Abstract
This study examines the complex relationships between Psychological Capital, family business, ownership, gender, and firm performance during the COVID-19 pandemic. The study examines the effects of these variables on firm performance and explores the empirical interaction effects. The findings reveal that Psychological Capital positively influences firm performance, supporting the hypothesis that owners with higher Psychological Capital contribute to better business outcomes. Additionally, family business and ownership significantly impact firm performance, indicating that family involvement and concentrated ownership drive organizational success. Surprisingly, the results indicate a negative impact of gender on firm performance, suggesting that firms managed by women are perceived as less successful. The study also explores the interaction effects and finds that the positive relationship between Psychological Capital and firm performance is amplified in family businesses. However, gender does not moderate this relationship, indicating that women Owners face challenges in translating their Psychological Capital into firm performance in the emerging economy of Ecuador. The results provide insights into the complex dynamics within family businesses and underline the need to address gender disparities and promote inclusive Ownership practices. Implications are discussed.
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Introduction
The global health emergency caused by Covid-19 has had a direct impact on the economic performance of countries around the world, especially emerging economies such as Ecuador. Specifically, it was responsible for Ecuador’s Gross Domestic Product (GDP) totaling USD 66,308 million in 2020, a decrease of 7.8%, according to data from the Quarterly National Accounts. In addition, while exports of goods and services as a whole declined by 2.1% in 2020 compared to 2019, imports declined by 7.9% compared to 2019, and trade value added declined by 6.9% in 2020 (BCE, 2022). Despite the importance of Covid-19 to firm wealth, few studies have examined the drivers of firm performance in this environment. For example, the study by Lopez et al. (2022) focused on the Superintendence of Companies and showed an 11% decrease in company sales revenue compared to 2019, highlighting the most affected sectors such as tourism, construction, and garment manufacturing. However, neglected factors such as business owner resources and characteristics such as psychological capability and gender may explain variation in business performance during the Covid-19, suggesting best practices for managing such a crisis.
Indeed, in today’s ever evolving and fiercely competitive business landscape, organizations are perpetually searching for strategies to bolster their performance and secure enduring success. Within this milieu, an expanding body of research underscores the pivotal role of Psychological Capital (PsyCap) in shaping outcomes within the workplace. PsyCap encompasses positive psychological resources, including hope, self-efficacy, resilience and optimism, which significantly influence organizational dynamics at the individual, team, and organizational levels. Recent studies have further accentuated the importance of considering contextual factors that may act as moderators in the relationship between Psychological Capital and business performance (Gooty et al., 2009; Peterson et al., 2011).
This study tests the interplay between Psychological Capital, family businesses, gender, ownership structures, and their collective influence on business performance in an emerging economy during the COVID-19 crisis. The significance of understanding how Psychological Capital impacts business performance cannot be overstated, as it equips organizations with the insights required to optimize their human resources and cultivate a workplace environment that fosters employee well-being and productivity. Furthermore, exploring the moderating effects of family businesses, gender, and ownership will shed light on the contextual factors that mold the intricate relationship between Psychological Capital and business performance in an emerging economy.
We will employ a quantitative research methodology to achieve our research objectives, gathering data from various organizations operating across various industries. Through rigorous statistical analysis and advanced modeling techniques, we will rigorously test the relationship between Psychological Capital (PsyCap), family businesses, gender, ownership structures, and business performance during a crisis such as COVID-19. More research needs to be conducted on the impact of a crisis on emerging economy family business PsyCap.
Our results significantly contribute to the existing body of literature on the impact of PsyCap on family businesses operating in an emerging economy, which has been an under-researched area. We gathered data during the COVID-19 pandemic to measure the impact on family businesses during a crisis scenario. By shedding light on the role of Psychological Capital and its interaction with family businesses, gender, and ownership structures in influencing business performance, our research aims to provide valuable insights for scholars and practitioners alike. Our research model is below (See Fig. 1).
The model design
The Covid-19 Crisis
Journal publications on the impact of COVID-19 have appeared in abundance. The news media around the world is still reporting on the pandemic. Scopus lists over a hundred thousand articles as of November 2022, with the keyword “COVID-19 and pandemic.” The pandemic’s short-and long-term effects have impacted every aspect of life. As the COVID-19 pandemic progressed worldwide, governments took strict measures to protect their populations. The most common and effective action to prevent and contain the virus is lockdowns, i.e., mandatory residential quarantines with specific mobility restrictions. On December 7, 2022, China’s National Health Commission announced that negative COVID-19 tests would no longer be required, with a few exceptions (i.e., nurseries, elderly care facilities, schools) (Łaszewska et al., 2021). On April 10, 2023, President Joe Biden signed a bill eliminating the COVID-19 emergency procedures effective May 11, 2023. While these lockdowns and emergency procedures have abated worldwide, COVID-19 is far from irradicated. The latest strain of the virus, called Arcturus, also known as XBB.1.16, has been primarily found in India, but is responsible for more than 7% of new U.S. infections and is predicted to become the next dominant strain in the United States, according to the Centers for Disease Control and Prevention.
Impact on emerging economies
The repercussions of the COVID-19 pandemic were particularly pronounced in emerging economies, with infrastructure and housing challenges exacerbating its impact. In countries like Ecuador, characterized by insufficient urban planning and widespread informal construction practices, issues such as overcrowded sites, limited privacy for family members, and substandard building materials were prevalent. These characteristics not only posed challenges for the population but also rendered the implementation of stringent lockdowns and long-term policies to combat COVID-19 impractical.
The global transition of the coronavirus from a public health crisis to a threat to the world economy was indisputable, and Ecuador experienced its share of challenges. As of 2020, over three million lives were lost, and more than 82 million people were infected with COVID-19, as reported by the World Health Organization (2021). In 2023, the health threat persists globally, with individuals still grappling with the aftermath of COVID-19. Moreover, emerging evidence suggests that altitude had an additional negative effect on mortality in Ecuador (Campos et al., 2021).
