Socioemotional Wealth and Entrepreneurial Orientation in Different Family Businesses' Generational Stages.
| Autor | Mucci, Daniel Magalhaes |
| Cargo | Research Article |
INTRODUCTION
Although entrepreneurial orientation (EO) has been extensively discussed in the strategic management literature since the early 80s, in the family business literature, it has been treated as an emerging stream with recent studies investigating the antecedents and consequences of EO in family businesses (e.g., Hernandez-Linares & Lopez-Fernandez, 2018). EO is one of the primary relevant constructs of the corporate entrepreneurship domain (e.g., Covin, Green, & Slevin, 2006; Miller, 1983). For instance, corporate entrepreneurship might comprise product and process innovation strategies and the search for new markets (Covin et al., 2006; Miller, 1983). Rauch, Wiklund, Lumpkin, and Frese (2009) define EO as "the strategy-making processes that provide organizations with a basis for entrepreneurial decisions and actions." (Rauch, Wiklund, Lumpkin, & Frese, 2009, p. 762). Based on the strategic posture of entrepreneurship, the concept of EO is deployed in some dimensions such as innovativeness, proactiveness, and risk-taking (Covin & Slevin, 1991; Covin & Wales, 2012; Miller, 1983), which have been debated as antecedents for business performance, longevity, and growth (e.g., Lumpkin & Dess, 1996; Rauch et al., 2009; Soares & Perin, 2020).
The shreds of evidence about EO antecedents and consequences in the family firm's domain have been controversial (e.g., Hernandez-Linares & Lopez-Fernandez, 2018; Naldi, Nordqvist, Sjoberg, & Wiklund, 2007; Zellweger, Nason, & Nordqvist, 2012). On the one hand, family firms might be less entrepreneurial than non-family firms since family managers are risk-averse toward preservation of their affective needs (Berrone, Cruz, & Gomez-Mejia, 2012; Gomez-Mejia, Cruz, Berrone, & Castro, 2011) and also might not be willing to share control and decisions with non-family members, and in that sense will lack in skills and competencies required to enable entrepreneurial practices (Gomez-Mejia et al., 2007; Naldi et al., 2007). On the other hand, in family firms, managers usually have a higher level of discretion and more extended periods in their positions, which provides a context aligned with nurturing altruistic values, patient capital actions, and stewardship behaviors, which benefit entrepreneurial actions (Lumpkin, Brigham, & Moss, 2010; Mucci, Frezatti, Jorissen, & Bido, 2020; Schulze, Lubatkin, Dino, & Buchholtz, 2001; Sirmon & Hitt, 2003).
Considering these controversies, it becomes relevant to investigate what characteristics drive EO in family firms since EO does not emerge automatically (Covin & Slevin 1991; Ling, Lopez-Fernandez, Serrano-Bedia, & Kellermanns, 2019). Therefore, recent studies have focused on business and family firm characteristics to uncover EO's antecedents. In the general management literature, a set of EO and entrepreneurial behavior determinants have been investigated, such as size, organizational structure, strategy, among other factors (e.g., Hashimoto & Nassif, 2014; Lumpkin & Dess, 1996; Wales, Gupta, & Mousa, 2013). Concerning the family firm particularities, prior studies provide evidence about the antecedents of EO such as family involvement in ownership, management, and governance (e.g., Bauweraerts & Colot, 2017; Casillas, Moreno, & Barbero, 2011; Miller & Le Breton-Miller, 2011; Sciascia, Mazzola, & Chirico, 2013; Stanley, Hernandez-Linares, Lopez-Fernandez, & Kellermanns, 2019), generational involvement (Cruz & Nordqvist, 2012), organizational culture (Cherchem, 2017; Zahra, Hayton, & Salvato, 2004), management practices use (Eddleston, Kellermanns, & Zellweger, 2012), and socioemotional wealth (SEW) preservation (Hernandez-Perlines, Moreno-Garcia, & Yanez-Araque, 2019).
Therefore, we focus on SEW since it is expected to influence EO (Kellermanns & Eddleston, 2006; Schepers, Voordeckers, Steijvers, & Laveren, 2014; Hernandez-Perlines et al., 2019). Based on the behavioral agency theory, family firms are loss-averse regarding SEW non-economic goals. In other words, SEW conceives that family firms will preserve non-economic goals or affective endowments that are family-centric ones and that will affect outcomes and behaviors in family firms. There has been little empirical evidence about SEW's consequences to each of EO's dimensions, although emotional and affective needs might influence several outcomes such as entrepreneurial orientation (Gomez-Mejia et al., 2007). For instance, Hernandez-Perlines, Moreno-Garcia, and Yanez-Araque (2019) argue that SEW influences EO by "helping the family achieve the non-economic objectives of improving their reputation, guarantee the provision of employment for members of the family and ensure family control in the next generation." (Hernandez-Perlines, Moreno-Garcia, & Yanez-Araque, 2019, p. 526). To provide additional evidence to this relation, we also investigate if the SEW-EO association differs between firstgeneration and later generations of family businesses, following the rationale that generational involvement is a moderation variable (Hernandez-Perlines, Ribeiro-Soriano, & Rodriguez-Garcia, 2021). The underlying assumption is that the SEW-EO relationship might be stronger for firstgeneration family firms, considering EO's determinants vary depending on the family business generational stage (Cruz & Nordqvist, 2012). Hence, our research question can be highlighted: How does the generational stage moderate the relationship between socioemotional wealth and entrepreneurial orientation?
