TY - JOUR
T1 - Socioemotional wealth and business risks in family-controlled firms
T2 - Evidence from Spanish olive oil mills
AU - Gomez-Mejia, Luis
AU - Haynes, Katalin Takács
AU - Núñez-Nickel, Manuel
AU - Jacobson, Kathyrn J L
AU - Moyano-Fuentes, José
PY - 2007/3
Y1 - 2007/3
N2 - This paper challenges the prevalent notion that family-owned firms are more risk averse than publicly owned firms. Using behavioral theory, we argue that for family firms, the primary reference point is the loss of their socioemotional wealth, and to avoid those losses, family firms are willing to accept a significant risk to their performance; yet at the same time, they avoid risky business decisions that might aggravate that risk. Thus, we propose that the predictions of behavioral theory differ depending on family ownership. We confirm our hypotheses using a population of 1,237 family-owned olive oil mills in Southern Spain who faced the choice during a 54-year period of becoming a member of a cooperative, a decision associated with loss of family control but lower business risk, or remaining independent, which preserves the family's socioemotional wealth but greatly increases its performance hazard. As shown in this study, family firms may be risk willing and risk averse at the same time.
AB - This paper challenges the prevalent notion that family-owned firms are more risk averse than publicly owned firms. Using behavioral theory, we argue that for family firms, the primary reference point is the loss of their socioemotional wealth, and to avoid those losses, family firms are willing to accept a significant risk to their performance; yet at the same time, they avoid risky business decisions that might aggravate that risk. Thus, we propose that the predictions of behavioral theory differ depending on family ownership. We confirm our hypotheses using a population of 1,237 family-owned olive oil mills in Southern Spain who faced the choice during a 54-year period of becoming a member of a cooperative, a decision associated with loss of family control but lower business risk, or remaining independent, which preserves the family's socioemotional wealth but greatly increases its performance hazard. As shown in this study, family firms may be risk willing and risk averse at the same time.
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U2 - 10.2189/asqu.52.1.106
DO - 10.2189/asqu.52.1.106
M3 - Article
AN - SCOPUS:34547458509
SN - 0001-8392
VL - 52
SP - 106
EP - 137
JO - Administrative Science Quarterly
JF - Administrative Science Quarterly
IS - 1
ER -