The impact on the global economy was substantial, affecting various sectors, including finance, production, tourism, and employment. Economic contraction witnessed a dramatic rise, with Ecuador experiencing an 11.1% decrease in the gross employment rate between June 2019 and June 2020, reaching 52.8% (Instituto Ecuatoriano de Estadísticas y Censos, 2021). While the epidemiological crisis in Ecuador currently exhibits favorable indicators, leading to the lifting of all restrictions in October 2022, the lasting effects on the country’s economic and social fabric necessitate a nuanced examination.
This contextual background underscores the importance of studying the interplay between Psychological Capital, family business, ownership, gender, and firm performance in an emerging economy like Ecuador during the COVID-19 pandemic. By delving into these intricate relationships, our research aims to contribute valuable insights into the multifaceted dynamics of family businesses, emphasizing the need to address gender disparities and advocate for inclusive ownership practices.
Impact on family businesses
In this context, the question is how worldwide health crises and other natural disasters (e.g., pandemics, earthquakes, fires, floods) affect family business performance in different countries, especially developing countries. This topic has been under-researched primarily in developing economies, while most research has focused on major world powers during crises. It is estimated that family businesses that are majority owned by a single family contribute 70–90% of the world’s GDP. Family businesses are estimated to comprise 60% of the global workforce. It is estimated that 93% of the workforce in Ecuador is employed by family businesses. According to the Family Firm Institute (FFI), family funds are used to start 85% of business launches worldwide. Family businesses significantly contribute to economic growth and are most businesses worldwide. According to the Global Entrepreneurship Monitor (GEM) Family Entrepreneurship Report, 81% of business owners co-own or co-manage their business with family members, and 62% say that family members are most of their employees (Bosma et al., 2021).
Gender roles and family businesses influence economic performance because these factors can affect how resources, including human and financial capital, are allocated within a business. Gender roles can influence how men and women are perceived and treated within a business, affecting their ability to contribute to its performance. Family businesses, owned and operated by members of the same family, can also affect performance because family dynamics can influence the business’s decision-making and management.
Positive Organizational Behavior and Psychological Capital
Positive Organizational Behavior (POB) (Luthans, 2002a; 2002b; Luthans & Avolio, 2009) plays a significant role in family business management. POB is “the study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement” (Luthans, 2002a, p. 59; Luthans et al., 2007a). POB directly applies to human resources’ positive development and management, which can lead to optimal family business management. POB has positively affected work attitudes and behaviors, including job satisfaction, organizational commitment, absenteeism, turnover, organizational citizenship, and work performance (Avey et al. 2008).
POB evolved into Psychological Capital or PsyCap (see Luthans & Youssef, 2004; Luthans et al., 2007b; Luthans & Avolio, 2009). Psychological Capital (PsyCap) is defined as “an individual’s positive psychological state of development that is characterized by having confidence (self-efficacy) to take on challenging tasks, making a positive attribution (optimism) about succeeding now and in the future, redirecting paths to goals (hope) to succeed, and when beset by problems, bouncing back (resilience) to attain success” (Luthans et al., 2007b, p. 3). POB evolved into Psychological Capital or PsyCap (see Luthans & Youssef, 2004; Luthans et al., 2007b; Luthans & Avolio, 2009). The components of PsyCap, known as the “HERO” within, include Hope (goals and pathways), Efficacy (confidence), Resilience (bouncing back from adversity), and Optimism (making positive attributions and having positive future expectations) (Luthans, 2002; Luthans et al., 2007b).
PsyCap should be recognized, developed, and leveraged among family businesses. Researchers have proposed that organizational PsyCap may be greater in family businesses than non-family businesses (Memili & Welsh, 2013). In addition, the organizational PsyCap of family businesses may play an essential role in the link between collective commitment to family-centered goals and economic performance. A study by Gómez-Mejía et al. (2007) found that Psychological Capital can buffer the adverse effects of family conflict on the performance of family businesses. The study suggests that Psychological Capital can help family members in business to better cope with the challenges of working together and to maintain positive attitudes and behaviors that can contribute to the performance of the business. Positivity is vital during crises such as pandemics and natural disasters.
One relevant question is whether family business performance is moderated by Psychological Capital (PsyCap) and if the gender of the owner plays a differentiating role. Understanding this relationship could better prepare family businesses for future natural and health crises.
In this context, the paper is organized as follows. The next section presents the background literature and the hypotheses. The following section describes the data and provides information on data collection, the study variables, and summary statistics. The estimations are presented, respectively, in the sections that follow. The last section concludes with final remarks and implications for entrepreneurship and academic studies beyond the Ecuadorian case.
Theory and hypotheses
To consider if gender, ownership, and family business moderates the relationship between Psychological Capital and performance, we review these concepts and their relationships.
Performance
Performance is a multidimensional notion in organizational economics and strategic management (Crook et al., 2008; Lubatkin & Shrieves, 1986; March & Sutton, 1997). As Chet Miller et al. (2013) emphasized, several vital contributions to the definition of performance can be mentioned. However, these are characterized by essential differences. Thus, while Jensen and Meckling (1976) define performance as maximizing profits, Wernerfelt (1984) argues that performance consists of high returns over long periods. This definition is close to the rate of return on assets underlined by Rumelt (1991). In addition, performance can be divided into individual performance (Baker, 1992) and global performance. The latter is defined by Richard et al. (2009) as involving financial performance (e.g., profits), product market (e.g., sales), and shareholder return (e.g., economic added value).
Following Venkatraman and Ramanujam (1986), this article defines performance as fulfilling economic goals, i.e., business performance.
