Are Family Owners Willing To Risk "Rocking The Boat"? A Blended Socioemotional Wealth-Implicit Theory Framework

Journal of Management

50 Pages Posted: 31 Dec 2024

See all articles by Luis R. Gomez-Mejia

Luis R. Gomez-Mejia

Arizona State University (ASU) - Management Department

Francesco Chirico

Jonkoping University - Jonkoping International Business School (JIBS); Macquarie University, Macquarie Business School

Michael Withers

Texas A&M University - Mays Business School

Geoffrey Martin

University of Melbourne - Melbourne Business School

Robert M. Wiseman

Michigan State University - Department of Management

Date Written: December 19, 2024

Abstract

We leverage research on socioemotional wealth (SEW) and implicit theories to develop a novel blended SEW-implicit theory framework that explains why some family firms are more risk seeking or more risk averse. According to implicit theory, individuals perceive reality through their interpretative cognitive filters. Those with an entity theory orientation see reality as relatively fixed or uncontrollable, while those with an incremental-implicit theory orientation tend to perceive reality as malleable and change as leading to positive outcomes. We theorize that family firms with high SEW intensity tend to adopt an entity orientation, whereas those with low SEW intensity tend to adopt an incremental orientation. Accordingly, we propose that the likelihood that family owners hold either orientation is shaped by organizational features associated with SEW intensity, namely (a) the salience of family versus business identity, (b) family founder imprinting, (c) generational stage, and (d) favorable path dependence. In turn, family owners with an entity orientation are less likely to take risks compared to family owners with an incremental orientation. Furthermore, we theorize that a firm’s performance hazard can shift family owners' implicit orientation from entity-based to incremental and vice versa, thereby impacting their risk-taking behavior.

Keywords: Decision-Making, Family Firms, Corporate Governance, Socioemotional wealth

Suggested Citation

Gomez-Mejia, Luis R. and Chirico, Francesco and Chirico, Francesco and Withers, Michael and Martin, Geoffrey and Wiseman, Robert M., Are Family Owners Willing To Risk "Rocking The Boat"? A Blended Socioemotional Wealth-Implicit Theory Framework (December 19, 2024). Journal of Management, Available at SSRN: https://ssrn.com/abstract=5064307 or http://dx.doi.org/10.2139/ssrn.5064307

Luis R. Gomez-Mejia

Arizona State University (ASU) - Management Department ( email )

Tempe, AZ 85287-4006
United States

Francesco Chirico (Contact Author)

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Michael Withers

Texas A&M University - Mays Business School

Geoffrey Martin

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

Robert M. Wiseman

Michigan State University - Department of Management ( email )

North Business Complex
East Lansing, MI 48824-1122
United States
517-432-3508 (Phone)

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