Now showing 1 - 10 of 11
  • Publication
    Socioemotional Wealth and Family Firm Performance: Economic Gains from Pursuing Noneconomic Goals
    (Academy of Management, 2013-08-09)
    Madison, Kristen
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    Kellermanns, Franz W.
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    Socioemotional wealth recently emerged as an important distinguishing characteristic between family and nonfamily firms. It is used in extant literature as a theoretical framework to rationalize the behavior of protecting family interests at the expense of financial success. We present socioemotional wealth differently: as a measureable construct, conceptualized through a stewardship theory lens, with empirical support for its positive relationship with family firm financial performance. Results also show hostile environments attenuate the SEW–performance relationship, indicating that firms with high socioemotional wealth are unable to make the necessary strategic adjustments needed to enhance performance in difficult environments.
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  • Publication
    The Link Between Family Firm Dynamics, Image and Firm Performance
    (SMS Strategic Management Society, 2011-11-06)
    Memili, Esra
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    Kellermanns, Franz W.
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    Eddleston, Kimberley H.
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    In this study, we draw upon organizational identity theory to examine factors that lead to the creation of family firm image and investigate how a family firm image impacts firm performance. We find that family firm pride, community social ties, and long-term orientation are positively associated with the likelihood that a firm portrays itself as a family business to consumers and stakeholders. In turn, we find that a family firm image benefits firm performance. Thus, our study demonstrates that by building a family firm image the unique family influences on the firm can be leveraged to create a competitive advantage for family firms.
  • Publication
    How Socioemotional Wealth biases Survival Risk Perceptions among Family Firm Owners
    (Academy of Management, 2011-08-15) ; ;
    Kellermanns, Franz W.
    Applying a behavioral perspective, we investigate how threats to firm survival, measured through reduced performance and heightened leverage, impact risk perceptions among family firm owners. More specifically, we test whether socioemotional biases induced by duration of family ownership and transgenerational sustainability intentions, alter the negative relationship between low profitability and high leverage on the acceptable sale price of the firm. In extension to existing literature on family owners' risk perceptions and organizational risk taking, our study finds increased risk sensitivity for family owners with long ownership traditions, whereas transgenerational sustainability intentions do not bias the negative relationship of low profitability and high leverage on acceptable sale price
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  • Publication
    The Impact of Relationship Conflict on Socioemotional Wealth Considerations of Family Firm Owners
    (Babson College, 2010-06-09) ;
    Kellermanns, Franz W.
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    A recent stream of research has started investigating the impact of socioemotional aspects of organizational ownership on the monetary value attached to a firm by its owners. In these attempts, several researchers have chosen the setting of family firms, since these firms have long be said to strive for non-financial next to financial goals (e.g., Chrisman, Chua & Litz 2004; Astrachan & Jaskiewicz 2008, Gomez-Mejia, Haynes, Nunez-Nickel, Jacobson & Moyano-Fuentes 2007). Based on the contentions of prospect theory, Zellweger, Kellermanns, Chrisman & Chua (2009) provide direct evidence that socioemotional aspects related to organizational ownership can have a monetary value in themselves by showing how transgenerational sustainability intentions increase acceptable sales prices indicated by family firm owners. However, whereas above studies discuss aspects of socioemotional wealth with positive valence, family firm owners also experience negative aspects related to organizational ownership, such as relationship conflicts. Relationship conflicts exist when there are interpersonal incompatibilities among group members which typically include annoyance and tension among group members (Jehn 1995), reducing productivity and satisfaction (Gladstein 1984; Wall & Nolan 1986), a particularly relevant socioemotional cost in the context of family firm ownership (Zellweger & Astrachan, 2008). While early organizational conflict theorists suggested that such conflict is detrimental to organizational functioning (Pondy 1967; Brown 1983; Sorenson 1999; Eddleston & Kellermanns 2007) and focused much of their attention on the causes and resolution of conflict (Schmidt & Kochan 1972; Brett 1984; Danes, Zuiker, Kean & Arbuthnot 1999), we lack an understanding about how relationship conflicts enter socioemotional wealth considerations, and through compensation inclination and mental accounting possibly impact the minimum acceptable sales price at which an owner is willing to sell out. Indeed, it has been suggested that relationship conflict in family firms may rip controlling families apart and threaten the survival of their organizations (Davis & Harveston 2001) by creating incentives to sell out ownership stakes (Levinson 1971; Beckhard & Dyer 1983). By investigating how relationship conflicts in family firms color acceptable sales prices of organizational ownership we make several important contributions. First, we speak to the recent literature exploring socioemotional aspect of corporate ownership (Gomez-Mejia et al. 2007; Astrachan & Jaskiewicz 2008; Shepherd, Wiklund & Haynie 2009) by exploring an untapped dimension of socioemotional wealth considerations, namely relationship conflicts. Thereby, we reach beyond studies who have investigated positively valenced aspects of socioemotional wealth (Zellweger, Kellermanns, Chrisman & Chua, 2009) and explore a potential downside related to family firm ownership. Second, we challenge Zellweger and Astrachan's (2008) recent assertion that socioemotional costs related to corporate ownership should feed into minimum acceptable sales prices in an inverted U-shaped manner. We argue that severe relationship conflicts do not lead to withdrawal behavior but, instead, foster escalating assessment of conflict related sunk costs. Third, we add to the ongoing discussion in economic psychology literature about how negative emotions may impact the monetary valuation of possessions (e.g., Lerner & Keltner 2000; Loewenstein & Lerner 2003). In this context, mood congruency theory contends that valuation of events and possessions is negatively influenced by bad emotions and positively influenced by positive emotions (Bower 1981; Lazarus 1991; Rusting 1998; Rusting 1999; Innes-Ker & Niedenthal 2002; Lin, Chuang, Kao & Kung 2006). In contrast to these predictions, prospect theory suggests that owners will price unpleasant outcomes through sunk cost considerations, negative experiences leading to higher valuations (Tversky & Kahneman 1991; Brockner 1992; Garland & Conlon 1998; Arkes & Ayton 1999). The present paper reconciles these conflicting views by showing that as a response to negative emotional affect (in our case induced by relationship conflicts) family firm owners will first lower their valuation of organizational ownership, as predicted by mood congruency theory, and above a certain conflict escalation level, start pricing sunk costs as assumed by prospect theory. As such, we propose a U-related relationship between relationship conflicts and minimum acceptable sales prices indicated by family firm owners. In sum, as a first study, we examine the carryover effect of negative emotional affect on the subjective valuation of organizational ownership (e.g., DeSteno, Petty, Wegener & Rucker 2000; Lerner & Keltner 2000). METHOD We obtained 349 questionnaires from privately-held family firm owners in Germany, representing 326 distinct firms. Using hierarchical multiple regression and following recent methodological guidance (Zellweger & Astrachan, 2008) we show that relationship conflict biases acceptable sales prices, after controlling for financial and non-financial influences on firm value (e.g., risk, cash flow, growth, size, private financial benefits of control, long-term investments). RESULTS Our preliminary results support our theoretical considerations. Through the theoretical lenses of mood congruency and prospect theory we indeed show that minimum acceptable sales prices are falling at lower severity of relationship conflict, as a result of mood congruent behavior induced by disappointment, sadness and consecutive disattachment related to the conflict. In such situations, willingness to accept prices are falling, creating incentives to sell out at lower prices, to get rid of the asset, even if this means accepting lower minimum acceptable sales prices. In contrast to the predictions of mood congruency theory, we find that as relationship conflicts gain in severity and escalate, nurturing anger, rage and mutual blaming, sinister attributions and actions, family firm owners get primed by the conflict and tend to hold their efforts with regards to the conflict on their mental accounts. In consequence, they require compensation when indicating minimum acceptable sales prices.
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  • Publication
    Building a Family Firm Image : How Family Firms can capitalize on their Familiness
    (United States Association for Small Business and Entrepreneurship, 2010-01-17) ;
    Kellermanns, Franz W.
