The Psychological Foundations of Management in Family Firms: Values, Biases, and Heuristics

2021 ◽  
pp. 089448652098563
Author(s):  
Pasquale Massimo Picone ◽  
Alfredo De Massis ◽  
Yi Tang ◽  
Ronald F. Piccolo
Keyword(s):  
Decision Making ◽  
Conceptual Framework ◽  
Family Business ◽  
Research Agenda ◽  
Family Firms ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Future Research ◽  
Future Research Agenda ◽  
Biases And Heuristics

Considering the heterogeneity of family firm behaviors as reflecting the values, biases, and heuristics of individuals, we discuss the implications of the psychological foundations of management in family firms. We develop a conceptual framework for investigating how the values, biases, and heuristics of family and nonfamily members affect strategic decision-making and the outcomes of family firms. To advance the field, we put forward some relevant questions and offer a future research agenda at the intersection of the psychological foundations of management and family business.

scholarly journals The Psychological Foundations of Management in Family Firms: Emotions, Memories, and Experiences

2021 ◽  
Vol 34 (2) ◽  
pp. 122-131
Author(s):  
Ronald H. Humphrey ◽  
Alfredo De Massis ◽  
Pasquale Massimo Picone ◽  
Yi Tang ◽  
Ronald F. Piccolo
Keyword(s):  
Decision Making ◽  
Conceptual Framework ◽  
Family Business ◽  
Family Firms ◽  
Firm Behavior ◽  
Family Firm ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Firm Outcomes ◽  
Biases And Heuristics

Exploring the psychological foundations of management in family firms is necessary to understand why they formulate and implement strategies differently from nonfamily firms, and why and how family firm behavior varies across different family firms. Picone et al. (2021. The psychological foundations of management in family firms: Values, biases, and heuristics. Family Business Review, 34(1), 12-32) have proposed a conceptual framework for the psychological foundations of management in family business, examining how the values, biases, and heuristics of family firm members affect strategic decision-making and family firm outcomes. Drawing on this framework, we examine emotions, memories, and experiences in family firms, disentangling “what we know” from “what we should know”, and offering some relevant questions to advance the field.

scholarly journals Predecessors’ Attitude toward Conflict Predictor of Family Business Sustainability

2018 ◽  
Vol 1 (1) ◽  
pp. 3
Author(s):  
Linda Salim ◽  
Mohd. Noor Shariff ◽  
Darwina Ahmad Arshad
Keyword(s):  
Decision Making ◽  
Family Business ◽  
Family Firms ◽  
Qualitative Interviews ◽  
Business Leaders ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Business Sustainability ◽  
Talent Pool ◽  
The Future

<p>Using qualitative interviews to understand the mindset of family business leaders in succession, this study proposes that attitude toward conflict is an important decision making element. A collective case studies uncover how attitude toward conflict predicts decision making during succession and influence optimism on the future of the firms. Findings of the study suggest that predecessors who welcome conflicts as a part of family firms take a more relaxed attitude toward succession, with a wider talent pool. This group are also more egalitarian in strategic decision making and optimistic toward the future of the firms. Predecessors who avoid conflict have smaller talent pool, making decisions to nominate few for the position. They is cautious, making decisions for the successors, and are pessimistic about the future of the firms. Contributions from this study are threefold. First, we introduce the use of attitude toward conflict to measure predecessors' behaviors during succession. Second, through identification of attitude toward conflict, we contribute to the literature by predicting predecessors' optimisms toward the future of the firms in the hands of the next generations. Third, this study contributes another dimension to reciprocal nepotism through discovery that family businesses upholding reciprocal nepotism behave differently.</p>

Strategic Decision Making in Intergenerational Successions of Small- and Medium-Size Family-Owned Businesses

2001 ◽  
Vol 14 (1) ◽  
pp. 11-23 ◽  
Author(s):  
Per-Olof Bjuggren ◽  
Lars-Göran Sund
Keyword(s):  
Decision Making ◽  
Decision Trees ◽  
Family Business ◽  
Legal System ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Medium Size ◽  
Strategic Decisions ◽  
The Family ◽  
Transition Modes

This paper deals with intergenerational successions of small and medium-size enterprises (SMEs). Entrepreneurs face an unavoidable succession dilemma: they must make either explicit or implicit strategic decisions about transitioning ownership of the family business. The main alternatives are to sell the company to someone outside the family or to make arrangements for an interfamily succession. In the latter case, there are many transition modes, e.g., through a gift of shares or a will. This paper uses decision trees to analyze intergenerational successions problems. One conclusion of the paper is that it is important for a society to provide a legal system that facilitates transitions of family companies within the family because the legal system will, among other positive factors connected with family businesses, preserve idiosyncratic knowledge of family character.

