TY - JOUR
T1 - In the Horns of the Dilemma
T2 - Socioemotional Wealth, Financial Wealth, and Acquisitions in Family Firms
AU - Gomez-Mejia, Luis R.
AU - Patel, Pankaj C.
AU - Zellweger, Thomas M.
N1 - Publisher Copyright:
© 2015, © The Author(s) 2015.
PY - 2018/4/1
Y1 - 2018/4/1
N2 - 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.
AB - 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.
KW - behavioral theory of the firm
KW - family business
KW - family firms
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U2 - 10.1177/0149206315614375
DO - 10.1177/0149206315614375
M3 - Article
AN - SCOPUS:85043855182
SN - 0149-2063
VL - 44
SP - 1369
EP - 1397
JO - Journal of Management
JF - Journal of Management
IS - 4
ER -