IFERA Reading Club – September

Date

Reading

Abstract

10/11/2023

16.00 (Rome)

Gedajlovic, E., Carney, M., Chrisman, J. J., & Kellermanns, F. W. (2012). The adolescence of family firm research: Taking stock and planning for the future. Journal of Management, 38(4), 1010-1037.

Through its rapid growth during the past decade, family business research has reached its adolescence as a field of study, and family business scholars now regularly contribute interesting and thought-provoking work to top-tier management, entrepreneurship, and finance journals. In this review article, the authors seek to document the growing maturity of family business research and to promote its integration into broader streams of inquiry in the organizational sciences. To do so, the authors describe recent family business research that addresses two fundamental questions: “How do firms differ in terms of their financial performance?” and “How do institutional conditions moderate performance differences between firms?” Based on their review, the authors describe the past and potential future contributions of family business research and conclude that it holds great promise to “give back” and provide meaningful contributions to the general field of management.

15/12/2023

16.00 (Rome)

Bammens, Y., Hünermund, P., & Andries, P. (2022). Pursuing gains or avoiding losses: The contingent effect of transgenerational intentions on innovation investments. Journal of Management Studies, 59(6), 1493-1530.

Many business‐owning families aspire to someday transfer their firm to the next family generation. Controversy surrounds the question of how these transgenerational intentions affect risky growth strategies such as investments in innovation: some emphasize the positives of a transgenerational time horizon for investments in future growth, others highlight the negatives of a more conservative mindset with amplified concern for stability and risk avoidance. Using regulatory focus theory, we resolve this long‐standing controversy about the impact of transgenerational intentions by theorizing how they can trigger a promotion focus with increased innovation spending or a prevention focus with reduced innovation spending, depending on the firm’s survival hazard. Based on a sample of around 3,900 German firms using OLS and 2SLS estimation, we find empirical support for our predictions. This study extends the mixed gamble lens on family firm decision‐making with insights from regulatory focus theory to build consensus on the role of transgenerational intentions while shifting consensus on the role of family ownership in relation to the innovation spending decision.

12/01/2024

16.00 (Rome)

Kotlar, J., & De Massis, A. (2013). Goal setting in family firms: Goal diversity, social interactions, and collective commitment to family–centered goals. Entrepreneurship Theory and Practice, 37(6), 1263-1288.

Goal setting in family firms is very complex due to the interplay between family and business systems. However, this topic is largely overlooked in family business research. In this qualitative study of goals and goal formulation processes among 76 organizational members across 19 family firms, we identify goal diversity as a direct consequence of the overlap between the family, ownership, and business systems. We found that goal diversity is expressed more strongly in the proximity of generational transitions, triggering social interaction processes through which organizational members contrast their goals. Our findings suggest that different types of social interactions lead to different behaviors, with familial social interactions being more effective than professional social interactions in managing goal diversity toward the formation of collective commitment to family–centered goals.

09/02/2024

16.00 (Rome)

Ben-Shahar, D., Carmeli, A., Sulganik, E., & Weiss, D. (2023). Power and dominant coalitions in family business. Academy of Management Review, 48(3), 530-555.

We address a key theoretical issue in the literature of dominant coalitions by explaining why, contrary to conventional wisdom, we observe the emergence of different coalitions under identical equity holdings of shareholders. Shifting the focus from exploring drivers of dominant coalition configurations in isolation (e.g., equity holdings), we expand on a relational perspective to explore how relational ties (soft power) among family shareholders interplay with equity holdings (hard power) in generating individual effective power to influence decision-making in the family firm. Drawing from and expanding on a cooperative game theory approach, this paper breaks new theoretical ground by providing insights into why and how the formation of relational ties (and lack thereof) among family shareholders affects the distribution of effective power in decision-making processes, over and beyond the share in equity holdings. Our work trains a microfoundation lens on the study of dominant coalitions by disentangling and assessing individual effective power in coalitions of shareholders in family firms. We further propose a new perspective and a formal modeling approach to explain and measure why and how relational ties among members shape their effective power to influence decision-making, thereby shedding light on why and how members participate in different coalitional configurations. Finally, we contribute to the literature on ownership structure by promoting a comprehensive perspective that incorporates both equity holdings and relational ties among family shareholders.

08/03/2024

16.00 (Rome)

Bunkanwanicha, P., Fan, J. P., & Wiwattanakantang, Y. (2013). The value of marriage to family firms. Journal of Financial and Quantitative Analysis, 48(2), 611-636.

This paper presents the first empirical evidence showing that the marriage of a member of the controlling family adds value to public corporations. The results, based on a uniquely comprehensive data set from Thailand, show that the family firm’s stock price increases when the partner is from either a prominent business or a political family. Abnormal returns tend to be higher for firms whose operation depends on extensive networks. In contrast, marriages to ordinary citizens are not associated with any abnormal returns. These findings are generally supportive of the value of networks in general and marriage in particular.

12/04/2024

16.00 (Rome)

Sasaki, I., Kotlar, J., Ravasi, D., & Vaara, E. (2020). Dealing with revered past: Historical identity statements and strategic change in Japanese family firms. Strategic Management Journal, 41(3), 590-623.

