Now showing 1 - 10 of 26
  • Publication
    Listening to the heart or the head? Exploring the “willingness vs. ability” succession dilemma
    Incumbents typically seek a highly committed and at the same time highly competent child as a successor, yet such a candidate is often not available. Extant literature is unable to predict which desired attribute—commitment (i.e., willingness) or competence (i.e., ability)—is most important in this dilemma. Drawing from institutional logics literature, we suggest that the incumbent’s personal experiences, education, and cultural embeddedness, as much as firm-level situational stimuli, direct incumbent attention to either corporate logic, favoring competence, or family logic, favoring commitment, to guide decision-making about which family member to choose as a successor. We test our hypotheses using policy capturing with responses of 1,060 family firm owner-managers, and contribute to research on succession, family firms, and institutional logics.
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  • Publication
    Doing more with less: Innovation input and output in family firms
    (Academy of Management, 2016-08)
    Duran, Patricio
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    Family firms are often portrayed as an important yet conservative form of organization that is reluctant to invest in innovation; however, at the same time, evidence shows that family firms are still flourishing and that many of the world's most innovative firms are indeed family firms. Our study contributes to disentangling this puzzling effect. We argue that family firms-owing to the family's high level of control over the firm, wealth concentration, and importance of non-financial goals-invest less in innovation but have an increased conversion rate of innovation input into output and, ultimately, a higher innovation output than non-family firms. Empirical evidence from a meta-analysis based on 108 primary studies from 42 countries supports our hypotheses. We further argue and empirically show that the observed effects are even stronger when the CEO of the family firm is a later-generation family member. However, when the CEO of the family firm is the firm's founder, innovation input is higher and, contrary to our initial expectations, innovation output is lower than that in other firms. We further show that the family firm-innovation input/output relationships depend on country-level factors, namely, the level of minority shareholder protection and the education level of the workforce in the country.
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    Scopus© Citations 567
  • Publication
    Exploration and Exploitation in Established Small and Medium-sized Enterprises: The Effect of CEOs' Regulatory Focus
    Based on theory of regulatory focus and organizational ambidexterity, we hypothesize that the level of engagement in exploration and exploitation in a small or medium-sized enterprise (SME) is affected by the respective CEO's chronic regulatory focus. In our analysis of survey responses from CEOs in Switzerland, we find that the CEO's level of promotion focus positively affects the firm's engagement in both, exploration and exploitation, while the CEO's prevention focus is negatively associated with the firm's exploration but not significantly related to its exploitation. The positive associations between a CEO's promotion focus and the firm's exploration/exploitation activities are enhanced under conditions of intense competition.
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    Scopus© Citations 137
  • Publication
    The Impact of Shared Stories on Family Firm Innovation : a Multi-Case Study
    (Sage, 2015-09-18) ;
    Dessi, Cinzia
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    Floris, Michela
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    Murru, Alessandra
    Innovation is a key determinant of long-term success for family firms. We apply a multiple case study research design to investigate the relationship between stories that are shared among family members across generations and the family firms' innovations. We derive a set of eight propositions suggesting that founder focus is negatively, and family focus is positively associated with innovation. We further propose that these relationships are mediated by the scope of decision-making options, the distribution of decision-making power between generations, and the role of conflict in the families.
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    Scopus© Citations 163
  • Publication
    Value Creation in Family Firms: A Model of Fit
    (Elsevier, 2015-06) ; ;
    Voordeckers, Wim
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    We propose a framework describing how family ownership can create or destroy value depending on the goals, resources, and governance of the family firm, which are each influenced by the family owners. Taking a contingency perspective, we suggest that a fit is required for all three elements - family-influenced goals, resources, and governance - for the family firm to flourish over generations. We conclude with a suggested research agenda indicating research opportunities at the nexus of these identified elements. Further we provide some guiding questions for practitioners that might stimulate fruitful discussions among family firm owners and managers about how to realize "fit."
