Organizational Social Relations and Social Embedding: A Pluralistic Review

To date there has been little systematic organization of the extensive literature on the processes and mechanisms shaping social relationships in and around organizations. In an analysis of 372 studies from this literature, we identified a broad spectrum of assumptions, priorities, and relational issues emerging from multiple disciplines and theoretical lenses. Three dominant perspectives surfaced in our study: economic, organizational, and interactionist. Each manifests distinctive ontologies of social relations, actors, relational processes, and modes of social embedding. The rich variety of relationships and causal patterns discovered characterizes more fully these perspectives, suggesting opportunities for further research within each, and a wider range of conceptual options to target relational paradigms toward different types of organizations, problems, and levels of analysis. It also brings to light the pluralistic nature of social relations in organizational contexts and the processes by which they become embedded.

A systematic examination of the family business contributions: is this domain a legitimate field of research?

Purpose

The purpose of this study is to systematically analyze family business research, which has experienced tremendous growth. Through this study’s categorization and evaluation of research, the authors illustrate the evolution of family business research in management, entrepreneurship and family business domains over the past decade.

Design/methodology/approach

This study provides an interdisciplinary systematic review of family business literature between 2008 and 2022 to analyze the family business field. Following similar previous reviews (Chrisman et al., 2003; Debicki et al., 2009), this study’s final sample includes 1,443 studies, which the authors categorize into six broad topics and 21 subcategories of management topics.

Findings

This study’s analysis reveals the field has grown nearly fivefold since 2007. As such, the authors examine the growth and decline of specific research topics. The authors also find in the past decade family business research has experienced rapid growth across a variety of outlets, signaling increasing reach, richness and legitimacy of the field.

Originality/value

By reviewing and analyzing 1,443 family business articles, the results illustrate the evolution of family business research over the past decade and what this means for its future. Based on this study’s systematic review, the authors offer insights into the state of the field and propose avenues for future research so the field can continue to prosper.

Symbolic Shareholder Democracy: Toward a Behavioral Understanding of the Role of Shareholder Voting in CEO Dismissals

We investigate the effect of expressive shareholder dissent voting, in which shareholders use their votes symbolically to express their discontent with management, on subsequent chief executive officer (CEO) dismissals. Using the routine but highly symbolic executive board discharge proposal voted on at the annual shareholder meetings of German firms, we argue that the board of directors understands these votes as a “vote of confidence in management” that challenges the CEO’s mandate to lead the firm. Arguing that board chairs are uniquely positioned to take up the stance of a steward of the firm and its leadership, we examine how independent and family board chairs moderate the board’s response to expressive voting dissent. Using a sample of German public firms over the period 2008–2015, we find that expressive voting dissent increases the chance of CEO dismissal increasingly with the level of dissent expressed. Contrary to prevailing agency theoretical expectations, we do not find that independent chairs are more responsive to expressive voting dissent, nor that this relationship is strengthened by the degree of minority institutional investor ownership of the firm. Consistent with the symbolic perspective on shareholder voting that we seek to develop, however, we find that family chairs are more likely to lead the board to dismiss the CEO due to the intrinsic disvalue they incur from symbolic leadership legitimacy challenges in their firms, and that the positive effect of having a family chair on the dissent induced chance of CEO dismissal is strengthened by the level of family ownership in the firm.

Funding: A University of Illinois at Chicago Summer Research Grant is gratefully acknowledged for S. Sauerwald.

Internationalization Strategies at a Crossroads: Family Business Market Diffusion in the Post-COVID Era

