Simulating Dynamic Capabilities and Value Creation in Family Firms

Abstract

The authors conduct a simulation study using system dynamics methods to interpret how and when paternalism affects dynamic capabilities (DCs) and by association value creation in family firms. Their simulation experiments suggest that the effect of paternalism on DCs and value creation varies over time. Initially, increasing levels of family social capital and low levels of paternalism are associated with high rates of DCs and value creation accumulation ( asset). Later, higher levels of paternalism produce their pressure to decrease DCs, value creation, and family social capital accumulation rates ( liability).

Value Creation and Performance in Private Family Firms

“…Although the task of developing reliable constructs and measures for assessing goals and performance of family enterprises must continue, two articles in this special issue demonstrate how some methods such as simulation experiments (Chirico, Nordqvist, Colombo, & Mollona, 2012) and narrative analysis (Dawson & Hjorth, 2012) that have not yet been employed in family business research can help accelerate the understanding of value creation across generations in privately held family enterprises.…”

“…Chirico et al (2012) use systems dynamics-a well-known simulation approach-to develop propositions for conditions when founder's paternalism (or excessive caring for others) acts as an asset or a liability for building financial value and social capital of family firms. Systems dynamics is particularly useful when the theoretical model involves interacting processes, circular causality or feedback loops (such as X influences Y, and Y in turn influences X), and time delays.…”

Tracing the Roots of Constructive Conflict Management in Family Firms

“…;Danes et al (1999);Kidwell et al (2012);Pieper et al (2013);Chirico et al (2012) Conflict managementCollaborative styles contribute to the achievement of family and business goals.Haberman and Danes(2007); Sorenson (1999); Spriggs et al (2012); Hedberg and Danes (2012); Jayantilal, Jorge, and Palacios (2016) Cooperation between family members promotes better intergenerational succession and innovation. Entrepreneurial couples, where partners maintain collaborative power interactions, are likely to adopt a productive business decision-making team.…”

2012

“…Research published in the September 2012 issue illustrates how other methods such as simulations (Chirico, Nordqvist, Colombo, & Mollona, 2012), content analysis (McKenny, Short, Zachary, & Payne, 2012), and narrative analysis (Dawson & Hjorth, 2012) can be effectively employed to deepen our understanding of performance of private family enterprises. Business historian Colli (2012) challenges researchers to think of performance as a plural rather than a singular construct.…”