In this context, several dimensions, including those not related to the practical effort of the workers but their intrinsic personalities, influence this performance. They include psychological issues (Psychological Capital), gender roles, or working with family members (Family business). Family businesses could influence economic performance because how the business is managed and passed down from generation to generation can affect its long-term sustainability and success (Brenes et al., 2011). In addition, Psychological Capital could moderate this relationship by allowing individuals to better cope with the unique challenges and stressors that can arise in a family business setting. For example, individuals with high levels of PsyCap may be better able to handle conflicts with family members and maintain positive relationships, leading to improved performance.
Additionally, PsyCap can help individuals have a more positive outlook on the future, leading to increased motivation and engagement in the business. Another aspect that we consider important is gender roles since they can also influence economic performance because societal expectations and discrimination can limit the opportunities and resources available to individuals based on their gender (Eagly & Karau, 2002). Those are the aspects that we will analyze in this article.
Psychological capital
“Psychological Capital (PsyCap) is the most valid and reliable measure that has come out of Positive Psychology and Organizational Behavior” (Luthans et al., 2007b, p. 13). Luthans and colleagues define PsyCap as “an individual’s positive psychological state of development that is characterized by: (1) having confidence (efficacy) to take on and put in the necessary effort to succeed at challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the future; (3) persevering toward and when necessary, redirecting paths to goals (hope) to succeed; and (4) when beset by problems and adversity, sustaining and bouncing back and even beyond (resilience) to attain success (Luthans et al., 2015, p. 2).”
Luthans was the first to write a book on Organizational Behavior in 1973 and devoted most of it to Positive Psychology. Positive Organizational Behavior (POB) (Luthans, 2002b, p. 59) is defined as “the study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in today’s workplace.” There are five central pillars of a psychological construct to be considered in POB: (1) theory and evidence-based; (2) positively oriented; (3) valid and reliable; (4) developmentally and managerially open; (5) related to criteria that are desired and measurable behaviors and performance (Luthans, 2002a, 2002b).
These criteria led to a systematic analysis of Hope, Efficacy, Resilience, and Optimism (HERO) best fit for Positive Psychology (Luthans, 2002a; Luthans et al., 2004; Luthans & Youssef, 2017). The acronym “the HERO within Hope, Efficacy, Resilience, and Optimism” first appeared in a Business Horizons article (Luthans et al., 2004, p. 47). However, other constructs can emerge and be added (Luthans & Yousef-Morgan, 2017). Hope is defined as “a positive motivational state based on an interactively derived sense of successful (a) agency (goal-directed energy) and (b) pathways (planning to meet goals)” (Snyder et al., 1991, p. 287). Efficacy is “the individual’s conviction or confidence about their abilities to mobilize the motivation, cognitive resources or courses of action needed to successfully execute a specific task within a given context (Stajkovic & Luthans, 1998, p. 66). Resilience is “the capacity to rebound or bounce back from adversity, conflict, failure or even positive events, progress and increased responsibility” (Luthans, 2002a, p. 702). Optimism is “a positive explanatory style that attributes positive events to personal, permanent, and pervasive causes and interprets negative events in terms of external, temporary, and situation-specific factors” (Luthans & Youssef-Morgan, 2017, p. 4). These psychological constructs are considered interactive and synergistic rather than independent and apart (for a complete explanation, see Luthans et al., 2015). POB (Luthans, 2002a, 2002b) and PsyCap (Luthans et al., 2004) establish the basis for this article.
Performance and Psychological Capital
The landscape of psychology has evolved significantly, with a notable shift towards emphasizing the positive qualities of individuals, departing from the traditional focus on negative aspects (Seligman & Csikszentmihalyi, 2001). This transformative perspective aligns seamlessly with Positive Organizational Behavior (POB). As defined by Luthans (2002), POB centers on the study and application of human resource strengths and positively oriented psychological capacities. Its goal is to enhance workplace performance by effectively measuring, developing, and managing these aspects.
Within the framework of POB, extensive research has explored the intricate relationships involving Psychological Capital. Most of these studies have scrutinized its associations with performance and job satisfaction (Luthans et al., 2007b). For instance, Luthans et al. (2005) provided empirical evidence affirming a positive correlation between Psychological Capital (PsyCap) and worker performance. Clapp-Smith et al. (2009) delved into the interplay between authentic Ownership (owner) and the PsyCap of sales staff (followers) as integral components of a company’s performance. Their findings bolstered the notion that PsyCap is positively intertwined with sales outcomes. Furthermore, PsyCap has demonstrated its value in facilitating job loss management, offering critical support during times of uncertainty, including economic crises (Chen & Lim, 2012). Similarly, Georgiou and Nikolaou (2019) argued that individuals boasting higher levels of PsyCap are more likely to secure employment.
Building upon this existing literature, which demonstrates the positive impact of Psychological Capital on performance, and considering the findings of Grözinger et al. (2022) and Bouckenooghe et al. (2019) that further support the influence of PsyCap on business performance, we propose the following hypothesis regarding the overall business performance of a firm:
H1
Psychological Capital positively influences business performance
This hypothesis suggests that an individual’s Psychological Capital, comprising elements such as self-efficacy, optimism, hope, and resilience, will positively affect a business’s overall performance. Individuals with higher levels of Psychological Capital are expected to exhibit enhanced job performance, contribute to achieving organizational goals, and navigate challenges with greater resilience and determination.
It is worth noting that further research and empirical validation are necessary to provide more robust evidence regarding the relationship between Psychological Capital and business performance. Nonetheless, the existing literature supports that Psychological Capital significantly drives positive outcomes within organizational contexts.
Family businesses
We delve into the intricate concept of a family and its relevance within the business realm. A family, characterized by blood ties or marriage, is one of the most profound social constructs humans develop. It serves as a sanctuary where individuals can freely express their inner selves, emotions, values, and beliefs, fostering an environment conducive to happiness. Furthermore, the interactions within a family unit facilitate personal growth and the development of maturity, ultimately contributing to overall well-being (Turliuc & Buliga, 2014).