COVID-19 is the last nail in the coffin of globalization as we know it. This research aims to explore the influence of capital ownership in the (re)design of internationalization strategies among firms, considering the new macroeconomic challenges. It is commonly accepted that the extent to which family businesses approach internationalization differs from their counterparts; as such, the identification of leverages or hinderers in this process and the potential singularities of these firms is urgent. Intermittences in global operation and discontinuous internationalization paths remain overlooked in the theory. Continuity or intermittence across the internationalization strategies, as well as their determinants, were tested using data from the triennia of 2018, 2019, and 2020; the data were gathered from the Iberian Balance Sheet Analysis System Database (SABI), through a balanced panel of 26,154 firms belonging to all sectors of the manufacturing industry. Empirical evidence supports the heterogeneity of strategies among family businesses, as well as dissimilarities from their non-family counterparts. The firm dimension, experience in global operation, and the regional ecosystem in which the firm is embedded are identified as being central in internationalization endeavors. Urgency and assertiveness of policy action addressing the new macroeconomic challenges are required to foster economic recovery, and exploring extant entrepreneurial fabric potential and the already-established networks will determine the pace and success of the measures. Moreover, empirical evidence reinforces region-specific actions to be implemented, proposing the re-location of economic activities while promoting the intensification of spatial clustering and international networking. Designing an accurate policy package places demands upon heterogeneous players and layers of action, overlapping clusters and networks, and the creation of a multilevel ecosystem in which the flow of economic, human, and knowledge aspects circulate, reinforcing community resilience.

Costs of Employee Stewardship Behaviors for Employees in the Work-to-Family Penetration Context during the COVID-19 Pandemic

Drawing on the work–home resources model, our aim in this study was to explore the negative effects of employee stewardship behavior on work–family conflict (WFC) through work-to-family border permeation (WFBP) for employees. A conditional process model linking employee stewardship behavior (ESB), family-supportive supervisor behavior (FBBS), work-to-family border permeation (WFBP), family support, and work–family conflict (WFC) was developed. Longitudinal data collected at two different time points from 323 employees of three internet companies in south China were examined. The results revealed that WFBP mediates the impact of ESB on WFC. Family-supportive supervisor behavior substantially weakens the relationship between ESB and WFBP and the indirect effect of WFBP. Similarly, family support undermines the relationship between WFBP and WFC and the indirect effect of WFBP. Employee-level stewardship and blurred work–family boundaries have been common phenomena in contemporary China, especially during the COVID-19 pandemic. This study is among the first to focus on the negative impacts of employee stewardship behaviors on the employee, especially on their family, from a Chinese context. These findings also increase our understanding of the effects of ESB and provide some new insights into how to mitigate WFC.

Heterogeneous collaborative networks and firm performance: Do the contingent effects of family management and intellectual property rights matter?

Purpose

The aim of this study is to investigate the relationship between heterogeneous collaborative networks and firm performance, using the resource-based view (RBV) and its extension through the knowledge-based view (KBV) as theoretical lens. Moreover, the authors examine family management and intellectual property rights (IPRs) as contingent factors that enhance the effectiveness of heterogeneous collaborative networks in achieving superior firm performance.

Design/methodology/approach

The hypotheses are developed and checked by using a panel data sample of 10,985 firm-year observations from 1,766 Spanish manufacturing firms over the period 2007–2016.

Findings

The results indicate that heterogeneous collaborative networks positively influence firm performance. Furthermore, the positive impact of these innovation networks on firm performance is reinforced by high levels of family management, and such effect is even stronger when there exists high levels of IPRs.

Originality/value

This research is the first, to our knowledge, to provide important new insights into the manner in which the effect of both family management and IPRs have the potential to amplify the performance gains attained from heterogenous collaborative networks.

Asset tangibility, information asymmetries and intangibles as determinants of family firms leverage

Using a sample of Spanish tourism small and medium-sized firms, we have tested the impact of family control, publicly-available information and tangibility on financial structure, providing a multi-theoretical model that incorporates contributions from the classical theory of finance, inspired by agency theory, the behavioural theory of the firm and strategic theory. The results point to the need to jointly consider the effects of information transmission practices, asset investment decisions and ownership structures on debt capacity. The results show how family control is associated with propensity to take on debt, so that the desire to maintain social control and socioemotional wealth prevails over risk aversion, being the relationship between family ownership and leverage more complex and contingent than has been assumed in financial and behavioural models. In addition, this study contributes further evidence on the importance of family reputational intangibles, showing a positive indirect effect on firms’ leverage capacity and relating to the gap left by finance theory regarding the value of intangibles for debt, which has meant that their value in reducing information asymmetries in the capital market has been overlooked.

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

Purpose

A 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/approach

Drawing 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.

Findings

The 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/value

The results establish that family businesses' attempts to preserve socioemotional wealth may come at the cost of promoting organizational diversity.

