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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Is It Better to Govern Managers Via Agency or Stewardship?

[We’re pleased to welcome author Albert E. James of Dalhousie University, Canada. James recently published an article in the Family Business Review entitled “Is It Better to Govern Managers via Agency or Stewardship? Examining Asymmetries by Family Versus Nonfamily Affiliation,” which is currently free to read for a limited time. Below, James reflects on the inspiration for conducting this research:]

fbra_30_2.coverThe research is based upon the first author’s dissertation. It is the result of his effort to understand the many different behaviours and outcomes that he witnessed during his 20-year career working as a non-family employee for various family firms—particularly his desire to understand why and how some families’ businesses seem to be more successful than others. It is also the result of a PhD supervisor’s determination to see her student succeed as an academic and her willingness to let him follow his passion and research questions.

The most challenging aspect of this process has been finding the way to tell the story of the research project. What is published here is the result of many re-writes, iterations, and direction changes. It was challenging to adapt concepts and measures to the particularities of the family business field. And it was challenging to make full use of the reviewers’ and editor’s advice. All in all, though, the challenges were an opportunity for a new academic to learn many things about rigorous research and publishing. Without the patient work, extensive knowledge and leadership of the co-authors, none of the challenges would have been overcome.

One of the study’s most surprising findings is the high level of positive work outcomes exhibited by both the family and non-family managers in the sample. Sometimes family business managers—of either type—are portrayed with at least a hint of negativity. Those in our sample, however, tended to score highly on behaviours and attitudes that are normally considered beneficial to organizations (i.e., job performance, organizational identification and affective commitment). As for the anticipated impact of our research, we hope that it will become known for providing empirical evidence that challenges commonly held assumptions regarding the attitudes and behaviours exhibited by non-family versus family managers and the mechanisms by which each group should be governed.

The advice I would give new scholars is to be willing to re-work the story you wanted to tell to your chosen audience. No matter how interesting you believe your research to be, you have to be willing to find the right way to tell the story. You need to tell the story in a way that fits your audience’s conversations. It is not easy to let go of parts of your research that were highly motivational for you. As hard as it is upon a first read, don’t take the reviewer and editor comments personally. Instead, take your time with the comments, let your reactions cool, and then find the nuggets and gems within them. Don’t be afraid to ask for help. This research started off as a study of non-family manager turnover intentions and became a story of the governance mechanisms used in family businesses. It is important to keep your eye on your end goal. If you can’t tell the entire story this time around, tell what you can, save the rest, add what you learned from the current round, and mix it into your next project.

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Read the December Issue of Family Business Review Free for 30 Days!

[We’re pleased to welcome Family Business Review editor Pramodita Sharma of the University of Vermont.]

The December 2014 issue of Family Business Review presents research from FBR_C1_revised authors color.inddColombia, Germany, Taiwan,and USA focused on various aspects of finance pertaining to family enterprises. Topics studied include financing and investment choices of family firms, dividend policies, post IPO performance. The editorial discusses the challenges and opportunities of publishing finance focused research in management journals such as Family Business Review, and vice versa. It is our hope that this important issue will help build further inroads in the important disciplinary interface between finance and family business studies.

You can read the December issue of Family Business Review free for the next 30 days! The lead article entitled “Family Involvement and Post-IPO Investment Policy” was authored by Bharat A. Jain and Yingying Shao, both of Towson University.

The abstract:

Drawing from agency theory and socioemotional wealth considerations, we evaluate the extent post-IPO investment policy choices and their economic consequences differ for family firms relative to nonfamily firms. Our results suggest that family firms underinvest in post-IPO liquidity, total investment spending, and R&D expenditures, relative to similar non-family firms. On the other hand, family firms overinvest in capital spending and underinvest in acquisition spending relative to nonfamily firms with dispersed but not concentrated ownership structures. Furthermore, while increases in R&D spending decrease shareholder value in family firms, the reverse is the case with acquisition spending.

Click here to view the Table of Contents for the December Issue! Want to know about all the latest news and research from Family Business Review? Click here to sign up for e-alerts!