The image and reputation of family firms is a relatively young field of research. The first articles to explore aspects of this topic appeared in the 1990s. As shown in Table 3, almost 90 % of the articles were published in the last decade, and nearly two-thirds have been published since 2010. The 73 articles in the review were published in 43 different journals. The journals with the most publications on the image and reputation of family firms are the Family Business Review (10 articles), Entrepreneurship: Theory and Practice (8 articles) and the Journal of Family Business Strategy (7 articles), which together published one-third of all the included articles. The journal’s main focus, as stated on its homepage, is used to assign an article to a research field.
The majority (65 %) of the papers appear in journals that focus on family businesses and entrepreneurship or on general management, discussing a broad spectrum of topics that range from the motivations for developing a family firm’s image and reputation to the economic and non-economic effects of a family firm’s image and reputation. Publications in marketing and communication journals (11 articles) focus on brand building activities and customer loyalty, with most of this publishing activity occurring since 2008. Publications that emphasize finance and accounting (8 articles) highlight the role of a firm’s reputation in investor relations, while publications on business ethics (7 articles) mainly discuss corporate social responsibility in relation to a firm’s reputation. The papers related to the image and reputation of family firms stem from various research fields, which demonstrates the topic’s relevance for several disciplines and reflects the variety of themes in this research area.
As documented in the appendix, most studies take a quantitative approach (42 studies, 58 %). Of these quantitative studies, 23 analyze archival data, whereby most of them address large or stock-listed companies, for which annual reports and other business data are disclosed. A large proportion of these studies (12) originate in the US; of these twelve studies, five focus on companies ranked in the S&P 500 or S&P 1500. Another cluster of archival data analyses consists of studies conducted in Southeast Asia, including Taiwan and Singapore, and in China. In this region, the analysis of archival data is the only method of quantitative data input. Another 19 studies describe mail, telephone or Internet surveys with either stakeholders or managers and/or owners of the company. Qualitative research designs, such as case studies or narrative interviews, are underrepresented (17 studies, 23 %). Eleven articles draw on case studies, of which four describe a single company. Another 14 papers (19 %) are conceptual or theoretical and do not include empirical data analysis.
Regarding the research subject, 23 studies investigate the distinctions between family firms and non-family firms and their effects on different aspects of reputation and image. Although both constructs are relatively stable, they adapt to changing conditions (Gioia et al. 2000). However, most studies are cross-sectional, and only nine are longitudinal, investigating the development of image or reputation over time.
With regard to geographical regions, the research focus lies in industrialized Western countries, where 47 of the 59 empirical studies were conducted. Western Europe is the region with most research activity (22 studies), focused primarily in Spain (5 studies) and Switzerland (4 studies), followed by the US (19 studies). Emerging countries are underrepresented, contributing only nine studies. However, the topic seems to be of some interest in Asia, with nine studies originating from this region. Three research projects cover industrialized countries and emerging countries in cross-country studies. No contributions were available from Africa.
Various theoretical lenses have been applied to investigate the image and reputation of family firms. Most papers have a clearly defined theoretical framework; 15 articles employ more than one theory, and only two articles lack a distinguishable framework. Sources are assigned to a theoretical foundation based on the definitions provided by the authors. Five theories, whose key statements regarding image and reputation are presented in this chapter, were employed more than five times. The articles under discussion mostly applied the resource-based view (RBV) as their theoretical framework (17 articles). The RBV considers image and reputation as intangible resources (Craig et al. 2008; Rindova et al. 2010) that affect a company’s competitive position and performance (Habbershon and Williams 1999; Huybrechts et al. 2011). A company’s reputation facilitates the accessibility of resources (Kashmiri and Mahajan 2014; Zang 1999) and new business opportunities (Sieger et al. 2011). A family firm’s special image seems to be a valuable resource, which influences customer loyalty (Orth and Green 2009).
A relatively new concept in family business research is socio-emotional wealth (SEW), which summarizes the total value that families gain from a firm, including non-financial value, such as reputation (Berrone et al. 2010; Gómez-Mejía et al. 2011). Since 2010, this concept has been applied in twelve articles, including six conceptual contributions. Striving for goals related to SEW, such as image and reputation, fosters socially responsible behavior in family firms (Berrone et al. 2010; Block and Wagner 2014).
