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Enlightening the influence of family TMT involvement on firm growth and degrowth rates

Abstract

Determining whether family management influences firm growth remains a controversial issue in current literature. This study addresses this research gap by analyzing the effect of family TMT involvement on firm growth, as a reflection of the mixed gamble trade-off between restricted versus extended socioemotional wealth priorities, taking into account both the duality between growth and degrowth as well as the multidimensional nature of firm growth. We establish that in the context of potential growth-promoting decisions, family-managed firms attach more importance to restricted than to extended SEW priorities. Meanwhile, in the context of potential degrowth-avoiding decisions, they prioritize extended over restricted SEW priorities. We also explore the contingent effect of financial slack in the former relationships, modulating the relevance attached to restricted and extended priorities within the SEW mixed-gamble. Using a longitudinal sample of 4047 Spanish private family firms, our findings confirm the utility of the SEW mixed gamble approach to explain how the level of family TMT involvement might influence growth rates while undeniably limiting degrowth rates. Moreover, our findings reveal a heterogeneous moderating effect of financial slack on the relationship between family TMT involvement and growth as well as degrowth.

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Notes

  1. The manufacturing subindustries are: 1. Meat industry; 2. Foodstuffs and snuff; 3. Drinks; 4. Textiles and clothing; 5. Leather and footwear; 6. Timber industry; 7. Paper Industry; 8. Graphics; 9. Chemical and pharmaceutical products; 10. Rubber and plastic; 11. Non-metallic mineral products; 12. Ferrous and non-ferrous metals; 13. Metal products; 14. Agricultural and industrial machinery; 15. Computer, electronic and optical products; 16. Electrical machinery and material; 17. Motor vehicles; 18. Other transport equipment; 19. Furniture industry; and, 20. Other manufacturing.

  2. The territorial subdivisions are: 1. Northwest 2. Northeastern 3. Madrid 4. Center 5. East 6. South 7. Canarias.

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Correspondence to María J. Martínez-Romero.

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Martínez-Romero, M.J., Diéguez-Soto, J. & Vandekerkhof, P. Enlightening the influence of family TMT involvement on firm growth and degrowth rates. Eurasian Bus Rev (2022). https://doi.org/10.1007/s40821-022-00220-5

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  • DOI: https://doi.org/10.1007/s40821-022-00220-5

Keywords

  • Family TMT involvement
  • Growth rates
  • Degrowth rates
  • Socioemotional wealth
  • Mixed gamble

JEL Classification

  • L21
  • L25
  • M12