Summary of – Promoting Organizational Diversity and Preserving Socioemotional Wealth: Can Family Businesses Balance the Two?
Document Type
Article
Abstract
Family businesses play a significant role in many economies, particularly in emerging markets like India. A key characteristic of these firms is their focus on preserving socioemotional wealth, which encompasses non-financial aspects of the firm that meet the family's affective needs, such as identity, influence, and dynastic succession. However, in an increasingly globalized business environment, family firms face pressure to pursue growth strategies that may potentially conflict with socioemotional wealth preservation.
Research Goals and Hypotheses
The authors investigate how organizational diversity, captured through heterogeneity in ownership structure, diversity in the senior management team, interfaces with the concept of the socioemotional wealth of family businesses in an emerging economy, when these firms pursue inorganic growth strategies.
Methodological Approach
Drawing on the concepts of socioemotional wealth, behavioural agency theory and bifurcation bias, the authors develop perspectives on how ownership structure, family influence in executive management and institutional shareholding influence a family firm's internationalization strategies captured through propensity to pursue cross-border M&A – an activity that may threaten the preservation of socioemotional wealth. The authors also explore the role of business group affiliation, another organizational diversity construct, and contingent parameters like past financial performance and export intensity in this study. The authors take pooled data over 15 years, involving 346 large firms from India, which are family-controlled, to carry out the study.
Results and Discoveries
The authors’ empirical analysis shows that family stakes in the company and family member's presence in the executive team negatively influence the propensity to pursue cross-border M&A activities. A firm's affiliation to a business group moderates these negative relationships. On the other hand, the presence of institutional shareholders, positive past financial performance and export intensity positively influence cross-border M&A propensity.
The results establish that family businesses' attempts to preserve socioemotional wealth may come at the cost of promoting organizational diversity.
Citation to the base paper:
Das, A. (2022), "Promoting organizational diversity and preserving socioemotional wealth: can family businesses balance the two?" Journal of Family Business Management, Vol. 12 No. 4, pp. 653-678. https://doi.org/10.1108/JFBM-06-2021-0060
Publication Date
2022
Recommended Citation
Das, A. (2022), "Promoting organizational diversity and preserving socioemotional wealth: can family businesses balance the two?", Journal of Family Business Management, Vol. 12 No. 4, pp. 653-678. https://doi.org/10.1108/JFBM-06-2021-0060
Publication Date
2022
Recommended Citation
Das, Arindam, "Summary of – Promoting Organizational Diversity and Preserving Socioemotional Wealth: Can Family Businesses Balance the Two?" (2022). Open Access archive. 9364.
https://impressions.manipal.edu/open-access-archive/9364
