Disentangling family firm heterogeneity: Evidence from a cross-country analysis

Rocio Arteaga; Rodrigo Basco

doi:10.24310/ejfb.13.2.2023.17638

Authors

Rocio Arteaga Kristianstad University Sweden https://orcid.org/0000-0001-7928-3047
Rodrigo Basco American University of Sharjah United Arab Emirates https://orcid.org/0000-0002-0168-2272

DOI:

https://doi.org/10.24310/ejfb.13.2.2023.17638

Keywords:

corporate governance, typology, transgenerational entrepreneurship, non-economic goals, firm performance, family business context, family firm

Agencies: all authors certify that they have no affiliations with or involvement in any organization or entity with any financial interest or non-financial interest in the subject matter or materials discussed in this manuscript. Based on that, there is no conflict of interest

Abstract

The existing typologies, classifications that identify types of family firms based on specific characteristics, aim to enhance our understanding of the heterogeneity of family businesses. However, these typologies fall short in thoroughly exploring and predicting behavioural and performance consequences associated with being categorized within specific classifications. Furthermore, the majority of the existing analyses have been empirically tested in one single country. To address these two research gaps, we use a sample of 814 small- and medium-sized family firms operating in 21 countries, collected by the STEP Project Global Consortium. This sample is employed to classify family firms based on their corporate governance similarities and explore their behavioural and performance patterns. Building on the principles of the configurative approach, we find that each of the four family firm configuration—group of family firms with related corporate governance mechanisms—has a unique yet similar combination of patterns in terms of transgenerational entrepreneurship practices, non-economic goals, and firm performance. Additionally, expanding on the isomorphic effect, we find evidence indicating that certain world macroregions exhibit a greater propensity for specific corporate governance configurations compared to others.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

References

Aguilera, R. V., & Crespi-Cladera, R. (2012). Family firms: Current debates of corporate governance in family firms. Journal of Family Business Strategy, 3(2), 66–69. https://doi.org/10.1016/j.jfbs.2012.03.006

Amato, S., Basco, R., & Lattanzi, N. (2022). Contextualizing employment outcomes in family business research: current findings and future research avenues. Management Review Quarterly, 72(2), 531-604. https://doi.org/10.1007/s11301-021-00226-9

Aronoff, C. E., & Ward, J. L. (2011). Family business governance: Maximizing family and business potential. In A family business publication (Book Series). Palgrave Macmillan. https://doi.org/10.1093/oxfordhb/9780199263684.003.0009

Arteaga, R., & Escribá-Esteve, A. (2021). Heterogeneity in family firms: Contextualising the adoption of family governance mechanisms. Journal of Family Business Management, 11(2), 200-222. https://doi.org/10.1108/jfbm-10-2019-0068

Arteaga, R., & Menéndez-Requejo, S. (2017). Family constitution and business performance: Moderating factors. Family Business Review, 30(4), 320-338. https://doi.org/10.1177/0894486517732438

Au, K., Han, S., & Chung, H. M. (2018). The impact of sociocultural context on strategic renewal: A twenty-six nation analysis of family firms. Cross Cultural & Strategic Management, 25(4), 604-627. https://doi.org/10.1108/ccsm-07-2017-0090

Bammens, Y., Voordeckers, W., & Van Gils, A. (2011). Boards of directors in family businesses: A literature review and research agenda. International Journal of Management Reviews, 13(2), 134–152. https://doi.org/10.1111/j.1468-2370.2010.00289.x

Basco, R. (2017). “Where do you want to take your family firm?” A theoretical and empirical exploratory study of family business goals. BRQ Business Research Quarterly, 20(1), 28–44. https://doi.org/10.1016/j.brq.2016.07.001

Basco, R. (2023). Family Business Management. Routledge, London. https://doi.org/10.4324/9781003273240

