Strategic Entrepreneurship in Family Firms

Recently it has been demonstrated that developing a family-based brand identity positively contributes to firm growth through its influence on customer-centered values (Craig, Dibrell & Davis, 2008). Focusing on branding activities, Craig and colleagues (2008) examined the influence of promoting a business as a "family business" to stakeholders like customers, suppliers and financiers. Family businesses that build a family firm image in the marketplace capitalize on customers' positive perception of family firms as trustworthy (Taguiri & Davis, 1996; Ward & Arnonoff, 1995), customer-focused and quality driven (Sundaramurthy & Kreiner, 2008). Therefore, being known as a "family firm" may be a positive attribute in the minds of stakeholders that contributes to performance. Drawing from organizational identity theory, we argue that a family firm image capitalizes on a family firm's ability to garner trust and respect in the marketplace. We define family firm image as the intentional projection of a family business identity to external audiences. While research suggests that family members' concern for their firm's image (Anderson & Reeb, 2003) and brand identity (Craig et al., 2008) influence success, the processes through which a family firm emphasizes its family firm image and how that impacts firm performance is not understood. Such an investigation is important since family firms are often assumed to be concerned with their image (Dyer & Whetten, 2006; Steier, 2001) and to be favorably viewed by consumers (Craig et al., 2008; Sundaramurthy & Kreiner, 2008), yet no known study has examined the antecedents and consequences of a family firm image.

Throughout the development of the field, family business scholars have sought to identify the sources of distinctiveness for family firms. One promising stream in this arena has been familiness (Habbershon & Williams, 1999), which applies resource based view to the family context. Familiness contends that the idiosyncratic family influence on firm level resources explains the competitive advantages or disadvantages of family firms. Despite its conceptual power, there has been great difficulty in operationalizing familiness into a functional research construct. Pearson et al (2008) make a strong movement to clarify and focus the concept in this direction using a social capital perspective as does Sharma (2008) with a broader discussion of family influenced resource pools. Still, there have been few empirical articles on familiness despite Habbershon and Williams (1999) call that "it is the conditions and antecedents of distinctive familiness that researchers ultimately need to clarify" (1999:13). Our article serves to meet this gap in the literature through the first in depth exploration of the distinctive properties and consequences of a single resource, reputation.

This paper seeks to extend our understanding of the growing field of Portfolio Entrepreneurship, the simultaneous ownership and engagement in several business activities (Westhead & Wright 1998; Carter & Ram 2003). Portfolio entrepreneurship has been identified as an important factor in both new venture creation and the economic landscape in general (Rosa & Scott 1996; 1999). We follow Carter and Ram's (2003) call to explore portfolio entrepreneurship within the family context. Specifically we address the why (cause) and how (process) of family portfolio entrepreneurship through comparative qualitative cases.

Based on agency theory, prior studies in divestiture literature argued and found that blockholder ownership functions as a catalyst of divestiture activity. This reasoning, however, assumes that all types of blockholders are primarily interested in utilizing their power to optimize the economic benefits of their ownership stakes. Drawing on socioemotional wealth perspective, the present study challenges this assumption for the case of family block ownership. As a baseline, we propose that family block ownership decreases the likelihood of divestiture occurrence since divestitures pose severe threats to family owners’ socioemotional benefits. Further, we analyze under which conditions financial wealth considerations outweigh socioemotional wealth considerations. Counter to our theoretical prediction, our empirical findings indicate that financial performance is not a sufficiently strong contingency factor which helps overcome the greater reluctance of family-controlled firms to engage in divestiture. Instead, our results suggest that to offset this greater reluctance financial wealth concerns need to pair with institutional legitimacy concerns in order to increase the likelihood of divestiture by family-controlled firms. Our study thus extends agency theory and contributes to both family and divestiture literatures.

Based on recent calls by researchers to apply concepts established in entrepreneurship theory in the family business context in order to advance both fields of research, this chapter examines to what degree the EO construct explains business activity of trans-generational firms. In particular, we challenge the fundamental claim by entrepreneurship scholars that the more entrepreneurial the firm, the higher it scores in the five EO dimensions and the more successful it should be over time. Indeed, a wide stream of literature proposes that entrepreneurial attitudes and behavior are crucial antecedents for a company's short- and long-term success (Dess, Ireland, Zahra, Janney & Lane, 2003; Zahra & Covin, 1995).