Organizational identity theory is employed eleven times to investigate the image and reputation of family firms. Organizational identity represents the central and enduring values and beliefs that members associate with an organization (Albert and Whetten 1985). Family firm owners, especially founders, often regard their firms as an extension of themselves and as a legacy for the next generation (Dyer and Whetten 2006). The owning family’s strong identification with the firm leads to reputation-related concerns. As a consequence, family members avoid harmful business practices that can damage the company’s reputation (Dyer and Whetten 2006; Zellweger et al. 2013).
Agency theory was used eleven times to investigate the image and reputation of family firms. The basic assumption of agency theory is that owners and managers have divergent goals, which can result in the opportunistic behavior of managers. To align managers’ goals with their own, business owners incur bonding and monitoring costs (agency costs) (Jensen and Meckling 1976). Family firms’ long-term orientation and reputation-related concerns seem to encourage them to value firm survival over the maximization of short-term wealth, which results in fewer agency conflicts and increased resource accessibility (Anderson et al. 2003; Yang 2010).
Brand identity theory (7 articles), which originates from marketing science, defines brand image as the general impression that a customer has of a brand (Keller 1993). These brand associations influence the customers’ decisions (Craig et al. 2008). Family firms are perceived as brands in their own right with specific associations (Krappe et al. 2011). Furthermore, institutional theory (5 articles), transaction cost theory (4 articles), stakeholder theory (4 articles), stewardship theory (3 articles) and several other theoretical frameworks were used to investigate different aspects of the image and reputation of family firms.
Entrepreneurial and family business journals discuss a variety of theories, including RBV (9 articles), SEW (7 articles), organizational identity (7 articles), and agency theory (4 articles). Organizational identity and SEW are commonly applied in family business and entrepreneurial journals to investigate the motives behind socially responsible behavior and reputation-related concerns. Moreover, organizational identity serves as a theoretical background for specific associations with family firms. The RBV is employed to explain influencing factors and the impact of image and reputation. Marketing and communication journals mainly publish articles using brand identity or RBV as a theoretical framework. Brand identity is applied to explore not only associations with family firms but also actions designed to build a favorable brand image, while articles based on RBV postulate that the owning family is an important part of the corporate brand. Contributions in finance and accounting journals focus on access to capital and analyze specific actions, such as dividend payments or disclosure policies, from an agency perspective.
Family firm definitions
Although family firm research is growing (Xi et al. 2015), no common definition exists for the family firm (Harms 2014; Kraus et al. 2011). Some researchers define a family firm according to ownership and family influence; others consider a firm’s self-perception or familiness to determine whether it is a family firm (Diéguez-Soto et al. 2015). Since these heterogeneous definitions have to be accounted for when interpreting the findings, the family firm definitions of the empirical articles included here were analyzed together with their respective research designs and empirical results. Most articles in this study define a family firm according to ownership and the control exercised by the family. Only one paper relies solely on self-perceptions, as expressed on websites and in interviews. Based on the information specified in the research design or the description of the sample, three main clusters evolved, as presented in Table 4.
The largest cluster consists of family-owned and managed firms, with family ownership of at least 50 % and the family’s active involvement in management or governance. Twelve publications in this cluster also required at least the involvement of a second generation of the family, and nine established the self-perception as a family firm as an additional criterion.
Cluster 2 consists of 20 studies that investigate very large and predominantly stock-listed companies. In terms of ownership, a threshold of at least 5 % seems to draw the line between family firms and non-family firms. Most studies in this group required family control or, more specifically, family members who acted as board members. All 20 studies analyzed archival data, mainly from the US (11 articles) or Asian countries (6 articles); 15 of these studies compared family firms with non-family firms.
The third cluster includes ten studies that investigate stakeholder perceptions of family firms or the family firm’s image through media coverage. Most of these studies did not include a detailed definition in their research design. Regarding the above mentioned impact of different family firm definitions on the results, the respective definition of family firm is included in the following analysis, and the distinctions between various types of family firms are discussed in more detail in Sect. 5.
Areas of research
Overview of research streams
In the course of the analysis, four content-related research streams crystallized. All contributions matched at least one of these streams; 46 matched several. As illustrated in Table 5, the importance of these research streams has changed over time. Early on, merely influencing factors and consequences were the subject of investigation. Since then, the number of publications that discuss the consequences has remained relatively stable; the number of those that examine influencing factors has increased. The consequences of communicating family ownership to stakeholder groups, such as consumers or employees, have been explored in eight studies, and six studies have been published since 2013. Actions have only been explored since 2004, and they have been increasingly researched in recent years. Associations with family firms, i.e., the specific characteristics of image or reputation, have predominantly interested researchers in the last 8 years.
