When does time enhance family firm performance? Examining family generation in control and family control dispersion through a mixed-gamble logic

doi:10.1016/j.lrp.2022.102272

Long Range Planning

Volume 57, Issue 1, February 2024, 102272

https://doi.org/10.1016/j.lrp.2022.102272 Get rights and content

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Abstract

We investigate the differential effect of time in terms of generation in control of the firm's management on family firm performance to address the call in the literature for a more nuanced treatment of family firms and their performance differences. By drawing on the mixed-gamble logic of the behavioral agency model, our work suggests that the family's socio-emotional wealth (SEW) varies across generations, resulting in complex performance relationships. We theorize and empirically find that earlier-generation family firms protect current SEW and perform increasingly worse while later-generation firms maximize prospective financial wealth and perform increasingly better. Additionally, we argue that high family control dispersion mitigates the negative effect on performance of earlier generations in control and increases the positive effect of later generations in control. Important theoretical and practical contributions emerge from this study.

Keywords

Performance

Time

Family generation in control

Family control dispersion

Family firms

Data availability

The data that has been used is confidential.

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Francesco Chirico is a Professor of Strategy and Family Business at Macquarie Business School & Jonkoping International Business School. Francesco Chirico's teaching and research focus on the intersection of strategy and entrepreneurship with a special focus on family firms. His research work explores resource management processes and acquisition and divestiture strategies that affect the realization of competitive advantage, innovation and value creation in organizations. Francesco Chirico's research has been published in international journals including, among others, Journal of Management, Journal of International Business Studies, Journal of Management Studies, Entrepreneurship, Theory & Practice, Strategic Entrepreneurship Journal, Organization Studies, Human Relations, Long Range Planning, Strategic Organization, Small Business Economics, and Family Business Review. He serves on the editorial review board of Entrepreneurship Theory and Practice and Family Business Review. He is a member of the Academy of Management, Strategic Management Society, International Family Enterprise Research Association, Family Enterprise Research Conference.

Franz W. Kellermanns is the Addison H. & Gertrude C. Reese Endowed Chair in International Business and Professor of Management in the Belk College of Business at the University of North Carolina – Charlotte. He holds a joint appointment with the Center for Family Business at the WHU–Otto Beisheim School of Management (Germany). He received his Ph.D. from the University of Connecticut. In a world-wide study, he was ranked 13th amongst the leading contribution authors in entrepreneurship research. His research interests include international business, strategy process and entrepreneurship with a focus on family business research. He is an editor of Entrepreneurship Theory and Practice and former associate editor of Family Business Review. He has published over 100 articles in peer reviewed journals, such as Organization Science, Journal of Management, Journal of Management Studies, Journal of Organizational Behavior, Journal of Business Venturing, Entrepreneurship Theory and Practice, Long Range Planning, Family Business Review, Academy of Management Learning and Education, etc. He serves on the Editorial Boards of Journal of Business Venturing, Journal of Management, Journal of Management Studies, Group and Organization Management, Family Business Review, Journal of Family Business Strategy and Strategic Entrepreneurship Journal. His most recent co-edited books are “Innovating Strategy Process" and the “Family Business Companion.”