Socioemotional wealth’s implications in the calculus of the minimum rate of return required by family businesses’ owners

Romero, Ma José Martínez; Ramirez, Alfonso A. Rojo

doi:10.1007/s11846-015-0181-9

Cited by 37 publications

(14 citation statements)

References 57 publications

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“…In these cases, firms did not want to make changes that might exclude these customers. This is in line with SEW considerations suggesting that family firms establish emotional ties toward their stakeholders, which are, although sometimes financially detrimental, not abrogated (Cennamo et al 2012;Romero and Ramírez 2017). Other incumbents had a younger customer base that was interested in technology, which helped them to try out innovative concepts -even though the performance of the new technology (e.g.…”

Section: Discussionsupporting

confidence: 76%

How can family businesses survive disruptive industry changes? Insights from the traditional mail order industry

2020

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The present study investigates how family firms respond to disruptive industry changes. We aim to investigate which factors prevent or support family firms’ adoption of disruptive innovations in their industry and which mechanisms lead to more or less successful coping with disruptive change. Our analysis is based on 24 qualitative interviews with top executives and on secondary data from an industry in which disruptive innovations dramatically changed the way business was generated. The industry in question is the mail order industry, which, in its early days, disrupted the retail business. When the Internet and, with it, ecommerce started to disrupt the industry in the late 1990s, the industry was characterized by a high proportion of family firms and a low level of innovativeness. While incumbent firms had been very successful for decades, most of them were confronted with serious turbulence when new entrants started changing the face of the industry. Our findings show that different factors impact reactions to disruptive industry change in two different phases, namely, opportunity recognition and opportunity implementation. While some of the influencing factors are determined by industry factors, family influence may function for better or worse for incumbent firms. Specifically, we find that in firms with a family disruptor, a family member in a powerful position who drives the adoption of the new technology, hindrances can be overcome and firms tend to show more successful strategies when reacting to the disruptive industry change.

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Section: Discussionsupporting

confidence: 76%

How can family businesses survive disruptive industry changes? Insights from the traditional mail order industry

2020

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“…Although socioemotional wealth, which is anchored at a deep psychological level among family owners, whose identity is inextricably tied to the organization (Berrone, Cruz, Gomez-Mejia, & Larraza Kintana, 2010), is typical in family-managed firms (Martínez-Romero & Rojo-Ramírez, 2015), it can vary considerably from one family firm to another (Berrone et al, 2012). In particular, not all types of executives have the same motivations and goals, and hence they may tackle technological innovation efficiency in a distinctive manner.…”

Section: Discussionmentioning

confidence: 99%

Technological Innovation Inputs, Outputs, and Performance

Diéguez‐Soto

Lizano

Ramirez

2016

Family Business Review

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The aim of this research is to study the moderating role of family management in the relationships between the intensity of research and development and the occurrence of continuous technological innovation and between the existence of technological innovation outcomes and long-term firm performance. The results show that family management reduces efficiency in the conversion of research and development expenses into technological innovation outcomes over time. Our findings also suggest that the influence of family management significantly contributes to improving the effect of the achievement of technological innovation on long-term performance.

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“…Finally, we used a cross-sectional design for our study. Although cross-sectional designs are currently standard practice (De Massis et al, 2018;Martínez-Romero & Rojo-Ramírez, 2017;Vandekerkhof et al, 2015), claims about causality cannot be sustained with this method. However, the use of an averaged value of the dependent variable over time further ensures that the direction of causality is from VDs to VC and that reversed causality can be ruled out.…”

Section: Limitations and Future Researchmentioning

confidence: 99%

“…Moreover, given that family firms are concerned not only with financial returns but also with noneconomic goals (Martínez-Romero & Rojo-Ramírez, 2017;Zellweger & Astrachan, 2008), management decisions are highly influenced by emotional considerations and socioemotional wealth (Berrone, Cruz, Gómez-Mejia, & Larraza-Kintana, 2010;Gómez-Mejia, Haynes, Núñez Nickel, Jacobson, & Moyano-Fuentes, 2007;Gómez-Mejia, Cruz, Berrone, & De Castro, 2011). By socioemotional wealth (SEW), Gómez-Mejia et al (2007) refer to "the non-financial aspects of the firm that meet the family's affective needs, such as identity, the ability to exercise family influence, and the perpetuation of family dynasty" (p. 106).…”

Section: Introductionmentioning

confidence: 99%

Value creation in privately held family businesses: The moderating role of socioemotional wealth

2019

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This article examines value creation (VC) in the context of privately held family businesses using a value‐based management approach. Namely, this paper assesses the influence of five value drivers (operating profit margin, sales growth, income tax rate, investment rate, and leverage) on the VC of family firms, considering the moderating effect of socioemotional wealth (SEW). Evidence from a sample of 188 Spanish family firms indicates a positive moderating effect of SEW on the relationship between operating profit margin, sales growth, and investment rate, and VC, leading to increases in the value of firms. The results emphasize that the importance of SEW and its variations imply heterogeneous strategic behaviours among family firms, and that economic and emotional goals might be compatible.

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Socioemotional wealth’s implications in the calculus of the minimum rate of return required by family businesses’ owners

Cited by 37 publications

References 57 publications

How can family businesses survive disruptive industry changes? Insights from the traditional mail order industry

How can family businesses survive disruptive industry changes? Insights from the traditional mail order industry

Technological Innovation Inputs, Outputs, and Performance

Value creation in privately held family businesses: The moderating role of socioemotional wealth

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