The 14 conceptual articles focus mainly on the family’s influence on the firm’s image and reputation. Six of these conceptual articles use SEW as a theoretical framework to explain family firms’ motives for pursuing non-financial goals (e.g., Berrone et al. 2012; Cennamo et al. 2012; Zellweger et al. 2013). All six articles were published between 2011 and 2014, and they suggest positive impacts of the firm’s commitment to their stakeholders on the firm’s reputation (e.g., Berrone et al. 2012; Cennamo et al. 2012; Hauswald and Hack 2013; Sharma and Sharma 2011). Regardless of the theoretical lens, a family’s heightened identification with its firm is supposed to increase its desire to protect the firm’s image and reputation (Cennamo et al. 2012; Vardaman and Gondo 2014; Zellweger and Nason 2008), especially when the family is visibly linked to the firm, e.g., when the company shares the family name (Zellweger et al. 2010, 2013). Long-term orientation (Huybrechts et al. 2011; Iyer 1999; Le Breton-Miller and Miller 2006, 2015), social ties (Hoffman et al. 2006; Huybrechts et al. 2011; Iyer 1999) and ethical values (Hoffman et al. 2006; Iyer 1999) are identified as additional drivers of image and reputation building. Reputation is suggested to have positive effects on social capital (Cennamo et al. 2012; Huybrechts et al. 2011), the self-esteem of family members (Hauswald and Hack 2013) and goodwill, as well as status in society (Cennamo et al. 2012; Hoffman et al. 2006). The positive effects of reputation can, in turn, contribute to the firm’s independency and longevity (Cennamo et al. 2012). In addition, the external context of a firm, such as the industry sector (Le Breton-Miller and Miller 2015), culture, the legal framework and other country-level particularities, condition how its reputation can be developed (Hauswald and Hack 2013; Sharma and Sharma 2011).
The following chapters illustrate and categorize the findings of the different research streams by focusing on the 59 empirical studies in this review.
Associations with family firms
Family firms are perceived as a special type of company with typical associations. Some studies characterize family firms as brands in their own right (Craig et al. 2008; Krappe et al. 2011). Table 6 shows the main associations with family firms that have been identified in empirical studies. Most of them are positive and relate to the social capital of family firms.
Family firms are described as socially responsible, trustworthy and customer-oriented firms that have strong ties to their communities. Overall, family firms are regarded as good corporate citizens (Krappe et al. 2011). The tradition and long-term orientation of family firms is also reflected by outside stakeholders. As a consequence, family firms are perceived as persistent and stable, although these properties are sometimes interpreted negatively as stagnation (Krappe et al. 2011). In specific sectors, family firms are negatively perceived by customers for being limited in product selection, for setting comparatively high prices (Carrigan and Buckley 2008; Orth and Green 2009), and for tending to be secretive (Othman et al. 2011). Family firms are also regarded as authentic, small and regionally operating companies (Carrigan and Buckley 2008; Krappe et al. 2011). Potential employees perceive family firms as competitive companies, with committed and socially responsible management, though with less formalized structures and limited career opportunities for non-family members (Covin 1994). However, the recent study of Botero (2014) suggests that the negative perceptions of family firms as employers are rather associated with small family firms.
Most studies that discuss the attributes of family firms were conducted in Western countries, and most of these studies find positive associations with family firms. Deephouse and Jaskiewicz (2013) compare family firms and non-family firms in eight countries from different cultural areas and suggest that family firms generally have better reputations than non-family firms. Botero (2014) found no differences between the US and China in these firms’ attractiveness as employers. By contrast, comparing the images portrayed in mission statements, Blodgett et al. (2011) found that US family firms highlight honesty and integrity, while international family firms emphasize environmentalism, globalism and social responsibility. Drawing on evidence from Russia, Keplinger and Feldbauer-Durstmüller (2012) found that the mass media portrays family firms as immoral, greedy and cheating. Othman et al. (2011) describe family firms in Malaysia as secretive. Therefore, the scientific evidence regarding the influence of culture remains inconclusive. In addition, stakeholders’ characteristics, including their individual experiences with family firms (Covin 1994), their education levels (Covin 1994; Sageder et al. 2015), and their personality traits (Hauswald et al. 2015; Sageder et al. 2015), influence their perceptions of family firms. Hauswald et al. (2015) found that family firms attract applicants who are concerned with the welfare of others and who value conservation rather than those who are open to change or who strive for self-enhancement. Moreover, perceptions seemingly depend on economic circumstances. In times of crisis, family firms appear more attractive to jobseekers (Hauswald et al. 2015), and stability becomes more important to stakeholders (Krappe et al. 2011). Under uncertainty, the image of family firms appears to be a quality reference for consumers (Beck and Kenning 2015).
