Promoting organizational diversity and preserving socioemotional wealth: can family businesses balance the two?

PurposeA key characteristic for a family firm, preservation of socioemotional wealth, may appear to be at conflict with the concept of organizational diversity. The authors investigate how organizational diversity, captured through heterogeneity in ownership structure, diversity in the senior management team, interfaces with the concept of the socioemotional wealth of family businesses in an emerging economy, when these firms pursue inorganic growth strategies.Design/methodology/approachDrawing on the concepts of socioemotional wealth, behavioral agency theory and bifurcation bias, the authors develop perspectives on how ownership structure, family influence in executive management and institutional shareholding influence a family firm's internationalization strategies captured through propensity to pursue cross-border M&A – an activity that may threaten the preservation of socioemotional wealth. The authors also explore the role of business group affiliation, another organizational diversity construct, and contingent parameters like past financial performance and export intensity in this study. The authors take pooled data over 15 years, involving 346 large firms from India, which are family-controlled, to carry out the study.FindingsThe authors’ empirical analysis shows that family stake in the company and family members' presence in the executive team negatively influence the propensity to pursue cross-border M&A activities. A firm's affiliation to a business group moderates these negative relationships. On the other hand, the presence of institutional shareholders, positive past financial performance and export intensity positively influence cross-border M&A propensity.Originality/valueThe results establish that family businesses' attempts to preserve socioemotional wealth may come at the cost of promoting organizational diversity.

Influence of Gender Diversity in Boards on Family and Non-family Businesses Towards Innovation and Creativity

This article aims to understand better the impact of the diversity of gender in boards on the innovation and creativity of companies in the context of the structure of business—family businesses and non-family businesses. Based on women’s participation in decision-making and family firm literature, we argue that women directors/executives’ impact on decision-making will rely on their relative power and credibility within the board. These dynamics are especially crucial, bringing creativity to family firm’s boardrooms as well. The results show that increases in innovation and creativity with women’s presence in family firms’ boards are due mainly to outsider non-family and insider family women directors/executives. Even after the division of women directors into independent and non-independent directors, the finding suggests that women independent directors have an impact on the company’s innovations. Conversely, women chair minimal effects on the innovation and creativity advances of the businesses. Furthermore, In the family business, the influence of women managers and women independent managers on the innovation and creativity of a company is slightly stronger.

Family social capital and governance of family businesses: The emerging market evidence

Considered as the most dominant business form in the entrepreneurial fabric in Morocco, as in the majority of countries in the world (Salhi, 2017), the family business is distinguished by a family social capital (FSC) making it competitive and perennial (Mesfar & Ben Kahla, 2018). This paper aims to analyze the influence of this capital, through its three dimensions — structural, relational, and cognitive — on the governance system of Moroccan family firms. The results of our exploratory study conducted among 30 family businesses in the form of interviews showed, on the one hand, that the existence of a strong FSC within the company makes its governance system based on informal family mechanisms. On the other hand, the weakness of the said capital has not led the companies that are the subject of our study to adopt formal corporate governance mechanisms as shared by several researchers. This is due, according to the interviewees, to socio-cultural considerations. Our results contribute to the enrichment of the literature while showing that the informality of governance mechanisms can be explained, not only by the strength of its FSC but also by such a socio-cultural context where the family model is of a communal and clan type welded by Islamic religious values of group cohesion

Leadership and Religion in Family Business

This chapter focuses on how and why entrepreneurial leadership in family businesses may be influenced by Christianity. This chapter is motivated by the need to understand further the influence that entrepreneurial leadership entails in the context of the most predominant business form around the world: family business. To contribute to understanding, this chapter offers a model to understand the nature of entrepreneurial leadership in family business influenced by the values and beliefs embedded in Christianity.