Basco, R., & Pérez-Rodríguez, M. J. (2011). Ideal types of family business management: Horizontal fit between family and business decisions and the relationship with family business performance. Journal of Family Business Strategy, 2(3), 151–165. https://doi.org/10.1016/j.jfbs.2011.07.004

Basco, R., Hernández-Perlines, F., & Rodríguez-García, M. (2020). The effect of entrepreneurial orientation on firm performance: A multigroup analysis comparing China, Mexico, and Spain. Journal of Business Research, 113, 409-421. https://doi.org/10.1016/j.jbusres.2019.09.020

Basco, R., Rodriguez Escudero, A. I., Martin-Cruz, N., & Barros-Contreras, I. (2021). The combinations of market and non-market strategies that facilitates family firm survival. Entrepreneurship Research Journal, 11(3), 245-286. https://doi.org/10.1515/erj-2019-0258

Baù, M., Chirico, F., Pittino, D., Backman, M., & Klaesson, J. (2019). Roots to grow: Family firms and local embeddedness in rural and urban contexts. Entrepreneurship Theory and Practice, 43(2), 360-385. https://doi.org/10.1177/1042258718796089

Beckhard, R. and Dyer, W. G. (1981). Challenges and Issues in Managing Family Firms. MIT Sloan School of Management, Working Paper, 1188–1189.

Berrone, P., Cruz, C., Gomez-Mejia, L. R., & Larraza-Kintana, M. (2010). Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less? Administrative Science Quarterly, 55(1), 82-113. https://doi.org/10.2189/asqu.2010.55.1.82

Botero, I. C., Betancourt, G. G., Ramirez, J. B. B., & Vergara, M. P. L. (2015). Family protocols as governance tools: Understanding why and how family protocols are important in family firms. Journal of Family Business Management, 5(2), 218–237. https://doi.org/10.1108/jfbm-01-2015-0001

Brenes, E. R., Madrigal, K., & Requena, B. (2011). Corporate governance and family business performance. Journal of Business Research, 64(3), 280-285. https://doi.org/10.1016/j.jbusres.2009.11.013

Brenes, E. R., Mena, M., & Molina, G. E. (2008). Key success factors for strategy implementation in Latin America. Journal of Business Research, 61(6), 590-598. https://doi.org/10.1016/j.jbusres.2007.06.033.

Brune, A., Thomsen, M., & Watrin, C. (2019). Tax avoidance in different firm types and the role of nonfamily involvement in private family firms. Managerial and Decision Economics, 40(8), 950-970. https://doi.org/10.1002/mde.3082

Burkart, M., Panunzi, F., & Shleifer, A. (2003). Family Firms. The Journal of Finance, 58(5), 2167–2201. https://doi.org/10.1111/1540-6261.00601

Campopiano, G., & De Massis, A. (2015). Corporate social responsibility reporting: A content analysis in family and non-family firms. Journal of Business Ethics, 129, 511-534. https://doi.org/10.1007/s10551-014-2174-z

Carlock, R. S., & Ward, J. L. (2001). Strategic planning for the family business. In Strategic Planning for the Family Business. Palgrave Macmillan, UK. https://doi.org/10.1057/9780230508750.

Carney, M. (2005). Corporate governance and competitive advantage in family–controlled firms. Entrepreneurship Theory and Practice, 29(3), 249-265. https://doi.org/10.1111/j.1540-6520.2005.00081.x

Carney, M., Gedajlovic, E., & Strike, V. M. (2014). Dead money: Inheritance law and the longevity of family firms. Entrepreneurship Theory and Practice, 38(6), 1261-1283. https://doi.org/10.1111/etap.12123

Chiu, T., Fang, D., Chen, J., Wang, Y., & Jeris, C. (2001). A robust and scalable clustering algorithm for mixed type attributes in large database environment. In Proceedings of the Seventh ACM SIGKDD International Conference on Knowledge Discovery and Data Mining, 263-268. https://doi.org/10.1145/502512.502549

