Value Is in the Eye of the Owner

Abstract

Drawing on the affect infusion model from cognitive psychology, the authors develop a conceptual framework that explains how affect related to corporate ownership influences the formation of socioemotional wealth perceptions among family firm owners, reflected in altered subjective value perceptions for the ownership stake. The authors explore target, personal, and situational features in the subjective valuation process for the ownership stake and explain how these factors mediate the relationship between affect and socioemotional wealth perceptions. They further the understanding about the level of bias in family owners’ subjective firm value assessments and offer new approaches for socioemotional wealth research.

Innovation in Family Firms: The Relative Effects of Wealth Concentration Versus Family-Centered Goals

“…We argue that family ownership may not correctly capture the consequences of business failure on total family wealth (both financial and socioemotional) since it provides an incomplete picture of risk bearing for family owners. If an owner has invested most of their personal wealth in the FF with no or limited diversification, they would be much more sensitive to the uncertainty resulting from innovation projects than in the case of a diversified owner with the same ownership stake (Sciascia et al, 2015;Zellweger & Dehlen, 2012). Rather than the percentage of family ownership being the main driver of innovation as speculated in previous studies, we argue that it is the family owners' WC in the firm that results in lower levels of innovation in FFs.…”

Technological Innovation Inputs, Outputs, and Performance

“…Indeed, family-managed firms are typically characterized as firms that give up on unprofitable innovation projects as soon as they are revealed to be so and that do not insist on continuing with them. Family managers may also be aware that if the family firm does not take risks, betting decidedly on its technological innovation outcomes to obtain a proper performance in the current changing environment, then they may actually be more risk taking and may be endangering the preservation of their socioemotional endowment (Zellweger & Dehlen, 2011).…”

A matter of control or identity? Family firms' environmental reporting decisions along the corporate life cycle

“…legitimacy stance (Cormier & Magnan, 2015), we contend that SEW is a multidimensional concept (Cennamo, Berrone, Cruz, & Gomez-Mejia, 2012;Gómez-Mejía et al, 2014) and focus on two dimensions of SEW that are the most sensitive to stakeholder claims: family control and influence and family identity. Furthermore, following Shepherd and Haynie (2009) and Zellweger and Dehlen (2012), we analyze to what extent family firms' EDs are motivated by the control and identity dimensions and change along the firms' life cycles.…”

“…The founder's strong emotional attachment with the firm enhances the family's commitment to the business and strengthens its identification with the firm. At this stage, family agents' cognitive processes are heavily influenced by emotional considerations (Shepherd & Haynie, 2009;Zellweger & Dehlen, 2012), and the SEW becomes key in making ED-related decisions. As these firms age, the number of family members and generations that are involved in leading the business increases, and the family's stake in the business becomes fragmented.…”