Now showing 1 - 5 of 5
  • Publication
    Toward a Paradox Perspective of Family Firms: the Moderating Role of Collective Mindfulness of Controlling Families
    (Sage, 2013) ;
    Melin, Leif
    ;
    Nordqvist, Mattias
    ;
    Sharma, Pramodita
    Despite numerous attempts to establish the link between family involvement and firm performance, research findings are alarmingly inconsistent. Some researchers, mostly drawing from traditional economics, depict a very pessimistic picture, suggesting that family involvement is a source of fundamental inefficiency because of owner-owner agency conflicts, resource constraints, and family utility maximization that detracts from firm value maximization (Dharwadkar, George, & Brandes, 2000; La Porta, Lopez-De-Silanes, Shleifer, & Vishny, 2002; Morck & Yeung, 2003; Peng & Jiang, 2010). Other researchers, however, referring to reduced owner-manager agency conflicts, concerns for long-term organizational prosperity, and the provision of unique resources such as patient financial capital, suggest that family-owned firms outperform nonfamily firms (Anderson & Reeb, 2003; Barontini & Caprio, 2005; McConaughy, Walker, Henderson, & Mishra, 1998; Villalonga & Amit, 2006). This favorable perspective has found support in a recent meta-analysis of studies on family firm performance in the U.S. stock market, which indicate a systematic outperformance of family firms (Carney, Gedajlovic, & van Essen, 2011). While inconsistent empirical findings on fundamental questions are not uncommon in management research, the theoretical inconsistencies are particularly worrying and raise fundamental concerns about the adequacy of our linear reasoning on the (in)efficiency of family involvement. What is noteworthy is that the concerns for tensions and theoretical inconsistencies have been very prominent in earlier family business writings (e.g., Tagiuri & Davis, 1996; Whiteside & Brown, 1991). Unfortunately, however, and most likely in consequence to a shift towards empiricist research methodologies that are best suited to uncover linear relationships, the attention of academics over the last years has moved away from how family firms deal with tensions and competing forces.
    Scopus© Citations 57
  • Publication
    The Importance of Looking toward the Future and Building on the Past: Entrepreneurial Risk Taking and Image in Family Firms
    (Emerald, 2010)
    Memili, Esra
    ;
    Eddleston, Kimberley H.
    ;
    ;
    Kellermanns, Franz W.
    ;
    Barnett, Tim
    ;
    Katz, Jerome
    ;
    Corbett, Andrew C.
    Drawing on organizational identity theory, we develop a model linking family ownership and expectations, entrepreneurial risk taking, and image in family firms to explain family firm growth. Testing our model on a sample of 163 Swiss family firms, we suggest that entrepreneurial risk taking and image can both lead to growth in family firms. We further find that family expectations have an influence on both entrepreneurial risk taking and family firm image. This finding suggests that family firms may benefit from two growth paths - forward looking risk-taking and the image of the family firm that builds on the past, and that these paths are nurtured by family expectations.
    Scopus© Citations 14
  • Publication
    Reference Point-Dependent Investment Decisions of Family and Non-family Owners
    (Budrich UniPress Ltd., 2010)
    Welsh, Dianne
    ;
    ;
    Surdej, Aleksander
    ;
    Wach, Krzysztof
    Studies examining leverage levels of family firms report a rather uniform picture: be they large or small, publicly quoted or privately held, family firms exhibit lower leverage levels than their non-family counterparts (e.g., Agrawal & Nagarajan, 1990; Villalonga & Amit, 2006; Mishra & McConaughy, 1999; Gallo & Vilaseca, 1996). While these findings are consistent with the stereotype of the financially conservative and risk-adverse family firm, they also suggest that the majority of these firms have a suboptimal capital structure that relies heavily on internally generated capital. This has the effect of not only inflating these firms' average cost of capital and suppressing their value, but also limiting the rate of firm growth to the growth of internally generated assets (Schulze & Dino, 1998). These preconditions seem to make family firms ripe candidates for underinvestment; which undermines their competitive position and, ultimately, threatens their very survival. However, the predominant role of family firms in the economic landscape stands in strong contrast to these predictions. In fact, family firms are at the forefront of many industries, challenging the assumption that these firms should be permanently risk-adverse. In reality, risk taking and funding of risky investments, such as R&D, are necessary for a firm's long-term survival (Gedajlovic, Lubatkin, & Schulze, 2004). In this context, our study sets out to shed some light on the risk-taking propensity of family firm owners. The study focuses on the control risk propensity of family firm owners, measured in terms of the leverage levels of the firms they control (Mishra & cConaughy, 1999).