chapter  7
Understanding entrepreneurial behaviors in family firms: does the socioemotional wealth model explain differences?
ByJONATHAN BAUWERAERTS, OLIVIER COLOT
Pages 22

Corporate entrepreneurship – i.e., the act of establishing new ventures or instigating innovation or renewal associated within an existing organization (Sharma & Chrisman, 2007) – has become a topic of great interest in the family business literature (e.g., Eddleston et al., 2012; Sciascia et al., 2013; Zahra, 2005). While several authors argue that family firms are supportive of corporate entrepreneurship (Aldrich & Cliff, 2003; Eddleston et al., 2008; Eddleston et al., 2012; Zahra, 2005), others underline that family businesses display specific features that undermine entrepreneurial activities (Allio, 2004; Gersick et al., 1997; Kelly et al., 2000; Miller et al., 2008). Indeed, corporate entrepreneurship can be stimulated by family members through their transgenerational business goals (Zahra, 2005), willingness to pass a sustainable company on to subsequent generations (Eddelston et al., 2008), or ability to respond to threat of imitability (Sirmon et al., 2008). Conversely, the involvement of entrenched family members in decisionmaking (Gömez-Mejía et al., 2001), the existence of a generational shadow (Davis & Harveston, 1999), paternalistic attitudes (Chirico et al., 2012), confining legacy (Kelly et al., 2000), and the fixation on successful past strategies (Upton et al., 2001) can mire the organization in traditions and conservatism so that entrepreneurial activities are stifled. These inconsistencies clearly illustrate that we are lacking understanding of the emergence of corporate entrepreneurship in the context of family firms (Nordqvist & Melin, 2010). An explanation for this could be that the lens of corporate entrepreneurship is not sufficiently applicable to family business research (Heck et al., 2008; Zachary et al., 2013). Indeed, corporate entrepreneurship uses the organization as unit of analysis when examining the emergence of entrepreneurial activities (Sharma & Chrisman, 2007). However, recent works indicate that a more complete understanding of the entrepreneurial phenomenon could be gained by shifting the focus from the family business to the family in business (Moores, 2009). In that sense, Discua Cruz et al. (2013, p. 21) propose and define the concept of intrafamily entrepreneurship as “entrepreneurship in the existing family businesses as well as new ventures”. This concept is broader and captures the interwoven entrepreneurial activities of families in business (Discua Cruz et al., 2013). In this chapter, we would argue that the socioemotional wealth (SEW) model (Gómez-Mejía et al., 2007) may explain the role of families in developing entrepreneurial activities so that our understanding of intrafamily entrepreneurship will be increased. Indeed, families in business may fulfill their socioemotional

needs by launching new ventures that provide jobs to family members and enlarge the sphere of influence of the family (Gomez-Mejia, Cruz, et al., 2011). At the same time, business families are likely to avoid developing new activities through technological innovation or diversification due to the SEW losses induced by such entrepreneurial choices (Chrisman & Patel, 2012; Cruz & Justo, 2009; Gomez-Mejia et al., 2010). Accordingly, we suggest that the degree to which business families are concerned with the preservation of their SEW exerts an influence on the type of entrepreneurial activities adopted by families in business (Berrone et al., 2012). Going a step further, this chapter also takes into account that SEW is a multidimensional construct. Indeed, Berrone et al. (2012) identified five dimensions to depict SEW: family control and influence over the company, identification of family members with the firm, binding social ties, emotional attachment of family members, and renewal of family bonds through dynastic succession (known by the acronym FIBER dimensions). Since family members may use different frames of reference according to their individual preferences (Berrone et al., 2012; Cennamo et al., 2012), we suggest that the various weights family principals place on each of the FIBER dimensions that composed SEW may explain the entrepreneurial activities of business families. In doing so, we will provide a first conceptual framework that considers the pursuit of different socioemotional needs as potential drivers or obstacles to intrafamily entrepreneurship. This chapter makes several important contributions to the entrepreneurship literature in general and in the family business field in particular. First, by addressing the relationship between family intrapreneurship and the family goals and reference frame, we add to the research stream that examines the ability and the motives of business families to pursue entrepreneurial objectives (Discua Cruz et al., 2013). While the family business literature emphasizes the role of non-financial objectives in decision-making (e.g., Gómez-Mejía et al., 2007), it has been relatively silent about the influence of socioemotional needs on entrepreneurial activities (Berrone et al., 2012). Second, we contribute to the family business literature by providing a more fine-grained analysis of intrafamily entrepreneurship. More specifically, we consider the heterogeneity among family entrepreneurs who can opt for different frames of reference in making entrepreneurial choices (Berrone et al., 2012). In line with Cennamo et al.’s (2012) theoretical paper, we argue that the various weights family principals place on FIBER dimensions affect decision-making, and more specifically the entrepreneurial choices of family entrepreneurs. As such, we endeavor to reconcile divergent opinions regarding the emergence of entrepreneurial behaviors in the context of family businesses. Finally, by combining SEW and intrafamily entrepreneurship, we answer to the call for theory-based studies in this area (Berrone et al., 2012; Zachary et al., 2013). While prior research has investigated how entrepreneurship is affected by SEW aspects such as kinship ties (Aldrich & Cliff, 2003), the longterm nature of family firm’s ownership (Zahra et al., 2004) or the desire to protect family wealth (Naldi et al., 2007), we strive to build a structured conceptual framework that integrates the importance dedicated to the construct of SEW and its dimensions in order to understand entrepreneurial activities of business families. By doing so, we provide new directions to guide future research in this field.