Does concentration of ownership and family control affect specialisation/diversification business strategies?

Diversification of the family business in emerging countries from the perspective of socio-emotional wealth. Literature Review

“…The search returned a total of 38 (thirtyeight) papers. First off, research conducted in countries categorized as developed by Morgan Stanley Capital International were dismissed: Germany (Kraus, Mensching, Calabró, Cheng, and Filser, 2016;Cesinger, Hughes, Mensching, Bouncken, Fredrich, and Kraus, 2016;Schmid, Ampenberger, Kaserer, and Achleitner, 2015); United States (Essen, Carney, Gedajlovic, and Heugens, 2015;Memili, Fang, and Welsh, 2015;Campbell, Eden, and Miller, 2012); Austria (Wąsowska, 2017); United Kingdom (Wang, 2016); Australia (Ratten, Ramadani, Leo-Paul, Hoy, and Ferreira, 2017); Spain (Hernández-Trasobares and Galve-Górriz, 2015, 2017Muñoz Bullon and Sánchez Bueno,2012); Italy (Pongelli, Caroli, and Cucculelli, 2016;Delbufalo, Poggesi, and Borra, 2016;Laffranchini and Braun, 2014;Majocchi and Strange, 2012); sample of Western European countries (Banalieva, Eddleston, and Zellweger, 2015); Singapore (Scholes, Mustafa and Chen, 2016). In the end, only 18 (eighteen) studies were identified within the established conditions, reflecting the embryonic state of the research within the framework of the three axes proposed in this work: diversification of the family business -unstable business environment-socioemotional perspective.…”

“…Emphasizing on ownership, this framework assumes that owners and managers, or the agents of an organization, are driven by the opportunity to obtain personal benefits; in this way, they lead to the emergence of agency conflicts based on different interests and risk preferences (Jensen and Meckling, 1976). Notwithstanding, in the particular case of family businesses, the concentration of ownership has a positive impact on the reduction of tensions by enabling the alignment of family interests among its members (Schulze, Lubatkin, Dino, and Buchholtz, 2001;Miller, Le Breton-Miller and Lester, 2010;Hernández Trasobares and Galve-Górriz, 2015), so that possible resistance would be mainly tied to the different modes of family participation (Schulze et al, 2001;Songini and Gnan, 2015). Regarding the subject of this review, this theory has allowed us to explain: a) that a closed-family ownership structure becomes a restriction for business diversification, so these companies diversify less than non-family ones (Gómez-Mejía et al, 2007;2010;Miller et al, 2010;Schmid et al, 2015;Delbufalo et al 2016; Hernández Trasobares and Galve Górriz, 2015; 2017); b) a positive relationship between family ownership and non-economic objectives, even greater in the case of those firms in the hands of their founders (Berrone et al, 2012;Zellweger, Kellermanns, Chrisman, and Chua, 2012;Kotlar et al, 2014;Miller and Le Breton Miller, 2014;Memili et al,2015;Kavadis and Castaner, 2015;Schulze, 2016).…”

The Role of Social Network in Family Business Diversification: Evidence from South Eastern Nigeria

“…Moreover, the results found in the literature regarding social network and business diversification are not conclusive. This is due to the various ways diversification has been conceptualized, measures used (Benito, Guerras-Martin, & Zuniga, 2012;Hernández-Trasobares & Galve-Górriz, 2015;Martin & Sayrak, 2003), and the type of businesses studied (i.e., family or non-family) (Ducassy & Prevot, 2010;Hernández-Trasobares & Galve-Górriz, 2015). Researches that have considered the type of family business diversification (related or unrelated) are few (Anderson & Reeb, 2003;Gomez-Mejia, Makri, & Kintana, 2010;Jones, Makri, & Gomez-Mejia, 2008).…”

“…Unrelated diversification increases a focal firm's market power and internal capital market benefit. Hence, it reduces the likelihood of bankruptcy and income variability (Shackman, 2007;Hernández-Trasobares & Galve-Górriz, 2015). It is employed by managers to satisfy personal interests, reduce firm-specific risk and obtain higher income and greater prestige rather than shareholder utility and the firm's value (Denis, Denis, & Sarin, 1997;Markides & Williamson, 1994).…”

“…Studies on diversification largely focused on the measurement of business diversification (Ducassy & Prevot, 2010;Hernández-Trasobares & Galve-Górriz, 2015), the relationship between diversification and business performance, the determinants of diversification (Anderson, Mansi, & Reeb, 2007;Chen & Yu, 2011;George & Kabir, 2012;Villalonga, 2004;Villalonga & Amit, 2006) and the effect of ownership structure on business diversification (Gourlay & Seaton, 2004;Ramaswamy, Li, & Veliyath, 2002;Zhang & Li, 2006). Other studies have also focused on the "extent" of diversification (i.e., less or more diversification), the "directions" (i.e., related or unrelated), and the "mode" (i.e., diversification via internal expansion or diversification via mergers and acquisitions of firms) (Hernández-Trasobares & Galve-Górriz, 2015).…”