CEO's empathy and salience of socioemotional wealth in family SMEs – The moderating role of external directors

A focus on preserving socioemotional wealth may influence entrepreneurial activities in family firms. In this paper, we identify the emotion of empathy in the family CEO as an antecedent of socioemotional wealth creation. We argue that the presence of one or more external directors can have a direct as well as moderating influence on the relationship between CEO's empathy and the salience of socioemotional wealth to the family CEO. Our empirical tests confirm these hypotheses. Several areas of future research are suggested to incorporate empathy and other emotions in family business studies.     

The impacts of family involvement on R&D investment intensity in firms: Evidence from China

Drawing on the perspective of socioemotional wealth, this paper explores the types of family involvement in family firms and their impacts on R&D investment intensity. Using data from the forecasts issued by A-share family firms listed on Chinese stock markets between 2008 and 2019, the study finds that the separation of ownership and control is negatively associated with R&D investment intensity in non-high-tech firms, whereas potential gains of socioemotional wealth from R&D activities by high-tech firms produce a positive influence that offsets the negative impact of the separation of ownership and control on R&D investments. It reveals the importance of gains of socioemotional wealth. In contrast to the separation of ownership and control, family involvement in management is negatively associated with firms’ R&D investment intensity in both high-tech firms and non-high-tech firms. Our results capture the diversity of family members’ identity recognition, which leads to family members’ different evaluations of the potential gains and losses of socioemotional wealth. Overall, the distinction between high-tech family firms and other family firms is shown to be significant, as is the distinction between the impacts of different types of family involvement.

     

Family management,family succession,and R&D investment: An empirical study

Using data from the statements issued by A-share family firms listed on Chinese stock markets between 2008 and 2019, this paper explores the impacts of family management and family succession on R&D investment. We draw on the perspective of restricted and extended socioemotional wealth and differentiate exploitative R&D and explorative R&D in a detailed study. The study finds that the proportion of family members among board members or senior executives and the kinship of the CEO or chair of the board of directors have different effects on R&D investment, indicating that a diversity exists in how family members identify their role within the company. Furthermore, the participation of the controller’s children in the enterprise can promote explorative R&D investment instead of exploitative R&D, but only during the process of intergenerational succession. The findings differ from prior research in calling attention to the facts that the impact of family management is not always homogeneous owing to the dispersion of family members into different positions, and it can be misleading to conclude that R&D investment is more conservative in family businesses without considering the structure of R&D investment.

     

Disassembling the influences of perceived family relational conflict on business family offspring’s intrapreneurial intentions

Entrepreneurial business family offspring are key figures in helping family businesses achieve transgenerational entrepreneurship. However, a global survey reveals that entrepreneurial offspring avoid the family business when conducting entrepreneurial activities. Our study makes the first effort to explore what reduces business family offspring’s intrapreneurial intentions in the family business context. Applying a mixed-method approach, we conduct 18 explorative interviews, a pretest of 124 Chinese business family offspring, and a formal survey of 131 Chinese business family offspring approaching their career decision point. We realize that growing up in family businesses often exposes offspring to two types of perceived family relational conflicts that their parents’ entrepreneurial endeavors incur, which we define as “big-family” and “parent-offspring” relational conflicts. Our empirical results suggest that the relationship between perceived family (i.e., parent-offspring and big-family) relational conflict and family business intrapreneurial intentions were serially mediated by family relational outcome expectation and family relational self-efficacy. Contributions to family business research and social cognitive career theory are discussed.

     

Using a dual system of reasoning in small businesses: Entrepreneurial decisions and subjective risk intelligence

This study aims at introducing subjective risk intelligence (SRI) in the context of small businesses to analyze how both rationality and intuition may influence the entrepreneurial decision-making process, particularly in affecting firms’ financial equilibrium.

SRI aggregates four dimensions: two positive attitudes (imaginative capability and problem-solving self-efficacy) and two detrimental ones (emotional stress vulnerability and negative attitude towards uncertainty). In particular, we argue that imaginative capability and emotional stress vulnerability refer to Kahneman’s System 1 (the intuitive), while problem-solving self-efficacy and negative attitude towards uncertainty appertain to System 2 (the rational).

We conducted an empirical investigation collecting data from an ad hoc survey administered to owners and managers of small businesses and their balance sheets over 2013–2017. After testing the proposed constructs’ reliability, we tested the influence that both Systems 1 and 2 have on SMEs’ financial structure through a pooled OLS regression estimator.