The majority of studies that investigate the associations with family firms ask participants to provide their personal impressions of typical family-owned and managed firms without giving a specific definition. In most cases, customers or community stakeholders describe their experiences with small, local, family-owned and managed companies in retail or tourism sectors in Western industrialized countries; empirical findings from other geographical regions are scarce. Krappe et al. (2011) found that small and large family firms are perceived differently. While the former are perceived as stagnant and hierarchically structured, large family firms are considered highly competitive. In addition, the limited attractiveness of family firms as employers relates to smaller firm size, which is associated with fewer career opportunities (Botero 2014). However, both types share relational qualities, such as trustworthiness, social responsibility, customer orientation and local embeddedness (Krappe et al. 2011).
Factors that influence image and reputation
The articles included in this review identified different factors that influence a firm’s reputation and image. These factors were clustered into categories, as shown in Table 7. Most of them are specific to family firms (e.g., family influence), while others apply to all types of companies, such as company size and age. Most of the family firm-specific factors create the desire to develop and protect a favorable reputation for the family and the firm and to foster relevant activities.
The family’s involvement is the factor that is most frequently explored in the analyzed papers. The contributions that discuss the differences between family firms and non-family firms found that family ownership and the family’s involvement in management support the development of a favorable reputation. Family ownership is a predictor of responsible behavior toward different stakeholders (e.g., De La Cruz Déniz Déniz and Cabrera Suárez 2005; Dyer and Whetten 2006; Tong 2007). The family’s involvement in the management allows it to build a family firm image (e.g., Gallucci et al. 2015; Memili et al. 2010), to determine the company’s strategy (Basco 2014; Kammerlander and Ganter 2015; Lee and Marshall 2013) and to take action to develop and protect the firm’s reputation (Deephouse and Jaskiewicz 2013; Miller et al. 2008; Yang 2010; Zang 1999). The influence of family involvement and control was confirmed for different firm sizes and levels of family ownership and control, ranging from 5 to 100 %.
As generally accepted in reputation research, firm characteristics, such as size, age (Fombrun and Shanley 1990) and financial performance (Fombrun and Shanley 1990; Roberts and Dowling 2002), are important for building a favorable reputation. The family business literature examined in this review also confirms these factors for family firms (Deephouse and Jaskiewicz 2013; Dyer and Whetten 2006; Kashmiri and Mahajan 2010; Zang 1999) and identifies additional predictors of reputation. Internationalization activities (Micelotta and Raynard 2011) and the industry (Micelotta and Raynard 2011; Westhead 2003) influence the relevance of reputation (Westhead 2003) and affect the strategy for communicating family ownership to stakeholders (Micelotta and Raynard 2011). Fast-growing family firms tend to set gaining reputation as a goal (Lee and Marshall 2013; Xu’nan 2011). The generation involved in the family firm influences reputation-related concerns. While founders aim for growth or performance (Miller et al. 2008), subsequent generations seem to be more concerned about the firm’s reputation in the community and with customers (Miller et al. 2008; Sorenson et al. 2009; Westhead 2003) or minority shareholders (Isakov and Weisskopf 2015). By contrast, anecdotal evidence shows that later generations may be less concerned about investors’ perceptions of reputation because the family might need less external capital to grow (Chen et al. 2010). The founders’ reputation shapes the company’s reputation (Irava and Moores 2010; Kirkwood and Gray 2009), which can be an advantage, though it can also prevent subsequent generations from creating their own reputation (Irava and Moores 2010).
