Does Growth Represent Chimera or Bellerophon for a Family Business? The Role of Entrepreneurial Orientation and Family Influence Nuances

Author:Tommaso Minola, Giovanna Campopiano, Lucio Cassia, Mara Brumana
Publication Date:01 Sep 2020
Does Growth Represent Chimera or
Bellerophon for a Family Business? The Role
of Entrepreneurial Orientation and Family
Influence Nuances
Department of Entrepreneurship andStrategy, Lancaster University, United Kingdom of Great Britain and Northern Ireland
Department of Management, Information and Production Engineering (DIGIP)
Center for Young & Family Enterprise (CYFE), Universitá degliStudi di Bergamo, Italy
Growth brings lifeblood to sustain longevity across generation, but also critical challenges for family business.
Relying on the behavioral agency model and its assumptions on risk-bearing in family firms, we discuss and test
the effect of family involvement in the top management team (TMT) on family business growth. We use an input-
behavior-outcome framework based on the mediating role of entrepreneurial orientation. We also consider the
moderating role of different ownership structures on the relationship between family involvement in the TMT on
entrepreneurial orientation (EO). Results based on survey data collected by the STEP research consortium support
the hypothesizednegative effect of family involvement in the TMTon growth, fully mediatedby EO. We also find that
the presenceof passive family membersas majority shareholders and multigenerationalinvolvement in ownership are
important contingencies of thedirect effect. Our evidencepoints to the fact that risk-bearing in familyfirms is not just
dependent on the degree of family involvement in management, but also on the interests of different types of
shareholders. We show that the at-times stylized negative traits of family firms are not universally valid, and that a
comprehensive view of familyinfluence over the business is neededto ascertain whether and to what extentthese firms
actually achieve growth.
Keywords: Family business; growth; behavioral agency model; risk-bearing; entrepreneurial orientation
Growth is one of the most challenging concernsfor family
businessesstriving to survive andsucceed from generation
to generation (Ingram et al., 2016; Naldi et al., 2007).
Growth is particularly importantin family firms, reflecting
both business- and family-related interests, and may thus
generate tensions (Ingram et al., 2016). Indeed, growth
helps family firms pursue the business-oriented goal of
sustaining a wealthy firm on one hand, and the family-
oriented goal of sustaining and engaging the enterprising
family across generations on the other hand. At the same
time, a growth strategy may threaten the family need for
liquidityand control over the business,so that some family
businesses deliberately limit their growth (Gómez-Mejía
et al., 2007, 2011; Hamelin, 2013). Metaphorically
speaking, whereas for some family firms growth might
epitomize Bellerophon, a hero of Greek mythology
helping them deal with multiple challenges, for others it
might embody Chimera, a monster causing disasters and
harming the futureof both the family and the business.
Extant literature has suggestedthat the decision to grow
or harvest heavily depends on the degree of family
influence over the business (Le Breton-Miller and Miller,
2008). However, there is contrasting evidence on the
effect of family influence on growth (Backman and
Palmberg, 2015; OBoyle et al., 2012). Due to the family
memberspotential tendency to adopt conservative
behaviors, the degree of family influence over the
business may negatively affect the likelihood of growth
in international markets (Sanchez-Bueno and Usero,
2014), sales and investment rates (Hamelin, 2013), and
investments in R&D, promotion, and other expenditures
Correspondence: Mara Brumana, Management, information and
production engineering, Universita degli Studi di Bergamo, Italy. E-mail:
European Management Review,
DOI: 10.1111/emre.12351
©2019 European Academy of Management
Vol. 17, 7657 ,
(Miller et al., 2011). Moreover, fam ily influence has been
shown to lead to lower growth rates, as family businesses,
compared to other types of firms, tend to have difficulties
in accessing the resources and capabilities needed to
sustain their competitive advantage and grow (Croce and
Martí, 2016; Sirmon and Hitt, 2003; Upton and Petty,
2000). Nevertheless, Chen et al. (2014) suggest that
whereas family-controlled firms record lower sales
growth rates, they are able to generate comparatively
higher employment growth rates. Lee (2006) also reports
a positive impact o f family influence ov er the business
on employment and revenue growth.