This paper provides some contributions to the family business literature. First, EO was seen as a determinant of many positive outcomes such as innovation (e.g., Craig, Pohjola, Kraus, & Jensen, 2014), firm growth (e.g., Casillas & Moreno, 2010), and performance (e.g., Schepers et al., 2014). Therefore, studying how the family particularistic intentions (SEW) influence EO and the generational stage moderating effect on this relationship might help academics and practitioners since EO does not emerge automatically. Hernandez-Linares and Lopez-Fernandez (2018) claim that "there is room to broaden our limited knowledge of how the EO relates to non-economic and family-oriented goals." (Hernandez-Linares & Lopez-Fernandez, 2018, p. 342). Second, prior literature has provided evidence that EO is less prominent in family firms, if compared with other firm types (e.g., Garces-Galdeano, Larraza-Kintana, Garcia-Olaverri, & Makri, 2016). Third, we also provide insights about the relevance of SEW to enhance or hinder EO or the EO benefits in family firms (Hernandez-Perlines et al., 2019; Llanos-Contreras, Jabri, & Sharma, 2019; Schepers et al., 2014) and argue that this effect is contingent to the presence of the founder or later generation in management, hence aggregating to the evidence from Hernandez-Perlines et al. (2019). For Rogoff and Heck (2003), "family is the oxygen that feeds the fire of entrepreneurship," which might be enhanced with the founder's presence (Rogoff & Heck, 2003, p. 559). Fourth, we also argue that SEW might be more relevant in later generations since it preserves the affective values that force an entrepreneurial spirit such as tradition, longevity, and family prominence over managing the firm. Finally, we also attend to Wales, Gupta and Mousa (2013) call that there is a lack of EO research in Brazil and other emerging economies. As well as for family firms in Mexico (e.g., Ling et al., 2019), we claim that SEW might be a determinant for nurturing entrepreneurial strategies in family firms in Brazil. Therefore, our empirical evidence allows us to discuss the SEW-EO relation in the context of emerging economies, particularly by highlighting the moderation role of the generation involvement.
The remainder of this paper is structured as follows. Section 2 reviews entrepreneurial orientation literature, especially in family firms, socioemotional wealth (SEW), and generational stage, and further develops the hypotheses. Section 3 presents the research method, the measurement of variables, and data analysis procedures. In Section 4, we report the outcomes of the analyses based on structural equation modeling. Finally, in Section 5, we discuss the study's results and implications and its limitations and paths for future research.
LITERATURE REVIEW
Entrepreneurial orientation
The field of corporate entrepreneurship has benefited from cumulative evidence since the 80s (Miller, 1983). Derived from this work, entrepreneurial orientation (EO) emerged as a relevant construct of corporate entrepreneurship (Covin, Green, & Slevin, 2006; Covin & Wales, 2019; Wales et al., 2013; Wales, 2016), which explains "the strategy-making processes that provide organizations with a basis for entrepreneurial decisions and actions" (Rauch et al., 2009, p. 762). Entrepreneurial orientation (EO) has also been defined as the "behavioral patterns whose presence enables entrepreneurship to be recognized as a defining attribute of the firm" (Covin & Lumpkin, 2011, p. 858). EO is regarded as a firm-level entrepreneurial attitude (Covin & Slevin, 1991; Miller, 1983), which is seen as a determinant of entrepreneurial behavior (Rauch et al., 2009) and as a consequence for organizations survival, growth, and performance (e.g., Casillas, Moreno, & Barbero, 2010; Covin & Wales, 2012).
Following the definition of an entrepreneurial firm by Miller (1983), which is "one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with 'proactive' innovations, beating competitors to the punch," prior studies have investigated EO as a multidimensional construct delimited by three dimensions: innovativeness, risk-taking, and proactiveness (Miller,1983, p. 771). First, innovativeness refers to organizational behaviors and strategic decision-making processes that create competitive advantage through product and technology experimentation, exploration, and development (Lumpkin & Dess, 1996...
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