Entrepreneurial orientation in family firms: the moderating role of technological intensity and performance

This paper examines how socio-emotional factors can influence family firms’ commitment to entrepreneurially- oriented activities, and how their level of commitment is moderated by the technological intensity of the sector and firm performance. We find that, while family firms are less entrepreneurially-oriented than non-family firms, this gap closes with increasing technological intensity of the sector. We find no evidence, however, to suggest any change in entrepreneurial orientation in family firms resulting from a drop in firm performance.     

TOP MANAGEMENT TURNOVER AND CEO SUCCESSION: AN INVESTIGATION OF THE EFFECTS OF TURNOVER ON PERFORMANCE

One strategic action which is often taken by firms in need of a turnaround is to bring in a new chief executive officer (CEO). Many observers argue, however, that having done this the new CEO must replace large numbers of top managers in order to effect a change in the firm's interactions and subsequent performance. Critics of this perspective insist that just the opposite is true. Substantial levels of turnover may only serve to further disrupt the organization decreasing performance still more. This controversy is addressed in the following study using a sample of 84 firms all of which experienced CEO succession during the year 1980. Analyses rely on a three-year-period pre-succession and three-year period post-succession. Three hypotheses are proposed. First, poor performance prior to CEO succession leads to greater turnover afterward. Second, that turnover is curvilinearly related to performance after the succession. And, finally, that successor type (i.e. whether the CEO was an inside or outside candidate) is related to the level of turnover in upper level management positions in the post-succession period. the results from tests of these hypotheses are presented, and the implications of these findings are discussed.     

A firm's external environment and the hiring of a non‐standard workforce: implications for organisations

This article empirically investigates organisations' strategic decision to hire non‐standard employees. Using US firm‐level data and a matched pair design, the study shows that firms operating in a more competitive environment and a less uncertain environment have a higher proportion of non‐standard workers. Further, firms with a greater proportion of non‐standard workers show higher financial growth. And finally, in a highly competitive environment, those firms that hire more non‐standard workers achieve significantly higher financial growth. Similar growth is experienced by those firms in the low uncertainty environment hiring more non‐standard workers. These results are all consistent with the research hypotheses.     

Formalized HR practices and firm performance: an empirical comparison of family and non-family firms

The influence of the family on human resource (HR) management structures creates important idiosyncrasies with potential implications in terms of firm performance. Based on the agency and socioemotional wealth perspectives, this paper examines the formalization and effectiveness of three basic HR practices – selection, training and compensation – in different contexts of family and non-family firms. Using a sample of 500 Spanish companies, the results show that a higher degree of HR formalization has a positive influence on firm performance, confirming the negative moderating influence of family involvement on the relationship between the formalization of training practices and the firm performance. In addition, the findings indicate that the mediating role of selection practices in the relationship between training and firm performance is smaller in family than in non-family firms.     

Myth or reality? Assessing the moderating role of CEO compensation on the momentum of innovation in R&D

This study researches the influences of CEO compensation on firm behavior to examine the interactive relationship between the behavioral momentum of innovation in R&D and CEO compensation. The models presented in this study are based on evolutionary, institutional, and agency theories to test hypotheses using data from 107 companies in the high-technology sectors in the United States. The results indicate that the pre-succession innovative behavior of these high-technology firms on R&D can positively affect these firms' post-succession innovative behavior towards R&D. That is, positive momentum in R&D innovation prevails in a firm across a change of the CEO. However, for the role of CEO compensation, short- and long-term compensation does not positively moderate this behavioral momentum in R&D. Hence, the moderating impact of short- and long-term CEO compensation to enhance the momentum of innovation in R&D can be romanticized. These findings provide boards of directors with evidence as to how a CEO succession matters to a firm's behavioral momentum in R&D, and whether CEO compensation can be strategized to change a firm's innovation and momentous behavior.     

Influence of family-centered goals on dividend policy in family firms: A socioemotional wealth approach

Socioemotional wealth (SEW) preservation is likely to be a key determinant for family firms when shaping their dividend policy. This paper analyzes how family-centered goals reflected by SEW can influence dividend policy in private family firms and explores how family involvement in management, generational stage, and firm hazard might moderate these relationships. Results indicate a negative association between SEW preservation and both the likelihood of giving dividends and the amount of dividend paid. This negative relationship is stronger when the CEO is a family member, in early generational stages and when the firm faces greater performance hazard. The amount of dividend paid is also lower when there are family members in other top management positions apart from the CEO. The evidence provided thus suggests that the existing heterogeneity in dividend policy in privately held family firms is strongly driven by differences in SEW priorities.

     

Production functions and productivity of family firms: Evidence from the S&P 500

This paper examines whether the higher profitability and valuation of family firms is related to differences in production technologies and production efficiency. Using data on S&P 500 manufacturing firms, we find that family firms are more productive than comparable non-family firms. Furthermore, our results show that the production technologies of family and non-family firms do not differ per se, thereby suggesting that the differences in the level of production output are caused by higher production efficiency of family firms. These findings indicate that the superior performance of family firms is related to their more efficient use of labor and capital resources.     