However, treating family firms as a homogeneous
category might be constraining (Daspit et al., 2018). For
example, with few exceptions, most studies on growth
do not distinguish the role of family members as owners
and/or managers, often assuming that the unification of
ownership and control that characterizes family
governance (Carney, 2005) unambiguously affects family
business behaviors and strategic decisions. Among these
exceptions, stu dies highlight that family involvemen t in
the top managementteam (TMT) is particularly important
in determining growth, as such involvement actually
enforces the particular goals and priorities of the owners
(Barbera and Hasso, 2013; Chrisman et al., 2018; Chua
et al., 2011; Coad and Timmermans, 2014). Family
involvement in the TMT is crucial for growth due to the
critical role of top managers in strategic planning and
execution (Chrisman et al., 2016; Upton et al., 2001),
and their accountability for the effective implementation
of strategic decisions (Chrisman et al., 2016; Guidice
et al., 2013). If the role of family managers in shaping
firmsbehaviors and performance is indisputable,
additional nuances of family involvement in ownership
are invoked as measures to be used, together with
managerial involvement, to capture the overall effect of
family influence on firm performance (Chrisman et al.,
2005; Garcia-Castro and Aguilera, 2014).
In this paper, we suggest three possible sources of
heterogeneityin the family ownership structurepresence
of non-family shareholders, passive family members as
majority shareholders, multigenerational involvement in
ownership and combine them with family involvement
in the TMT to study growth in family firms. In so doing,
we offer a comprehensive and nuanced view of family
influence over the business and its role in explaining firm
growth. Moreover, research has long considered family
influence on performance as a black box, thus limiting
understanding the mechanisms intervening in such
relationship, and ultimately, the growth process itself
(Chrisman et al., 2016). We claim that entrepreneurial
orientation (EO), a well-known antecedent of growth
(Casillas andMoreno, 2010; Rauch et al., 2009), isa good
candidate to explain how different forms of family
involvement lead to growth. We thus theorize and test
an input-behavior-outcome relationship where the input
is the form of family involvement in management and
ownership structure, behavior is the entrepreneurial
orientation, and outcome is family business growth. We
then use this model to address the following research
question: Under which conditions and how does family
involvementin the TMT affect growth in family business?
The behavioral agency model (BAM) (Wiseman and
Gómez-Mejía, 1998) underpins the development of our
model. In particular, we use the differentmotives guiding
strategic decision-making in family firms at different
degrees of familyinvolvement in the TMT to explain firm
growth. In addition,we take into account how non-family
shareholders, passive family members as shareholders,
and owners from different generations actually differ in
terms of risk-bearing, that is. perceived wealth-at-risk
(Hoskisson et al., 2017; Wiseman and Gómez-Mejía,
1998), thus hindering or strengtheningthe effect of family
involvement in management.
We test our model via structural equation modeling on
a unique sample of645 family firms derived from the first
worldwide double-respondent STEP (Successful
Transgenerational Entrepreneurship Practices) survey,
launched by 48 universities affiliated with the STEP
project and completed in 2015. The findings show that
different nuances(Daspit et al., 2018) of family
influence have to be considered to fully grasp the effect
on family firm growth. Indeed, while family involvement
in the TMT has a negative effect on firm growth (fully
mediated by EO), this relationship is attenuated by the
presence of passive family members as major
shareholders, and strengthened by the presence of
multiple generations in ownership. We find, instead, no
significant moderating effect for the presence of non-
family shareholders.
Overall, thesefindings contribute to the ongoing debate
on the relationship between family involvement,
governance, and family firm performance (Daspit et al.,
2018) through the input-behavior-outcome model that
offers a comprehensive picture of the phenomenon on a
global sample of family firms. In addition, our study
advances the importance of EO as the mechanism that
renders family involvement an effective determinant of
family firm growth (Casillas and Moreno, 2010; Covin
et al., 2006; Moreno and Casillas, 2008). Implications
for theory and practice are also offered. In particular, this
model suggests tha t BAM predictions dep end on the
interests of different types of family shareholders, that is,
passive family members as major shareholders, and
family shareholders belonging to different generations
(e.g., Fattoum-Guedri et al., 2018). Practitioners should
also carefully consider our models predictions to fine-
tune the ownership and management structure in the
family firm so as to foster entrepreneurial orientation and
©2019 European Academy of Management
G. Campopiano et al.

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