrepreneurial success is contingent on strategic capabilities and resource orchestration theory explains how well family firms nurture capabilities to structure, bundle and leverage resources that define competitive advantage (CA). This study combines these two theoretical viewpoints to propose the effects of EO and SKM capability on CA to achieve successful performance in family firms. Design/methodology/approach This study uses a hybrid approach applying structural equation modelling (SEM) and deep-learning artificial intelligence (DL-AI) analysis to survey data on 268 Malaysian family firms. Findings SEM results confirm that CA mediates the relationship between innovativeness, proactiveness and risk-taking dimensions of EO and firm performance. Autonomy and competitive aggressiveness have no bearing, however. The relationships among innovativeness, proactiveness and risk-taking with CA and performance are positively moderated by SKM capability, becoming more potent at higher levels. Moreover, four additional DL-AI models reveal the necessity of specific EO dimensions and the interacting effects of EO–SKM capability to influence CA and to attain performance success subsequently. Originality/value This study theorizes and presents two new boundary conditions to a knowledge-based theory of the family firm and its firm performance. First, CA mediates the relationship between EO and performance; and second, SKM capability moderates the relationships between EO and CA and between EO and family firm performance. Methodologically, this study uses DL-AI to embrace non-linearity and prioritize predictor variables based on normalized importance to produce greater accuracy over regression analysis. Hence, DL-AI adds methodological novelty to the knowledge management and family firm literature.

Limits to psychological ownership in the family business

2018 ◽  
Vol 8 (2) ◽  
pp. 196-216 ◽  
Author(s):  
Wouter Broekaert ◽  
Bart Henssen ◽  
Johan Lambrecht ◽  
Koenraad Debackere ◽  
Petra Andries
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Strategic Decision ◽  
Psychological Ownership ◽  
Operational Control ◽  
Negative Effects ◽  
Additional Insight ◽  
Content Type ◽  
The Family ◽  
And Control

Purpose The purpose of this paper is to analyze how the sense of control, psychological ownership and motivation of both family owners and non-family managers in family firms are interrelated. This paper analyzes the limits set by family owners when delegating control to their non-family managers and the resulting potential for conflict and demotivation of the non-family managers. Design/methodology/approach Building on the existing literature, first, an overview of the literature on psychological ownership and control is presented. Second, the paper analyzes the insights gained from interviews with 15 family owners and non-family managers in five family firms. Findings This study finds that motivating non-family managers is not merely a matter of promoting a sense of psychological ownership throughout the company. A strong sense of psychological ownership may facilitate but also hinder the cooperation between family and non-family. Family owners are often only willing to delegate operational control, while non-family managers also feel entitled to participate in strategic decision making. This leads to the proposition that non-family managers’ psychological ownership in family firms’ conflicts with family owners’ desire to maintain control. Originality/value This study answers the calls to seek additional insight in how non-family managers function within family firms. By shedding light on the complex relationship between control, psychological ownership and motivation in family firms, the study responds to the calls for more empirical validation of the psychological ownership framework and for more research into the potential negative effects of psychological ownership in the family business.

scholarly journals Shared Identity, Family Influence, and the Transgenerational Intentions in Family Firms

2019 ◽  
Vol 11 (4) ◽  
pp. 1130 ◽  
Author(s):  
Raj Mahto ◽  
Jiun-Shiu Chen ◽  
William McDowell ◽  
Saurabh Ahluwalia
Keyword(s):  
Succession Planning ◽  
Family Firms ◽  
Psychological Ownership ◽  
Family Influence ◽  
American Family ◽  
Next Generation ◽  
Shared Identity ◽  
The Family ◽  
The Relationship ◽  
Primary Predictor

A family’s transgenerational intention (TI) to pass ownership of the firm to the next generation of family members is the defining characteristic of a family. TI reflects a family’s intention to engage in succession planning, which is the primary predictor for succession success. In this study, we draw on psychological ownership theory to develop and test a model of a family’s TI. In the model, we argue that family influence impacts TI through shared identity. We also argue that a family firm CEO’s relationship to the family (by blood vs. marriage vs. hire) moderates the relationship between shared identity and TI. We tested our hypotheses and the model on a sample of North American family firms and found support for most hypotheses.