Chrisman, J. J., Chua, J. H., Le Breton-Miller, I., Miller, D., & Steier, L. P. (2018). Governance mechanisms and family firms. Entrepreneurship Theory and Practice, 42(2), 171-186. https://doi.org/10.1177/1042258717748650

Chua, J. H., Chrisman, J. J., & Sharma, P. (2003). Succession and non-succession concerns of family firms and agency relationship with nonfamily managers. Family Business Review, 16(2), 89-107. https://doi.org/10.1111/j.1741-6248.2003.00089.x

Chua, J. H., Chrisman, J. J., De Massis, A., & Wang, H. (2018). Reflections on family firm goals and the assessment of performance. Journal of Family Business Strategy, 9(2), 107-113. https://doi.org/10.1016/j.jfbs.2018.02.001

Chua, J. H., Chrisman, J. J., Steier, L. P., & Rau, S. B. (2012). Sources of heterogeneity in family firms: An introduction. Entrepreneurship Theory and Practice, 36(6), 1103–1113. https://doi.org/10.1111/j.1540-6520.2012.00540.x

Ciravegna, L., Kano, L., Rattalino, F., & Verbeke, A. (2020). Corporate diplomacy and family firm longevity. Entrepreneurship Theory and Practice, 44(1), 109-133. https://doi.org/10.1177/1042258719838477

Corbetta, G. (1995). Patterns of development of family businesses in Italy. Family Business Review, 8(4), 255–265. https://doi.org/10.1111/j.1741-6248.1995.00255.x

Corbetta, G., & Salvato, C. A. (2004). The board of directors in family firms: One size fits all? Family Business Review, 17(2), 119–134. https://doi.org/10.1111/j.1741-6248.2004.00008.x

Cowan, P. J. (2007). Geographic usage of the terms Middle Asia and Central Asia. Journal of Arid Environments, 69(2), 359-363. https://doi.org/10.1016/j.jaridenv.2006.09.013

Cruz, C. T. M. C., Habbershon, T., Nordqvist, M., Salvato, C., & Zellweger, T. (2006). A conceptual model of transgenerational entrepreneurship in family-influenced firms.

Daspit, J. J., Chrisman, J. J., Ashton, T., & Evangelopoulos, N. (2021). Family firm heterogeneity: A definition, common themes, scholarly progress, and directions forward. Family Business Review, 34(3), 296-322. https://doi.org/10.1177/08944865211008350

Davis, J., Hampton, M., & Lansberg, I. (1997). Generation to generation: Life cycles of the family business. Harvard Business Press.

Davis, P. (1983). Realizing the potential of the family business. Organizational Dynamics, 12(1), 47–56. https://doi.org/10.1016/0090-2616(83)90026-8

De Kok, J. M., Uhlaner, L. M., & Thurik, A. R. (2006). Professional HRM practices in family owned‐managed enterprises. Journal of Small Business Management, 44(3), 441-460. https://doi.org/10.1111/j.1540-627x.2006.00181.x

Deephouse, D. L., & Jaskiewicz, P. (2013). Do family firms have better reputations than non‐family firms? An integration of socioemotional wealth and social identity theories. Journal of Management Studies, 50(3), 337-360. https://doi.org/10.1111/joms.12015

Dibrell, C., & Memili, E. (2019). A brief history and a look to the future of family business heterogeneity: An introduction. The Palgrave handbook of heterogeneity among family firms, 1-15. https://doi.org/10.1007/978-3-319-77676-7_1

DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147. https://doi.org/10.2307/2095101

Dyer, W. G. (2006). Examining the “family effect” on firm performance. Family Business Review, 19(4), 253–273. https://doi.org/10.1111/j.1741-6248.2006.00074.x

Dyer, W. G. (2018). Are family firms really better? Reexamining the ‘family effect’on firm performance. Family Business Review, 31(2), 240-248. https://doi.org/10.1177/0894486518776516

Ensley, W. & Pearson W.A. (2005). An exploratory comparison of the behavioral dynamics of top management teams in family and nonfamily new ventures: Cohesion, conflict, potency, and consensus. Entrepreneurship Theory and Practice, 29(3), 267–284. https://doi.org/10.1111/j.1540-6520.2005.00082.x

Gallo, M. A., & Vilaseca, A. (1998). A financial perspective on structure, conduct, and performance in the family firm: An empirical study. Family Business Review, 11(1), 35-47.