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    Scopus© Citations 48
  • Publication
    Family, Wealth, and Governance: An Agency Account
    (Wiley-Blackwell, 2015-11) ;
    Family firms often evolve into ownership constellations with multiple family owners. Building on agency theory, we argue that the growing complexity within a group of family blockholders gives rise to what we label family blockholder conflicts, defined as conflicts within a group of family owners. To curb family blockholder conflicts, families often separate the family from its assets and install intermediary governance structures. We explore four frequently applied structures (uncoordinated family, embedded family office, single family office, and family trust), which vary in their degree of separation between family owners and assets and consequently the extent to which the firm might incur family blockholder costs and the double-agency costs associated with appointing agents to oversee agents. We conclude with a discussion of the distributive effects of the four family governance constellations for family wealth over time.
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    Scopus© Citations 97
  • Publication
    The Role of Information Asymmetry in the Choice of Entrepreneurial Exit Routes
    Our quantitative study investigates the determinants of internal versus external exit routes in family firms. Building on information asymmetry theory, we examine how an owner's inferior knowledge about the abilities of potential external entrants (in contrast to family internal successors) renders a family internal transfer more likely. This information asymmetry, however, can be mitigated by activities such as owners' screening and transfer candidates' signaling efforts to reveal the candidates' abilities. Our data exhibits a positive effect of signaling and an inverted U-shaped effect of screening on the probability of external exit routes. Firm age, as a driver of emotional attachment, weakens these effects.
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    Scopus© Citations 91
  • Publication
    "I want this firm to be in good hands:" Emotional pricing of resigning entrepreneurs
    (Sage, 2014-06-03)
    Given the importance of non-economic considerations throughout the entrepreneurial life cycle, I aim to investigate the drivers of owner-managers' "emotional pricing" when they wish to sell their firms to successors. Emotional pricing thereby denotes those elements of the owner-managers' price expectations that cannot be traced back to economic considerations. Building on arguments from behavioral finance, I hypothesize that "emotional pricing," which in this study reflects owner-managers' willingness to sell the firm at a discount, is driven by the reluctance to lose access to information about the firm and to lose influence on the firm, and by an aversion to putting the firm's future at risk. In particular, I argue that a long-term relationship between an owner-manager and a firm, a familiar relationship between an owner-manager and a successor, and situational contingencies-especially unsatisfactory firm performance-increase the owner-manager's emotional-pricing component. I test the hypotheses using a sample of 1,354 owner-managers of Swiss SMEs, who provided their views on their exit intentions. I subsequently compare those results to 455 actual ownership transfers involving Swiss SMEs.
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  • Publication
    An attention-based view of family firm adaptation to discontinuous technological change: Exploring the role of family CEOs' non-economic goals
    (Wiley-Blackwell, 2014-04-10) ;
    Recent studies show that managerial attention is a particularly important precursor of established firms' responses to discontinuous technological change. However, little is known about the factors that shape managerial attention-response patterns. In our qualitative study, we investigate how the attention of family firm CEOs to discontinuous technological shifts, the interpretation and decision-making processes associated with these changes, and ultimately organizations' responses are affected by CEOs' non-economic goals. Based on seven longitudinal case studies in the German consumer goods industry, we induce a process model that extends the findings of the literature on the attention-based view and helps to explain heterogeneity in family firms' adaptation to discontinuous technological change. We show that the family CEO's specific non-economic goals-such as power and control, transgenerational value, the maintenance of family reputation, the continuance of personal ties, or personal affect associated with the family business-determine whether the CEO assesses an emerging technology as relevant enough to warrant a reaction from the firm. Moreover, the family CEO's non-economic goals constrain the set of considered responses. The outcome of this sensemaking process determines the organization's response. For instance, in the specific context of this study, the goal of "family power and control" entailed an immediate interpretation of the focal trend as important for maintaining influence, and resulted in an unconstrained set of responses and, ultimately, high innovation in the new domain. Over time, family CEOs might re-evaluate the emerging trend based on their goals and adapt organizational moves accordingly. We identify and discuss how ambiguities and dilemmas may arise during this process. Our findings contribute to the literature on adaptation to discontinuous technological change and to family firm research.
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