Guarding the Family Jewels:An Inter-Institutional Perspective of Venture Creation in Family Firms

Abstract

Despite the importance of family firms as an institution in traditional societies, we know little about the justifying logic for the resource allocation decision for new ventures in family firms. through an inductive study of thirty-six NVs in eight Indian family firms at different stages of evolution we propose that within family firms, resource allocation to new ventures requires justification fitting the family's economic, expertise, reputation and attachment (EERA) logic. Family 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 NV opportunities, sibling and cousin - consortium 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: Family Firms, new venture creation, emerging markets, inter-institutional system