Research Gaps in Family Owned Businesses: Conceptual Link Between Socioemotional Wealth, Family Commitment and Firm Performance

Razzak, Mohammad Rezaur; Mustamil, Norizah Mohd; Bakar, Raida Abu

doi:10.1504/ijbex.2019.10017983

Cited by 2 publications

(8 citation statements)

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“…Family commitment is not a complex issue to comprehend, but the decision by any individual related to such life-long commitment to an organization may create individual uncertainty and stress (Carlock and Ward, 2001;Hatak et al, 2016;Razzak et al, 2018). Family members usually have to balance between their commitment to the family members who own the firm and their immediate family who may not be directly involved in ownership.…”

Section: Family Commitmentmentioning

confidence: 99%

“…Therefore, family members that choose not to commit to the family enterprise may feel that their bond with the rest of the family is likely to get weaker due to their lack of active participation. In cases where strongest links to the family is through the family firm, such individuals may be reluctant to terminate that relationship even if it does not fall in line with their life pursuits, or they feel that it is not in their best long-term interest (Razzak et al, 2018). Therefore, it is vital for family business leaders to assure family members outside this circle that they are still very much a part of the family.…”

Section: Family Commitmentmentioning

confidence: 99%

“…Some studies suggest that the above link is mostly likely mediated by pertinent variables that reflect collective behavior of family firm owners, such as family commitment (e.g. Razzak et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

“…Surprisingly, except for a few studies (e.g. Hatak et al, 2016;Razzak et al, 2018;Zahra et al, 2008), this important construct has been more or less overlooked in prior empirical works especially in efforts to discern the linkage between SEW and firm performance. Yu (2009) while investigating dependent variables in family business research deployed an expert panel comprising of 30 prominent authors in family business studies to rank the most important variables in family business research that warrant further investigation.…”

Section: Introductionmentioning

confidence: 99%

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Socioemotional wealth and performance in private family firms

Razzak

Jassem

2019

JFBM

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Purpose Although family business literature acknowledges that family firms owners are motivated by a set of socioemotional wealth (SEW) goals along with firm-centric business goals, yet a consistently predictable pattern of relationship between SEW and financial wealth is yet to be discerned. The purpose of this paper is to propose a theoretical model based on the stakeholder approach to suggest that family commitment mediates the association between the dimensions of SEW and firm performance. Design/methodology/approach A set of hypotheses are proposed that are tested using structural equation modeling with data collected from 357 medium to large sized privately held family firms in Bangladesh. The data analysis is done with SmartPLS (v.3.2). Findings The results indicate that family commitment partially mediates the relationships between family control and influence, family identification, emotional attachment and renewal of family bonds through dynastic succession and firm performance. The only non-significant relationship was between binding social ties and firm performance. The results provide a more nuanced understanding of the link between SEW goals and firm performance, and present important implications for theory and practice. Research limitations/implications The cross-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. A longitudinal study with data obtained from multiple individuals at different levels of the organization would possibly yield more robust findings. Furthermore, in the absence of a multi-country and multi-sector analysis, a broad generalization of the findings may not be feasible. Practical implications The knowledge that family identity, emotional attachment and renewal of family bonds through dynastic succession may be leveraged to enhance the commitment of subsequent generation of family firm owners to the firm that may be pertinent to incumbents who desire to see their successors more engaged in the family enterprise. Furthermore, knowing that excessive focus on family control over the firm leads to negative outcomes is also pertinent to family firm leaders. Social implications Survival of family businesses is vital to the global economy as one of the primary drivers of global GDP growth and source of new employment. Policy makers can benefit from the findings of this study to customize policies that take into cognizance the importance of SEW owners of family firms and the fact that some of these SEW goals actually benefit the firm in terms of enhanced commitment to the enterprise and consequently superior firm performance. Originality/value The role of family commitment as a mediator between SEW and firm performance has not been dominant in the literature. By providing a finer-grained understanding of how family commitment accounts for the relationship between family-centric non-economic goals such as SEW and firm-centric goals such as business performance, the study presents a theoretical link between sociomemotional wealth and financial wealth in the context of private family firms.

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Section: Family Commitmentmentioning

confidence: 99%

Section: Family Commitmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Socioemotional wealth and performance in private family firms

Razzak

Jassem

2019

JFBM

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“…This behavior basically translates to the notion that owners of family businesses view their firms as a family institution rather than an expendable instrument , and such a view should inhibit behavior that generates sound managerial strategies that positively impact firm performance. Therefore, it may be stated that a family's willingness to commit resources, time and effort to the firm suggests that the interests and the values of both the family and the business organization are aligned by a collective vision that will lead to positive firm-centric outcomes, implying that such family commitment should be positively associated with the firm's performance goals (Razzak et al, 2020).…”

Section: Linking Family Commitment To Firm Performancementioning

confidence: 99%

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

Razzak

Jassem

Akter

et al. 2021

JSBED

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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.

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Research Gaps in Family Owned Businesses: Conceptual Link Between Socioemotional Wealth, Family Commitment and Firm Performance

Cited by 2 publications

References 0 publications

Socioemotional wealth and performance in private family firms

Socioemotional wealth and performance in private family firms

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

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