However, the definition becomes more complex when transitioning from the realm of regular families to the unique context of family businesses. A family, viewed through the lens of business, takes on a different perspective. Hernández-Linares et al. (2017) propose that a family, in a business context, consists of individuals who identify as a family. Consequently, the prevailing consensus in the literature is that a family business emerges when at least two family members participate in economic activities (Çınar & Karcıoğlu, 2013).
Distinct from typical business entities, a family business operates with implicit behaviors rooted in the moral and ethical values of the family unit. Scholarly discourse has categorized family support in such businesses into two fundamental types: emotional and instrumental (King et al., 1995). Emotional support encompasses expressions of interest in the business’s concerns, close attention to the entrepreneur’s actions, encouragement of achieving business objectives, and unwavering support during challenging periods. Conversely, instrumental support entails the provision of tangible assistance and actions that facilitate the active involvement of the family in the business’s operations (Welsh et al., 2018).
In the context of our research, our hypotheses revolve around the influence of family businesses on firm performance and the moderating role of Psychological Capital within this intricate relationship. By exploring these dynamics, we aim to contribute to understanding how family dynamics and values intersect with the business world, ultimately impacting business performance during a crisis scenario such as COVID-19.
Family Business, Psychological Capital, and performance
As already explained, the concept of family plays a multifaceted role, serving as a vital social construct that enables individuals to freely express their emotions, values, and beliefs in an intimate and nurturing environment, contributing significantly to their overall happiness and personal growth (Turliuc & Buliga, 2014).In this context, family businesses adhere to the moral and ethical values intrinsic to the family unit, resulting in implicit behavioral norms and patterns. In sum, the intricate interplay between family, business, and their governing values underscores the unique dynamics of family-owned enterprises, setting them apart from their non-family counterparts (Çınar & Karcıoğlu, 2013; Tagiuri & Davis, 1992).
Psychological Capital, on the other hand, has emerged as a significant factor associated with business performance (Grözinger et al., 2021), business satisfaction (Kwok et al., 2015), and family satisfaction (Siu et al., 2021). However, the presence of family members within a business can profoundly influence the quality of life through emotional support, potentially serving as a critical influencer in the relationship between Psychological Capital and the variables mentioned above.
In light of these nuanced considerations, we propose that in the context of a family business, when an Owner actively engaged in the business possesses a high degree of Psychological Capital, the positive relationship between family business involvement and business performance is further strengthened (Raja et al., 2019). This augmentation can be attributed to individuals with elevated levels of Psychological Capital being inherently better equipped to navigate the unique challenges and opportunities inherent in family businesses. These challenges may include managing intricate family dynamics and balancing multiple organizational roles. Furthermore, individuals with heightened Psychological Capital are more predisposed to engage in behaviors that significantly contributing to improved performance. Such behaviors encompass strategic decision-making, effective communication, and proactive problem-solving. For instance, a family member who boasts high levels of Psychological Capital may consistently demonstrate a positive attitude toward their work, exhibit exceptional resilience when faced with adversities, and ultimately enhance their overall performance within the business (Bouckenooghe et al., 2019). In contrast, a family member characterized by lower levels of Psychological Capital may manifest a less positive attitude, reduced resilience, and, consequently, a detrimental impact on their business performance.
As elucidated through our discussion, emotional and instrumental supports within the familial context are inherently complementary, as corroborated by the existing body of literature. They collectively exert a positive and reinforcing influence on the following hypothesis:
H2
Family businesses positively moderate the relationship between Psychological Capital and business performance.
Gender, Psychological Capital, and performance
A comprehensive exploration of Psychological Capital’s role in family businesses, particularly in conjunction with gender dynamics, remains an underdeveloped study area. This study addresses this significant gap and scrutinizes the intricate interplay between Psychological Capital, gender, and its influence on family business performance in an emerging economy.
Prior research has elucidated the pivotal role of PsyCap in shaping business performance (Bouckenooghe et al., 2019). However, its interaction with the gender of family business Owners has been comparatively understudied. This study aims to bridge this gap and provide valuable insights into the nuanced dynamics within this relationship.
Gender role congruence theory posits that women often encounter distinctive challenges when striving for legitimacy in traditionally male-dominated fields, where differing standards are applied to assess the performance of individuals based on their gender (Eagly & Karau, 2002). Over time, the role of women in various spheres, including entrepreneurship, has evolved, and researchers have explored ways to enhance their freedom, mobility, health, economic security, and participation in decision-making processes (Hamadani et al., 2020).
Within the context of business Ownership, the influence of gender on entrepreneurial success has been a topic of multifaceted discourse. Some scholars, such as Mor et al. (2020) and Powell and Eddleston (2013), contend that businesses led by men tend to exhibit higher profitability and experience swifter growth than women. Several studies have identified gender as a significant determinant of a company’s success.
Given these considerations, we posit that gender plays a pivotal moderating role in the relationship between Psychological Capital and family business performance. In essence, the connection between Psychological Capital and business performance may vary depending on the gender of the individual at the helm. This hypothesis is rooted in the understanding that societal and cultural factors, intertwined with gender norms, can significantly influence how individuals perceive and leverage their psychological resources within the entrepreneurial landscape (Eagly & Karau, 2002). Gender-specific expectations, role perceptions, and socialization processes may mold an Owner’s utilization of Psychological Capital, consequently exerting a discernible impact on family business performance.
This hypothesis postulates that gender operates as a moderator, influencing the strength and direction of the relationship between Psychological Capital and family business performance. It proposes that the effect of Psychological Capital on business performance may undergo variations contingent on the gender of the Owner. Societal and cultural factors interwoven with gender norms are anticipated to mold how Owners harness their Psychological Capital, thereby shaping their family business performance outcomes.
