Toward a Paradox Perspective of Family Firms: the Moderating Role of Collective Mindfulness of Controlling Families

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.