Family businesses and non-family equity: literature review and avenues for future research

Thiele, Felix

doi:10.1007/s11301-017-0123-5

Cited by 15 publications

(9 citation statements)

References 92 publications

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“…In line with the literature (Gomez-Mejía et al, 2007;Berrone et al, 2012;Thiele, 2017), our interviews with family owners confirm the family's strong adherence to control. In terms of legal share ownership, all five companies we visited were fully family owned, with transfers of ownership limited to intra-family transfers.…”

Section: Family Owners' Sense Of Control and Psychological Ownershipsupporting

confidence: 90%

“…In general, both family members and non-family members working for a family firm have a higher sense of control and higher feelings of psychological ownership than individuals working for non-family firms. On the part of the family members, family firm owners often attach greater importance to maintaining control over their company than non-family owners (Ward, 1988; Miller and Le Breton-Miller, 2005; Croci et al , 2011; Mullins and Schoar, 2016; Thiele, 2017). As a result, this high degree of family control gives rise to a strong sense of psychological ownership among family owners (Pierce et al , 2001).…”

Section: Introductionmentioning

confidence: 99%

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Limits to psychological ownership in the family business

Broekaert

Henssen

Lambrecht

et al. 2018

JFBM

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Purpose-The purpose of this paper is to analyze how the sense of control, psychological ownership and motivation of both family owners and non-family managers in family firms are interrelated. This paper analyzes the limits set by family owners when delegating control to their non-family managers and the resulting potential for conflict and demotivation of the non-family managers. Design/methodology/approach-Building on the existing literature, first, an overview of the literature on psychological ownership and control is presented. Second, the paper analyzes the insights gained from interviews with 15 family owners and non-family managers in five family firms. Findings-This study finds that motivating non-family managers is not merely a matter of promoting a sense of psychological ownership throughout the company. A strong sense of psychological ownership may facilitate but also hinder the cooperation between family and non-family. Family owners are often only willing to delegate operational control, while non-family managers also feel entitled to participate in strategic decision making. This leads to the proposition that non-family managers' psychological ownership in family firms' conflicts with family owners' desire to maintain control. Originality/value-This study answers the calls to seek additional insight in how non-family managers function within family firms. By shedding light on the complex relationship between control, psychological ownership and motivation in family firms, the study responds to the calls for more empirical validation of the psychological ownership framework and for more research into the potential negative effects of psychological ownership in the family business.

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Section: Family Owners' Sense Of Control and Psychological Ownershipsupporting

confidence: 90%

Section: Introductionmentioning

confidence: 99%

Limits to psychological ownership in the family business

Broekaert

Henssen

Lambrecht

et al. 2018

JFBM

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“…Our analyses show that the added value of PE in FB for both parties is only achievable if stewardship practices are embraced by both parties from entry, during cooperation, and until exit. In so doing, we demystify this topic, allowing us to reduce the knowledge and empathy gap between FBs and PE investors, and responding to the recent call of Thiele (2017) to broaden our knowledge on the use of external equity in family firms and avoid potential prejudices on this form of financing. In addition, through our research, we advance several practices (see Figure 1) that can be used by both parties for cooperation and an effective relationship.…”

Section: Practical Implicationsmentioning

confidence: 99%

“…FBs follow this order since many FB owners show reluctance towards external shareholders (Cressy and Olofsson, 1997;Sirmon and Hitt, 2003). Several studies indicate that many FBs are suspicious of external financing, such as private equity (henceforth PE), as they fear losing control and believe that their long-term orientation or family-oriented goals will be undermined (Poutziouris, 2001;Cronqvist and Nilsson, 2005;Achleitner et al, 2008;Fernando et al, 2014;Holt et al, 2017;Thiele, 2017). Moreover, from the PE investors' perspective, FBs can be less attractive as an investment opportunity due to their low transparency and the perception of a lower level of professional management (Seet et al, 2010).…”

Section: Introductionmentioning

confidence: 99%

“…Notwithstanding these obstacles, recent studies illustrate that PE financing in FBs is on the rise in Europe (RBSC, 2014;Cabral-Cardoso et al, 2016;Thiele, 2017). PE is a broad term that encompasses capital provided to unlisted companies in different stages of the business lifecycle, such as venture capital, development capital, buy-outs, and so forth (EVCA, 2007).…”

Section: Introductionmentioning

confidence: 99%

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Building and maintaining the family business-private equity relationship

Molly

Arijs

Lambrecht

2017

JSBED

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Purpose Adopting an integrated agency and stewardship perspective, the purpose of this paper is to understand the relationship between family businesses (FBs) and private equity (PE) investors at three stages: entry, cooperation, and exit. Design/methodology/approach This qualitative study combines the perspectives of 11 FB owners and/or managers, seven PE investors, and four intermediaries. The in-depth interviews of this purposive sample are analysed at the intra- and inter-case level using a template analysis approach up to reaching theoretical saturation. Findings Building and maintaining an effective relationship between the FB and the PE investor requires both a stewardship perspective (i.e. reciprocal principal-steward behaviour) and a necessary but insufficient agency perspective (i.e. principal-principal behaviour). Research limitations/implications More large-scale studies with an integrated agency-stewardship perspective on FBs using PE can increase the external validity of the insights from this research to build and maintain an effective relationship between both parties. Practical implications Providing insights into the relationship building process and best practices, this study helps reduce the knowledge and empathy gap that exists between FBs and PE. Originality/value The results clarify the need to reconcile an agency and stewardship perspective to thoroughly understand the relationship and behaviour of FBs and PE investors, and to help the parties understand and benefit from each other’s added value.

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