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.

Ownership Structure, Board Composition and Entrepreneurship : Evidence from Family Firms and Venture-Capital Backed Firms

The purpose of this article is to investigate how ownership structure, especially family and/or venture-capital involvement, as well as entrepreneurial activities, defined as strategic change and renewal, help explain the involvement of independent members on boards of directors. The CEOs of 2,455 small and medium-sized, private enterprises from practically all industries were contacted in a telephone survey, resulting in an exceptionally high response rate. The findings reveal that family firms are more reluctant to involve independent directors on their boards than non-family firms that presence of venture capitalists increases the frequency of independent board members and that ownership has an impact on board roles. The results do not support the hypothesised relationship that independent directors enhance entrepreneurial activities. One implication of our study is that the often-argued-for strategic contribution of outsiders to the boards in family firms may be overemphasised. Another implication is that family firms that choose to acquire additional capital should be aware that this could result in a change in the board composition and the loss of control of the business. However, new and external owners’ inclusion on the board seems to be negotiable since there are also venture capitalists that do not insist on board representation.

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.

Behavioural agency theory and the family business

The behavioural agency theory was developed to provide a more comprehensive explanation and prediction of managerial risk taking, in response to some shortcomings of agency theory. In general, the theory offers explanations of why decision makers prefer some strategic choices to others. The use of behavioural agency theory in family business research has, however, been very limited. Family business scholars recently adapted this theory to construct the family business variant, the ‘socioemotional wealth’ construct, which offers better explanations for the risk taking and decision making behaviours of family firms. This chapter provides an overview of behavioural agency theory and the socioemotional wealth construct, explores how they have been used in family business research, and offers suggestions for how this theory can be used in further research to contribute to both the family business and the general management literature. Keywords: family business, behavioural agency theory, socioemotional wealth, family firm heterogeneity.

Introducing theoretical perspectives on family business

As the field of family business has grown immensely over the last couple of decades, a multitude of theories from different fields has been introduced. However, there are surprisingly few attempts to provide an overview of theories that may be of particular interest for the family business scholar. Thus, this introduction chapter gives a critical overview of theoretical perspectives, before taking a closer look at the use of theories in family business studies. Regarding the current state of the family business field, the authors argue for putting more effort in building theory from family business research as well as a stronger emphasis on ‘giving back’ to theories borrowed from other fields. Lastly, the chapter describes the development of the book and introduces the 13 chapters and their contributions.

Kinship and the family business

The purpose of this chapter is to review and synthesise the prior work on kinship in family firms and to open up future research avenues for this interesting and important topic. The study shows that kinship is highly relevant in family firms by revisiting the concept of family and kinship as well as the definition of family firms. This chapter explores important aspects related to family firms, such as continuity of generations, succession, inheritance and resource provision and links these to kinship. These aspects are identified as four functions of kinship and indicate the possible research gaps, thereby suggesting future kinship research avenues.

Corporate identity manifested through historical references

Purpose – The purpose of this paper is to focus on how firms draw on historical references in corporate marketing. The paper seeks to analyze the logic behind such efforts from a corporate identity perspective and to propose potential risks and/or benefits of doing so. The paper aims to inspire the understanding of how references to history are used in marketing and the outcome of such use. Design/methodology/approach – The paper mainly draws on literature relating to corporate marketing and the use of history in organizations. Combining these theories, and pointing at empirical examples, the paper clarifies why references to history can be important mani-festations of corporate identity. The paper comes up with propositions concerning what consequences the reference to history in corporate marketing can have for firms’ marketing strategies and business development. Findings – The paper outlines a connection among corporate identity, organizational identity, and image through corporate communications. It suggests that among the range of corporate characteristics, historical references can be particular valuable for corporate communications thanks to the reliability age can provide (as opposed to liabilities of newness). Still, elaborations suggest that the planned use of historical references has both pros and cons in terms of business development. Originality/value – Despite the notion that history, as an inevitable and distinctive firm feature, can play an important role in corporate marketing, research on the topic is quite scarce. This paper offers some remedy to this gap by elaborating on the internal and external rationales for applying historical references and how these can be explained in connections between corporate identity and history.

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.