The family’s ethical values and beliefs are passed down through generations (Blombäck and Brunninge 2013). These values determine how family members act toward stakeholders inside and outside the company (Byrom and Lehman 2009; Fernando and Almeida 2012; Kirkwood and Gray 2009; Sorenson et al. 2009). Family values help shape the firm’s image (Presas et al. 2011), and they are reflected in the firm’s level of commitment to its stakeholders, who support its reputation (Uhlaner et al. 2004). Hence, the conceptual model of Cennamo et al. (2012) is confirmed. Adhering to ethical norms helps build enduring network relationships by consistently meeting expectations and obligations (Sorenson et al. 2009). Family firms build strong social ties in their communities (Byrom and Lehman 2009; Uhlaner et al. 2004; Zellweger et al. 2012) and forge close relationships with their customers (Carrigan and Buckley 2008; Levenburg 2006; Presas et al. 2014), employees (Marques et al. 2014; Perrini and Minoja 2008) and business partners (Sieger et al. 2011; Zang 1999). This involvement in the community and in business networks enhances the reputation of the family and the firm (Sorenson et al. 2009). Strong local ties foster responsible behavior toward the community to ensure that a positive public image of the firm is projected (Berrone et al. 2010; Byrom and Lehman 2009; Marques et al. 2014).
The family’s identification with the firm is an important driver of reputation-related concerns. The family’s integration into the firm allows to establish a family-based identity and to create a strong family firm image (Craig et al. 2008; Memili et al. 2010; Zellweger et al. 2012). When the family name is part of the firm’s name, the family seeks to keep the firm’s name unsullied (Deephouse and Jaskiewicz 2013; Kashmiri and Mahajan 2010, 2014; Uhlaner et al. 2004). However, the study of Isakov and Weisskopf (2015) in Switzerland found that having the family name as part of the firm’s name had no effect on dividend policy. Family managers who identify strongly with their firms feel personally liable for responsible conduct toward customers and society (Kammerlander and Ganter 2015; Uhlaner et al. 2004). The desire to protect the firm’s reputation influences family managers’ strategic options (Kammerlander and Ganter 2015). If family firm leaders are able to take pride in the firm because of their identification with it, they are encouraged to invest in a positive image and to enhance the firm’s reputation (Zellweger et al. 2012).
Families aim to create value over generations (Miller and Le Breton-Miller 2005). The long-term orientation of family firms allows them to generate assets, such as a family firm image, (Miller et al. 2008; Zellweger et al. 2012), to invest in social capital (Uhlaner et al. 2004; Zellweger et al. 2012), and to create a favorable reputation rather than pursuing short-term financial results (Miller et al. 2008).
As some family firms have rich histories and traditions, the family represents continuity for these firms (Micelotta and Raynard 2011). A family’s heritage contributes to the authenticity of a family-based brand (Blombäck and Brunninge 2013), serving as a means to highlight familiness as a part of the brand image (Blombäck and Brunninge 2013; Micelotta and Raynard 2011). Moreover, a long history of trustworthy and socially responsible behavior enhances a firm’s reputation and can ensure the support of its stakeholders (Kashmiri and Mahajan 2014; Perrini and Minoja 2008).
A country’s legal framework conditions how a firm’s reputation can be developed. National legislatures may force companies to implement measures to inform or protect stakeholders, such as corporate social responsibility (CSR) programs, which influence corporate reputation (Blodgett et al. 2011; Othman et al. 2011).
Actions to create a firm’s image and enhance its reputation
Several family firm characteristics encourage the establishment of a family firm’s image and facilitate actions to develop and protect its reputation. Stakeholders’ perceptions shape a company’s reputation (Fombrun and Shanley 1990). Actions concerning a firm’s relationship to its customers, employees, investors and other stakeholders are essential for creating a favorable reputation. The articles consulted for this review analyze different actions. Table 8 presents the main clusters of actions.
