Diversification decisions among family firms: The role of family involvement and generational stage

Abstract

While prior literature has focused on whether family firms are more or less inclined to diversification than non-family firms, the examination of differences in diversification among family firms has received much less attention. We analyze how family involvement (in ownership, control, and management) and the generational stage in the company (first versus later generations) influence diversification among family firms. The empirical evidence is provided by a sample of publicly listed family firms from the EU. Our results show that larger levels of family involvement in the firm are associated with lower diversification. Furthermore, first-generation family firms are found to be less diversified than their later-generation counterparts.

The effect of socioemotional wealth on the relationship between entrepreneurial orientation and family business performance

“…Given that “a direct measurement of SEW phenomena is virtually non-existent, and construct development is just beginning” (Jiang et al, 2018, p. 133), SEW has generally been considered through distal proxies in the empirical research (Debicki et al, 2016), typically using family ownership (e.g., Berrone et al, 2010; Gómez-Mejía et al, 2007, 2018) but also other measures of family involvement (e.g., Casillas et al, 2010; Munõz-Bullón et al, 2018). These proxies for SEW have substantial limitations however, since univariate measures do not explore the dimensions of the SEW construct in detail (Berrone et al, 2012).…”

“…Hence, firms that aspire to protect and build their SEW are less likely to execute aggressive strategies, as these could harm their reputation. Indeed, SEW purists tend to limit their aggressive activity, including strategies of diversification (Gómez-Mejía et al, 2010; Munõz-Bullón et al, 2018), acquisition (Gómez-Mejía et al, 2018), and internationalization (Yang et al, 2020) to prevent SEW loss, despite the risk of negative consequences for firm performance. Accordingly, we argue that a higher concern to preserve SEW may dampen the relationship between competitive aggressiveness and family firm performance.…”

Pengaruh Corporate Governance Terhadap Inefisiensi Investasi Dengan Free Cash Flow Sebagai Pemoderasi

“…Apabila dibandingkan dengan pemegang saham minoritas, maka pemegang saham terbesar memiliki hak voting dalam memilih anggota dewan direksi yang dinilai dapat bekerjasama dengan mereka, memiliki hak control terhadap operasional perusahaan, kemudian memiliki akses yang lebih luas untuk mendapatkan informasi internal perusahaan sehingga menurunkan information asymmetry dengan dewan direksi dibandingkan pemegang saham minoritas, dan memiliki kesempatan untuk terlibat dan berpartisipasi dalam pengambilan keputusan strategis perusahaan, serta melakukan pengawasan (monitoring) secara aktif terhadap kinerja dewan direksi atau manajer (Clay, 2002;Goldman & Wang, 2017;Muñoz-Bullon, Sanchez-Bueno, & Suárez-González, 2018;OJK, 2014;Rashed, Abd El-Rahman, Ismail, & Samea, 2018;Wardhana & Tandelilin, 2011;Wei, Wu, Li, & Chen, 2011). Keistimewaan tersebut menimbulkan dugaan yang kuat bahwa pemegang saham terbesar memiliki pengaruh terhadap inefisiensi perusahaan.…”

Family influence and firm performance: the mediating role of stewardship

“…Family involvement, in terms of ownership (percentage of family shares), management (family members on management team) and control (family members on the board of directors; together, these measures constitute the power dimension of F-PEC), is a basic condition for a family to exercise influence and sets a minimum threshold to define a family firm (Chrisman et al , 2005; Muñoz-Bullon et al , 2018). Yet family involvement by itself cannot establish a competitive advantage (or disadvantage) (Le Breton-Miller and Miller, 2013); only through interactions with the organization does it affect value (Chrisman et al , 2005).…”