Abstract

Family scholars have consistently suggested that family-controlled firms (FCFs) take a long-term orientation, which reflects their familial value system. These values or dominant logics of the FCF (i.e., core logic to ensure the long-term viability of the FCF) may be seen in how the FCF operates, such as strategic risk and the use of slack resources. Recently, many scholars have suggested that FCFs sometimes do not act in the best interest of their shareholders with the family more concerned with generating and maintaining socioemotional wealth (i.e., non-economic returns, such as social benefits gained from the reputation of the firm which accrue back to the family). As such in FCFs, the management, which incorporates family members as part of the dominant coalition, should more readily adopt a long-term perspective (i.e., dominant logic) without inducement due to the manager’s family standing to lose more (i.e., socioemotional and economic wealth) than the common shareholder (i.e., economic wealth) if the firm fails.

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