Moreover, cultural factors may illuminate the income disparity between genders in the business realm, attributing it to various factors related to Owners and the intrinsic characteristics of the business (Khalife & Chalouhi, 2013). Consequently, self-employed women often encounter disadvantages compared to their male counterparts, stemming from barriers associated with education, familial responsibilities, and workplace dynamics, which Rosa et al. (1994) argue are systematic. Rosa et al. (1994) and Murnieks et al. (2020) elucidate that this disparity appears linked to divergent objectives pursued by men and women in entrepreneurship. Women tend to prioritize qualitative objectives aligned with the needs of their families over quantitative ones related to financial performance (Kalleberg Arne and Kevin, 1991). Consequently, women are more likely to perceive businesses as insufficient for fulfilling family goals and requirements, potentially leading to comparatively lower family business performance vis-à-vis their male counterparts. The challenges faced by women entrepreneurs encompass social limitations, such as discrimination and limited societal acceptance, personal constraints associated with the perception of entrepreneurship as a predominantly masculine domain, differential treatment from clients or suppliers, financial limitations encompassing difficulties in securing credit and lack of investment opportunities, and environmental constraints typified by inadequate institutional and government support (Chunera, 2020a).
It is imperative to acknowledge that this is a multifaceted issue, and numerous women-led businesses have achieved remarkable success, underscoring that the purported negative association between gender and business performance does not invariably hold (Elizabeth & Baines, 1998). Nevertheless, within the specific developmental context of the studied economy, as Khalife and Chalouhi (2013) articulated, such regions often exhibit social landscapes that favor men. Therefore, we propose the following hypothesis:
H3
Gender negatively moderates the relationship between Psychological Capital and business performance.
Ownership, Psychological Capital, and performance
We propose that ownership structure positively moderates the relationship between Psychological Capital and business performance. This hypothesis advances the notion that the influence of Psychological Capital on business performance is contingent upon the specific ownership structure governing the business.
Ownership structure, a fundamental aspect of business organization, delineates how ownership and control are distributed within an enterprise, encompassing configurations such as sole proprietorship, partnership, or corporation (Carr & Sequeira, 2007; Lutz, 1995). This hypothesis contends that the ownership structure is pivotal in shaping how Psychological Capital impacts business performance.
As elucidated in preceding sections, Psychological Capital comprises indispensable individual psychological resources, including self-efficacy, optimism, hope, and resilience. These resources are paramount for entrepreneurs and business owners as they navigate the multifaceted challenges and uncertainties inherent in the business landscape (Grégoire et al., 2019). Extensive prior research underscores the affirmative relationship between Psychological Capital and business performance, resulting in heightened productivity, innovation, and profitability levels.
Nonetheless, the hypothesis posits that the prevailing ownership structure modifies the intricate connection between Psychological Capital and business performance. Distinct ownership structures may be characterized by disparate attributes, governance mechanisms, and decision-making processes, which interact with Psychological Capital to configure the ultimate business outcomes (Bouckenooghe et al., 2015; Romano et al., 2000).
In a sole proprietorship, wherein the owner retains absolute control and decision-making authority, the impact of Psychological Capital on business performance may be direct and robust. Elevated levels of self-efficacy, optimism, and resilience in the owner can propel entrepreneurial initiatives, culminating in enhanced business performance (Owens et al., 2013).
Conversely, in partnership or corporation settings, where decision-making authority is diffused among multiple owners or shareholders, the relationship between Psychological Capital and business performance may assume a more intricate character. Factors such as ownership conflicts, divergent objectives and interests, and variances in Psychological Capital levels among owners may intricately interplay (Suprapto et al., 2015). The hypothesis posits that the ownership structure exerts a moderating influence, thereby shaping the strength and orientation of the relationship between Psychological Capital and business performance within these contexts.
It is imperative to acknowledge that the specific manifestation of this moderation effect may be contingent on contextual factors encompassing the industry type, business size, and the idiosyncratic attributes of the involved owners. For instance, in the milieu of a small family-owned business, the dynamics of ownership and familial relationships may profoundly influence the interplay between Psychological Capital and business performance.
In summary, this hypothesis posits that ownership structure is a positive moderator in the relationship between Psychological Capital and business performance. Exploring this moderation effect promises to yield invaluable insights into the interplay between psychological resources, ownership configurations, and resultant business performance outcomes. Thus, we propose the following:
H4
Ownership positively moderates the relationship between Psychological Capital and business performance.
Ownership, gender and performance
The presence of women in ownership positions within companies positively influences organizational performance, a phenomenon substantiated by the amalgamation of Agency Theory and Gender Economics.
Agency theory posits that the congruence of interests between principals (company owners) and agents (company managers) augments organizational performance (Peris-Ortiz et al., 2012). In the context of gender diversity in Ownership, women Owners introduce distinctive perspectives, decision-making styles, and approaches that harmonize with the multifaceted interests of stakeholders (Rao & Tilt, 2016). This alignment cultivates robust stakeholder relationships, fosters effective communication, and engenders proficient decision-making processes, ultimately positively impacting the organization’s overall performance.
Concurrently, gender economics acknowledges the sway of gender disparities on economic behavior and outcomes (Chunera, 2020b). Ownership teams marked by gender diversity are renowned for amplifying decision-making acumen, fostering innovation, and surmounting challenges adeptly. Women Owners often epitomize traits including collaboration, empathy, and an inclusive Ownership ethos, all of which contribute to a conducive work environment, elevated employee contentment, and heightened engagement (Gotsis & Grimani, 2016). These attributes invariably conduce to superior performance outcomes within the organization.
