Commitment Escalation to a Failing Family Business

Abstract

The overarching intent of this manuscript is to heighten awareness to the concept of commitment escalation as it bears on a failing family business. Specifically, drawing on the concept of emotional ownership, together with self‐justification arguments, we (1) identify factors considered to be most forceful in contributing to the presence of commitment escalation and thus, resistance to change in a failing family business, and (2) model these related factors in a form that can serve heuristically to stimulate future empirical research capable of testing for the construct validity of commitment escalation in a family business context.

To Merge, Sell, or Liquidate? Socioemotional Wealth, Family Control, and the Choice of Business Exit

“…Performance threats should intensify the difference between family and nonfamily owners in relation to the option of business exit versus continuation. SEW presents a psychological barrier to the firm’s extinction and causes family owners to tolerate and even justify increasingly negative performance cues while escalating their commitment to the business without resorting to exit (see Chirico, Salvato, Byrne, Akhter, & Arriaga Múzquiz, 2018). In this regard, Lansberg (1988), DeTienne and Chirico (2013), and Sharma and Manikutty (2005) argue that family owners often avoid or deny such a reality, preferring instead to continue the operations of a failing business for affective rather than financial reasons.…”

If we can't have it, then no one should: Shutting Down Versus Selling in Family Business Portfolios

“…The basic claim of social identity theory is that individuals who identify themselves with particular social groups, such as a family business, favor those groups (Ashforth and Mael, ; Tajfel et al , ; Turner, ). Social identity refers to the groups to which one belongs (Chirico et al , forthcoming) and arises because individuals classify themselves and others into social categories (Turner et al , ). These classifications enable individuals to make sense of their social environment and to define themselves in relation to others (Ashforth and Mael, ; Deephouse and Jaskiewicz, ).…”

“…First, the family's long‐term involvement and the common practice of including the family's name in the business' name enhance its members' identification with the family firm as their social group; indeed, evidence shows that business families strongly identify with their firms (Deephouse and Jaskiewicz, ). Such identification is often a function of the family's needs and demands (Miller, Breton‐Miller, and Lester, ) such that the business becomes an extension of the family and its members (Chirico et al , forthcoming). By identifying themselves with the business, the family comes to define itself in terms of a perceived social group or category (Mael and Ashforth, ).…”

“…Ashforth, Schinoff, and Rogers, ; Gomez‐Mejia et al , ). Put differently, tougher situations increase family owners' commitment to their business assets and resources (Chirico et al , forthcoming; Salvato et al , ). In a similar vein, some family business scholars suggest that family owners feel increasingly aware and obliged to retain and revitalize a business in more difficult situations (Cruz and Nordqvist, ; Lumpkin, Brigham, and Moss, ).…”

To Your Health: Health Insurance, Self‐Employment Exit, and Older Entrepreneurs

“…Both internal factors and external contexts can serve to influence whether or not one persists in, or exits from, self‐employment (Gimeno et al ). Although evidence has indicated that individual factors, such as personal values (Holland and Shepherd ) and socioemotional wealth (Chirico et al ; Parastuty et al ), as well as expected financial and emotional costs (Shepherd, Wiklund, and Haynie ) can all effect whether or not individuals exit self‐employment, it is also important to consider the impact that external contexts and the life‐cycle stage of an individual can have on the decision to persist in self‐employment (Gimeno et al ).…”