MANAGEMENT CONTROL SYSTEMS IN FAMILY FIRMS: A REVIEW OF THE LITERATURE AND DIRECTIONS FOR THE FUTURE

Family firms play a significant role in the global economy. Although family firm literature has devoted much time and effort to investigating topics concerning corporate governance, leadership, ownership and succession, accounting issues have received relatively scant attention. In this paper, we assemble and critically review extant literature on the choice of management controls. This is an essential topic for firms as management control systems (MCS) are used to make sure subordinates behave in function of the goals of the firm. Family firms, however, have distinct features, such as differences in governance structures and goals, which can have a significant impact on whether and how MCS are used. We conclude this review paper by providing avenues for future research that can advance our understanding of both the determinants and the outcomes of the choice of MCS.     

An Organizational Justice-Based View of Self-Control and Agency Costs in Family Firms

abstract    By integrating insights from two seemingly disparate literatures – economics and organizational justice – within the general agency framework, we advance propositions that suggest a fine-grained explanation of agency costs at family firms. In so doing, we account for the differential effects of the controlling owners' self-control (i.e. the governance mechanisms they adopt and how they administer those mechanisms) on the justice perceptions of the family and non-family employees. Our integrative view allows us to strike a realistic balance between the overly optimistic views about family firm governance that have been expressed by agency scholars and the overly pessimistic views expressed by management scholars in the past few years.     

Strategic automation and decision-making authority

This paper studies how automation impacts the structure of decision-making in organizations. We develop a theoretical model of a firm, where a principal makes a decision about how much to prioritize the new product development division when the division is led by a manager who holds private information specific to this division and has misaligned preferences with the principal. The principal chooses whether to decentralize this decision by delegating it to the manager, resulting in more informed but unbiased decision. In this setting, we investigate how automation which reduces operational variability may alter this choice of organizational structure. The findings from our analysis show that firms deploy automation resources differently depending on their organizational structure: centralized firms choose to automate divisions that face more uncertainty, while decentralized firms do the opposite. Moreover, increasing access to automation results in higher centralization of decision-making in firms. In the extensions, we show that the strategic use of automation reduces the informativeness of intrafirm communication, and also, that automation can be a strategic substitute to monetary contracts.     

Sustainability and Environmental Behaviour in Family Firms: A Longitudinal Analysis of Environment‐Related Activities,Innovation and Performance

Environmental behaviour plays an important role as concerns the public image and performance of firms, as well as for the achievement of sustainable development in society. This study investigates the behaviour of family firms regarding environment‐related activities, innovation and performance. Opposing goals are found to impact environmental behaviour of family firms, in particular the trade‐off between family firms' risk awareness and their aim of achieving socioeconomic wealth. We find that family firms initially lag regarding environment‐related activities, beneficial product, process and organizational innovations and performance. Yet, family firms catch up and show overall less volatility compared with other firms. Overall, we thus observe a convergence process between family and non‐family firms, which ultimately enables the two types of firm to achieve similar outcomes in terms of environment‐related activities, beneficial innovations and performance. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Family business succession roadblock model based on fuzzy linguistic preference relations

This study investigates how to reduce future barriers to succession and other problems related to family governance by constructing a succession roadblock map. The study explores succession roadblocks in family businesses and provides a succession planning tool that is based on empirical data from 42 director members of the Taiwan Institute of Directors. An analytical hierarchy of family business succession and succession roadblocks are divided into three categories: family roadblocks, institutional roadblocks, and market roadblocks. Next, this study calculates the weights and rankings of the severity of such roadblocks and the likelihood of their occurrence. Specifically, this study constructs a succession roadblock matrix that categorizes succession roadblocks into four categories: the ownership dilution model, sell or withdraw model, ownership management model, and dispersive ownership model. This study also establishes a roadblock strategy matrix for successor positioning and proposes suggestions for practical strategic planning to overcome the challenges of succession roadblocks.     

“举亲”还是“求贤”——家族企业继任者来源的思考

家族企业代际传承是一个复杂的过程,其继任者的选择对企业发展至关重要。论文从继任者来源的角度对家族企业代际传承进行研究,将家族企业继任者来源划分为三种类型,并对这三种类型的利弊进行梳理,以期为家族企业代际传承的理论研究与管理实践提供借鉴和参考。     

Breadth-of-impact frontier: How firm-level decisions and selection environment dynamics generate boundary-spanning inventions

In this paper, we provide an ex-ante explanation for why some technologies such as James Watt’s steam engine move successfully across broad technological fields, while other technologies do not. Using a sample of VC-backed biotechnology firms, we examine firm knowledge exploration choices along three dimensions—the decision to build from technologies across broad fields, the decision to explore application domains that are new to the firm, and the decision to mix these two options at the same time. We argue that firm-level invention decisions find differing responses when received by the selection environment. We find evidence of a “breadth-of-impact frontier” for technologies, wherein the choice of whether a firm should enter into a new application domain than those of the past should be informed by the degree to which the technology is citing prior work narrowly or broadly. The findings suggest that the belief that broad sourcing diversity will always result in greater citation diversity requires some caveats. The results contribute to the understanding of not only how entrepreneurial firms evolve but also how individual firms contribute to collective progress.     