Hierarchical Inconsistency: A Monitoring Mechanism to Reduce Securities Fraud in Emerging Markets

Research has indicated limited effects of formal governance measures on securities fraud prevention in emerging markets due to the weak rule of law. We propose that hierarchical inconsistency, misaligned rank ordering in formal organizational and informal social hierarchies of the corporate elite, can provide a novel monitoring mechanism to reduce securities fraud. Leaders at the top of the two inconsistent hierarchies can feel distressed and motivated to engage in contestation and challenge each other’s authority, thus providing checks and balances and preventing groupthink. This monitoring effect is likely to be stronger when either of the two heads has dominant and unequivocal superiority in their respective hierarchy, making them particularly distressed by the hierarchical inconsistency and prone to contest. We test our argument in the context of publicly listed family-controlled firms in China, where business and family hierarchies may confer superiority to different individuals. Our study contributes to the corporate securities fraud literature by understanding how formal organizational structures and informal social relationships interact and jointly influence governance effectiveness in emerging markets.

Organizational Psychological Capital in Family Firms: the Role of Family Firm Heterogeneity

Organizational psychological capital—comprising hope, confidence, resilience, and optimism—is a vital resource for family firms in times of stress. Surprisingly, whether and how family firm idiosyncrasies impact organizational psychological capital remains unclear. Considering the theoretical paradigm of socio-emotional wealth, we investigate two important family firm characteristics as antecedents of organizational psychological capital: the family involvement in the top management team and the generation of the family firm. We further propose that these relationships are moderated by a board of directors’ tenure. Based on an empirical analysis of listed U.S. family firms, our results confirm a negative relationship between family membership in the top management team and organizational psychological capital. In addition, we find that descendant family firms exhibit higher levels of organizational psychological capital than founder family firms. The results also confirm the moderating role of board tenure. This study works toward a more holistic view of family firm heterogeneity and specifically how different types of family involvement shape a firm’s positive strategic resources.

The self-centered philanthropist: family involvement and corporate social responsibility in private enterprises

Although corporate social responsibility (CSR) has attracted increasing attention in recent years, systematic studies on the CSR of Chinese enterprises are absent from academic publications. This study examines the effects of family involvement in the CSR of private enterprises. Using private enterprise data in China, the article reveals that, on the one hand, family involvement will improve CSR investment toward community stakeholders; on the other hand, family involvement has a negative effect on the CSR of contractual stakeholders. With the influence of “chaxu geju,” the author argues that Chinese families tend to shift between different logics of behavior when faced with people with whom they have different types of relationships and incorporate this behavioral mode into company practices when they engage themselves in management and business affairs.

CEOs Driving Decision Making Toward Higher Performance: Strategic Micro-foundations of Small-Sized Family Firms

Chief executive officers (CEOs) have a substantial influence on the decision-making processes of the top management team (TMT) and the performance of the firm in general, and this influence is particularly important in small-sized family firms. By integrating research on CEO qualities and the CEO–TMT interface to explain how they interact in ways that drive firm performance, we provide a first attempt to highlight the importance of CEO capacity to implement decisions that were made following a comprehensive process (i.e., strategic decision comprehensiveness, SDC) for the performance of small-sized family firms. In so doing, we provide a micro-foundation lens and also direct research attention to decision implementation, a key issue in the field of strategic management, which unfortunately has relatively been overlooked in the extant literature. Results of multisource survey data collected from CEOs and TMT members of 131 small-sized family firms indicate a positive interaction effect between CEO implementation capacity, the TMT SDC, and the performance of small-sized family firms.

Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance

This study investigates the effects of family control on corporate innovation activity in publicly traded firms in Japan under stakeholder-oriented corporate governance. In a sample of 14,991 firm-year observations in publicly traded firms in Japan during the period 2007 to 2016, we tested whether family owners or board members are enhancing research and development investments. While theoretical perspectives of principal–principal conflicts generally assume a negative relationship between family control and research and development intensity, we find a positive relationship, which supports the stewardship theory perspective. Additionally, we find that main bank ownership positively moderates the relationship between family control and research and development, suggesting that the main bank could affect the decision-making of family board members in the long-term. This result is supported by the close relationships between the main bank and client firms. Furthermore, our study reveals that the shareholder orientation of foreign shareholders suppresses family board members’ long-term orientation. We conclude that the exploitation presumed by principal–principal conflict perspectives has not been thoroughly investigated in Japan’s stakeholder-oriented corporate governance system.