Gómez-Mejía, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms. Academy of Management annals, 5(1), 653-707. https://doi.org/10.5465/19416520.2011.593320

Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52(1), 106-137. https://doi.org/10.2189/asqu.52.1.106

Gómez-Mejía, L. R., Neacsu, I., & Martin, G. (2019). CEO risk-taking and socioemotional wealth: The behavioral agency model, family control, and CEO option wealth. Journal of Management, 45(4), 1713-1738. https://doi.org/10.1177/0149206317723711

Gómez-Mejía, L. R., Basco, R., Gonzalez, A. C., & Muller, C. G. (2020). Family business and local development in Iberoamerica. Cross Cultural & Strategic Management, 27(2), 121–136. https://doi.org/10.1108/ccsm-02-2020-223

Gubitta, P., & Gianecchini, M. (2002). Governance and flexibility in family-owned SMEs. Family Business Review, 15, 277–297. https://doi.org/10.1111/j.1741-6248.2002.00277.x

Habbershon, T. G., & Astrachan, J. H. (1997). Research note: Perceptions are reality: How family meetings lead to collective action. Family Business Review, 10(1), 37–52. https://doi.org/10.1111/j.1741-6248.1997.00037.x

Hernández-Linares, R., Sarkar, S., & López-Fernández, M. C. (2017). How has the family firm literature addressed its heterogeneity through classification systems? An integrated analysis. European Journal of Family Business, 7(1-2), 1-13. https://doi.org/10.24310/ejfbejfb.v7i1-2.5013

Holland, P. G., & Boulton, W. R. (1984). Balancing the ‘family’ and the ‘business’ in family business, Business Horizons, 27(2), 16–21. https://doi.org/10.1016/0007-6813(84)90004-1

Ibrahim, B., Dumas, C., & McGuire, J. (2001). Strategic decision making in small family firms: an empirical investigation. Journal of Small Business Strategy, 12(1), 80-90.

Jaffe, D. T., & Lane, S. H. (2004). Sustaining a family dynasty: Key issues facing complex multigenerational business- and investment-owning families. Family Business Review, 17(1), 81–98. https://doi.org/10.1111/j.1741-6248.2004.00006.x

Jorissen, A., Laveren, E., Martens, R., & Reheul, A. M. (2005). Real versus sample-based differences in comparative family business research. Family Business Review, 18(3), 229–246. https://doi.org/10.1111/j.1741-6248.2005.00044.x

Kampouri, K., & Hajidimitriou, Y. (2023). International partnership failures in the context of family small and medium enterprises internationalisation. European Journal of Family Business, 13(1), 56–70. https://doi.org/10.24310/ejfbejfb.vi.15154

Kano, L., & Verbeke, A. (2018). Family firm internationalization: Heritage assets and the impact of bifurcation bias. Global Strategy Journal, 8(1), 158-183. https://doi.org/10.1002/gsj.1186

Kano, L., Ciravegna, L., & Rattalino, F. (2021). The family as a platform for FSA development: Enriching new internalization theory with insights from family firm research. Journal of International Business Studies, 52, 148-160. https://doi.org/10.1057/s41267-020-00308-y

Kets de Vries, M. F. R. (1993). The dynamics of family controlled firms: The good and the bad news. Organizational Dynamics, 21(3), 59-71. https://doi.org/10.1016/0090-2616(93)90071-8

Krueger, N., Bogers, M., Labaki, R., & Basco, R. (2021). Advancing family business science through context theorizing: the case of the Arab world. Journal of Family Business Strategy, 12(1), 100377. https://doi.org/10.1016/j.jfbs.2020.100377

