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Family businesses and strategic change: The role of family ownership

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<mark>Journal publication date</mark>31/10/2024
<mark>Journal</mark>Review of Managerial Science
Volume18
Number of pages24
Pages (from-to)2981-3005
Publication StatusPublished
Early online date10/10/23
<mark>Original language</mark>English

Abstract

In this study, we analyze how the performance-aspiration gap influences strategic change in family firms, providing evidence of the moderating role of family ownership in this relationship. According to socioemotional wealth (SEW) theory, family owners pursue non-financial as well as financial goals, are more risk-averse due to their personal wealth being tied to the firm, and seek to maintain control of the firm to preserve and build their SEW—all characteristics that influence their strategic behavior. We therefore suggest that strategic decisions in family-owned firms are less influenced by purely economic performance, and that such firms tend to persevere more strongly in their strategic direction. We test our hypotheses on a sample of publicly listed European firms between 2007 and 2016. Our findings confirm that the success of firms inhibits strategic change, and that family ownership moderates this relationship by making the overall effect smaller, indicating greater resistance to change despite economic pitfalls.