Family involvement in management and firm growth
Deadline for submissions: 15 February 2018
Managers are highly interested in increasing sales and number of employees, i.e. pursuing firm growth (Davidsson, Delmar and Wiklund, 2006). On the one hand, firm growth is a performance measure that witnesses the validity of the value proposition for customers; on the other hand, growth is a means to help the firm to reduce costs – to benefit of the community of workers and suppliers (Davidsson, Achtenhagen and Naldi, 2010). Growth is a complex process that requires resources and capabilities to face the fierce current competition (Achtenhagen, Naldi and Melin, 2010). This is particularly true for family controlled businesses (Ward, 1997), which represent the vast majority of companies around the world. Indeed, family owners might be unable to provide managers the necessary resources to realize growth (Davis and Stern, 1988). Alternatively, they could be able to grow but unwilling to do so, fearing the potential negative implications of growth on family control over the firm (Casillas, Moreno and Barbero, 2010). As matter of fact, literature recognizes that family businesses have specific characteristics that make their growth processes unique (Stenholm, Pukkinen, and Heinonen, 2016).
However, empirical evidence shows cases of high-growth firms that are family controlled: many family firms grow and reach considerable size, especially in Europe, where 48.6% of the world’s 500 largest family businesses are located, generating revenues of US$2.89t - i.e. the 13.2% of Europe’s GDP, and employing more than 8.9 million employees - i.e. the 2.3% of Europe’s workforce (Ernest & Young, 2016). Family controlled firms are also the backbone of U.S. economy where they account for 64% of GDP and generate 78% of all new job creation. And family-run firms represent 85% of $1 billion-plus businesses in South-East Asia, around 75% in Latin America, 67% in India and around 65% in the Middle East (The Economist, 2016).
Family firms are not all the same, indeed, i.e. they are very heterogeneous, and a major source of heterogeneity stands in the extent to which family members occupy upper echelon positions (Hambrick, and Mason, 1984). In particular, the management of the firm could be characterized by a high or a low family involvement. In other words, family firms (a) could be led by a family CEO or a nonfamily CEO and (b) the top management team could be composed of family as well as nonfamily managers (Klein, Astrachan and Smyrnios, 2005). While family ownership has served as a useful lens to investigate firm growth (Daily and Thompson, 1994), prior literature did not sufficiently explore how such growth is related to family involvement in management, thus offering us the opportunity to propose this special issue.
Considering an analysis of family involvement in management all around the world, statistics reveal some subtle differences between the world’s major economic areas. Family members are involved in the executive management of 72% of North American publicly listed family firms and of 81% for private companies. In Europe, family
involvement at the executive level counts for 68% for publicly listed firms and 76% for private companies. Executive family members are 90% in Latin America for private companies and 56% in Asia-Pacific (Ernest & Young, 2016).
Family involvement in management could be an asset or a liability for family firm growth (Yeung, 2000) as it influences the way strategy is planned and realized (Upton, Teal and Felan, 2001). We consequently would like to explore the relationship between family involvement in management and firm growth by looking for advanced papers that are able to introduce environment-level, firm-level, family-level and individual level concepts in the conversation. This special issue is open to any type of contribution, but we explicitly look for research papers that advance our understanding on how, when, why and to what extent family involvement in management influences firm growth.
We look forward to receiving papers with innovative or more traditional theories that disentangle the topic with qualitative and quantitative methods. We aim to attract high quality papers in order to advance our understanding of this topic. A non-exhaustive list of possible topic areas includes the following.
- What type of resources and competencies enable family managers to secure firm growth?
- What is the potential for non-family executives to influence or obstruct growth?
- How does managerial ownership in family firms affect firm growth? How could dilution of family ownership influence firm growth?
- How does family involvement in management intervene in the complex relationships between financial resources and growth and between growth and profitability?
- How do management needs and structures evolve as family firms grow?
- What are the characteristics of growth-oriented family leaders and managers?
- What are the family characteristics that make family involvement in management conducive or unfavorable to growth?
- How do formal and informal governance mechanisms and structures affect the relationship between family involvement in management and firm growth?
- How do industrial and technological contingencies influence the family involvement in management – firm growth relationship?
- How do social and cultural contingencies influence the family involvement in management – firm growth relationship? How the investigated relationships vary among European countries and between European countries and the rest of the world?
- How does family involvement in management interact with specific firm strategies (e.g. internationalization, innovation, vertical integration, M&A, sourcing, organization, succession, finance, diversification, CSR, etc.) in influencing firm growth?
- When and how does family involvement in management set firm growth as primary goal for the business? And how is it related to socio-emotional wealth and non-economic goals?
- Could the common measures (e.g. GDP, number of employees, profit, product range, etc.) be applied tout court to define growth in family firms? Alternatively, do we need to consider different sides, such as satisfaction, inclusivity, caring for others, integration of communities, etc., to define growth?
- Is the relationship among family involvement in management and growth contingent upon different global contexts (European vs. non-European context)?
We hope that the portfolio of articles that will be eventually accepted in this special issue may contribute not only to management research, but also to family business, financial and upper echelon studies.
Submission and timeline
Submissions are due by February 15, 2018. Manuscripts should be submitted online at http://mc.manuscriptcentral.com/emr and should follow the Submission Guidelines available at: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1740-4762/homepage/ForAuthors.html. Please note that all articles will be subject to the standard EMR double-blind review process.
For questions regarding this special issue, please contact any of the Guest Editors.
- Achtenhagen, L., Naldi, L., & Melin, L. (2010). “Business growth”—Do practitioners and scholars really talk about the same thing?. Entrepreneurship Theory and Practice, 34(2), 289-316.
- Casillas, J. C., Moreno, A. M., & Barbero, J. L. (2010). A configurational approach of the relationship between entrepreneurial orientation and growth of family firms. Family Business Review, 23(1), 27-44.
- Daily, C. M., & Thompson, S. S. (1994). Ownership structure, strategic posture, and firm growth: An empirical examination. Family Business Review, 7(3), 237- 249.
- Davidsson, P., Achtenhagen, L., & Naldi, L. (2010). Small firm growth. Foundations and trends in entrepreneurship, 6(2), 69-166.
- Davidsson, P., Delmar, F., & Wiklund, J. (2006). Entrepreneurship and the Growth of Firms. Edward Elgar Publishing.
- Davis, P., & Stern, D. (1988). Adaptation, survival, and growth of the family business: An integrated systems perspective. Family Business Review, 1(1), 69-84.
- Ernest & Young. (2016). Family Business Yearbook, 3th edition.
- Hambrick, D. C., & Mason, P.A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2): 193–206.
- Klein, S. B., Astrachan, J. H. and Smyrnios, K. X. (2005). The F-PEC Scale of Family Influence: Construction, Validation, and Further Implication for Theory. Entrepreneurship Theory and Practice, 29, 321–339.
- Stenholm, P., Pukkinen, T., & Heinonen, J. (2016). Firm Growth in Family Businesses—The Role of Entrepreneurial Orientation and the Entrepreneurial Activity. Journal of Small Business Management, 54(2), 697-713.
- Upton, N., Teal, E. J., & Felan, J. T. (2001). Strategic and business planning practices of fast growth family firms. Journal of small business management, 39(1), 60-72.
- Ward, J. L. (1997). Growing the family business: Special challenges and best practices. Family Business Review, 10(4), 323-337.
- Yeung, H. W. C. (2000). Limits to the growth of family‐