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The wealthiest family business owners are recognized as economically powerful, but there is little theoretical underpinning to explain how their behavior differs from their counterparts. To increase our understanding of family firm owners we draw on literature to introduce the concept of the rentier which we contrast with the socioemotional wealth (SEW) perspective of ownership. We test contrasting predictions by examining the strategic behavior of the one percent wealthiest business owning households in the United States using data from Federal Reserve Board’s 2013 Survey of Consumer Finance. Our findings depict an entrepreneurial category of owners who blend aspects of both rentier and SEW modes, but suggest important shortcomings of both perspectives.

We extend March and Simon’s (1958) analysis of strategic decisions by distinguishing between two rules for allocating attention – priority versus causality. We develop theory concerning causality rules which have been largely overlooked in prior literature. Specifically, we examine how performance feedback on the intermediate productivity goal and the higher‐order profitability goal independently and jointly influence the variability of firm capital investments. Panel analysis of 2,477 Spanish manufacturing firms reveals that these goals jointly affect the variability of capital investments through both priority and causality attention rules. Our study provides new insights on how firms handle multiple goals, deconstruct performance feedback, and cope with the attentional constraints of bounded rationality.

During a recession firms face a dilemma between investing cash to take advantage of emerging opportunities and holding cash to buffer against the crisis. Given this tension, we ask: Is cash king during a recession? Using a sample of publicly traded manufacturing firms between 2004 and 2010, we use peer cash holdings to instrument for cash and examine whether the curvilinear relationship between cash and stock market performance (Tobin's Q) changes during the economic crisis. We find that the before-recession benefits of cash decline at very high levels of cash holdings (.9 of total assets), whereas the during-recession benefits begin to decline at medium levels of cash holdings (.4 of total assets). Our results reveal that the nature of the curvilinear relationship between cash and market performance shifts from a diminishing returns curve before-recession to a more pronounced inverse U-shaped relationship during-recession.

Growing concern about economic inequality has generated a polarized narrative regarding the causes and consequences of extreme wealth. We contend that divided ideological positions obscure a more mundane reality about the typical wealthiest 1% households. Using data from the triennial survey of consumer finance, we demonstrate that there is substantial heterogeneity within the 1%. Contrary to public discourse, the typical 1% household does not have wealth reflective of popular rich lists, but derives a significant share of its wealth from ownership and active management of small- to medium-sized private enterprise. We use these findings to shed new insights on business families’ relationship to economic inequality and open promising new areas of inquiry regarding the role of the family business in society.

Together, Penrosean and Barnean resource-based logic make up the dominant theoretical approach to understanding firm growth. While extant literature focuses on a common lineage between Penrosean theory and the resource-based view (RBV), we explicate divergence at these origins of resource-based theorizing and subject the growth implications of each to meta-analytic testing. RBV’s central tenets concern resources that meet valuable, rare, inimitable, and nonsubstitutable (VRIN) criteria, while Penrose’s theory discusses the versatility of resources. Theoretically, VRIN resources allow firms to exploit unique opportunities, while versatile resources allow firms to recombine resources in novel ways to create growth. Using meta-analytic techniques, we find that versatile resources are associated with higher levels of growth, whereas VRIN resources are not. We offer novel insights into alternative characteristics of resources derived from the same conceptualization of the firm, add greater specificity to the performance construct, and open up avenues for new theorizing on firm growth that is more closely aligned with Penrose’s theory.

We advance understanding of the embedded role of the family household in governing firm performance in an impoverished setting. Drawing on bricolage theory, which articulates how individuals make do with resources at hand, we suggest that family household diversity facilitates creativity while family household shared business experience facilitates routinization. While initially performance enhancing, unfettered creativity and overroutinization have detrimental effects and thus expect the highest levels of performance to occur at moderate levels of family household diversity and shared business experience. We find general support for our hypotheses using a large sample of firms and families in impoverished Indian households.

Contexts dominated by informality are often characterized by their perceived deficiencies, as “institutional voids” lacking legal rules of the game that would otherwise allow inhabitant entrepreneu...

The phenomenon of portfolio entrepreneurship has attracted considerable scholarly attention and is particularly relevant in the family firm context. However, there is a lack of knowledge of the process through which portfolio entrepreneurship develops in family firms. We address this gap by analyzing four in-depth, longitudinal family firm case studies from Europe and Latin America. Using a resource-based perspective, we identify six distinct resource categories that are relevant to the portfolio entrepreneurship process. Furthermore, we reveal that their importance varies across time. Our resulting resource-based process model of portfolio entrepreneurship in family firms makes valuable contributions to both theory and practice

Las familias son los motores de la actividad económica en todo el mundo. En muchos casos, su impacto económico dura siglos y generaciones. Este fenómeno se denomina la iniciativa empresarial como transgeneracional (TE) y se define como los procesos, recursos y capacidades que utiliza una familia. Transgenerational entrepreneurship, as a discipline, examines the processes, resources and capabilities that allow family enterprises to create social and economic value over time in order to succeed beyond the first generation of business owners. While tangible resources such as financial and physical capital are certainly important factors in the long-term success of a family-run business, this book focuses specifically on the role of intangible resources and capabilities, which are less easily quantifiable but equally vital.

Whereas existing research on the longevity of family firms has focused on the survival of firms, this article investigates transgenerational entrepreneurship of families. By building on the transgenerational entrepreneurship research framework, the authors argue that by shifting from firm to family level of analysis, one gains a deeper understanding of family firms’ ability to create value across generations. The authors find evidence for their argument in that such a level shift reveals extended entrepreneurial activity, which is missed when focusing exclusively on the firm level. The study introduces and empirically explores the construct of family entrepreneurial orientation, which may serve as an antecedent to transgenerational value creation by families.

Firms in impoverished settings exist largely outside of formal institutional boundaries; however, they are not void of institutional influence. We shed light on one of the most fundamental institutions, which we suggest governs much of economic activity in impoverished contexts: the family. We integrate institutional and resource-based theories to explicate the role of the family in impoverished business activity. We develop theory to explain how the family constrains entrepreneurial behavior through pressure to conform to accepted norms, yet enhances business performance through the provision of critical resources. We test our hypotheses using a unique sample of households and firms in Indian slums. Our paper contributes by developing theory on the role of informal institutions (the family) in business activity and providing a preliminary investigation into factors that may influence firm success in impoverished settings.