Do Family Firms Have Better Reputations than Non-Family Firms? An Integration of Socio-Emotional Wealth and Social Identity Theories
Journal of Management Studies, Vol. 50., No. 3., pp. 337-360, 2013
Posted: 15 Jul 2013
Date Written: May 1, 2012
We draw from socio-emotional wealth and social identity research to develop a theory on reputational differences among family and non-family firms. We propose that family members identify more strongly with their family firm than non-family members do with either a family or non-family firm. Heightened identification motivates family members to pursue a favourable reputation because it allows them to feel good about themselves, thus contributing to their socio-emotional wealth. We hypothesize that when the family's name is part of the firm's name, the firm's reputation is higher because family members are particularly motivated for their firm to have a better reputation. Family members also need organizational power to pursue a favourable reputation; thus, we hypothesize that the level of family ownership and family board presence should be associated with more favourable reputations. We find support for our theory in a sample of large firms from eight countries with disparate governance systems and cultures.
Keywords: corporate reputation, family firms, social identity theory, socio-emotional wealth
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