Volume 13, Issue 3 - Special Issue: The family effect: A compass for research on heterogeneity of family businesses in embedded contexts; Guest Editors: Rania Labaki, Michael Mustafa and Ramona Zachary

We highlight recent research on the intertwinement of family, entrepreneurship, and strategy with a particular focus on entrepreneurial and business families. Our efforts lead us to untangle the nodal points by suggesting an interpretative framework of their main dimensions, motivators, and impacts. The family logic transcends entrepreneurial, strategic, and psychological decisions and dimensions by shaping in different ways their processes from the motivations to the outcomes. It appears, therefore, as an essential unit of study that ought to inform future research of family businesses in embedded contexts. Towards this direction, we suggest a series of theoretical and empirical route(s) along with methodological recommendations.

The future study of the family firm calls for in-depth, precise conceptualizations, as well as multidisciplinary methodologies. The family firm is presented herein as a suprasystem that offers a full recognition and representation of its organizational and relational realities. Future family firm research must embrace these conceptualizations and build an unbiased parallel research suprasystem that enhances future research studies through demonstrating the interconnectedness and interdependentness of family, business, and family/business interface subsystems. Doing so will move the family firm and entrepreneurship disciplines toward creating a path to achieving a deeper and wider understanding of how family firm suprasystems emerge, develop, and sustain themselves overtime. Future researchers can meet these challenging opportunities with appropriate conceptualizations and methodologies.

Leveraging on the behavioural mixed gamble lens, we contend that heterogeneity in organisational goals leads to different diversification behaviours in family firms. Using survey and archival data on a sample of 988 family SMEs homogenous in their (high) family involvement level, we show that family SMEs that pursue nonfinancial (financial) goals exhibit lower (higher) probability of extending the boundaries of the firm to new product and/or market domains. Interestingly, in the face of threats, only those family SMEs that prioritise financial goals exacerbate their propensity to diversify, while increased vulnerability leads to an even lower probability of adopting diversification decisions among family SMEs with nonfinancial goals.

The aim of this study is to test how different dimensions of entrepreneurial orientation (EO) affect the growth and performance of SMEs in the short term in a rapidly changing business environment. In addition, a scale for measuring EO is tested in the SME context. The data ( n  = 260) was gathered from Finnish SMEs, and analyzed with structural equation modelling. The results show that EO has two dimensions in SMEs: innovativeness and risk-taking. Proactiveness and innovativeness measure the same phenomenon. Results show that innovativeness has a significant and positive effect on SME performance but not on SME growth. Risk-taking, in turn, has a positive effect on SME growth but not on performance. However, the relationship depends on how growth and performance are defined. Further, the results showed that EO should be seen as multidimensional and be measured by two lower-order dimensions reflecting managerial behaviors and attitudes. This study contributes to theory formation by showing EO as a two-dimensional construct among SMEs and suggests managerial implications by showing the effects of innovativeness and risk-taking on SME growth and SME performance. Further, the results show the importance of EO in the short term, as the current business environment can be described as a time of rapid and unpredictable change, when strategic decision-making requires quick decisions to seize opportunities and counter threats.

This essay responds to recent calls for more research on family firms’ heterogeneity from an ownership perspective. We complement the legal and economic view of ownership by focusing on the concept of psychological ownership (feeling of possessions) in family firms. We explore its dynamics, processes and implications as well as its limited inclusion in the family business field to date. Building on a brief review of the literature, we suggest the concept of psychological ownership can help expand our understanding of family firms’ heterogeneity. Additionally, we put forward a future research agenda for psychological ownership in family firms.

This paper studies the influence of purchasing financial products (FPs) on the innovation strategy of family businesses (FBs) under the background of Chinese system. Applying a difference in difference methodology we are able to compare FBs who have purchased FPs with FBs who have not yet purchased FPs, and compare FBs that have purchased FPs before and after the purchase. We distinguish between different patent types (invention, utility, and design), and find that purchasing FPs significantly increase the design patents of FBs. That means buying FPs will shift innovation direction to safer and more economical path. Moreover, the effect of purchasing FPs on innovation outputs is governed by institutional ownership, government subsidy, and R&D personnel ratio. This paper contributes to our understanding of the important role of risk aversion in technological innovation strategy of FBs.

This research contributes to the knowledge of individuals called hybrid entrepreneurs who combine primary paid employment with secondary self-employment activity. We work with a dataset of 30 countries participating in the 2017 European Union Labour Force Survey. We conduct a multivariate analysis of individual and family-related characteristics of hybrid entrepreneurs. Our results highlight that hybrid entrepreneurs are a specific subgroup of the population of self-employed individuals. While the hybrid entrepreneurs are also a relatively heterogeneous group themselves, we show that most of them do business in the agricultural sector and live in rural areas. Their business activities seem to be on average younger than those being run by primarily self-employed individuals. This likely reflects the temporary nature of many hybrid entrepreneurship endeavours. Interestingly hybrid entrepreneurs have, on average, higher levels of education, but this finding relates mainly to those being involved in non-agricultural activities. Women are less likely to pursue hybrid entrepreneurship, which is even less likely associated with having caring responsibilities for children. Future research should provide more longitudinal insights into the family-kids related aspects of hybrid entrepreneurship.

The study uses data from an ethnographic study of 32 family members from six families from New Delhi and the National Capital Region (NCR), India, to develop our understanding of entrepreneurial intentions in the younger members of middle-class families of India. The study identifies two critical familial influences, generational congruence and the need to maintain harmony, along with the presence of feministic values, as factors that impact the development of entrepreneurial intentions. The study further confirms that the need to conform to a social image impacts the decisions taken by family members. By highlighting the significant influence that family can have on the development of entrepreneurial intentions, this research points out gaps in how current policies and programs target entrepreneurship development in transforming economies like India. While the limited geographic scope of this study makes the findings applicable only to families in New Delhi and NCR and less generalizable overall, it further highlights the need to conduct similar studies across other parts of India, as well as other countries with similar cultural dimensions as India. The researchers suggest focussing policies towards promoting trust and confidence in entrepreneurship as a potential career option and highlighting the benefits of pursuing entrepreneurship amongst the masses by keeping in mind the cultural and geographic differences across the country. The novelty of this study lies firstly in its methodological approach, where entrepreneurial intentions are evaluated via short ethnographies. Secondly, with a strong focus on Indian family dynamics, the authors have identified novel influences that could apply to other transforming economies with similar social-cultural factors to India.

Family firms (FFs) tend to display specific characteristics that differentiate them from non-family companies. In addition to the importance that FFs hold for the economic structure of many countries, their characteristics have motivated a wide range of research studies, including succession, corporate governance, and strategic management. The purpose of this study is to examine the role of resources (i.e. internationalisation networks), capabilities (i.e. employee characteristics and knowledge), and market orientation (i.e. internationalisation motivations), and how these facets influence the international performance of FFs. To this end, we administered a web-based questionnaire to a sample of 212 small and medium-sized FFs based in Portugal. In terms of the research methodology, we applied structural equation modelling (SEM) to test our hypotheses. We found that not only do resources and capabilities return a positive impact on internationalisation motivations, but also the combination of resources and capabilities and internationalisation motivations can positively influence the international performance of FFs. Our research contributes both to theory and FF management practises by analysing the strategic orientations adopted in internationalisation processes and the empirical relevance held by resources and capabilities. More specifically, we find that proactivity (i.e. internationalisation motivations), a network of contacts (i.e. resources) and assuming risks, mitigated by knowledge about the external market (i.e. capabilities), can enable the achievement of superior international performance for FFs.