Strategic Resources and Family Firm Performance - Windesheim

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The RBV has proven its value as an appropriate theoretical framework in the field of family business research (Chrisman, Chua & Zahra, 2003). Within this framework, the competitive advantage of a firm can be discussed by referring to the firm’s underlying resources, specific strategies and skills, and thereby allows for differentiation among family firms instead of regarding the family effect as a specific advantage that is common to all family firms. Habbershon and Williams (1999) stipulate that this focus on underlying resources, specific strategies and skills is the appropriate level of analysis for assessments of family firm advantages. This is also acknowledged by Melin and Nordqvist (2007), who state that overemphasizing the similarities between family firms downplays the differences and can lead to an overly simplistic view on family firms. The RBV, therefore, is an appropriate framework for focusing on the distinctive resources of family firms and for analyzing the firms’ unique traits. Various scholars, in turn, discuss possible sources of competitive advantage among family firms (Carney, 2005: Eddleston, Kellermans & Sarathy, 2008; Habbershon & Williams, 1999; Miller & Le Breton-Miller, 2005; Miller et al., 2008; Sirmon & Hitt, 2003). Sirmon and Hitt (2003) discuss five possible family-firm-specific resources and their corresponding positive outcomes: • Human capital is defined as the acquired knowledge, skills, and capabilities of individuals. The positive attributes related to human capital that stem from family influence include extraordinary commitment, warm relationships and the potential for deep, firm-specific tacit knowledge. • Social capital is the goodwill or other benefits generated by various social relations (Adler & Kwon, 2002). Social capital in the family firm is based on strong network ties, shared languages and narratives, trust, norms and obligations. All of these components are embedded in the family and can lead to the development of human capital. • Patient financial capital is capital that is invested for an extended period of time and thus carries little threat of liquidation on short notice. In this regard, the generational outlook of family members creates a focus on a long-time horizon instead of shortterm results. • Survivability capital represents the pooled personal resources that family members are willing to loan, contribute, or share for the benefit of the family business. Such capital can help the firm through poor economic times. • Governance structure is relevant in that the mutually-shared objectives, trust and family bonds found in family firms reduce more formal governance costs. However, familiness is not always a positive characteristic. Habbershon and Williams (1999) coins the terms “distinctive familiness” and “constrictive familiness” to differentiate between the positive and negative sides of familiness. “Distinctive familiness” stands for the enhancement of family and business capital stocks that occurs as a consequence of a balanced flow of capital between these systems. On the other hand, “constrictive familiness” reflects the negative outcome caused by an excess flow of capital in one direction. Sharma (2008) 7
emphasizes in this respect the need for a balance in the input and output of resources from the family to the business and vice versa. In general, the RBV emphasizes that the availability of appropriate resources is a necessary, but insufficient, condition for achieving a long-term competitive advantage. Resources must be managed in a way that leads to capabilities that make it possible to achieve a competitive advantage (Sirmon & Hitt, 2003). Therefore, the management of these strategic resources is discussed in the next section. 1.3.3 Management of strategic resources Tagiuri and Davis (1996) suggest that the success of a business will depend on whether the bivalent characteristics are effectively managed. The effective management of these attributes should result in a positive outcome for the business dimension, as well as for the family and ownership dimensions. The idea that long-term prosperity of the family business system requires positive outcomes in both the business dimension and the family dimension is widely acknowledged (e.g., Ward, 1987; Litz, 2008; Sharma, 2004). Sharma (2004) argues that recognition of the intertwinement of family and business leads to the definition of highperforming family firms as organizations that take financial and non-financial goals into account when attempting to meet the expectations of various stakeholders, including the family, the business, and owners. Figure 1.2 depicts the performance of family firms in a matrix. The expression “warm hearts and deep pockets” stands for those family business systems that have achieved high levels of emotional and financial capital, the preferred state a the family firm. Sharma proposes that family firms can overcome low levels in one of the two dimensions in the short term. However, in the long term, family firms need to achieve positive scores in both dimensions. Figure 1.2: Matrix of family and business dimensions Business dimension Positive Negative Source: Sharma, 2004 Positive Family dimension Negative I II Warm hearts and deep pockets Pained hearts but deep pockets High financial and high emotional High financial but low emotional capital capital III IV Warm hearts but empty pockets Pained hearts and empty pockets Low financial but high emotional capital Low financial and low emotional capital Litz (2008) takes a somewhat broader approach by proposing that a family business system can be compared to a Möbius strip, which is a mathematical concept. A Möbius strip can be described as “a band of paper given a 180 degree twist prior to having its two ends 8
Page 1 and 2: Strategic Resources and Family Firm
Page 3 and 4: Promotoren: Prof.dr. A. Buijs Prof.