The confluence of these two perspectives substantiates the assertion that the presence of women in Ownership positions exerts a salutary influence on organizational performance. This effect is underpinned by the harmonization of stakeholder interests, the infusion of distinctive perspectives, and the adoption of unique decision-making paradigms by women Owners. Additionally, their penchant for collaborative, empathetic, and inclusive Ownership methodologies further augment the work environment, propels employee satisfaction, and bolsters engagement levels (Randel et al., 2018). Indeed, the research findings underscore that the collaborative, empathetic, and inclusive Ownership approaches that women Owners frequently espouse redound to augmented employee satisfaction and engagement, constituting a linchpin for the enhancement of organizational performance (Randel et al., 2018; Doh & Quigley, 2014; Welsh et al., 2017).
This hypothesis proposes that organizations with women in ownership perform better because they benefit from a harmonious blend of stakeholder interests, diverse perspectives, and inclusive decision-making. This relationship fosters a positive work environment, increases employee satisfaction, and improves organizational performance. Therefore, we propose the following hypothesis:
H5
A woman business Owner has a positive impact on performance.
In simpler terms, it suggests that women in leadership roles can enhance the connection between how a company is structured (its Ownership) and how well it performs. Their inclusive leadership style and ability to align interests contribute to better performance outcomes.
Research Methodology
Ecuadorian context and data
According to the Encuesta Estructural Empresarial (Instituto Ecuatoriano de Estadísticas y Censos, 2021), the production of Ecuadorian companies reached $91.2 billion, an essential pillar of the country’s economy since its contribution to GDP was approximately 84.4%. In this context, the three most essential industries in 2021 were manufacturing, wholesale and retail trade, and mining. (National Institute of Statistics and Census, 2021). The manufacturing industry contributed 29.9% of the GDP. Wholesale and retail trade and mining industries made 13.6% and 13.9% of GDP, respectively. From this panorama, the importance of the companies can be appreciated, especially those belonging to the first three industries, because they contribute nearly 54% of the GDP. In terms of employed personnel, the three industries that contribute the most are wholesale and retail trade, manufacturing, and services, with 27.8%, 24.6%, and 39.8%, respectively; in other words, these three categories provide close to 92.2% of total employment. In this way, it is understood that promoting the business sector should be considered of utmost importance for the growth of production and employment in the country, so studying the phenomenon of entrepreneurship becomes relevant in the Ecuadorian context.
In 2020, COVID-19 impacted the Ecuadorian economy negatively and unexpectedly. In an attempt to preserve the health of Ecuadorians, authorities took preventive actions to avoid contagions, such as suspension of economic activities and confinement during the crisis’s first months. These measures affected a decrease in the country’s domestic demand, in turn, on the supply side (Lanchimba et al., 2020). One year later, the Ecuadorian context vaccination campaigns did not start. Even though it began in several countries, the hope of an economic recovery is threatened by a possible second wave of COVID-19 worldwide due to new strains with a high level of contagion. In December 2020, different variants were exposed, such as the strain from the United Kingdom. This alarmed the population due to the high number of infections in December (this strain had been detected since September of the same year); the South African variant, like the U.K. strain, is more transmissible than other strains. The Rio de Janeiro variant is being analyzed in laboratories to determine its level of contagion or aggressiveness (Anadolu Agency, 2021).
Sampling and data collection
We collected primary information from Ecuadorian entrepreneurs. Due to social distancing measures and pandemic-related restrictions, the survey was exclusively distributed through online social networks between December 2020 and January 2021. Six hundred forty-eight individuals were invited to participate in the online survey, and 622 consented. Among these 622 respondents, two hundred thirteen Ecuadorian business owners or co-owners completed the study, resulting in a response rate of 34%. As a result, these 213 responses were considered usable. Importantly, it is worth noting that 75% of the businesses included in the study were categorized as family-owned. Of the completed surveys, 200 were considered usable, resulting in an impressive response rate of 94%. In the context of our study, it is essential to emphasize that we have utilized the entire sample, encompassing 75% family-owned businesses and 25% non-family businesses. This deliberate selection aligns with the broader business landscape in Ecuador, where family businesses dominate, as evidenced by the 85.95% reported by the Superintendencia de Compañías del Ecuador (2024). By including both family and non-family businesses in our study, we aim to provide a comprehensive representation of the diverse business environment in the country.
This approach was deemed valid for several reasons: (i) Pandemic-Related Constraints: The COVID-19 pandemic imposed restrictions on in-person data collection methods. As a result, online surveys were a practical and safe means of gathering information during this period. (ii) Efficiency and Reach: Online surveys enabled access to Ecuador’s diverse and geographically dispersed audience. (iii) Confidentiality and Convenience: Online surveys offered anonymity that may have encouraged respondents to provide candid answers. Participants could complete the survey at their convenience, increasing the likelihood of participation. (iv) Online Business Communities: Ecuador has active online social networks and business groups, providing a suitable platform for distributing and promoting the online survey to a relevant audience. Considering these factors, online surveys are a valid and appropriate method for data collection in this study, especially given the pandemic-related restrictions and the need to reach Ecuadorian entrepreneurs and business owners.
It is essential to mention that the entrepreneurial orientation in Ecuador still needs to be better developed. The entrepreneurial orientation could be measured through the Doing Business Index provided by the World Bank (2020). It measures the ease with which entrepreneurs must do business, considering barriers to entry and obstacles to business management. It is expected that the higher the country’s score, the greater the entrepreneurial activity. In the case of Ecuador, the Doing Business Index ranking is 129, with a score of 57.7 (on a scale of 0 to 100) (World Bank, 2020). Like all Latin American countries, this index is medium-low. The entrepreneurial activity needs to be promoted and provide an environment to take risks or a high level of business opportunities since the costs that this entails are very high, which, in turn, does not facilitate a positive environment for doing business in Ecuador.
Analysis
Dependent variables. Economic performance: Entrepreneurs were asked to rate their performance.