Filling the void of family leadership: institutional support to business model changes in the Italian Industry 4.0 experience

We examine whether the probability of innovating a company’s business model towards the Industry 4.0 paradigm is affected by external institutional support and family leadership. Industry 4.0 is the information-intensive transformation of global manufacturing enabled by Internet technologies aimed at reinventing products and services from design and engineering to manufacturing. Using a sample of 3000 firms from a corporate survey on the manufacturing industry in Italy, our results showed that family leadership has a significant positive influence on the adoption of Industry 4.0 business models, but only in terms of family ownership. By contrast, family management has a negative influence on the probability of adopting a new business model. However, this negative influence is almost totally offset by the presence of the Triple Helix, i.e. the external support by public institutions and universities, which counterbalances the lower propensity of family managers to adopt Industry 4.0 business models. This supporting role only occurs when institutions and universities act together.

Comparison of remuneration in family and non-family firms in the Czech Republic

Purpose

The purpose of this paper is to analyse 100 of the largest family firms and their personnel costs and employee numbers compared to non-family firms in the Czech Republic and confirm if there exist differences between personnel costs for family and non-family firms.

Design/methodology/approach

The sample consisted of 100 family firms and 97 non-family firms from the Czech Republic for the comparison. Four hypotheses about relation between personnel costs for family and non-family firms and their governing body were set. Descriptive statistics were calculated, and t-tests and Kruskal–Wallis test for confirmation of set hypothesis were used.

Findings

Sales volume and production consumption results are used as variables, which were compared between family and non-family firms to achieve the most relevant possible conclusions. Based on our results, it can be stated that differences between personnel costs, which, in this study, comprise employee wages, are not statistically significant in the largest Czech family firms. There are significant differences in personnel costs for company boards. In comparing employee numbers and the number of members of statutory bodies, however, no significant difference was ascertained.

Originality/value

This study responds to a gap in the literature, by exploring the differences between personnel costs (for employees and governing body) in the area of the Czech Republic. This study also contributes to the understanding of the remuneration within family firms, by assessing the role of executive remuneration in family firms.

A meta-analytic examination of the relationship between family firm generational involvement and performance

Purpose

The purpose of this paper is to examine the relationship between family firm generational involvement and performance. Although researchers have studied this relationship extensively, a complete understanding of its true magnitude and sign is still lacking.

Design/methodology/approach

This meta-analysis sheds new light on this relationship, integrating the findings of 43 studies with 51 independent samples and 18,802 family firms.

Findings

The results reveal a small and negative relationship indicating that later-generation family firms perform worse compared to first-generation ones. The authors also show that the relationship is stronger for younger than older and for private than public firms. Finally, the measurements of both variables influence the relationship yielding critical research implications.

Research limitations/implications

This study suggests that future researchers examining the effects of generational involvement on family firm performance should conduct their analysis using multiple measures of both variables to ensure the accuracy of their results. It also highlights the need of family business scholars to converge to the use of a universal family firm definition, as findings differ significantly in strength and direction depending on which definition is used.

Practical implications

From a practitioners’ perspective, the findings imply that owners of young and private family firms should consider professionalizing and adopting a balanced top management team composition consisting of both family and non-family members as a way to mitigate the negative effects of “familiness” on performance.

Originality/value

This study empirically demonstrates the importance of adopting a generational perspective when examining differences in family firm performance.

Impact of family involvement on strategy and CEO compensation

Purpose

As widely known and well established, strategic decision-making at family firms is an interface between business interests and family considerations. The purpose of this paper is to understand the underlying basis of decision-making in setting corporate strategy and designing chief executive officer (CEO) compensation at founder- vis-à-vis descendant-led family firms in the Indian pharmaceutical sector.

Design/methodology/approach

A sample of 106 BSE-listed pharmaceutical companies have been studied over the period 2012–2017 resulting in a total of 636 firm-year observations. Impact of family involvement in business (FIB) on corporate strategy and CEO compensation has been analysed by constructing multivariate panel data regression models. To deal with the problem of endogeneity, Arellano-Bond (1991) dynamic panel data estimation procedure has moreover been conducted.

