Listening to the Heart or the Head? Exploring the “Willingness Versus Ability” Succession Dilemma

[We’re pleased to welcome authors Melanie Richards of University of Bath, Nadine Kammerlander of WHU–Otto Beisheim School of Management, and Thomas Zellweger of the University of St. Gallen. They recently published an article in the Family Business Review entitled “Listening to the Heart or the Head? Exploring the “Willingness Versus Ability” Succession Dilemma,” which is currently free to read for a limited time. Below, they reflect on the influences and possible impact of this research:]

What motivated you to pursue this research?

When talking to entrepreneurs, we increasingly realized that finding a willing and able successor from the family was often a challenge. Often, the incumbents reported about very capable children who were, however, not willing to take over the business but wanted to start a different career. In other cases the successors showed willingness, but lacked the ability, according to their parents. Thus, we started to wonder whether willingness or ability was more important to the incumbents.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

In the year 2019, succession is generally not considered a “hot topic” – neither in academia nor in the public press. Yet it is of utmost relevance. Each year, tenthousands of small- and medium-sized (family) business are up for succession in Germany and Switzerland only. Those businesses are the backbone of our economy, they provide a large number of job positions and trainee jobs. Hence, keeping them up and alive should be of interest not only for incumbents, but also for politicians and basically everyone interested in the continued prosperity of the economy. As such, I find it particularly important to understand how successor decisions and succession decisions are made. I hope that our study on successor preferences makes it clear that there are many important research gaps left in the field of succession and that they are worth being closed.

In what ways is your research innovative, and how do you think it will impact the field?

In this study, we provided a scenario – or case vignette – to the respondents of our study. That is, we describe a specific retirement situation and availability of succession candidates to them and ask them whom they would choose. Such survey based “policy capturing” has several advantages over traditional, questionnaire-based research asking for past successions or asking for intentions. The big advantage is that we can really learn about preferences here, which are undistorted by the specific situation of the entrepreneur. Thus, they help us to build up a better conceptualization and theorizing of how the entrepreneurs make sense and decide.

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A Different Perspective on the Nonfamily vs. Family CEO Debate

[We’re pleased to welcome authors Rüveyda Kelleci of Hasselt University, Frank Lambrechts of Hasselt University, Wim Voordeckers of Hasselt University, and Jolien Huybrechts of Maastricht University. They recently published an article in the Family Business Review entitled “CEO Personality: A Different Perspective on the Nonfamily Versus Family CEO Debate,” which is currently free to read for a limited time. Below, they reflect on the inspiration for conducting this research:]

What motivated you to pursue this research?

Current family business research on family firm CEOs has mainly focused on the characteristic of “family kinship” to explain the differences and the performance effects of nonfamily vs. family CEOs; however, such research has neglected other aspects of CEOs that may better explain their behavior. Indeed, we argue that the strategy and success of the family firm critically depends on the leadership behavior of the firm’s CEO, which is largely driven by CEO personality. Given that CEO personality has been largely unexplored in the family business domain, we wanted to address this substantial knowledge gap. Therefore, based on a unique, hand-collected dataset, we examined the personality traits of nonfamily and family CEOs in privately held Belgian family firms.

In what ways is your research innovative, and how do you think it will impact the field?

Our research is one of the only studies to empirically examine the very hard to come by data on personality of family firm CEOs. Therefore, our study can serve as a foundation for future research in this unusual, yet important area. We offer a fresh new perspective on the debate about nonfamily vs. family CEOs and thereby alter the way in which differences between the two CEO types are commonly viewed. We argue that family kinship alone cannot fully explain or predict the differences between nonfamily and family CEOs and that we must incorporate their personalities. We find significant differences between nonfamily and family CEOs with regard to nine personality traits: independent minded, democratic, data rational, behavioral, detail conscious, conscientious, relaxed, worrying, and trusting. The findings suggest a very balanced personality profile for nonfamily CEOs and a rather strong-willed personality for family CEOs. Our findings also reveal several personality traits of nonfamily CEOs that are significantly associated with firm financial performance. Surprisingly, for family CEOs, we find no such indications. Moreover, our results call into question some assumptions in the literature about how family CEOs and nonfamily CEOs differ and provide a deeper understanding of prior work. We hope our study will become an important springboard for future research on CEO personality in family firms.

What advice would you give to new scholars and incoming researchers in this particular field of study?

One approach to advance our knowledge of family firm CEOs is to integrate family business research with insights from research on personality. This can help family business scholars to deepen and/or question current assumptions and predictions about differences in behavior between family and nonfamily CEOs. Moreover, as prior research has found that the success of the family firm reflects CEO personality, we argue that a deeper understanding of the personality traits of CEOs in family firms will further the debate on the conduct and performance of family firms. The findings of our study provide numerous fruitful avenues for future research.

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September Issue of Family Business Review!

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We are pleased to announce the September Issue of Family Business Review (FBR) is now available and free to read through the end of September!

Check out the editorial, in which Senior Associate Editor Donald O. Neubaum discusses the domain of family business research and offers suggestions to future scholars.