Lee, J. (2006). Family firm performance: Further evidence. Family Business Review, 19(2), 103–114. https://doi.org/10.1111/j.1741-6248.2006.00060.x

Levinson, H. (1983). Consulting with the family business: what to look for, what to look out for, Organizational Dynamics, 12(1), 71–80. https://doi.org/10.1016/0090-2616(83)90028-1

Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-172. https://doi.org/10.5465/amr.1996.9602161568

Lumpkin, G. T., & Dess, G. G. (2001). Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle. Journal of Business Venturing, 16(5), 429-451. https://doi.org/10.1016/s0883-9026(00)00048-3

Madanoglu, M., Altinay, L., & Wang, X. (2016). Disentangling the effect of family involvement on innovativeness and risk taking: The role of decentralization. Journal of Business Research, 69(5), 1796–1800. https://doi.org/10.1016/j.jbusres.2015.10.058

Matthews, C. H., Moore, T. W., & Fialko, A. S. (1999). Succession in the family firm: A cognitive categorization perspective. Family Business Review, 12(2), 159-170. https://doi.org/10.1111/j.1741-6248.1999.00159.x

Meyer, A. D., Tsui, A. S., & Hinings, C. R. (1993). Configurational approaches to organizational analysis. Academy of Management Journal, 36(6), 1175–1195. https://doi.org/10.5465/256809.

Neubauer, F., & Lank, A. G. (1998). Stages of Evolution of Family Enterprises. In The Family Business: Its governance for sustainability, 26–55. https://doi.org/10.1007/978-1-349-14465-5_2

Neubaum, D. O., Kammerlander, N., & Brigham, K. H. (2019). Capturing family firm heterogeneity: How taxonomies and typologies can help the field move forward. Family Business Review, 32(2), 106–130. https://doi.org/10.1177/0894486519848512

Nordqvist, M., Sharma, P., & Chirico, F. (2014). Family firm heterogeneity and governance: A configuration approach. Journal of Small Business Management, 52(2), 192–209. https://doi.org/10.1111/jsbm.12096

Norusis, M. (2012). IBM SPSS statistics 19 advanced statistical procedures companion. Addison Wesley.

Parada, M. J., Gimeno, A., Samara, G., & Saris, W. (2020). The adoption of governance mechanisms in family businesses: An institutional lens. Journal of Family Business Management, ahead-of-print. https://doi.org/10.1108/jfbm-07-2019-0054

Pittino, D., Barroso Martínez, A., Chirico, F., & Sanguino Galván, R. (2017). Psychological ownership, knowledge sharing and entrepreneurial orientation in family firms: The moderating role of governance heterogeneity. Journal of Business Research, 84, 312 - 326. https://doi.org/10.1016/j.jbusres.2017.08.014

Poza, E. (2004). Family Business. Thomson South-Western Publishing, Mason: Ohio.

Rau, S. B., Schneider-Siebke, V., & Günther, C. (2019). Family firm values explaining family firm heterogeneity. Family Business Review, 32(2), 195–215. https://doi.org/10.1177/0894486519846670

Rienda, L., & Andreu, R. (2021). The role of family firms heterogeneity on the internationalisation and performance relationship. European Journal of Family Business, 11(2). https://doi.org/10.24310/ejfbejfb.v11i2.10591

Samara, G., Jamali, D., & Lapeira, M. (2019). Why and how should SHE make her way into the family business boardroom? Business Horizons, 62(1), 105-115. https://doi.org/10.1016/j.bushor.2018.09.001

Sharma, P., & Carney, M. (2012). Value creation and performance in private family firms: Measurement and methodological issues. Family Business Review, 25(3), 233-242. https://doi.org/10.1177/0894486512457295

Sharma, P., Chrisman, J. J., & Chua, J. H. (2003). Predictors of satisfaction with the succession process in family firms. Journal of Business Venturing, 18(5), 667-687. https://doi.org/10.1016/s0883-9026(03)00015-6

