In the horns of the dilemma: socioemotional wealth, financial wealth and acquisitions in family firms

Item Type Journal paper
Abstract We posit that family firms often face a dilemma in their strategic decision making: whether to maintain current socioemotional wealth (SEW) or pursue prospective financial wealth. Applying such a mixed gamble perspective to acquisitions, family owners assess potential acquisitions with regard to their impact on both wealth dimensions. In line with this reasoning, we find that family control implies a general reluctance to acquire, and, when an acquisition happens, a preference for related targets. Because financial and socioemotional viewpoints lead to largely incompatible predictions about the occurrence and relatedness of acquisitions, family firm owners use their firm's vulnerability as a signal. Increased vulnerability leads to a heightened propensity to prioritize financial over SEW problem framing, which is reflected in the acquisition of unrelated targets. Empirical results are supportive of these predictions.
Authors Gomez-Mejia, Luis; Patel, Pankaj & Zellweger, Thomas
Journal or Publication Title Journal of Management
Language English
Subjects business studies
HSG Classification contribution to scientific community
Refereed Yes
Date 2018
Publisher Sage Publ.
Place of Publication Thousand Oaks, Calif.
Volume 44
Number 4
Page Range 1369-1397
Number of Pages 50
ISSN 0149-2063
ISSN-Digital 1557-1211
Publisher DOI https://doi.org/10.1177/0149206315614375
Depositing User Prof. Dr. Thomas Zellweger
Date Deposited 30 Sep 2015 14:12
Last Modified 20 Jul 2022 17:25
URI: https://www.alexandria.unisg.ch/publications/244245

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Gomez-Mejia, Luis; Patel, Pankaj & Zellweger, Thomas (2018) In the horns of the dilemma: socioemotional wealth, financial wealth and acquisitions in family firms. Journal of Management, 44 (4). 1369-1397. ISSN 0149-2063

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https://www.alexandria.unisg.ch/id/eprint/244245
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