Social capital and innovation in family firms: The moderating roles of family control and generational involvement

Drawing on the social capital literature, we examine whether the co-existence of distinct yet interacting social groups, namely family and non-family members, creates the conditions for increased family firm innovation. In particular, we theorize that family and non-family social capital have a joint positive effect on family firm innovation and this joint effect is stronger than the single effects of family and non-family social capital. In addition, we predict that while family control has a positive moderating effect, generational involvement has a negative moderating effect on the above-mentioned relationship. With supportive empirical results, our research makes important contributions to the existing literature.     

Mapping the successful succession process in family firms: evidence from Greece

The succession process in family firms has by far been determined to be the most critical phase in the family business life-cycle (e.g. Morris et al. Journal of Business Venturing 18:513–531, 1997; Wang et al. 2000) and characterized as the period in which most family firm fatalities occur (Handler and Kram Family Business Review 1:361–381, 1988). This paper is an empirical study on Greek family firms and seeks to identify the critical success factors that have a major impact on the outcome of a generational transition in the leadership of the family firm. Based on an integrated conceptual framework proposed by Pyromalis et al. (2006), we test the impact of five factors, namely the incumbent’s propensity to step aside, the successor’s willingness to take over, the positive family relations and communication, succession planning, and the successor’s appropriateness and preparation on both the satisfaction of the stakeholders with the succession process and the effectiveness of the succession process per se. The results provide a useful insight and confirm the importance of the aforementioned factors in the succession process by mapping a safe passage through the family business succession process, and by contributing not only to the overall family business literature but also generating strong arguments in favor of the family firm as an integral entrepreneurial element for a region’s sustainable economic development.     

Is nepotism so bad for family firms? A socioemotional wealth approach

This paper focuses on the issue of nepotism or the practice of hiring and managing family members in family firms. Extant research suggests that while nepotism is related to numerous problems, it also offers some unique advantages to family owned firms. We use a socioemotional wealth (SEW) perspective to develop a theoretical framework that explains how nepotism influences firm performance. In doing so, we rely upon a nuanced conceptualization of SEW to clarify why some family firms are more likely to engage in nepotism than others, as well as explain the contingencies under which nepotism may prove beneficial or detrimental for family firms. Finally, we explore how human resource practices might impact the interplay between nepotism, environmental contingencies, and firm performance.     

Untangling Goal Tensions in Family Firms: A Sensemaking Approach

While economic and non-economic goals may converge in the long term, they often lead to tensions for organizational decision-makers in the short term, especially in family firms that place much emphasis on family-related goals. We draw on a sensemaking approach to investigate such potential tensions in the decision-making of family firms. Based on a qualitative analysis of 59 interviews, 501 items of archival data and 39 observations from eight private Irish firms, we explore the perceived goal tensions of family firm decision-makers as they seek to balance economic and non-economic goals. We identify three sensemaking mechanisms – ensuring continuity in the family firm, preserving family cohesion, and delegating responsibilities to trusted advisors – that assist family firm decision-makers in managing these goal tensions. Moreover, we identify that sensegiving based on three different values – sense of commitment, community embeddedness, and family firm identity – helps family firm decision-makers to justify and communicate their decisions. Our model contributes to a more granular understanding of the management of goal tensions and of decision-making in family firms by going beyond the question of whether family firms prioritize economic or non-economic; instead, it reveals concrete processes showing how firms balance and aim to incorporate both goals. Furthermore, we advance knowledge on sensemaking in family firms by revealing how sensemaking can explain idiosyncratic family firm behaviour and by showing how family firm decision-makers use specific values when ‘giving sense’ to justify their decisions.     

CEO turnover in family firms: How social exchange relationships influence whether a non-family CEO stays or leaves

Interpersonal relationships are an important factor in organizations, and a growing number of articles examine how such relationships affect why people stay or leave organizations. In this article, we investigate how affective attachment between actors influences the turnover and retention process of non-family CEOs in family firms. By employing a social exchange perspective, we reveal under which conditions affective attachment come into being. We focus on the relationship between a non-family CEO and two generations of the owner family. Conceptualizing their relationship as an exchange triad, we show how imbalances influence the affective attachment created in this triad and outline the implications for turnover. Our article contributes to the literature on family businesses and turnover by linking the affective side of interpersonal relationships to CEO retention and turnover.     

家族企业子女接班的制度化管理

作为我国家族企业代际传承首选形式的子女接班,由于我国家族企业深受"家文化"的影响,目前存在职业经理人队伍和市场不成熟,规模小、技术含量低的现状,家族企业尚未发展到两权分离的程度,故采用"子承父业"的接班模式具有一定的合理性。但是,我国家族企业子女接班未形成制度化,存在子女接班人选择的主观性和随意性、缺乏权力传承协调和移交机制等危害,最终导致信任危机和影响家族企业可持续发展等一系列的后果。因此,家族企业子女接班从子女接班人的甄选、培养、评估和考核、奖惩到最后获得继承权,需要运用人力资源管理的视角来分析,以此强化子女接班制度化管理思维。