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    Eddleston, Kimberley H.
    There is much debate regarding whether family firms have a competitive advantage in the marketplace. Some believe that their greatest competency may be their familiness; or the resources that accrue at the intersection of the family and business systems. Building on this belief, we argue that firms that brand themselves as family businesses may experience superior performance since consumers often see family firms as trustworthy, quality-driven and customer-focused. Thus, a family firm image may be a way for family firms to exploit their familiness in the marketplace. The results from our study support this view and also identify factors that increase the likelihood that a family business will choose to create a family firm image. Family firms that express much pride in their family connection and heritage, have strong ties with other businesses in their communities, and stress a long-term orientation in strategic planning were most likely to possess a strong family firm image. These results were found through a survey-based study of 179 CEOs of privately-held family businesses in Switzerland. Our findings have important implications for practice because they demonstrate how family firms may be able to accrue a performance advantage in the marketplace. While some family firms choose to downplay their family ties, perhaps due to (mis)perceptions regarding their conservatism and resistance to change, those firms that decide to foster a family firm image by branding themselves as family firms and highlighting their family involvement seem to be most successful. Therefore, in these tough economic times when it is most necessary for firms to stand-out from the crowd to garner and maintain business, our results suggest that building a family firm image may help family businesses to successfully compete. A family firm image may facilitate firm performance and may also help family firms to weather economic downturns.
  • Publication
    The Impact of Relationship Conflict on subjective Family Firm Valuation
    (Academy of Management, 2010-08-09) ;
    Kellermanns, Franz W.
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    The present paper empirically investigates the impact of family relationship conflict on subjective firm valuation by family firm owner managers. Drawing on the emerging socioemotional wealth perspective of corporate ownership, we find a U-shaped relationship between relationship conflict inside the family firm and subjective family firm valuation. This finding suggests that negatively valenced emotions induced by the conflict, at low levels of conflict, lead to emotion congruent withdrawal behavior and hence lower valuation. With conflicts gaining in fervor and severity, owner-managers start endowing and pricing sunk costs related to the conflict. This finding suggests that emotions do indeed have spill-over effects on monetary value perceptions and that negatively valenced emotions induced by relationship conflict are not linearly appraised. Rather, to understand the impact of negative emotions on corporate ownership appraisal and attachment it is required to reconcile the emotion congruency with the prospect theory perspective.
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  • Publication
    Corporate Entrepreneurship and Image in Family Firms
    (Academy of Management, 2009-08-11)
    Memili, Esra
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    Eddleston, Kimberley H.
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    Kellermanns, Franz W.
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    Barnett, Tim
    The impact of family ownership and family expectations on corporate entrepreneurship and family firm image has been underresearched. Drawing on corporate entrepreneurship and organizational identity theories, we develop a model linking family ownership and expectations, corporate entrepreneurship, and image in family firms. We also suggest that corporate entrepreneurship and image can lead to growth in family firms. We test the model on a sample of 163 Swiss family firms. Our most important findings are that family expectations have direct influence on both corporate entrepreneurship and image and that both corporate entrepreneurship and image are associated with growth in family firms.
  • Publication
    Family Firm Valuation by Family FIRM CEOs: The Role of Socioemotional Value
    (FERC, 2009-04-24) ;
    Kellermanns, Franz W.
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    Chrisman, James J.
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    Chua, Jess H.
    Based on the contentions of prospect theory that ownership endows possessions with a value premium, this study provides evidence that socioemotional value in family firms influences the monetary value attached to the firm by family owners. Ability to measure socioemotional value is a critical step toward establishing that it has a direct instead of an imputed link to family firm behavior. The results from two different samples of family firm owner-CEOs show that the socioemotional values for their firms increase with their desires for transgenerational sustainability, a distinctive socioemotional attribute of family firm ownership.
  • Publication
    Corporate entrepreneurship in family firms: a stewardship perspective
    ( 2008-01-10)
    Eddleston, Kimberley H.
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    Kellermanns, Franz W.
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