Research Brief: Latest FBR Research for Practitioners

Well, the time has come again for Karen Vinton to recap Family Business Review’s stellar research offerings and provide insight for practitioners. This week we offer three Executive Summaries. The first of which investigates five major dimensions essential to the socioemotional wealth (SEW) of families. The second summary explores why some family business owners are more biased than others when assigning value to their ownership stakes. The final article summary also includes a podcast interview with the author and examines performances of family firms by looking at them through the lens of the their respective business histories.


We hope you enjoy these summaries and invite you to share them with your colleagues and clients via our social sharing buttons.

Summary 1: “Socioemotional Wealth in Family Firms: Theoretical Dimensions, Assessment Approaches, and Agenda for Future Research”
by Pascual Berrone, Cristina Cruz and Luis R. Gomez-Mejia

One of the most exciting theoretical concepts to emerge in recent years in the field of family business is socioemotional wealth (SEW). The SEW model suggests that family firms can be motivated by and committed to nonfinancial aspects of the firm that meet the family’s affective needs. This article is an excellent summary of what is currently known and not known about SEW and proposes an ambitious research agenda.

In order to advance our knowledge and understanding of SEW, the authors recognize the need for additional research and have taken an important step toward that goal. In this article they propose five major dimensions of SEW, called FIBER:

  • Family control and influence
  • Identification of family members with the firm
  • Binding social ties
  • Emotional attachment
  • Renewal of family bonds to the firm through dynastic succession

They also propose a set of possible survey items which could be used to measure these various dimensions (see Table 1). Once the survey instrument is tested and refined, this model has the potential to further impact the family enterprise field.

SEW is a useful and powerful tool for practitioners because the model can help both practitioners and the clients they serve better understand the uniqueness of family firms. Reading this article is an excellent way to start learning more about SEW.

To link to the study, click here.

Summary 2: “Value Is in the Eye of the Owner: Affect Infusion and Socioemotional Wealth Among Family Firm Owners”
by Thomas Markus Zellweger and Tobias Dehlen

This article explores the following question: Why are some family business owners more biased when assigning a value to their ownership stake than others? The authors use the affect infusion model (AIM) from cognitive psychology to help explain how affect related to family firm ownership and socioemotional wealth (SEW) is mediated by target, personal and situational features.

The model shows that an owner’s subjective valuation and market valuation of a business are more identical when the owner:

  • Is familiar with the value assessment and asset transfer processesIs highly motivated to sell
  • Has a reliable market assessment and performance information

The model also shows that the subjective and market valuations vary significantly when:

  • An asset is more personally relevant to an owner as part of his/her overall wealth or identity or as a work place
  • Ownership structure is complex and it is difficult to clearly assess the true value of an asset
  • Personal and business finances are intermingled

These results are summarized in Table 1 of the article and illustrated using a case example.

When valuing a family business, practitioners and family firm owners need to be aware of the potential benefits and drawbacks of SEW. For example, an owner of a family business might put an unrealistic price on an asset because of SEW, thus making it unsellable in the market. But, on the other hand, SEW may help to explain why a family business owner is willing to put family capital into an enterprise that others might not be willing to invest in.

To link to the study, click here.

Summary 3: “Contextualizing Performance of Family Firms: The Perspective of Business History” 
by Andrea Colli

This article looks at the performance of family firms by using the perspective of business history. The author reminds us that writing a business history is not simply the telling of a story, but rather explaining what occurred. Business histories can provide longitudinal evidence which may be absent from other forms of research and which may also help practitioners work with their clients.

Business historians have only recently begun to focus on firm performance in their research, but the history of a business makes it clear that performance changes over time and space and is a “changing cultural artifact.” Four historical meanings of performance are proposed by the author in this article: survival as a family-owned firm, embeddedness with the local community and with the family, reputation of both family and business, and sustainability through the balance of growth and family control. Each of these is examined in detail using illustrative examples from the histories of family firms.

Examining a family firm’s history can provide practitioners with a longitudinal perspective of the firm which can enrich and enhance the work practitioners do with their clients. A podcast interview with the author which further explores this fascinating topic can be found here.

To link to the study, click here.

For complete issues as well as the latest Online First articles, . FFI members receive complimentary subscription to FBR. If you need assistance accessing your account please contact [email protected].

About The Contributor

Karen L. Vinton Ph.D. is a 1999 Barbara Hollander Award winner and Professor Emeritus of Business at the College of Business at Montana State University, where she founded the University’s Family Business Program. An FFI Fellow, she has served on its Board of Directors and chaired the Body of Knowledge committee. From 1997 through 2011, Vinton served on the editorial board of Family Business Review, and is the current assistant editor. Before retiring, Vinton served as director for her own family’s business (negotiating its eventual sale) and had her own family business consulting practice, Vinton Consulting Services. Karen can be reached at [email protected].

Be sure to look for The Practitioner: Wednesday Edition next weekfor an article from D. Randolph Waesche, president of Resource Management Inc.

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Yours in Practice,

The Practitioner

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