Results show that the intuitive and the rational components of risk intelligence affect entrepreneurs’ decision-making differently. The rational component seems to stimulate the entrepreneurial orientation to risk tolerance. The intuitive component limits the entrepreneurial propensity to take financial risks due to the desire for stability attached to this cognitive process. Accordingly, we highlight the importance of enhancing a balance between the two systems of thinking. Practical implications suggest that entrepreneurs with a dominant attitude towards problem-solving self-efficacy, or a positive attitude towards uncertainty, should invest in developing imaginative capabilities or emotional control, and vice versa.

     

Supply management and family business: A review and call for research

Family-owned enterprises dominate global business, generating 70–90% of the world's gross domestic product. Existing management research has validated that family businesses often behave differently than non-family businesses, primarily by focusing on idiosyncratic non-economic goals that are not typically assessed in traditional business research. Extant supply management literature has yet to investigate the influences of family business, thus overlooking a potential significant source of variation in our research as well as limiting our managerial relevance. The objective of this paper is to introduce supply management scholars to family business, including its prominence and unique characteristics. Applying socioemotional wealth as a theoretical lens, we develop a research agenda from existing supply management and family business literature by offering propositions for future research where family business influences may permeate contemporary supply management topics including strategic supply management, sourcing strategy, supplier relationships, sustainability, risk, and e-procurement. In doing so, we provide an initial foundation for supply management scholars to both incorporate family business effects into research and launch new research streams. This is one of the first papers to our knowledge that introduces the field of family business to supply management scholars.     

Mindfulness,socioemotional wealth,and environmental strategy of family businesses

The study advances knowledge in the field of business strategy and the environment by incorporating mindfulness theory into the research on socioemotional wealth (SEW) and its environmental consequences in family businesses. Using an integrative model, the paper investigates the relationship between mindfulness SEW dimensions and family firms' environmental strategies, specifically in developing sustainable products and processes. This study also proposes the firm's capabilities as a mediator in this relationship, while market turbulence is a moderator in the relationship between the firm's capabilities and sustainable products and processes. The empirical results show that in protecting SEW, specifically in the identification of family members with the firm and binding social ties, mindfulness provides a rich endowment that develops appropriate capabilities to produce sustainable products and processes. While the moderating role of market turbulence is insignificant, we can infer that irrespective of how turbulent (or not) the market is, the firm's capabilities are a key determinant of sustainable products and processes. Our findings offer theoretical and managerial implications for sustainable practices in the family business context.     

Individual entrepreneurial orientation and performance: the mediating role of international entrepreneurship

This paper analyses the role that individual entrepreneurial orientation (IEO) plays in the success of international entrepreneurship moves. We focus on the mediation effect of international entrepreneurship in the relationship between IEO and firm performance. We argue that entrepreneurial experience constitutes an important source of IEO and propose an objective measure of IEO. The hypotheses are empirically analysed using a 22-year panel of family SMEs. Our results confirm the hypotheses and provide a better understanding of the role of IEO in the success of corporate strategies such as internationalisation. Specifically, IEO is found to improve firm performance indirectly by increasing the speed of internationalisation, and this effect is non-linear. Our study contributes to the literature by extending international entrepreneurship literature by offering a more complete view of the causes and consequences of IEO. Finally, our results also contribute to the literature on family firm heterogeneity.

     

Recruiting outside board members in the small family business: an ideological challenge

The focus of this paper is to explore how contrasting ideologies influence the selection process of outside directors in the small family business. Small family businesses donot just represent smallscale economic activity but they are the outcome of entrepreneurial ambition and family involvement. This means that willpower and emotional commitment blend with calculative considerations. As emotional as well as cognitive constructs the family, management and entrepreneurship each represent an ideology: paternalism, managerialism and entrepreneurialism. The proposed ideological framework is positioned against alternative approaches to the study of board selection processes. Two sets of data are presented. A piloting survey of 12 family businesses is used to substantiate the theoretical assumption that entrepreneurial firms avoid having outside directors and managerial firms welcome outside directors, leaving paternalistically-run family businesses ambivalent. Repeated in-depth interviews in two family businesses, one founder-managed and entrepreneurial, the other established and traditional, reveal how the professionalization of the board enforces managerialism, challenging thus far dominating ideologies, entrepreneurialism and paternalism. The outcome of this ideological contest, if properly orchestrated, is an energized and more competitive family business.     

The interplay of entrepreneurial and non-entrepreneurial internationalization: an illustrative case of an Italian SME

This study describes SME internationalization as a process that combines entrepreneurial and non-entrepreneurial behaviour. We bring in insights from prior literature and use an illustrative case study of an Italian SME to demonstrate the interplay of entrepreneurial and non-entrepreneurial behaviour during the internationalization process. Our study shows that the combination of entrepreneurial and non-entrepreneurial internationalization cannot be fully explained with existing International Entrepreneurship literature or other internationalization theories, as they do not take into account the nonlinear nature of internationalization or explain why the process seems to reach a ‘glass ceiling’ beyond which it does not progress. The study concludes with a conceptual framework providing an alternative explanation. Based on our conceptual reasoning we propose that predominantly non-entrepreneurial internationalization can occur without developing a clearly defined internationalization strategy. Additionally, we argue that low commitment to internationalization prevents capability development and may lead to nonlinear internationalization. Furthermore, we suggest that family involvement may moderate a firm’s international entrepreneurial orientation, consequently leading to more non-entrepreneurial internationalization.