Findings

Supporting stewardship theory, founder-owned and governed firms have been found to favour “growth” strategy and distribute “conservative” executive pay, thereby exerting a positive moderating impact on the strategy-compensation linkage. On the contrary, descendants/second-generation entrepreneurs have put forth a “conservative” stance for growth and innovation, and have rather been observed to favour a “liberal” compensation policy, thereby showcasing the application of behavioural agency theory.

Originality/value

The research is a novel attempt to unravel the interaction between corporate strategy and CEO compensation in a family firm backdrop carried out in the context of an emerging economy. The study, moreover, adopted an all-encompassing definition of FIB (ownership, management and governance).

Examining the Impact of Innovation Forms on Sustainable Economic Performance: The Influence of Family Management

The aim of this research is to explore the effect that innovation, as a potential source of sustained competitive advantage and firm growth, has on the achievement of sustainable economic performance. In particular, this paper empirically examines the influence of four innovation forms (intramural R&D, extramural R&D, product innovation, and process innovation) on firms’ sustainable economic performance, considering the moderating effect of family involvement in management. To test the hypotheses, random-effects regression analyses are applied to a longitudinal sample of 598 Spanish private manufacturing firms throughout the 2006–2015 period. The results show a negative effect of intramural and extramural R&D on sustainable economic performance and a positive effect of process innovation on sustainable economic performance. Moreover, a reinforced relationship between process innovation and sustainable economic performance is also revealed when family involvement in management acts as a moderator. The findings make several contributions to research and practice.

Organizational antecedents of firms’ adoption of strategic human resource practices: Toward a reconciliation of CEO perceptions and family influence

There is lively debate in the literature about the effects of family influence on employment practices. Particularly, little empirical research explores the role of family influence in driving a firm’s adoption of specific strategic human resource practices such as high-performance work systems. Drawing from the tenets of the resource-based and stewardship theories, this study examines the relationship between chief executive officers’ perceived human resource capability and firm adoption of high-performance work systems in family business, and the joint moderating effect of family management and ownership on the above linkage. Our analysis uses chief executive officer–human resource manager matched samples of 145 Taiwanese publicly listed firms, the results show that chief executive officers perceived human resource capability is significantly and positively associated with the adoption of high-performance work systems. Moreover, this relationship is found to be the strongest when the family assumes leadership in management (i.e. the firm has a family chief executive officer) and family ownership is high.

A worldwide empirical analysis of the accounting behaviour in the waste management sector

Drawing on stakeholder theory, the premise in this manuscript is that moral and ethical behavior in terms of correct financial information contribute to higher sustainable performance that satisfies the wide range of stakeholders who are interested in the economic feasibility and environmental viability of waste management firms. On the basis of a scientific literature review and by using a balanced panel data set of 416 waste management firms worldwide over the period 2013-2016, the empirical evidence shows that ownership structures (e.g. governmental, institutional, corporate group, family, and concentrated) as well as corporate governance characteristics (e.g. size of the board, directors' gender, nationality, and expertise) diversely affect waste management firms' accounting behavior in terms of both discretionary accruals and earnings smoothness. The findings bring into focus the "black boxes" of ownership structures and corporate governance encouraging the policy makers to shape up laws that can constrain accounting misbehavior in waste management firms.

Looking backward through the looking glass: Reference groups and social comparison

Scholars often assume that reference groups are industry-wide, homogeneous, and stable. We examine this assumption and suggest hypotheses based on managers’ motivations such as self-enhancement and self-improvement, social identity, and affiliation-based impression management. We test hypotheses on failure-induced changes in reference groups and their direction in terms of upward and downward comparisons. An empirical examination of changes in reference groups for firms listed on the Dow Jones Industrial Average Index between 1993 and 2008 shows that performance below social aspirations induces changes in reference groups and toward upward comparisons. The results indicate that managers can choose to change the reference group – a cognition-centered response – as an alternative to such action-centered responses as organizational search and risk-taking in response to poor performance from social aspirations and that upward comparisons may be the result of social performance shortfalls to give a better impression and to improve firm performance.

