chapter  6
Keeping it in the family: financial rewards in family firms
BySARA CARTER, FRIEDERIKE WELTER
Pages 17

The aim of this conceptual chapter is to explore financial rewards in Family Entrepreneurship, and the influence of factors, specific to Family Entrepreneurship, that are likely to impact on the allocation of financial rewards. In so doing, it illuminates a relatively unknown dimension of family businesses – how families influence value extraction from family-owned businesses and, conversely, how the business influences family life in terms of its consumption behaviour and relative lifestyle. Unlike non-family firms where reward decisions are largely determined by business efficiencies, and bounded by rigid governance requirements, reward decisions in family firms are also influenced by family needs and desires and by emotional relationships within the family. Family firms are also likely to be characterized by reward allocation structures and processes that are negotiated between the business and the family, regardless of whether governance requirements apply also. Thus, this chapter draws attention to previously unexplored interactions between the family and the firm that impact on both family and business strategies, and the role of altruism and trust as key dimensions in the allocation of financial rewards. As so little is understood about the financial rewards of entrepreneurship, the chapter starts by considering what these rewards are and the reasons why there has been so little interest in researching this topic. The chapter next considers the types of financial rewards available within family firms, providing a broad overview of the factors that may influence reward allocation in the family firm. Next, the allocation of financial rewards is theorized. Stewardship, altruism and trust are important influences on financial rewards within the family business, drawing attention to the contexts within which families determine financial rewards. The chapter concludes with an outlook, outlining perspectives for future research.