Family control and influence on JV investment – the moderating effect of JV type and IC components

Abstract

PurposeThis paper aims to investigate the effect of the nature of ownership and board characteristics on the investment choices in joint ventures (JVs) from the dimensional point of view, controlling for the effect of JV type and other components of intellectual capital.Design/methodology/approachThe authors study a sample of Italian, Spanish, German and French nonfinancial listed firms over the 2010–2018 period, controlling for the fixed effects of the company's sector of operation and the year. The authors also analyze the effect of family control and influence on JV investment size, taking into consideration certain board characteristics, the type of JV, human capital efficiency, structural capital efficiency and capital employed efficiency while also controlling for a firm's profitability and size. To test the hypotheses, GLS panel data was used.FindingsThe results indicate that the size of the investment in JVs is smaller for family firms than for nonfamily businesses. The presence of CEO duality has an opposing effect on the size of the investment in joint ventures as it has a lowering effect in family businesses while it exerts an amplifier influence in nonfamily businesses. Moreover, the type of joint venture has a significant effect for family firms: the choice of a link joint venture reduces the size of the investment. The authors find that human capital efficiency increases JV investment size for all firms.Originality/valueThis study is the first to analyze the effect of the main dimension of socioemotional wealth – family control and influence – on a firm's JV investment size. It controls for the effect of JV type – link or scale – and the interplay of the other IC components.

Related party transactions and earnings management in family firms: the moderating role of board characteristics

“…, 2012). Family control and influence over the firm gives the family visibility and status (Gavana et al. , 2021).…”

“…The concept of SEW (G omez-Mej ıa et al, 2007(G omez-Mej ıa et al, , 2011, through its different dimensions, encompasses the various non-financial returns the family receives from exerting control over the firm (Berrone et al, 2012). Family control and influence over the firm gives the family visibility and status (Gavana et al, 2021). Organizations' social structure is characterized by the set of relationship among their members (Valeri, 2021, p. 4), and in family firms, relationships involve family members as well as non-family members (Miller et al, 2009).…”