The impact of sociocultural context on strategic renewal

Purpose

The purpose of this paper is to contribute a multilevel, cross-national analysis of the role that sociocultural context may play to enrich the understanding of strategic renewal in family firms. The authors conceptualize sociocultural context as consisting of firm-level social contexts and national culture, and propose that: heterogeneous social contexts in family firm management, i.e. family CEO and multigenerational involvement, give rise to mindsets that have differential effects on renewal efforts and that the proposed effects are subject to variation due to the moderation of national cultural dimensions of uncertainty avoidance and power distance.

Design/methodology/approach

The authors use unique date set consisting of 959 family firms from 26 countries drawn from a cross-national, quantitative study of family firms.

Findings

The authors found that family CEO is negatively related to renewal across cultures, and this relationship is attenuated by uncertainty avoidance and power distance. In addition, multigenerational involvement is positively related to renewal, and this relationship is enhanced by the two cultural dimensions.

Practical implications

The authors suggest that decision makers examine how different contexts, practices and cognition contribute to overall dominant logics that exist in firm. In doing so, they can evaluate how logics as a whole affect renewal, and also how different parts of the logics play a role. This overall evaluation will afford managers a holistic picture of renewal forces that operate in family firm and allow managers to make precise changes to enhance strategic renewal.

Originality/value

The findings support the contention that there is cultural-dependent countervailing effects on strategic renewal within family firms.

Family involvement in publicly traded firms and firm performance: a meta-analysis

Purpose

This study aims to investigate the effects of family involvement in corporations on firm performance. It remains unclear whether family-owned companies, or companies with other forms of family involvement in the corporate governance, perform better than firms with no family involvement. Furthermore, the study focuses on family involvement in publicly traded firms, which are different from private family firms. Hence, knowledge about family firms will be enriched through a closer look at the publicly traded family firms and shed further light onto the heterogeneity among family firms.

Design/methodology/approach

The present study uses a meta-analysis of the extant research on family involvement and publicly traded family firm performance. The authors synthesize past research, identify and reconcile mixed findings and expand the understanding of the phenomenon.

Findings

Involvement of the founding family members in firm governance tends to improve firm performance, albeit the effect is rather weak. However, the effect varies greatly depending on the type of family involvement and the measure of performance. The authors also identify regional differences, as well as variations by the firm size and study design. Furthermore, under-researched areas are identified for future research.

Practical implications

The results of the study would be useful in guiding organizational design and investment decisions.

Originality/value

By using the meta-analytic approach, the present study provides a comprehensive review of the empirical evidence available on the issue so far. Most importantly, the authors were able to conduct a series of tests to assess the moderating effects of a number of factors that could not be evaluated in any individual study in the meta-analytic database.

The effect of equity and bond issues on sustainability disclosure. Family vs non-family Italian firms

Purpose

This paper aims to study firms’ attitudes toward using sustainability reporting for facilitating raising external capital and the effect of the ultimate controlling owner on disclosure.

Design/methodology/approach

A disclosure index is constructed on the basis of sustainability reports, for a sample of 230 Italian listed firms. Empirical analysis is based on panel data models.

Findings

Firms are more prone to disclose when they are planning to issue equity/bonds. Family control does not affect disclosure in the case of bond issues, but it has a moderating effect in the case of equity issuance. A family CEO, increasing the family’s sense of identification with the business, improves disclosure.

Research limitations/implications

Family ownership is the most viable measure to assess its socioemotional wealth (SEW). This assesses only the dimension related to family control and influence but it does not take into account other aspects of SEW. This study focuses on the relationship between disclosure and financing choices; it does not analyze the relationship between disclosure and success of equity/bond issues.

Practical implications

Family firms should improve their sustainability reporting, especially for firms operating in environmentally sensitive industries. Sustainability reports could play an effective role as a control mechanism in a firm’s behavior toward the environment, society, its employees and consumers.

Originality/value

The paper contributes to the studies on sustainability, showing that the nature of ultimate controlling owners and firms’ financing decisions affect disclosure. Moreover, it contributes to family firms’ literature, shedding light on the effect of the family control and sense of identification with the firm on disclosure.

The relationship between socioemotional and financial wealth

Purpose

A growing volume of family firm literature has argued that the preservation of family socioemotional wealth takes precedence over the pursuit of financial goals. The purpose of this paper is to develop a conceptual framework that builds knowledge regarding the two-way relationship between socioemotional and financial forms of wealth, to develop a more complete theory of wealth concerns that may inform family firm decision-making.