Strategic decision-making in family firms: an explorative study

2018 ◽  
Vol 12 (5/6) ◽  
pp. 655
Author(s):  
Andreas Kallmuenzer ◽  
Wolfgang Hora ◽  
Mike Peters
Keyword(s):  
Decision Making ◽  
Family Firms ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Explorative Study

Relational and Contractual Governance in Family Firms: Effects on Strategic Decision Making

2002 ◽  
Vol 15 (3) ◽  
pp. 205-222 ◽  
Author(s):  
Mikko Mustakallio ◽  
Erkko Autio ◽  
Shaker A. Zahra
Keyword(s):  
Decision Making ◽  
Social Control ◽  
Structural Equation ◽  
Family Firms ◽  
Strategic Decision ◽  
Equation Modeling ◽  
Strategic Decision Making ◽  
Formal Control ◽  
Governance Model ◽  
The Social

Governance of family firms differs from mainstream corporate governance in an important respect: Important owners, i.e., family members, may have multiple roles in the business. In this paper, we develop and test a model of family firm governance that incorporates both formal control and social control aspects of governance. Governance based on the formal control draws on agency theory, whereas the social control aspects draw on social theories of governance, addressing social capital embedded in relationships. Drawing on these theories, we examine the influence of different governance mechanisms on the quality of strategic decision making. The Family Business Governance Model is tested using survey data from 192 family firms in Finland. We use structural equation modeling in testing the empirical validity of the model. The empirical analysis largely supports our hypotheses on formal control and social control as well as their influences on the decision-making quality.

In the Horns of the Dilemma: Socioemotional Wealth, Financial Wealth, and Acquisitions in Family Firms

2015 ◽  
Vol 44 (4) ◽  
pp. 1369-1397 ◽  
Author(s):  
Luis R. Gomez-Mejia ◽  
Pankaj C. Patel ◽  
Thomas M. Zellweger
Keyword(s):  
Decision Making ◽  
Family Firms ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Socioemotional Wealth ◽  
Family Control ◽  
Financial Wealth ◽  
Empirical Results ◽  
Problem Framing ◽  
Firm Owners

We posit that family firms often face a dilemma in their strategic decision making: whether to maintain current socioemotional wealth or pursue prospective financial wealth. Applying such a mixed gamble perspective to acquisitions, family owners assess potential acquisitions with regard to their impact on both wealth dimensions. In line with this reasoning, our results show that family control implies a general reluctance to acquire and, when an acquisition happens, a preference for related targets. Because financial and socioemotional viewpoints lead to largely incompatible predictions about the occurrence and relatedness of acquisitions, family firm owners use their firm’s vulnerability as a signal. Increased vulnerability leads to a heightened propensity to prioritize financial over socioemotional wealth problem framing, which is reflected in the acquisition of unrelated targets. Empirical results are supportive of these predictions.

A systematic review of innovation in family firms and future research agenda

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manzoor Ul Akram ◽  
Koustab Ghosh ◽  
Dheeraj Sharma
Keyword(s):  
Dynamic Capabilities ◽  
Family Firms ◽  
Institutional Environment ◽  
Family Firm ◽  
Strategic Decision ◽  
Future Research ◽  
Research Directions ◽  
Content Type ◽  
Future Research Agenda ◽  
Future Research Directions

PurposeIn this paper, the authors have used a systematic literature review methodology of 147 journal articles published in peer-reviewed journals. The analysis includes studies based on country of origin, the periodic proliferation of studies and the methodological design of the studies. As an outcome of the review, the studies are classified on the innovation in family firms under four broad categories – innovation input, family governance mechanisms, innovation output and the external environment. Some fruitful avenues of research are outlined in this domain.Design/methodology/approachThe literature on innovation in family firms – the most dominant and ubiquitous form of organization across the world – is gaining pace. The influence of family by way controlling ownership, management and governance on, and in interaction with business acts as a complex proposition that shapes the strategic decision-making in the family firm including innovation. The purpose of this paper, therefore, is to advance the understanding of innovation in family firms and provide a list of future research questions of theoretical and practical value.FindingsBased on this review, the authors provide future research directions pertaining to innovation in emerging economy family firms, effect of the institutional environment of family firm innovation as well family firms' innovativeness in the wake of pro-market reforms, different classes of ownership in family firms and innovation, family firm goal heterogeneity and innovation, and family firm dynamic capabilities and innovation.Originality/valueThe review provides a comprehensive understanding, trends and future research directions in the domain of innovation in family firms.

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