Risk aversion in the family business: the dark side of caution

2014 ◽  
Vol 35 (5) ◽  
pp. 38-42 ◽  
Author(s):  
Martin R.W. Hiebl
Keyword(s):  
Risk Aversion ◽  
Family Business ◽  
Risk Taking ◽  
Family Firms ◽  
Family Businesses ◽  
Business Leaders ◽  
Dark Side ◽  
Content Type ◽  
The Family ◽  
Practical Implications

Purpose – This paper aims to shed light on the potential downsides of risk aversion in family firms. Moreover, it seeks to provide measures on how to balance risk taking and risk aversion in family businesses. Design/methodology/approach – The article first presents four “dark sides” of risk aversion in family businesses and then describes three groups of measures to balance risk aversion and risk taking. Both the dark sides as well as the measures to balance risk aversion and risk taking are derived from recent scientific research. Findings – Family businesses may decrease risk aversion and foster risk taking and innovativeness by creating transparency on their risk profiles and including outside knowledge in the form of non-family managers, directors or shareholders. Moreover, properly educating and integrating younger family generations might also alleviate an overly high focus on short-term risk aversion. Practical implications – Family business leaders might find the approach and findings presented in this paper helpful for securing the longer-term survivability of their firms and for improving innovativeness. Originality/value – This article is among the first to deal with the dark sides of risk aversion in family businesses, which might endanger their longer-term survivability.

scholarly journals Sibling Rivalry vs. Brothers in Arms: The Contingency Effects of Involvement of Multiple Offsprings on Risk Taking in Family Firms

2019 ◽  
Vol 11 (16) ◽  
pp. 4447 ◽  
Author(s):  
Chen ◽  
Wang ◽  
Wang ◽  
Luo
Keyword(s):  
Risk Taking ◽  
Family Firms ◽  
Family Firm ◽  
Sibling Rivalry ◽  
The Family ◽  
Increase Risk ◽  
Managerial Implications ◽  
Succession Process ◽  
Using Data ◽  
Generational Succession

Succession process is a significant matter that is vital to the sustainability of a family firm. Families are generous in involving the offspring(s) into the family business so as to fulfill inter-generational succession. In this paper, we concentrate on the issue on the results of the involvement of multiple offsprings in family firms. By using data collected from China listed family firms between 2009 and 2015, we reveal that there exist contingency effects of the involvement of multiple offsprings on risk taking in different phrases. The involvement of new offspring(s) that leads the sibling rivalry to happen would increase risk taking of the family firm in a short-term. While for those family firms in which offsprings serve together as brothers in arms, risk taking is even lower than that of family firms with no more than one offspring. Our findings have managerial implications for dealing with succession process and maintaining sustainability of family businesses.

When Does the Family Matter? Institutional pressures and corporate philanthropy in China

2019 ◽  
Vol 40 (6) ◽  
pp. 833-857 ◽  
Author(s):  
Jianhua Ge ◽  
Evelyn Micelotta
Keyword(s):  
Family Firms ◽  
Corporate Philanthropy ◽  
Empirical Support ◽  
Institutional Pressures ◽  
Socially Responsible ◽  
Institutional Effects ◽  
Corporate Giving ◽  
The Family ◽  
Stage 1

This paper investigates whether family firms display corporate giving practices significantly different from nonfamily firms. Our two-stage model theorizes, and finds empirical support from a survey of 3,075 Chinese private firms, that firms sensitive to institutional pressures (as a result of firm visibility and political linkages) are more likely to engage in philanthropy (stage 1) and to donate larger amounts (stage 2). In stage 1, family and nonfamily firms display similar conforming behaviors, aimed at maintaining sociopolitical legitimacy. In stage 2, family ownership intensifies the effect of institutional pressures on firms’ philanthropic giving, as reputational motives overlay legitimacy concerns. Our study integrates institutional analyses of socially responsible practices and family business theories to yield insights on the role of the family variable as a key moderator of institutional effects.

ORGANIZATIONAL CULTURE SHAPED BY ENTREPRENEURIAL ORIENTATION IN FAMILY FIRMS

2021 ◽  
Vol 22 (2) ◽  
pp. 9-21
Author(s):  
Małgorzata Okręglicka
Keyword(s):  
Organizational Culture ◽  
Risk Taking ◽  
Entrepreneurial Orientation ◽  
Family Firms ◽  
Family Businesses ◽  
Five Dimensions ◽  
Entrepreneurial Culture ◽  
The Family ◽  
Competitive Aggressiveness ◽  
Dominant Influence

Contemporary enterprises are still looking for ways and methods of achieving a competitive advantage, which invariably include entrepreneurship. Entrepreneurial orientation is an organizational construct consisting of five dimensions: proactivity, innovation, competitive aggressiveness, autonomy and risk taking. Family businesses show a significant specificity of functioning in many areas due to the dominant influence of the family on the management of such entities. It is not a uniform group, and individual companies may significantly differ, e.g. depending on the profile of their activity. However, in cases, organizational culture can determine the level of entrepreneurial orientation of the organization. In this article, research efforts focus on differences in the level of entrepreneurial orientation and building an entrepreneurial culture depending on the profile of the business. The conclusions were based on the results of the own questionnaire survey conducted among 118 small family businesses in Poland.

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