Behavioural outcomes of next-generation family members’ commitment to their firm

Are there variations in behaviours and leadership styles of next-generation family members or descendants who join their family business due to different forms of commitment? Evidence from a dual respondent study of 109 Canadian and Swiss family firms suggests that descendants with affective commitment to their family firms are more likely to engage in discretionary activities going beyond the job description, thereby contributing to organizational performance. Next-generation members with normative commitment are more likely to engage in transformational leadership behaviours. Both affectively and normatively motivated next-generation members use contingent reward forms of leadership. A surprising finding of this study is the binding force of normative commitment on positive leadership behaviours of next-generation members. This study empirically tests the generalizability of the three-component model of commitment to family businesses, a context in which different forms of commitment may play a unique role.

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.