If we can't have it, then no one should : Shutting down versus selling in family business portfolios

How does a business family manage its business portfolio in times of declining performance to sustain the portfolio's long-term endurance? Drawing on social identity theory and six family business portfolios from Pakistan, we find that business families may prefer to shut down a satellite business rather than sell it, which is primarily driven by identity considerations. In addition, the family's goal to recycle the assets, the aim to restart the business later, and the increasing decline in performance are important contingency factors. This study contributes to the literature on portfolio entrepreneurship, business exit, and the enduring entrepreneurship of family firms.

Regional diversity and economic performance

This thesis consists of an introductory chapter and four individual papers. In each paper the relationship between some form of spatial diversity and economic performance is analyzed. Diversity is treated as a potential source of externality effects, mainly in the form of knowledge spillovers. The first paper studies the impact of a broad range of spatial externalities on the productivity of manufacturing plants. While finding positive effects of specialization and competition, there is no support for positive spillovers of either related or unrelated industry diversity. The second paper argues that relatedness should be framed at the level of individuals and consequently should be measured in terms of, for example, education and occupation rather than industry belonging. The results show that educational- and occupational related diversity matter for regional productivity growth, while related industry diversity is positively related to employment growth. The third paper analyzes the importance of neighborhood related diversity, in terms of both industries and education, and internal human capital for firms’ propensity to innovate. The findings support that education and skills are strongly related to firm innovation. Additionally, firms in metropolitan regions are more innovative in neighborhoods with more related diversity in industries, while firms in rural regions seem to benefit more from related diversity in education. In the fourth paper, the location factor of interest is segregation, which may be regarded as inverse diversity. The results show that neighborhood segregation has a negative effect on individual employment. However, it is not the spatial separation of individuals with different backgrounds that causes lower employment but rather the distress of segregated neighborhoods.

Behavioural theory and the family business

Fifty years have passed since Cyert and March’s 1963 A Behavioral Theory of the Firm. During this time, BTOF has been adopted across different research domains to investigate how organizations set goals, how they determine aspirations and how they finally react to performance aspiration discrepancies. Cyert and March’s framework has also recently emerged as one of the dominant paradigms to understand the ways in which family business organizations make decisions. In this chapter, I review the theoretical development and empirical results of BTOF and its application in the family business field of study in order to identify theoretical and empirical gaps and propose suggestions for future research. The conclusions suggest that BTOF is both a theoretically and empirically valid perspective in family business research, particularly when combined with other theoretical frameworks. The principal recommendation is to apply behavioral theory to enhance scholarly understanding of  how family organisations define their aspiration levels and respond to organizational problems.