Does family control perform? Unpacking the role of socioemotional mechanisms linking family control and family firm performance
Hamza Smajic, Ramo PalalicPurpose
This study investigates the socioemotional wealth model in which identification of family members with the firm, their emotional attachment to the firm, and renewal of family bonds through dynastic succession mediate the relationship between family control and influence and firm performance. Drawing on Upper Echelons Theory as a theoretical rationale, we argue that family control relates to affective, relational, and temporal orientations in family firms that, in turn, shape firm performance.
Design/methodology/approach
The study uses cross-sectional data from 252 family businesses across five Western Balkan countries awaiting accession to the European Union. Data were collected using convenience sampling and analyzed using structural equation modeling. Among socioemotional wealth dimensions, only the binding social ties dimension was excluded during pretesting because it did not demonstrate acceptable reliability and validity.
Findings
Results show that the extent of family control and influence is positively related to identification of family members with the firm, their emotional attachment to the firm, and renewal of family bonds through the dynastic succession. Further, identification of family members with the firm and renewal of family bonds through dynastic succession positively relate to family firm performance. Finally, the results indicate that identification of family members with the firm mediates the relationship between family control and influence and family firm performance.
Originality/value
The study utilizes the reduced FIBER scale (FIER) to capture the socioemotional wealth in an underresearched European context, while combining the socioemotional wealth model and Upper Echelons Theory to explain the capacity-orientation-outcome model in which family's discretion in decision-making stemming from family control and influence relates to family-centric orientations, shaping family firm performance.