Independent variables.Psychological Capital: To measure PsyCap, we were asked to rate the performance on a seven-point Likert scale: “I feel confident in representing my role in meetings with management. I feel confident contributing to discussions about the organization’s strategy. I feel confident presenting information to a group of colleagues. If I find myself with a problem within the organization, I can think of many ways to get out of it. Right now, I see myself as being successful within the organization. I can think of many ways to reach my current organization’s goals. At this time, I am meeting the organization’s goals that I have set for myself. I can be “on my own,” so to speak, within the organization if I must. I usually take stressful things within the organization in stride. I can get through difficult times within the organization because I have had trouble before and always look on the bright side of things regarding my role. I am optimistic about what will happen to me in the future regarding my role within the organization.” Gender: is calculated as a dummy variable (female = 1, male = 0). Family business: is calculated as a binary variable (family businesses = 1, non-family businesses = 0), based on the question, “Do you consider your business/company/venture to be a family business?” This question was used to determine whether the surveyed businesses were family-owned or not. Ownership: is measured as a dummy variable (ownership = owner, 0 = non-owner).
Control variables. We controlled education level, age, and region. Education: is measured as a categorical variable with primary school, secondary school, college degree, master’s degree, or higher. Age is the age of the firm owner. Region: is measured as a categorical variable (Mountain = 1, Coast = 0).
Methodology
We gathered 200 usable surveys from Ecuadorian entrepreneurs between December 2020 and January 2021. Continuing with the process, the next thing to consider is the nature of the dependent variable, whether it is continuous or discrete.
Measures and validity/reliability assessment
We conducted an exploratory factor analysis (EFA) to assess the psychometric properties of the scales. We also examined the latter reliability by conducting a confirmatory factor analysis (CFA). All the Average Variance Extracted (AVE) estimates were more significant than 0.50, ranging from 0.52 to 0.54 (Bagozzi & Yi, 1988). The standardized factor loading of all items is not less than 0.5, and the Average Variance Extracted (AVE) confirmed the convergent validity of the measurement model (Fornell et Larcker, 1981; Hair et al., 2010). Moreover, each AVE was higher than the square of the factors’ intercorrelations (i.e., shared variance), suggesting the discriminant validity of the measurement model (Appendix 1).
Data analysis and results
Descriptive statistics
Descriptive statistics of the variables are shown in Table 1. The firm’s economic performance shows a mean of 3.603 and a standard deviation of 1.525, suggesting an extensive range of the firm’s performance scores. The Psychological Capital exhibits a mean of 5.034 and a standard deviation of 0.753, showing significant differences among family firm owners. Pearson correlations between firm economic performance, its driver, psychological and moderators, and control variables show no evidence of an unacceptable level of multicollinearity (VIF < 10) (Kovács et al., 2005). Indeed, the moderators such as gender (Mean = 0.549, S.D. = 0.499), family business (Mean = 0.761, S.D. = 0.428), and ownership (Mean = 0.676, S.D. = 0.469) do not exhibit any high correlation. Similarly, the correlation between the control variables, especially age (Mean = 36.451, S.D. = 12.798), education (Mean = 2.803, S.D. = 0.800), region (Mean = 1.967, S.D. = 0.281), and sector (Mean = 1.610, S.D. = 0.661), and the rest of the variables is low, confirming the lack of multicollinearity among variables. Furthermore, the correlations among all these variables are less than the condition index of 30 or above as high (Fragoso et al., 2020; Kalnins, 2018).
The study supposes that the probability of achieving the best performance for a particular class differs for all enterprises. Finite mixture models have been used as appropriate models to estimate distinct parameters of a regression model or distribution in each group, classify individuals, and draw conclusions about how each group behaves (Gray & Alava, 2018; Lanza & Rhoades, 2011). A finite mixture model was used and tested for four models with classes 1 to 4. The results show that the model with four classes is the best (4 classes (776.2531) < 1 class (791.9859) < 2 classes (783.2515) < 3 classes (784.0789)). However, after performing the model with four classes, the results show that the firm economic performance for classes 1 (4.733) and 3 (4.111) are relatively close. The models with 1 to 3 classes were then fitted, whose AIC comparison suggests retaining the model with two classes (2 classes (783.2515) < 3 classes (784.0789) < 1 class (791.9859)). Finally, the model with two classes was retained. About 70% of firms are in Cluster 1, and 30% are in Cluster 2. The level of performance is 3,94 for cluster 1 and 3,10 for cluster 2 (Table 2).
Hypotheses testing
Main effects
Table 3 shows the results of the model. Class 2 is the base for comparison. H1 hypothesized that Psychological Capital has a positive effect on business performance. Table 3 shows that the more the Psychological Capital of the family business Owner increases, the better its performance (β = 2.019, p < 0.001). These results support H1, family business (β = 0.349, p < 0.001) and ownership (β = 0.968, p < 0.001) significantly affect firm performance. This finding suggests that firms managed and owned by family members benefit from the latter, making them more successful. Conversely, gender has a negative impact on firm performance (β=-0.614, p < 0.001), suggesting that firms managed by women are perceived as less successful. This result is in the expected direction based on a male-dominated society, such as Ecuador.
Moderating effects
H2 predicted a positive effect of the interaction between family business and Psychological Capital on firm performance. This result is confirmed, validating H2 (β = 0.349, p < 0.001) and highlighting that firm performance depends not only on the psychological capital of its owner but also on its control by a family. H3 assumed that gender will positively moderate the relationship between Psychological Capital and firm performance. The result confirms this hypothesis (β=-2.541, p < 0.001), suggesting that women are not perceived as leading their firms to performance even if their Psychological Capital is high. Therefore, H3 is not confirmed. H4 assumed that ownership will positively affect the influence of Psychological Capital on firm performance. The result (β=-1.406, p < 0.001) does not support this idea, rejecting H4. This finding suggests that ownership does not generally translate into success for family businesses. Finally, the results show that the interaction between Psychological Capital, gender, and ownership has a positive effect on firm performance (β = 2.223, p < 0.001), suggesting that firms perform better not only when the Psychological Capital of its owner is high but also when the latter owner is a woman who owns more than 50% of the firm’s capital. This result confirms H5.