Page 6 and 7: Acknowledgments Welcome to the worl
Page 8 and 9: I would also like to thank the supp
Page 10 and 11: 4.3.2 Variables....................
Page 12 and 13: 1: Family involvement, strategic re
Page 14 and 15: Figure 1.1: The three-circle model
Page 16 and 17: As early as 1982, Tagiuri and Davis
Page 20 and 21: connected” (see Figure 1.3, based
Page 22 and 23: and 2007 (the review period used by
Page 24 and 25: Table 1.2: Empirical trends in soci
Page 26 and 27: Study Journal 3 Reagans et al. (200
Page 28 and 29: esearch include the structural, rel
Page 30 and 31: 1.5.2 Defining the family firm The
Page 32 and 33: 1.5.3 Family firms in the Netherlan
Page 34 and 35: group of business-owning families,
Page 36 and 37: 2: Ownership social capital in priv
Page 38 and 39: 2.2 Background on ownership social
Page 40 and 41: Figure 2.1: Research framework incl
Page 42 and 43: these lines, McFayden and Cannella
Page 44 and 45: social capital within the family. T
Page 46 and 47: Shared vision (Cronbach’s alpha =
Page 48 and 49: Results of Hypothesis Testing Table
Page 50 and 51: Table 2.2: Correlations between var
Page 52 and 53: Table 2.3: Prediction of ownership
Page 54 and 55: Figure 2.3: Interaction term shared
Page 56 and 57: mobilization of bridging ownership
Page 58 and 59: 3: The relationship between ownersh
Page 60 and 61: always appear in the market at some
Page 62 and 63: embeddedness. “Structural embedde
Page 64 and 65: To realize the positive effect of b
Page 66 and 67: The closeness of the family is an i
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Product innovation (Cronbach’s al
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Table 3.1: Factor analysis of multi
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Table 3.3: Prediction of product in
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The solid line in Figure 3.2 is ste
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in themselves that improve seminal
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Conclusions The purpose of this stu
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changes have implications for new b
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of this relationship. Of the 21 stu
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Hypothesis 2: There is a positive r
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4.2.3 Developmental conditions for
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Figure 4.1: Research framework Role
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Table 4.1: Overview of sample chara
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4.4 Results The empirical analysis
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Table 4.3.: Means, standard deviati
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Theoretical implications The findin
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Appendix: Questionnaire items Finan
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ased on the theoretical framework p
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The transfer of a firm is a highly
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• Trust, • Conflicts and rivalr
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5.2.3 Moderator: Is the successor a
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Variables Dependent variable: The p
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Table 5.3: Predicting profit growth
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5.5 Discussion and conclusion In re
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104
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Table 6.1: Summary of research find
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vision and a high quality of relati
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prominent role in this respect. Own
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The second issue relates to the int
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6.4 Limitations and directions for
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influence ownership practices, and
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118
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esults show a positive direct effec
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The results are in line with the pr
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124
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De onderzoeksvraag wordt beantwoord
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De belangrijkste conclusie met betr
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kunnen daarbij helpen door het verh
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132
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Bamford, B.C., Bruton, G.D., & Hins
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Danes, S.M., Lee, J., Stafford, K.,
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Gersick, K.E., Lansberg, I., Desjar
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Lane, P.J., & Lutbatkin, M. (1998).
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Mustakallio, M.E., Autio, E., & Zah
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Shanker, M.C., & Astrachan, J.H. (1
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Vilaseca, A. (2002). The shareholde
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148
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Past research has raised many inter
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