Research Summary

This paper examines how strategy‐makers attempt to reconcile change initiatives with organizational values and principles laid out long before, still encased in strategic identity statements such as corporate mottos and philosophies. It reveals three discursive strategies that strategy‐makers use to establish a sense of continuity in time of change: elaborating (transferring part of the content of the historical statement into a new one), recovering (forging a new statement based on the retrieval and re‐use of historical references), and decoupling (allowing the co‐existence of the historical statement and a contemporary one). By so doing, our study advances research on uses of the past, establishes important linkages between identity and strategy research, and enhances our understanding of the intergenerational transfer of values in family firms.

Managerial Summary

Crafting a new corporate philosophy or mission statement can help implement strategic change, but can also be experienced as a disruption in people's sense of “who we are” as an organization. This paper reveals a variety of strategies that managers can use to deal with the tension between promoting change and maintaining a sense of continuity with a distant, revered past. By doing so, it helps managers confronting these issues deal with the enabling and constraining effects of the past. While this is a more general challenge for organizations with historical legacies, it is a particularly delicate issue for family firms grappling with the need to transfer values from one generation to the next, while retaining flexibility to change and adapt over time.

10/05/2024

16.00 (Rome)

Miller, D., & Le Breton–Miller, I. (2014). Deconstructing socioemotional wealth. Entrepreneurship Theory and Practice, 38(4), 713-720.

There have appeared of late numerous important articles elaborating on and researching the concept of socioemotional wealth, within the last year in Entrepreneurship Theory and Practice, others published in journals ranging from Administrative Science Quarterly to Family Business Review. Given the increasing popularity and generality of the concept, it is perhaps worth revisiting it to assess its potential for enhancing our understanding of family firms. We shall examine the socioemotional wealth concept and the challenges it poses for researchers, and propose some conceptual and methodological notions for increasing its utility.

14/06/2024

16.00 (Rome)

Miller, D., Le Breton‐Miller, I., & Lester, R. H. (2011). Family and lone founder ownership and strategic behaviour: Social context, identity, and institutional logics. Journal of Management Studies, 48(1), 1-25.

There is controversy in the literature about the effects of ownership on strategy and performance. Some scholars have taken agency explanations as definitive, arguing that closely held firms outperform. Empirical studies, however, show conflicting findings for firms with concentrated ownership: lone founder firms outperform, family firms do not. Such conflicts may be due to the failure of agency theory to distinguish between the social contexts of these different types of owners. We argue that explanations of performance must take into account not simply ownership, but who are the owners or executives and how their social contexts may influence their strategic priorities. Family owners and CEOs, influenced by family stakeholders in the business, are argued to assume the role identities and logics of family nurturers and thus strategies of conservation. By contrast, lone founders, influenced by a wider set of market‐oriented stakeholders, are argued to embrace the identities and logics of entrepreneurs and strategies of growth. Family founders and founder‐executives are held to blend both orientations. These notions are supported in a study of Fortune 1000 companies.

13/09/2024

16.00 (Rome)

Ramírez‐Pasillas, M., Lundberg, H., & Nordqvist, M. (2021). Next generation external venturing practices in family owned businesses. Journal of Management Studies, 58(1), 63-103.

Drawing on an Entrepreneurship as Practice (EaP) approach, this article examines how next generation members in family owned businesses (FOBs) engage in external venturing. Our study builds on longitudinal qualitative research in two Mexican FOBs where the next generation launched ten ventures. It reveals five different practices of external venturing used by next generation family members: ‘obtaining family approval’, ‘bypassing family’, ‘family venture mimicking’, ‘jockeying in family’, and ‘jockeying around family’. The five practices are combined into three routes for external venturing: ‘imitating the family business’, ‘splitting the family business’, and ‘surpassing the family business’. Building on notions from Michel de Certeau’s practice theory, this study contributes to theorizing the five practices as ways of operating and the routes as modes of sensing to better understand how next generation family members deal with settings featured by dominant orders within the family and the FOB in their attempts to originate and launch their new ventures.

11/10/2024

16.00

(Rome)

König, A., Kammerlander, N., & Enders, A. (2013). The family innovator's dilemma: How family influence affects the adoption of discontinuous technologies by incumbent firms. Academy of Management Review, 38(3), 418-441.

We integrate research on family business and discontinuous change to better explain why incumbents vary in when and how they adopt discontinuous technologies. Family influence induces companies to strive for continuity, command, community, and connections and, thus, alters the mix of constraints under which firms operate. Consequently, family influence weakens several of the inertial forces described in the discontinuous change literature, particularly the level of formalization, dependence on external capital providers, and political resistance. However, it also aggravates critical sources of organizational paralysis, specifically emotional ties to existing assets and the rigidity of mental models. We aggregate these seemingly contradictory effects to show that, overall, discontinuous change conflicts with essential goals and values of the family system, and, therefore, family influence entails fundamentally different dilemmas than those described in extant research. In turn, although highly family-influenced companies recognize discontinuous technologies later than their less family-influenced counterparts, they implement adoption decisions more quickly and with more stamina. Moreover, family influence reduces adoption aggressiveness and flexibility. We discuss important implications of our research for conversations on discontinuous change as well as for the debate on the advantages and disadvantages of family influence in firms.