Do Family Firms Have Better Reputations Than Non‐Family Firms? An Integration of Socioemotional Wealth and Social Identity Theories

Abstract

We draw from socioemotional wealth and social identity research to develop a theory on reputational differences among family and non-family firms. We propose that family members identify more strongly with their family firm than non-family members do with either a family or non-family firm. Heightened identification motivates family members to pursue a favourable reputation because it allows them to feel good about themselves, thus contributing to their socioemotional wealth. We hypothesize that when the family's name is part of the firm's name, the firm's reputation is higher because family members are particularly motivated for their firm to have a better reputation. Family members also need organizational power to pursue a favourable reputation; thus, we hypothesize that the level of family ownership and family board presence should be associated with more favourable reputations. We find support for our theory in a sample of large firms from eight countries with disparate governance systems and cultures.

Tweaking the entrepreneurial orientation–performance relationship in family firms: the effect of control mechanisms and family-related goals

“…For the purpose of this study, we define family firms as firms where ownership and management is aligned within one or more families (i.e., family members of the owning family/-ies are involved in managing the firm), owning family/-ies hold more than 50% of shares, and at least two family members are active in the firm (Miller et al 2007;Westhead and Cowling 1998;O'Boyle et al 2012;Steiger et al 2015). Previous studies show, for example, that, in comparison to their non-family counterparts, family firms do business rather risk-averse (Naldi et al 2007), and less aggressive, unless threatened (Gómez-Mejía et al 2007), due to image and reputation reasons (Deephouse and Jaskiewicz 2013). Their business behavior is influenced by the goals to protect the longevity of the family firm ) and the will to pass on the firm to the next generation for their own and the family's interest (Berrone et al 2012).…”

“…This additional item measures the attitude of family firms in competition and addresses previous discussions on the less aggressive competitive behavior of family firms (Deephouse and Jaskiewicz 2013;Gómez-Mejía et al 2007). To assure content validity, the accuracy and R2: In general, the top managers of my firm believe that owing to the nature of the environment, it is best to explore it gradually via timid, incremental behavior//… bold, wide-ranging acts are necessary to achieve the firm's objectives R3: When confronted with decisions involving uncertainty, my firm typically adopts a cautious, ''wait-and-see'' posture in order to minimize the probability of making costly decisions//… a bold posture in order to maximize the probability of exploiting potential opportunities C4: Our business contributes with an agreeable attitude to the well-being of the family, the competitors and the society//Our business only contributes to the own well-being and not to that of competitors and society…”

“…A tendency to be aggressive towards competitors can result in negative consequences from the industry and society such as disrespect and a bad reputation (Deephouse and Jaskiewicz 2013). Family firms are influenced from their family-related social embeddedness and thus prefer to compete unaggressively (Le Breton ).…”

Entrepreneurial behaviour, firm size and financial performance: the case of rural tourism family firms

“…Recent findings from family business research show that family firms are particularly risk-averse (little Risk-Taking) due to image and reputation reasons (Deephouse & Jaskiewicz, 2013;Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007;Naldi, Nordqvist, Sjöberg, & Wiklund, 2007). Instead, goals that protect the longevity and the socio-emotional wealth goals of the family firm (Brannon & Edmond, 2016) as well as assuring longterm performance tend to dominate (Berrone, Cruz, & Gomez-Mejia, 2012;Zellweger, Nason, & Nordqvist, 2012).…”

Social identity theory and the family business

“…(Tajfel, Fraser, & Jaspars, 1984, p. 5) Adapted to the organisational context by Ashforth and Mael (1989), SIT today is commonly used in management and business studies (Hogg & Terry, 2000;Reicher, Spears, & Haslam, 2010) in which it functions, for instance, as a way to explain both intra-and interorganisational group behaviour. SIT has also recently been adapted by family business research (for instance, Deephouse & Jaskiewicz, 2013;Shepherd & Haynie, 2009;Zellweger, Eddleston, & Kellermanns, 2010). Issues of identity are central to the way family firms are portrayed and defined and allow new insights to be gained into the "meaning structures of the family and business components of a 'family business'" (Whetten, Foreman, & Dyer, 2014, p. 480).…”