This paper challenges the prevalent notion that family-owned firms are more risk averse than publicly owned firms. Using behavioral theory, we argue that for family firms, the primary reference point is the loss of their socioemotional wealth, and to avoid those losses, family firms are willing to accept a significant risk to their performance; yet at the same time, they avoid risky business decisions that might aggravate that risk. Thus, we propose that the predictions of behavioral theory differ depending on family ownership. We confirm our hypotheses using a population of 1,237 family-owned olive oil mills in Southern Spain who faced the choice during a 54-year period of becoming a member of a cooperative, a decision associated with loss of family control but lower business risk, or remaining independent, which preserves the family's socioemotional wealth but greatly increases its performance hazard. As shown in this study, family firms may be risk willing and risk averse at the same time.

/pdf/socioemotional-wealth-and-business-risks-in-family-44bbmmx58o.pdf

Socioemotional Wealth and Business Risks in Family-controlled Firms: Evidence from Spanish Olive Oil Mills

This article uses Ajzen's theory of planned behavior to build an entrepreneurial intention questionnaire (EIQ) and analyzes its psychometric properties. The entrepreneurial intention model is then ...

https://papers.ssrn.com/sol3/Delivery.cfm/etap_318.pdf?abstractid=1396448&mirid=5

Development and Cross-Cultural Application of a Specific Instrument to Measure Entrepreneurial Intentions

What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)

The appropriate resources are necessary but insufficient to achieve a competitive advantage. Resources must also be managed effectively. Herein, we develop a resource management process model composed of three components that can lead to a competitive advantage. These components include the resource inventory (evaluating, adding, and shedding), resource bundling, and resource leveraging. We examine resource management in family firms and thus explore the unique characteristics of five resources and attributes of family firms that provide potential advantages over nonfamily firms. The resources are human capital, social capital, patient capital, survivability capital, along with the governance structure attribute.

Managing Resources: Linking Unique Resources, Management and Wealth Creation in Family Firms

The Resource-Based View (RBV) of competitive advantage provides a theoretical framework from the field of strategic management for assessing the competitive advantages of family firms. The RBV isolates idiosyncratic resources that are complex, intangible, and dynamic within a particular firm. The bundle of resources that are distinctive to a firm as a result of family involvement are identified as the “familiness” of the firm. This approach provides a research and practice method for assessing the specific behavioral and social phenomena within a firm that provide an advantage. Using a familiness model for assessing competitive advantage overcomes many of the problems associated with the generic claim that family companies have an advantage over nonfamily companies. It also provides a unified systems perspective of family firm performance.

A Resource-Based Framework for Assessing the Strategic Advantages of Family Firms

This article proposes an alternative method for assessing the extent of family influence on any enterprise, enabling the measurement of the impact of family on outcomes such as success, failure, strategy, and operations. This proposed method, utilizing a standardized and valid instrument— the F-PEC—enables the assessment of family influence on a continuous scale rather than restrict its use as a categorical (e.g., yes/no) variable. The F-PEC comprises three subscales: power, experience, and culture. This article discusses these scales in detail.

The F-PEC Scale of Family Influence: A Proposal for Solving the Family Business Definition Problem

In 1995, we were commissioned to conduct research on the impact of family businesses on the U.S. economy. A search of all relevant research led to the conclusion that the majority of existing data ...

/pdf/family-businesses-contribution-to-the-u-s-economy-a-closer-1gamx9mt1f.pdf

Family Businesses’ Contribution to the U.S. Economy: A Closer Look:

This article presents a framework for assessing commonly accepted family business statistics, based on the criteria used to define a family business Using existing research from multiple fields and sources, a range is extrapolated for the total number of family businesses in the US, their contribution to Gross Domestic Product (GDP) and employment

http://journals.sagepub.com/doi/pdf/10.1111/j.1741-6248.1996.00107.x

Myths and Realities: Family Businesses' Contribution to the US Economy— A Framework for Assessing Family Business Statistics

For a solution to the family business definition dilemma, we propose the application of a scale that assesses the extent and the quality of family influence via the measurement of three dimensions: Power, Experience, and Culture. The Family Influence on Power, Experience, and Culture (F-PEC) scale is tested rigorously, utilizing a sample of more than 1,000 randomly selected companies, through the application of exploratory and confirmatory factor analytic techniques. The scale demonstrates high levels of reliability. F-PEC has been applied in a number of studies, contributing to theory development, particularly in terms of the impact of family influence on distinct resources, and as a source of competitive advantage.

The F–PEC Scale of Family Influence: Construction, Validation, and Further Implication for Theory:

This article examines how owners of firms subjectively value their ownership stake in monetary terms. We utilize endowment and possession attachment literature to investigate how emotional benefits and costs related to organizational ownership affect emotional value. Thereby we define emotional value as that part of Willingness to Accept, unexplained by the financial value of the ownership stake and the financial private benefits of control accruing to the owner. Our research provides new insight into firm owners' psychology and value considerations where an owner values non-financial aspects of the ownership stake.

/pdf/on-the-emotional-value-of-owning-a-firm-46tb6t5tk8.pdf

Joseph H. Astrachan

Papers

The F-PEC Scale of Family Influence: A Proposal for Solving the Family Business Definition Problem

Family Businesses’ Contribution to the U.S. Economy: A Closer Look:

Myths and Realities: Family Businesses' Contribution to the US Economy— A Framework for Assessing Family Business Statistics

The F–PEC Scale of Family Influence: Construction, Validation, and Further Implication for Theory:

On the Emotional Value of Owning a Firm