The Family Firm as an Inter - Institutional System: New Venture Creation in Indian Family Firms

Abstract

This paper advances the nascent literature on institutional logics by outlining the theory of family firm as an inter-institutional system. We specifically examine justifying family logic for the decision to allocate resources for a new venture in a family firm. Using case studies of thirty-six NVs in eight Indian family firms at different stages of evolution our findings suggest that within family firms, resource allocation to new ventures requires justification fitting the family’s Economic, Expertise, Reputation and Attachment (EERA) logic. We propose that the family EERA logic enables family members acting as NV champions to more openly frame NV opportunities in terms of their personal preferences than non-family managers. When screening these NV opportunities, family firms are also more likely to compromise on economic criteria and give preference to nurturing family expertise and attachment logic. Family members acting as NV champions are also under lesser constraints to justify NV performance-corporate alignment to secure additional resources at implementation stage.

Keywords: Entrepreneurship, Case study, Institutional theory, Qualitative research design, Entrepreneurship processes