Developing Capabilities for Sustainability in Family Small Enterprises

Though literature in family perpetuity and sustainability is well documented from the advanced economies, there is scarcity of insights from emerging markets where this research relates. The study, therefore, sought to investigate, understand, and interpret the underlying drivers of sustainability in small family businesses using the stewardship theory paradigm in the Nigerian family business environment. A qualitative method with 41 in-depth interviews involving owners and managers of family-owned small and medium businesses was conducted. The study empirically shows that there is an interrelationship between family structure and business sustainability; hence, the practice of polygamy was found to be inimical to family business success and sustainability. Building on the stewardship theory, the paper develops a model of sustainability for small and medium family businesses. The study contributes to the theoretical literature on stewardship and family business sustainability.

Are Family Businesses a Good Environment for Project Management?

Relationships between project management, operations management, and organizational strategy are well-known, as well as organizational influences on project. Family businesses work on projects, but their unique nature makes family firms a challenging context for Project Management. This chapter aims to present and discuss the specific dynamics of family business that can impact project management practices. By definition, a project is a complex system, consisting of a set of dozens of interrelated sub-processes. As is known, the percentage of projects that satisfy both technical requirements, budget compliance and which meet the deadlines, is extremely low. This fact forces the researchers to equip themselves with more sophisticated tools to face the complexity of a project, in order to increase its chances of success.

“I'm Your Leader Now, but Do You Trust Me?”

Leadership succession is inevitable for most family businesses. To effectively face this challenging transition, next-generation leaders need to have the ability to gain their employees' trust which is typically very challenging due to previous generation' influence on the business. The chapter explores how trust in family leaders can impact succession when a business is passed from one generation to the next. This chapter presents two comparative examples of family business cases operating in the transportation sector in Italy. In the first business, the succession already took place and the next-generation leader is running the firm, while in the other firm, the incumbent generation is still in charge of the company and is not passing the baton. Results show that the incumbent and next-generation leader's perception of their leadership style correspond to non-family employees' perceptions. However, employees' trust in the incumbent is higher than the trust in the successor.

Family Capital in Family Businesses

Family capital is all social, human, and financial capital a family has at their disposal in the family to advance the business. Family capital is the pool of resources unique to family business and it has the potential for family businesses to gain competitive advantage over nonfamily businesses in today's competitive landscape. To advance the knowledge about strategic management in family businesses, this chapter reviews quantitative empirical work on each dimension of family capital and concludes that the field is still in its infancy. Most studies concentrate on (a part of) social capital, a few on human capital, and very few on all three dimensions. The review of the literature describes avenues for further research on family capital.

Internationalization of Family Businesses

Worldwide, family businesses are one of the cornerstones of the entrepreneurial fabric, being as a consequence central to growth and development. In a globalized era, these institutions require the attention of businessmen, practitioners, and policymakers. The chapter seeks to examine if the internationalization performance does vary according to firm size, and its link to the innovative performance in multiple dimensions along with conventional characteristics such as age and turnover. Theoretical research evidences the interest in understanding the patterns and determinants of the internationalisation performance, given its importance in firm growth and survival; however, this strategical option brings advantages and problems. Empirical evidence demonstrates that the determinants do change according to firm dimension; estimations provide valuable insights about the connection between globalized operation and innovation, for the different organisations.

The Sustainability of Resource-Sharing Family Business in Relation to Family Non-Economic Goals

Small and medium family businesses have distinct characteristics that differ from large corporations, with distinct challenges to their owner-managers. Many entrepreneurial families seek to achieve non-economic goals and share familial resources without compensation, not necessarily maximization of their sustainable value. As a consequence, traditional financial reporting is of limited use to them, as it does not reflect their priorities. This article introduces sustainability elements in the socio-emotional-wealth theory; identifies a family business type called resource-sharing; proposes a financial ruleset to quantify the sustainable financial position of the company regarding the achievement of non-economic goals of the family; and introduces an integrated mechanism to identify strategic implications for both family and business. Concepts are applied to family businesses from three countries, to verify applicability and usefulness.