Strong relationships to stakeholders are essential for developing a reputation. These relationships concern investors, employees and business communities. To satisfy the multitude of interests, various types of activities have been investigated. From the investor perspective, voluntary disclosure policy (Chen et al. 2008), tax aggressiveness (Chen et al. 2010), dividend policy (Isakov and Weisskopf 2015) and earnings management (Xu’nan 2011) have been analyzed. Due to concentrated ownership, family firms are prone to discriminate against external investors. The topic of several studies was family firms’ tendency toward entrenchment, particularly in Asian countries (Sue et al. 2013; Xu’nan 2011, Yang 2010). In a study on Swiss stock-listed family firms, Isakov and Weisskopf (2015) found that dividend payments were generally significantly higher for family firms than for non-family firms. Reputation-related concerns seemingly have the potential to limit expropriation behavior against minority shareholders (Sue et al. 2013; Xu’nan 2011). For business partners, a company’s reputation complements business information and facilitates contracting (Zang 1999). Moreover, a family firm’s relationship with its employees is very important, as it is a reliable employer that creates good working conditions (De la Cruz Déniz Déniz and Cabrera Suárez 2005; Fernando and Almeida 2012; Miller et al. 2008; Perrini and Minoja 2008). The direct involvement of family members, along with trustworthy behavior, creates close relationships with customers and enhances the firm’s reputation (Carrigan and Buckley 2008; Presas et al. 2014).
Many families strongly identify with their firms, which prompts them to act in socially responsible ways (Berrone et al. 2012). Hence, family firms avoid actions that can potentially damage their reputations and attempt to interact responsibly with their stakeholders (Dyer and Whetten 2006). A high level of identification and commitment gives rise to socially responsible activities (Marques et al. 2014; Uhlaner et al. 2004). Family firm owners avoid job cuts (Block 2010) and engage in workplace CSR initiatives (Block and Wagner 2014; Fernando and Almeida 2012; Marques et al. 2014), but they hesitate to act in an employee-oriented way if they believe that these practices might endanger family control or the SEW (Cruz et al. 2014). With regard to the customer dimension of CSR, family firms aim to minimize negative incidents related to their products (Block and Wagner 2014; Kashmiri and Mahajan 2014). In addition, family firms perform better than or at least as well as non-family firms in terms of environmental protection (Berrone et al. 2010; Block and Wagner 2014; Cruz et al. 2014). However, various manifestations of socially responsible behavior exist, ranging from a firm’s philanthropic giving to compensate for its environmental misconduct and to shape its reputation (Du 2015) to a firm’s socially responsible conduct, regardless of economic benefits, that is motivated by family values (De la Cruz Déniz Déniz and Cabrera Suárez 2005). Socially responsible behavior is observed in different types of family firms; however, the company size seems to affect the different manifestations of CSR. While small firms focus on the employee and community dimensions (Marques et al. 2014; Uhlaner et al. 2004), large companies strive to develop their reputations in a broader context by including diversity, product-related and environmental aspects (Block and Wagner 2014; McGuire et al. 2012).
A family firm’s corporate identity is unique because the family is an inimitable component of the firm (Memili et al. 2010). Many family firms build a strong family brand identity (Craig et al. 2008) by integrating their traditions, beliefs and self-perceptions (Blombäck and Ramírez-Pasillas 2012). The corporate brand identity either arises from an intuitive process or is subject to strategic considerations (Blombäck and Ramírez-Pasillas 2012). Different strategies are designed to integrate the family into the firm’s identity to varying degrees, ranging from closely intertwining the family and the firm to clearly focusing on the company and subordinating the family’s role (Micelotta and Raynard 2011). The family firm’s identity constitutes the basis for its corporate reputation if the identity attributes are widely accepted (Zellweger et al. 2013). As family firms are primarily perceived positively, their identities have the potential to create competitive advantages in the market (Zellweger et al. 2012).
The firm’s identity provides the basis for communication with stakeholders (Balmer 2008). The elements of this identity are conveyed through behavior and communication, thereby creating an image and building a reputation (Blombäck and Ramírez-Pasillas 2012). Family firms present their firms’ identities to stakeholders through various channels, such as websites (Blombäck and Brunninge 2013; Gallucci et al. 2015; Micelotta and Raynard 2011), mission statements (Blodgett et al. 2011) and marketing materials (Gallucci et al. 2015). In addition to formalized communication channels, the family and employees are responsible for conveying the firm’s identity and values to customers and other stakeholders (Presas et al. 2011). Firms that decide to promote familiness create their reputation in the market by building on the positive perceptions of family firms (Craig et al. 2008; Presas et al. 2014). Many family firms implement CSR activities, whose communication potentially enhances a firm’s reputation (McGuire et al. 2012; Othman et al. 2011).