Given the fact that FBR is only in its 31st year of publication, the field of family business research is relatively young compared with other disciplines within business. However, interest in family business research is growing at a phenomenal rate as, on average, almost 900 research articles on family business have been published every year since 2010 (which greatly exceeds the 30 and 230 articles written on average, per year, in the 1980’s and 1990’s, respectively). The variety of special issues in journals from disciplines outside of family business is further evidence of the widespread interest of other business scholars in family business phenomena. In fact, our discipline has had a long history of reaching out to scholars in disparate fields, as witnessed by special issues early in FBR’s existence on philanthropy in family foundations (1990), women in family businesses (1990), and international business (1991).

 


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To learn more about the journal, visit FBR’s homepage!

FBR is accepting Special Issue Proposals to be published in 2020!


 

Family photo attributed to Free-Photos.

Do Family Firms Have a Trust Advantage?

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[We’re pleased to welcome authors Dr. Susanne Beck of LBG Open Innovation in Science Center and Dr. Reinhard Prügl of the FIF@Zeppelin University, Lake Constance, Germany, who recently published an article in Family Business Review entitled, “Family Firm Reputation and Humanization: Consumers and the Trust Advantage of Family Firms Under Different Conditions of Brand Familiarity,” which is currently free to read for a limited time. Below, they reflect on the significance of the article.

fbra_30_2.coverWhat motivated you to pursue this research?

Authors: Observing an increasing number of publications using fictitious brands, we were asked by family entrepreneurs if the discovered trust advantage of family firms holds true for brands consumers are already familiar with. As we did not have an answer for this question and did not find any literature talking to that question we started this research project.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

Authors: As already mentioned above, this research was primarily triggered by extensive discussions with different family entrepreneurs. Furthermore, as family firms are the dominant organizational form in almost all economies around the world, and as we do not fully understand yet how the perception of this governance structure affects major stakeholder groups, we decided to contribute to explore and better understand the underlying dynamics.

What has been the most challenging aspect of conducting your research? Were there any surprising findings?

Authors: It was a really challenge to find companies willing to let us use their real brands for our studies. Furthermore, it was not easy to integrate four studies into one single paper. Nevertheless, we received great guidance throughout the process from our Editor Allison Pearson which finally made it possible to solve the riddle successfully. The biggest surprise on our side was two-folded: a) that the trust advantage and its consequences on purchase intention remain for real and familiar brands, and b) the discovery of a stronger “humanization” of the brand as a major underlying reason for the existence of the trust advantage of family firms.

In what ways is your research innovative, and how do you think it will impact the field?

Authors: We think that we are able to contribute by a) finding evidence for the trust advantage of family firms even if stakeholders (in our case consumers) are already familiar with the brand, and b) by discovering “humanization” of the brand as a central mechanism explaining the trust advantage ascribed to family firms. By that we hope to bring forward the interesting field of family business branding, furthering our understanding of its antecedents and consequences based on theoretical reasoning and empirical evidence.

What did not make it into your published manuscript that you would like to share with us?

Authors: In the end and thanks to great guidance from the editorial side we were able to include all four studies into a mixed-methods design. This was challenging but the result is very satisfying.

What advice would you give to new scholars and incoming researchers in this particular field of study?

Authors: Join in! There are lot of things to discover in the field of family business brands. As a start there are several review papers we would recommend: Beck, 2016; Binz Astrachan, Botero, Astrachan, & Prügl, 2018; and Sageder, Mitter, & Feldbauer-Durstmüller, 2018 are great starting points to quickly dive into the topic. Furthermore: just e-mail us, we are ready to discuss upcoming questions with you

What is the most important/ influential piece of scholarship you’ve read in the last year?

Authors: That is a VERY difficult question as there are so many interesting pieces out there. What we definitely would recommend: reading literature from different and seemingly unrelated areas, for example in the topic of this paper it helped us a lot to read the literature from of course family business, but also marketing, management, psychology, economics, or experimental methods.

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Handshake Photo attributed to Free-Photos (CC)

March Issue of Family Business Review

Read the March Issue of the Family Business Review, and stay up to date with the latest research on Family Business and Family Firms.
fbra_30_2.coverFamily Business Review (FBR) a refereed journal published quarterly since 1988, is a scholarly publication devoted exclusively to the exploration of the dynamics of family-controlled enterprise, including firms ranging in size from the very large to the relatively small.

To read more about the issue click here.

To contribute to the scholarship please visit the submissions page.

 

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A Reflection by David Jiang on “More Than Meets the Eye”

[We’re pleased to welcome authors David S. Jiang of Georgia Southern University, Franz W. Kellermans of the University of North Carolina at Charlotte, Timothy P. Munyon of the  University of Tennessee, and M. Lane Morris of the University of Tennessee. They recently published an article in the Family Business Review entitled “More Than Meets the Eye: A Review and Future Directions for the Social Psychology of Socioemotional Wealth,” which is currently free to read for a limited time. Below, Dr. Jiang reflects on the inspiration for conducting this research:]

fbra_30_2.coverThis research is based on the first author’s dissertation, which is a winner of the Family Firm Institute’s 2017 Best Dissertation Award. The article reviews 421 papers published across 25 journals during the past decade to propose new directions for the social psychology of socioemotional wealth (SEW), which is a popular concept and theoretical perspective in the family business literature that deals with the nonpecuniary benefits that family members derive from control over their family firm.