Design/methodology/approach

The authors conceptually examine contingencies affecting the relationship between financial and socioemotional wealth (in both causal directions).

Findings

The authors predict when one form of wealth (socioemotional/financial) is likely to dominate the other (financial/socioemotional) in the family firm’s strategic decisions.

Originality/value

The paper advances knowledge on the two-way relationship between socioemotional and financial forms of wealth providing a platform for further development in the nascent field of family business research, including our understanding of family firm decisions regarding control and influence over the family business, environmental policy, altruism toward family members, R&D, accounting choices and corporate diversification.

Socio-emotional wealth and family: revisiting the connection

Purpose

In this commentary, the author aims to question whether the socio-emotional wealth (SEW) construct should be limited to family firms by noting that non-family owners and founders, i.e. those who yet have to involve family in their enterprise‘s operations, management or ownership, are also motivated to maximize their socioemotional wealth.

Design/methodology/approach

The concept of SEW has generated significant traction in the family business literature and motivated an important body of work about how SEW alters decision-making in family firms. Professors Martin and Gomez–Mejia (this issue) extend past contributions by teasing apart complex relationships among the underlying dimensions of the construct. However, the domain of that paper, as well as the SEW construct, has heretofore been limited to family firms. The author builds his commentary on the work of Martin and Gomez–Mejia (this issue) to argue that the notion that SEW shapes decision-making in the owner controlled and owner-managed non-family firms, as well as family firms.

Findings

The author’s overarching conclusion is that there are several dimensions in which family interests materially alter decision-making but others in which family likely plays a moderating and possibly even a suppressor role. The surprising implication is that it may not be SEW per se that distinguishes family firms from non-family firms but rather how the family dynamic alters the influence of SEW on outcomes of interest.

Originality/value

Acknowledging that personal and familial SEW have a common foundation allows one to sharpen the research focus and shift it from questions about how SEW might alter decision-making in family firms to questions about how the presence of family members alters the influence of SEW on decision-making in owner-controlled and owner-managed firms. This commentary explicates the argument and offers some suggestions about how this re-framing might allow for the extension of the SEW concept from the family firm to its influence on founder-managed and non-family firms.

Slack in family firms: evidence from Italy (2006-2010)

Purpose

– The purpose of this paper is to examine the relationship between available slack and firm performance in Italian family-controlled public firms (FCPFs) from 2006 to 2010. In addition the authors analyze the moderating effects of specific board structure variables on the relationship between slack resources and firms’ performance.

Design/methodology/approach

– A pooled cross-section of family and non-family publicly traded firms was drawn from COMPUSTAT global and matched with corporate governance and family firm variables hand-collected from companies’ standard profiles from Italy's primary stock exchange, Borsa Italiana. The hypotheses were tested using the feasible generalized least square method in order to analyze the data from 583 firms-observations, controlling for self-selection bias and reverse causality.

Findings

– The study shows that FCPFs with available slack experience less than proportionate increases in performance, suggesting a concave curvilinear slack-performance relationship. However, the slack-performance relationship is contingent on board independence and board size: greater board independence and larger boards in FCPFs relate to higher performance when the firm lacks or has too much slack available. The findings suggest that a balanced approach of oversight and stewardship helps families to make better resources allocation, to the benefit of outside shareholders as well.

Research limitations/implications

– The slack measure was restricted to available slack. Future studies can expand this research inquiry with other forms of slack, including potential and recoverable slack. The sample included only publicly traded family and non-family firms, thereby limiting the generalizability of the findings to other types of family enterprises. Lastly, the results only attend to the slack-performance relationship by controlling whether the firm's performance is below or above the industry average.

Practical implications

– Policy makers and non-family stakeholders may rely on the findings better understand the factors that can alter the family's propensity for risks and its related strategic decisions in the Italian context. Procedures to fully monitor family management's decision making or, at the other extreme, to give the family free reign are likely to disadvantage families, their business, and their outside stakeholders.

Originality/value

– The study reconciles the debate on the role of slack on firms’ performance by proposing a curvilinear relationship. The study is one of only a handful of research inquiries centrally addressing the role of slack in family-owned businesses, and the only analysis focussed on Italian FCPFs.