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It's a Family Affair: How Social Identification Influences CEO Compensation in Family Firms (WITHDRAWN)
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Author: Elisabeth F. Mueller, U. of Passau
Author: Miriam Nicole Flickinger, Aarhus U.
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Although family firms have long been of interest to researchers, research on socio-psychological dynamics within the upper echelons of family firms, e.g. with regard to CEO compensation, is limited. A deeper understanding of these dynamics, however, is a necessary prerequisite not only to explain why some CEOs of family firms receive higher or lower pay than other CEOs of family firms. More importantly, such an analysis provides important insights into the cognition, behavior, and motivation of individual CEOs as the key decision makers in family firms. Using a sample of S&P 500 firms between 2006 and 2014, this study aims to dig more deeply into the socio-psychological dynamics of CEO compensation in family firms by adopting a behavioral perspective based on social identity theory to explain heterogeneous patterns of CEO compensation in family firms.
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Paper is No Longer Available Online: Please contact the author(s).
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Does Family Meet its Affective Need by Owning and Operating Business in Socioemotional Wealth Ways?
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Author: Yijie Min, Guanghua School of Management, Peking U.
Author: Qi Wang, Shandong U.
Author: Yingnan Zhao, Nanjing U.; school of business
Author: Jiangyong Lu, Peking U.
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The socioemotional wealth (SEW) model plays a vital role in family business research. However, the implicit assumptions of this model are rarely discussed and tested, which may impair the robustness of the SEW mechanism. Based on two studies, this paper focuses on the above issue by examining whether business-owning families receive affective benefits from owning businesses and running them in a socioemotional manner. Based on large-scale social survey data, the findings of our first study suggest that families who own businesses generally exhibit more identification with family identities. Although this main effect remains stable across different family structures (family size and the number of generations), it offers limited predictive power for families involving authoritative generational relationships or those that own businesses only for a short period of time. Our second study focuses on the feedback effects of specific operations of family businesses. Our results suggest that workplace family altruism and ethical leadership from family owner-managers enhance business-owning families¡¯ identification levels. However, community support shows predictive power conditionally and formal human resource management practice does not have significant effect. The above findings support the robustness of the SEW model in most cases but reveal a number of boundary conditions. Some aspects of family business operations that are widely mentioned in the SEW literature fail to provide valid predictions, which implies that it is necessary to more closely consider competitive theories and contexts before applying the SEW model.
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Paper is No Longer Available Online: Please contact the author(s).
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Different modes of performance feedback, ownership structure on diversification in family firms.
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Author: Lin-Hua Lu, National Taipei U. of Technology
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The behavioral agency model (BAM) suggests that family firms’ main priority is the preservation of the family’ socioemotional wealth (SEW). This priority also makes family firms less likely to invest in diversification than nonfamily firms, as diversification has a greater potential of weakening SEW. However, these findings are inconsistent with the current well-accepted assumption that family firms are focused on long-term investments. To reconcile these contradictory findings, we add insights based on the performance feedback mechanism proposed by behavioral theory as related to its impact on firm’s diversification horizon. The combination of BAM and behavioral theory on the aspects of family SEW leads us to hypothesize that family firms are less likely to invest in diversification activities when performance is above both historical and social aspiration levels. We furthermore posit that the two different forms of performance comparisons lead to dissimilar diversification behaviors. We further our investigation by determining how family ownership structure influences the relationship between performance feedback and diversification. We use data from a sample of Taiwanese publicly listed family firms from 1995 to 2015. Consistent with our predictions, we find that family firm’s diversification strategies vary significantly depending on whether the firm has positive or negative feedback regarding its historical and social aspiration level. We further find that ownership structure affects the relationship between negative performance feedback and diversification, where the influence of this effect is significantly different depending on which comparison (historical or social) are used.
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Paper is No Longer Available Online: Please contact the author(s).
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It's Not Done Until It's Done: The "Generational Shadow" and Descendant CEOs' Acquisition Decisions
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Author: He Soung Ahn, Korea U. Business School
Author: Hicheon Kim, Korea U.
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An appointment of a family heir as the new CEO attracts significant media attention and signals the advent of a new chapter of family leadership. Regardless, the senior generations can remain to exert influences on the descendant CEO, thereby casting a generational shadow over the successor. The purpose of this paper is to investigate the impact of such generational shadow on decision CEOs¡¯ acquisition decisions. Given that senior generations¡¯ lack of trust towards the successor refrains them from implementing a complete transfer of power, a generational shadow is negatively associated with descendant CEOs¡¯ number of acquisitions. At the same time, descendant CEOs are able to overcome the constraints imposed by the senior generations when they display performance improvements since succession and when the number of industry peers¡¯ successful acquisitions increase. Above arguments are tested with acquisition decisions made by publicly listed family-controlled firms in South Korea between 1998 and 2015.
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Paper is No Longer Available Online: Please contact the author(s).
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