What motivated you to pursue this research?
SEW research has helped significantly advance the family business literature since Luis Gomez-Mejia and colleagues first introduced SEW in 2007. However, although SEW research has already done a lot for the literature, we also believe that it can do so much more. Motivated by these beliefs, we originally spent 2 years (2014-2015) in the review process at the Academy of Management Review (AMR) trying to outline the emotional aspects of SEW, only to have our work rejected in the last round on a split editorial team decision. After this rejection, we realized that what we really needed to do was review the SEW literature in ways that would first establish a foundation to understand the many psychological phenomena that fit within SEW research. This is why we are thrilled to have our work on this subject published in Family Business Review (FBR) – a high-quality outlet that can help further the psychological understanding of various SEW phenomena and outcomes.

What has been the most challenging aspect of conducting your research?
We think that the most challenging aspects probably came from the review process. We were trying to say something that was connected to but very different from what existing SEW research has already said and/or done. Naturally, it’s often difficult to seamlessly communicate novel ideas in ways that reviewers will immediately understand with a first draft. Recognizing this, after we received feedback from the first round of FBR reviews, we realized that we had to extensively change our analytical strategy and approach in order to be as comprehensive as possible. This way, we could address the reviewers’ many concerns while still maintaining our core message and contributions. Although our original submission to FBR reviewed 41 SEW articles, as can be seen in the published article, our final sample included 421 articles. Altogether, it was extremely challenging to increase the review’s scope by more than ten-fold in a 3-month revision window! Needless to say, the first author spent a lot of late nights culling through the expansive SEW literature to create an action plan that utilized the authorship team’s collective strengths and expertise.

How do you think your research will impact the field?
It is difficult to tell at first but we hope that our article will ultimately help build stronger family firm microfoundations. We think there are a lot of novel directions that SEW and broader family firm research could go from here and hope that other scholars will agree and join us in these pursuits!

 

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Family Constitution and Business Performance: Moderating Factors

[We’re pleased to welcome authors Rocio Arteaga and Susana Menéndez-Requejo of the University of Oviedo, Spain. They recently published an article in the Family Business Review entitled “Family Constitution and Business Performance: Moderating Factors,” which is currently free to read for a limited time. Below, they reflect on the inspiration for conducting this research:]

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What motivated you to pursue this research?

Family Constitution is a relevant instrument that is used in practice for facilitating the continuity of family businesses. Nevertheless few academic studies have studied Family Protocols, due to the difficulty in obtaining pertinent information at both the aggregate and company levels.

However, Spain is characterized by an above-average implementation of Family Protocols and the prominent development of institutions that are linked to family businesses. The Family Business Institute of Spain (www.iefamiliar.com) is an important international leader regarding initiatives such as the Network of Family Business Chairs that exists throughout the Spanish university system and the Family Business Regional Associations that are present and active in every region in Spain.

In what ways is your research innovative, and how do you think it will impact the field?

We performed in-depth interviews with expert consultants who specialize in Family Constitutions to grasp primary components of a Family Constitutions. We have also analyzed a unique sample of 530 Spanish family businesses. Half of these firms received financial aid from the government to implement a Family Protocol during 2003-2013.

We present possible explanations to expect a positive relationship between Family Constitutions and future firm performance, primarily linked to its ability to reduce conflicts among family, shareholders and managers. We specifically explore the improvement in monitoring managers and firm professionalization, the improved alignment between firm owners that shareholder agreements entail, and the communication and transparency between family members that Family Constitutions foster.

We expect that this research promotes that business families engage in the complex and lengthy communication and agreements process of Family Constitutions with determination. Even during times of economic crisis, we observed that companies that had implemented a Family Protocol reported higher levels of firm performance growth.

We also expect that this article encourages family firm scholars to develop future studies regarding the topic of Family Constitutions.

What did not make it into your published manuscript that you would like to share with us?

A Family Protocol is the result of a process of communication and agreements among owners of a family business that are collated in a written document that includes a set of rules and procedures for governing family business relationships and is signed and ratified by each family member.
Family Constitutions address the firm history, the future vision of the family firm, include norms and rules for family members regarding their incorporation into the business, succession planning, shareholder agreements (transfer of shares, dividends, firm valuation), and develop power structures in the firm and the family in regard to the company (Board of Directors, Family Council). Protocols improve and channel communication, information (also prior to decision-making) and transparency among family members who are in some manner linked to the firm and guide future generations. Family Constitutions contribute to improving the coexistence and cohesion of family generations that are linked to the firm.

We observe that family businesses that implemented a Family Constitution had significantly improved performance within 2 years after the implementation. This positive relationship between the implementation of a Family Constitution and future firm performance is stronger for firms that had a nonfamily CEO, had multiple family owners, or were controlled by later generations.

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