Family firms are perceived as customer- and service-oriented entities (Binz et al. 2013). A positive reputation with customers is an important goal for family firms (Danes et al. 2008; Kammerlander and Ganter 2015; Lee and Marshall 2013). Regardless of their strategic orientation, these firms engage in building good relationships with their customers (Basco 2014; Craig et al. 2008). They aim to provide excellent service (Orth and Green 2009) through direct interactions with their customers (Carrigan and Buckley 2008; Uhlaner et al. 2004), to implement new complementary customer services (Levenburg 2006) and to pursue quality and innovation strategies that protect their companies’ reputation with respect to customers (Kammerlander and Ganter 2015). Using the family name in the company name raises concerns regarding product quality (Kashmiri and Mahajan 2014).
Consequences of a firm’s image and reputation
A firm’s image and reputation have impacts on its performance and on non-financial benefits. Table 9 provides the main factor clusters that have been investigated empirically.
The interrelationship of reputation and performance has been well researched in general business studies (e.g., Boyd et al. 2010; Fombrun and Shanley 1990; Lee and Roh 2012; Roberts and Dowling 2002). The family business literature confirms the positive effects of a firm’s reputation on its performance. Actions that enhance its reputation contribute to its performance (Fernando and Almeida 2012; Levenburg 2006). Investments in CSR enhance a firm’s reputation and simultaneously have a positive effect on financial success (Block and Wagner 2014; Kashmiri and Mahajan 2010). Again, a family’s identification with the firm, especially when the firm takes its name from the family name, seems to stimulate social and financial performance (Kashmiri and Mahajan 2010). Family firms that build a family firm image achieve better financial results (Craig et al. 2008; Gallucci et al. 2015; Memili et al. 2010; Zellweger et al. 2012). Integrating the firm’s reputation into its strategic goals produces better financial performance and growth (Basco 2014, Lee and Marshall 2013). However, Danes et al. (2008) found that companies that strive to improve their reputations show lower performances, although this finding is contradicted by the longitudinal study of Lee and Marshall (2013). Analyzing the same data set, they show that companies whose strategic goals involve boosting their reputations are younger than the average company and show above-average profit growth. Consequently, Danes et al.’s (2008) findings appear to be driven by age rather than by strategic orientation. The relationship between image, reputation and performance was investigated for all company sizes, predominantly suggesting the positive influence of image and reputation on financial performance.
A good reputation facilitates a firm’s access to resources. In particular, financial capital (equity and debt) is available under better conditions, as empirical studies on large and stock-listed family firms suggest (Anderson et al. 2003; Kashmiri and Mahajan 2010; Li 2010; Zang 1999). In addition, evidence has shown that CSR activities enhance a firm’s reputation and increase employee satisfaction (Marques et al. 2014; Perrini and Minoja 2008) and employee loyalty (Perrini and Minoja 2008). Communicating family ownership and control to potential applicants in Germany increased their willingness to join family firms (Hauswald et al. 2015); at the very least, doing so had no negative impact on the firms’ attractiveness as employers in the US and China (Botero 2014).
The creation and communication of a family firm’s image serves as a competitive advantage and contributes to the company’s success (Craig et al. 2008; Zellweger et al. 2012). Family firms aim to develop solid relationships with their customers (Binz et al. 2013; Carrigan and Buckley 2008; Levenburg 2006). Hence, customers generally perceive family firms as customer-oriented and trustworthy organizations (Orth and Green 2009; Sageder et al. 2015), which has positive effects on customer loyalty, customer retention (Binz et al. 2013; Craig et al. 2008), customers’ recommendation to friends (Sageder et al. 2015) and their acceptance of new products (Beck and Kenning 2015). These effects are especially evident in the retail sector and service industry.
While the impacts on performance and customer loyalty are well documented, there is scarce evidence on the effects of reputation on other, non-financial assets. A positive reputation contributes to a firm’s social capital; it assures the support of the community (Perrini and Minoja 2008; Sorenson et al. 2009; Zang 1999), for later generations as well (Miller and Le Breton-Miller 2005), and allows the firm access to business networks (Sieger et al. 2011; Zang 1999). It opens the door to new business opportunities (Fernando and Almeida 2012; Sieger et al. 2011) and secures the firm’s status in society (Carrigan and Buckley 2008). While community support is evident for smaller family firms, access to business networks and opportunities are reported for large firms. However, as these clusters include only few studies, these findings must be interpreted with caution.