Family commitment and performance in private family firms: moderating effect of professionalization

Abstract

PurposeThe purpose of this research is to examine the interplay between family commitment as a family-centric resource and professionalization of the organization as a firm-centric resource to determine how the two phenomenon come together to enhance business performance in the context of privately held family firms.Design/methodology/approachDeploying the theoretical lens offered by the resource-based view, a conceptual link is developed between family commitment to the firm and firm performance with the potential moderating influence of firm professionalization. The hypotheses are tested using data collected from 357 privately held medium-to-large family-owned manufacturing companies in Bangladesh. The data are analyzed through structural equation modeling using SmartPLS (v.3.2).FindingsThe data analysis suggests that in absence of the moderator; professionalization, family commitment has a positive and significant association with firm performance. While in the presence of the moderator the above relationship is substantially stronger. The findings indicate that when family-specific resources and firm-specific resources are synchronized, it enhances performance of the family firm and puts it on a strong economic footing toward a more sustainable future.Research limitations/implicationsCross-sectional nature of the study exposes it to the specter of common method bias despite the fact that procedural remedies were initiated to minimize the impact of such occurrence. Furthermore, data were collected from a single individual in each organization. Therefore, a longitudinal study with data obtained from multiple individuals at different levels of the organization would possibly yield more robust findings.Practical implicationsLeaders of family firms may find pertinent clues from the outcome of this study. Particularly, the confluence of family commitment to the firm as a family-specific resource and professionalization as a firm-specific resource can be valuable, rare, difficult to imitate and substitute source of competitive advantage for the family business organization.Social implicationsSurvival of family businesses is vital to the global economy as one of the primary drivers of global gross domestic product growth and source of new employment. Policymakers can benefit from the findings of this study to customize policies to nurture growth of family enterprises and incentivize family firms to adopt professionalization through better governance and transparent managerial procedures.Originality/valueA nuanced understanding of how family commitment and firm professionalization combine to significantly improve performance of family firms has not been dominant in the literature. Therefore, findings of this study carry special theoretical implications, because it suggests that both family-specific features and firm-specific features are necessary for enhanced levels of firm-centric business outcomes such as economic performance.

Entrepreneurial strategies and family firm culture in the Arab world: a systematic literature review

“…, 2020; Herrera and de las Heras Rosas, 2020), conflicts in family businesses (Soleimanof et al. , 2018; Razzak et al. , 2021), family entrepreneurship and culture (Leal-Rodríguez et al.…”

“…As a result, understanding what a family business is essential. Various definitions of family businesses have evolved in recent years, but there has yet to be a clear consensus on what constitutes a family business (Razzak et al. , 2021).…”

“…Previous researchers conducted literature reviews to examine different disciplines in the scientific area of family businesses, such as family business goals and organizational culture behavior (Vallejo-Martos, 2011;Gupta and Levenburg, 2012;Vallejo, 2016;Alaya et al, 2017;Litzky et al, 2020), familiness and business strategy (Basco, 2015;Basly, 2017;Kumar et al, 2021), family business structure (Pucci et al, 2017;Fathallah et al, 2020;Herrera and de las Heras Rosas, 2020), conflicts in family businesses (Soleimanof et al, 2018;Razzak et al, 2021), family entrepreneurship and culture (Leal-Rodr ıguez et al, 2017;Randerson et al, 2020), and the innovation process in family businesses (Roffia et al, 2021;Alves et al, 2020).…”

“…Consequently, we assert that the distinguishing characteristics of Arab clans are precisely those that would provide competitive advantages and protection from competitive pressures, hence ensuring the long-term viability and prosperity of family companies in the region (Alaya et al. , 2017; Razzak et al. , 2021).…”

Effects of ethnicity and gender on ethically driven small business performance

“…Hispanic American females tend to experience positive results upon starting a business when they are part of a collectivist group (Zarzosa, 2019). A past study JSBED 29,7 (Ruzzak et al, 2021) noted -"when family-specific resources and firm-specific resources are synchronized, it enhances the performance of the family firm and puts it on a strong economic footing toward a more sustainable future." Although, a study (Liñ an et al, 2016) suggests that people with more individualistic values show higher entrepreneurial intentions than those with lower levels of individualist values.…”