     

Linking entrepreneurial and market orientation to the SME’s performance growth: the moderating role of entrepreneurial experience and networks

Entrepreneurial orientation and market orientation (EO and MO, respectively) have received extensive research attention in the past several decades. Although scholars widely agree that both MO and EO are critical to firms’ performances, a better understanding is still needed about how market and entrepreneurial orientation develop over time as well as their relative impact on the growth of the SME’s performance. This study does not consider MO and EO as generic resources that always positively influence firms’ performances; instead, it tries to explore contingent elements, such as social and business networks and accumulated entrepreneurial experience. The hypotheses were tested on 191 small and medium-sized electronic firms located in an Italian geographical cluster during two periods: 2005 and 2016. This study suggests that SMEs, which develop social networks, may enjoy considerable advantages from entrepreneurial and market orientation, improving their performance benefits. Moreover, our results show that previous entrepreneurial experience, when specific, can reinforce the impact of entrepreneurial and market orientation on firms’ performance growth. This analysis makes several important contributions to the management literature on the strategic orientation of firms, the entrepreneurial experience and network development.

     

Do Family Firms Have Better Reputations Than Non‐Family Firms? An Integration of Socioemotional Wealth and Social Identity Theories

We draw from socioemotional wealth and social identity research to develop a theory on reputational differences among family and non‐family firms. We propose that family members identify more strongly with their family firm than non‐family members do with either a family or non‐family firm. Heightened identification motivates family members to pursue a favourable reputation because it allows them to feel good about themselves, thus contributing to their socioemotional wealth. We hypothesize that when the family's name is part of the firm's name, the firm's reputation is higher because family members are particularly motivated for their firm to have a better reputation. Family members also need organizational power to pursue a favourable reputation; thus, we hypothesize that the level of family ownership and family board presence should be associated with more favourable reputations. We find support for our theory in a sample of large firms from eight countries with disparate governance systems and cultures.     

Behavioral agency and corporate entrepreneurship: CEO equity incentives & competitive behavior

Scholars have long studied drivers of entrepreneurial behavior among established firms. Yet little is known about how individual factors shape a firm’s choice to pursue entrepreneurship. We draw on behavioral agency theory to explore the role of equity incentives in driving corporate entrepreneurship. Our findings suggest CEOs avoid corporate entrepreneurial behaviors as their option wealth increases. However industry dynamics also prove to be an important contingency when predicting the effects of both restricted stock and stock options on the likelihood that the CEO engages in corporate entrepreneurship. Our findings provide a theoretical platform for predicting dimensions of entrepreneurial behavior and highlight effects of CEO equity ownership.

     

Special issue on “The role of networks in entrepreneurial performance: new answers to old questions?”

The nature and extent of relationships between entrepreneurial networks and entrepreneurial performance are old questions. Scholars have explored the nature of entrepreneurial networks and have focused on their relationship with, and effects on, performance, which is viewed in this special issue in terms of the strategic development of established businesses and new ventures. However, while much is now known about the origins and effects of social networks there continues to a paucity of research on how social networks are used in various organizations, and when one or more networks are drawn upon for what specific purpose. Each article in this special issue addresses one or more of these questions in a range of industries and environments, namely poor village entrepreneurs who have to work in a highly challenging financial and social environment in Bangladesh, “early internationalizing small firms” in South Africa, high technology “early-stage ventures” in Hong Kong, 3-D technology ventures that operate with an “open” business model, and the “multi-rational” nature of networks in family businesses in and beyond the UK. In all, this collection of papers comprises a body of scholarship with fine-grained studies on how and when specific social networks are drawn on in various forms of organization. The subsequent discussion of these issues extends knowledge of the various ways in which entrepreneurs and entrepreneurial businesses advance their interests by leveraging familiar business and social networks.     