Discussion and conclusion
The study conducted sheds light on the intricate relationships between Psychological Capital (PsyCap), family business, ownership, gender, and firm performance, particularly in the context of the COVID-19 pandemic. The globalized and highly competitive nature of today’s business landscape necessitates a focus on the adaptability and positivity of individuals and organizations to ensure long-term success. Our exploration of PsyCap serves as a mechanism through which positivity permeates organizational structures, influencing followers and teams positively, as demonstrated by Avey et al. (2011) and Haar et al. (2014).
In the face of uncertainties triggered by the pandemic, evidence-based decision-making becomes crucial for business survival. Entrepreneurs, viewed as agents of social and political change, play a pivotal role in market dynamics. Given PsyCap’s trainable nature, it emerges as a resource to buffer against emotional exhaustion, especially relevant during crises like the current pandemic (Cheung et al., 2011).
Adapting interventions from positive clinical psychology for PsyCap development has demonstrated the potential to enhance positivity, alleviate negativity, and improve overall well-being (Sin & Lyubomirsky, 2009). Understanding the validity of the relationship between PsyCap and performance in crises is paramount. This study contributes by evaluating the impact of PsyCap during the pandemic, differentiating between family and non-family businesses to discern the nuances of this relationship.
Family businesses, integral to the global economy, possess unique characteristics such as strong family ties, emotional involvement, and long-term orientation. Research by Peterson et al. (2011) emphasizes the positive influence of PsyCap on family business performance, promoting a positive work environment, fostering innovation, and enhancing communication among family members. However, our findings suggest that the impact of PsyCap may vary based on the specific context and crisis experienced by the family business.
The discussion now turns to a comprehensive analysis of the study’s implications within the context of its research objectives and hypotheses. Confirming Hypothesis 1, our results align with existing research emphasizing the positive impact of PsyCap on business performance (Avey et al., 2011; Haar et al., 2014). Family business and ownership emerge as significant influencers, positively affecting firm performance. This observation underscores the potential benefits of family involvement, leveraging shared values and long-term commitment to enhance competitiveness and performance.
In contrast, the study reveals a negative impact of gender on firm performance, indicating that firms managed by women may be perceived as less performant. This calls for cautious interpretation, considering potential biases or systemic factors hindering women’s access to resources and opportunities. Further investigation is essential to unveil the underlying mechanisms and contextual factors contributing to this gender disparity.
While Hypothesis 2 on interaction effects is supported, indicating a positive impact of the interaction between family business and PsyCap on firm performance, Hypothesis 3, assuming gender moderates the relationship between PsyCap and firm performance, is not confirmed. This suggests that women owners may face challenges translating their high PsyCap into tangible performance outcomes, highlighting gender-related barriers or biases.
Contrary to Hypothesis 4, which proposed that ownership positively affects the influence of PsyCap on firm performance, our results imply that ownership alone does not guarantee success for family businesses. Other factors, such as ownership qualities, strategic decision-making, and effective utilization of PsyCap, play crucial roles in determining firm performance.
Finally, Hypothesis 5 is validated, indicating that the interaction between PsyCap, gender, and ownership positively affects firm performance. Firms perform better when owners possess high PsyCap, are women, and own more than 50% of their capital. This emphasizes the potential benefits of combining psychological resources, gender diversity, and ownership concentration to drive firm performance.
In summary, our study contributes valuable insights into the complex interplay between PsyCap, family business, ownership, gender, and firm performance. While emphasizing the positive effects of PsyCap and family involvement on firm performance, the negative impact of gender prompts reflection on gender disparities within the business landscape. These findings underline the need for further investigation into the underlying factors contributing to gender differences in firm performance and strategies to mitigate these disparities.
The nuanced nature of ownership’s influence on firm performance is evident, suggesting that ownership alone is insufficient for success within family businesses. This calls for exploration into ownership structures’ mediating factors and effective utilization of PsyCap. The positive effect of the interaction between family business and PsyCap on firm performance underscores the unique strengths of family businesses in improving performance outcomes.
While our study provides valuable insights, acknowledging its limitations is crucial. Cross-sectional data limits establishing causality, urging future longitudinal studies. Exclusively online data collection may introduce selection bias, warranting mixed-method approaches for future research. The study’s focus on Ecuador calls for caution in generalizing findings to different cultural and economic contexts.
The negative impact of gender on firm performance raises questions about gender disparities, necessitating further qualitative studies to uncover specific challenges faced by women entrepreneurs. Future research should explore mediating factors determining ownership structure effectiveness, and evaluate the impact of public policy initiatives aimed at promoting gender equality and women’s entrepreneurship. Indeed, women’s entrepreneurship is a way to contribute to women’s economic autonomy, family stability and country economic growth. Therefore, policy makers should improve women’s access to capital, finance and savings. For example, the state government should promote gender equality in public companies and their boards of directors. This can spill over into private companies, such as family-owned businesses. In addition, the state government should also promote better access to education for the female gender, which is key to running businesses.
In conclusion, our study offers significant contributions to the understanding of relationships between PsyCap, family business, ownership, gender, and firm performance. As we strive for more inclusive and thriving business environments, these findings can guide practitioners and policymakers in fostering inclusive ownership practices, leveraging psychological resources, and rectifying gender disparities within organizations. However, further research is warranted to explore these relationships in greater depth and develop targeted strategies for diverse organizational settings.
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Lanchimba, C., Welsh, D.H. & Kaswengi, J. Unveiling the interplay of psychological capital, family business, and gender on firm performance during COVID-19. Int Entrep Manag J 20, 1401–1427 (2024). https://doi.org/10.1007/s11365-024-00963-9
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DOI: https://doi.org/10.1007/s11365-024-00963-9