Sharma, P., Chrisman, J. J., Pablo, A. L., & Chua, J. H. (2001). Determinants of initial satisfaction with the succession process in family firms: A conceptual model. Entrepreneurship Theory and Practice, 25(3), 17-36. https://doi.org/10.1177/104225870102500302

Shepherd, D., & Haynie, J. M. (2009). Family business, identity conflict, and an expedited entrepreneurial process: A process of resolving identity conflict. Entrepreneurship Theory and Practice, 33(6), 1245–1264. https://doi.org/10.1111/j.1540-6520.2009.00344.x

Siehl, C., Davis, J., & Dyer, W. G. (1987). Cultural change in family firms: Anticipating and managing business and family transitions. Administrative Science Quarterly, 32(4), 635. https://doi.org/10.2307/2392903.

Soleimanof, S., Rutherford, M. W., & Webb, J. W. (2018). The intersection of family firms and institutional contexts: A review and agenda for future research. Family Business Review, 31(1), 32-53. https://doi.org/10.1177/0894486517736446

Suess, J. (2014). Family governance – Literature review and the development of a conceptual model. Journal of Family Business Strategy, 5(2), 138–155. https://doi.org/http://dx.doi.org/10.1016/j.jfbs.2014.02.001

Tylecote, A., & Visintin, F. (2007). Corporate governance, finance and the technological advantage of nations. Routledge. https://doi.org/10.4324/9780203933886

Uhlaner, L. M., Berent-Braun, M. M., Jeurissen, R. J. M., & de Wit, G. (2012). Beyond size: Predicting engagement in environmental management practices of Dutch SMEs. Journal of Business Ethics, 109(4), 411–429. https://doi.org/10.1007/s10551-011-1137-x

Van der Heyden, L., Blondel, C., & Carlock, R. S. (2005). Fair process: Striving for justice in family business. Family Business Review, 18(1), 1–21. https://doi.org/10.1111/j.1741-6248.2005.00027.x

Vandemaele, S., & Vancauteren, M. (2015). Nonfinancial goals, governance, and dividend payout in private family firms. Journal of Small Business Management, 53(1), 166-182. https://doi.org/10.1111/jsbm.12063

Wagner, D., Block, J. H., Miller, D., Schwens, C., & Xi, G. (2015). A meta-analysis of the financial performance of family firms: Another attempt. Journal of Family Business Strategy, 6(1), 3-13. https://doi.org/10.2139/ssrn.2825069

Westhead, P., & Cowling, M. (1998). Family firm research: The need for a methodological rethink. Entrepreneurship Theory and Practice, 23(1), 31–56. https://doi.org/10.1177/104225879802300102

Westhead, P., & Howorth, C. (2007). ‘Types’ of private family firms: an exploratory conceptual and empirical analysis. Entrepreneurship and Regional Development, 19(5), 405-431. https://doi.org/10.1080/08985620701552405

Yildirim-Öktem, Ö. (2018). Family involvement in governance of family business groups. European Journal of Family Business, 8(1), 5-15. https://doi.org/10.24310/ejfbejfb.v8i1.5002

Yu, A., Lumpkin, G. T., Parboteeah, K. P., & Stambaugh, J. E. (2019). Autonomy and family business performance: The joint effect of environmental dynamism and national culture. International Small Business Journal: Researching Entrepreneurship, 37(2), 153–185. https://doi.org/10.1177/0266242618811893

Zellweger, T. M., & Nason, R. S. (2008). A stakeholder perspective on family firm performance. Family Business Review, 21(3), 203-216. https://doi.org/10.1177/08944865080210030103

Zellweger, T. M., Nason, R. S., & Nordqvist, M. (2012). From longevity of firms to transgenerational entrepreneurship of families: Introducing family entrepreneurial orientation. Family Business Review, 25(2), 136-155. https://doi.org/10.1177/0894486511423531