家族企业社会情感财富的传承路径与路障——基于多案例的研究

在家族企业研究领域,社会情感财富自2007年提出后便获得越来越多学者们的认同和追随。目前中国家族企业如何进行代际交接以实现企业可持续发展是时代要求下的重要课题。本文回顾以往文献,通过对8家案例企业的深度访谈,进行多案例对比分析,并利用扎根理论研究方法论的数据编码技术,建立了社会情感财富5个维度的传承路径与路障理论模型。研究发现:通过家族培养、公司治理、家族鞭策、家族决策,家族成员拥有对企业的控制权和影响力;家族通过培养家族归属感和自我效能感来培养家族成员对企业的认同;家族通过创设实践共同体、拓展重构在代际传承过程中传递并保持紧密的社会关系;家族通过关系管理以及权威治理凝聚家族情感,维系家族成员间情感依恋;家族通过构筑共同愿景、设计传承模式以及家庭教育实现跨代传承意愿。此外,权威路障、情感路障、制度路障、市场路障等4类路障会影响社会情感财富在家族企业中的传承。     

Non-family-members in the family business management team: a multinational investigation

The purpose of this study was to investigate, in a multi-country context, the inclusion of family-member managers and non-family-member managers in family businesses, and the relationship of this variable to certain management activities, styles and characteristics. A large sample (N = 593) of family businesses was generated from six countries (Croatia, Egypt, France, India, Kuwait and the United States), countries with significant differences in cultures, economies, levels of entrepreneurial activity, and family business demographics. Correlation and then Regression results indicate that, as the percentage of non-family-managers in the management team increases, there is an increase in the use of outside assistance, the use of sophisticated financial management, and the consideration of going public; but a decrease in family member conflict, in the original founder’s influence, and in the formulation of succession plans. Implications of these findings, for practitioners, consultants and researchers, are presented.     

Drivers of entrepreneurial aspirations at the country level: the role of start-up motivations and social security

This paper investigates whether various start-up motivations and a country’s level of social security can explain the prevalence of entrepreneurial aspirations. For entrepreneurial aspirations and motivations we use country-level data from the Global Entrepreneurship Monitor (GEM) for the year 2005. We distinguish between the necessity motive, independence motive and increase wealth motive and between aspirations in terms of innovativeness, job growth and export orientation. Our findings indicate that social security negatively affects a country’s supply of ambitious entrepreneurship. Our results also suggest that entrepreneurial aspirations in terms of job growth and export relate positively to the increase wealth motive.     

Full circle support: unpacking the relationship between women entrepreneurs’ family-to-work support and work interference with family

With an anchoring in conservation of resources theory, this study examines the mediating role of women entrepreneurs’ work-related emotional exhaustion in the relationship between their family-to-business support and work interference with family, as well as the moderating role of the entrepreneurial character of their company’s strategy in this process. Survey data collected from women entrepreneurs in Argentina indicate that a notable reason that business support received from the family diminishes work interference with that same family is that it abates the sense of being overburdened by work. This benefit of reduced exhaustion is especially prominent to the extent that women entrepreneurs pursue an energy-consuming, entrepreneurial strategy for their business. For entrepreneurship scholars and practitioners, this research accordingly reveals a critical channel through which supportive family relationships can decrease the probability that women entrepreneurs bring work challenges home (i.e., diminished depletion of work energy), and it shows how this explanatory factor varies with the strategic profile they adopt for their business.

     

International entrepreneurial orientation and regional expansion

Abstract

This study examines how behavioral elements of international entrepreneurial orientation (i.e. product innovativeness, risk-taking, proactiveness, competitive aggressiveness, and autonomy) increase variability in scope of regional market expansion, and the international marketing channel management conditions under which this occurs. Results from an empirical study in a developing market show that not all behavioral elements of international entrepreneurial orientation (IEO) increase scope of regional expansion. The study specifically finds that scope of regional expansion is fostered when high levels of product innovation intensity, risk-taking, competitive aggressiveness, and autonomous behaviors are aligned with a stronger channel management capability. Conversely, the regional expansion values of product innovation novelty and proactiveness are cancelled out when channel management capability levels are high.     

Entrepreneurship through Bricolage: a study of displaced entrepreneurs at times of war and conflict

ABSTRACT

War and conflict brings about adverse changes for those who are displaced. How do entrepreneurial individuals respond to such adversity to either set-up, or continue with their existing entrepreneurial endeavours that would improve their own livelihood or that of others who have been affected? Whilst previous studies have found local knowledge, networks and resources to be crucial in the development of ventures in the war and conflict context, alienation from mainstream society within the host location often means that to succeed, those who are displaced require alternative strategies and approaches. Through examining the entrepreneurial ventures of six internally displaced entrepreneurs in Pakistan, our study identifies that entrepreneurial individuals find different ways to adapt to the new order, with both internal and external bricolage becoming the key strategies deployed to either re-establish their previous businesses or to develop new endeavours in the host location. To compensate for lack of local knowledge, networks and resources, we found that entrepreneurs followed closely their previous paths in their bricolage attempts, relying on reconfigurations of their pre-existing competencies, as well as utilizing pre-established and clandestine networks.