In the Horns of the Dilemma: Socioemotional Wealth, Financial Wealth, and Acquisitions in Family Firms

Luis Gomez-Mejia, Pankaj C. Patel, Thomas M. Zellweger

Research output: Contribution to journalArticle

66 Scopus citations


We posit that family firms often face a dilemma in their strategic decision making: whether to maintain current socioemotional wealth or pursue prospective financial wealth. Applying such a mixed gamble perspective to acquisitions, family owners assess potential acquisitions with regard to their impact on both wealth dimensions. In line with this reasoning, our results show that family control implies a general reluctance to acquire and, when an acquisition happens, a preference for related targets. Because financial and socioemotional viewpoints lead to largely incompatible predictions about the occurrence and relatedness of acquisitions, family firm owners use their firm’s vulnerability as a signal. Increased vulnerability leads to a heightened propensity to prioritize financial over socioemotional wealth problem framing, which is reflected in the acquisition of unrelated targets. Empirical results are supportive of these predictions.

Original languageEnglish (US)
Pages (from-to)1369-1397
Number of pages29
JournalJournal of Management
Issue number4
StatePublished - Apr 1 2018
Externally publishedYes



  • behavioral theory of the firm
  • family business
  • family firms

ASJC Scopus subject areas

  • Finance
  • Strategy and Management

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