How Do Family Firms Launch New Businesses? A Developmental Perspective on Internal Corporate Venturing in Family Business

Abstract

This conceptual work depicts internal corporate venturing in family business as consisting of two separate and sequential strategic choices: first, the decision about the degree of relatedness between the parent firm and the venture; second, the definition of the level of venture autonomy. Drawing on stewardship theory, we argue that family business dynamics, and in particular the development of the ownership structure, influence how family firms pursue internal corporate venturing and make decisions related to such two steps. We also discuss the contingent effect of corporate governance characteristics and of the national legal system.

Does Growth Represent Chimera or Bellerophon for a Family Business? The Role of Entrepreneurial Orientation and Family Influence Nuances

“…In addition, we had no opportunity to consider whether the family grows more than the firm, or vice versa, it would thus be interesting in future research to take into account that the lifecycle of the family and the business might follow a different pace, thus affecting the relative importance of family needs with respect to business needs (Bañegil Palacios et al ., 2013). Following this line of reasoning, it is also important to consider the stage of the family lifecycle that together with the ownership lifecycle and business circle (Gersick et al ., 1997) affect the entrepreneurial endeavors of the family business (Brumana et al ., 2017; Minola et al ., 2016), and in turn, family firm growth. The conservative behavior of family firms and the related effects on EO and growth could be more pronounced at specific stages of the family lifecycle (e.g., when married owners with children see the firm as a legacy for the heirs; Belenzon et al ., 2016).…”

“…Whereas in the previous hypotheses we discuss the effect of the former on growth through EO, we here focus on how different ownership structures affect such relationship. The role of family dynamics and firm ownership structure in shaping the family firm's entrepreneurial orientation has recently received increased attention (Brumana et al ., 2017; McKelvie et al ., 2014; Minola et al ., 2016).…”

Corporate governance in entrepreneurial firms: a systematic review and research agenda

“…The stewardship perspective is applied in 3 quantitative studies and discussed in 2 non-empirical studies. According to stewardship theory, in certain circumstances, executives' and directors' interests are similar to those held by shareholders (Davis et al 1997), a typical situation for family business (e.g., Sciascia et al 2013;Brumana et al 2017). Stakeholder theory, which normatively addresses how corporate governance should be designed to represent various stakeholders' interests (Abor and Adjasi 2007;Barnes 2007), is discussed in 2 reviews and 1 non-empirical study.…”

Researching Entrepreneurship in Family Firms

“…The four types of family firms proposed are labeled "Constrained," "Competency-Enhancing," "Diversified Family Dominant," and "Dynastic." Brumana et al (2017) depict internal corporate venturing in family business as consisting of two sequential strategic choices: the degree of relatedness between the parent firm and the venture and the level of venture autonomy. Drawing on the stewardship theory, they argue that the development of the ownership structure influences these two decisions.…”

“…Papers were reviewed according to standard JSBM procedures and Table summarizes the papers in this issue that successfully negotiated this process. Three papers investigated a specific type of entrepreneurship in family business, either innovation (Fitz‐Koch and Nordqvist ), corporate venturing (Brumana, Minola, Garrett, and Digan, ) or portfolio entrepreneurship (Cruz and Justo ). One paper proposes a typology of corporate entrepreneurship orientations in family firms (Randolph, Li, and Daspit ).…”