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Firms use aspirations to regulate innovative search activities, but peer and historical referents may contain different signals regarding performance feedback. Integrating insights from the literature on profit persistence with the behavioral theory of the firm, we propose a persistence-based framework of organizational innovative search that connects the persistence characteristics of feedback from peer and historical referents with innovative search. We first predict that feedback from peer referents is more persistent than feedback from historical referents. Further, we theorize that peer performance feedback produces more pronounced effects: Performance above (below) peer aspiration leads to less (more) innovative search compared with performance above (below) the historical aspiration level. In addition, because industries impose heterogeneous levels of profit persistence, the differential effect between peer and historical performance feedback on innovative search is likely to be more evident in highly persistent industries. Examining the research-and-development intensity of a comprehensive panel of Compustat manufacturing firms over the past 45 years, our results from quasi–maximum likelihood analysis and fixed-effect panel regression largely support our theoretical development. Our study extends a nascent understanding of aspiration heterogeneity by revealing and empirically confirming the critical role of persistence.

Existing theory describes how family firms utilize a unique socioemotional reference point to frame strategic decision making, but scholars have not fully considered family-level strategy or change...

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.

In this essay, we critique the usage of the term ‘institutional void’ to characterize non-Western contexts in organizational studies. We explore how ‘conceptual stretching’ of institutional voids – specifically, the theoretical and geographic expansion of the concept – has led not only to poor construct clarity, but also pejorative labelling of non-Western countries. We argue that research using this term perpetuates an ethnocentric bias by deifying market development and overlooking the richness and power of informal and non-market institutions in shaping local economic activity. We call for an ‘epistemological rupture’ to decolonize organizational scholarship in non-Western settings and facilitate contextually grounded research approaches that allow for more indigenous theorization.

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.

While established firms can efficiently manage their resource portfolio, new ventures must construct resource boundaries by assembling resources. In doing so, new ventures are often pushed to utilize resources that are owned by other actors. These inter-organizational relationship strategies do not expand organizational boundaries, but rather create permeable boundaries. We theorize that boundary permeability confers greater access to resources, but limits control over them. Therefore, new ventures face a risky option: utilize fewer but fully controlled resources or access a broader range of resources under limited control. We examine the effects of R&D boundary permeability across growth dimensions of sales, profitability, and employees using a sample of young knowledge intensive ventures. In doing so, we explore early stage boundary management decisions and reveal opportunities and threats to opening venture boundaries.

Firms use reference points to evaluate financial performance, frame gain or loss positions, and guide strategic behavior. However, there is little theoretical underpinning to explain how social per...

Recent scholarly work on necessity entrepreneurship has highlighted shortcomings in theoretical development underlying the construct and, by extension, limitations in our understanding of the behav...

Crowdfunding is often touted as a recent innovation that unleashes entrepreneurial potential by connecting entrepreneurs to small amounts of money from a broad base of individuals. However, literature on the topic has largely neglected the rich history of crowdfunding and failed to make an interesting and salient distinction between online and offline crowdfunding. This paper explicates the historical roots and current practices of offline crowdfunding, compares and contrasts online and offline crowdfunding, develops theoretically grounded predictions linking each type of crowdfunding to entrepreneurship outcomes, and offers related future research opportunities. We hope to build a rich appreciation for offline crowdfunding, provide insight into how crowdfunding as a financing mechanism has evolved and persists in contemporary society, and lay a foundation for future scholarly work in the area.

The authors explore how entrepreneurs with limited resources legitimated (or failed to legitimate) a new organizational category in different jurisdictions in Canada despite severe resistance. The authors identify three meso-level domains of institutional action (public, administrative, and legal), where actors intervene to change their macro-institutional environment. The findings suggest that these domains mediate the relationship between micro-level agency and macro-level institutions. The authors describe how macro-level consensus about the category legitimacy emerges through a competition between judgments embedded in different discourses and how a particular discourse attains validity, forcing other actors to change their initial unfavorable legitimacy judgments and recognize the category’s legitimacy.

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...

This conceptual article seeks to address the heterogeneity of family firms in terms of their innovativeness by investigating business family communication dynamics. We use the established family communication constructs of conversation and conformity orientations to develop a typology of family firms in terms of innovativeness. We provide empirically testable propositions and present possible operationalizations for future research. In particular, we argue that supportive business families (i.e., families characterized by high conversation orientation and moderate conformity orientation) are associated with the highest levels of innovativeness in the family-controlled firm. Through this article we hope to deepen our understanding of the relationship between family and firm levels of analysis, to develop a stronger bond between communication and innovative behavior, and to identify family-related antecedents of heterogeneity in family firm innovativeness.Key Words: family communication, family firms, innovativeness.Innovativeness reflects a firm's tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes (Lumpkin & Dess, 1996). The study of innovativeness is a significant area of inquiry in family firm research (Stewart, Lumpkin, & Katz, 2010; Uhlaner, Kellermanns, Eddieston, & Hoy, 2012). By family firms we refer to companies in which a family (i.e., the "controlling family") possesses a significant ownership stake and in whose operations multiple family members are involved (Sirmon, Arregle, Hirt, & Webb, 2008).Literature is polarized between studies claiming that family firms present a unique and favorable setting for innovativeness (Kellermanns, Eddieston, Barnett, & Pearson, 2008; Lumpkin, Brigham, & Moss, 2010; Rogoff & Heck, 2003) and others revealing that family firms are less likely to engage in innovation because of the overlap between owners and management (Block, 2012; Chrisman & Patel, 201 1; Munari, Orfani, & Sobrero, 2010; MunozBullon & Sanchez-Bueno, 2011). To further complicate the picture, research has shown that the level of innovativeness within firms may not remain constant and is likely to change over time (Zellweger & Sieger, 2012).To untangle the factors causing variation in family firm innovativeness, we argue that family involvement in a firm does not necessarily positively or negatively influence innovating activity, but rather the nature of influence varies significantly depending on the characteristics of the family involved in the firm. In this conceptual article, we argue that family firms can be more or less innovative depending on the communication archetypes of the controlling family. We adopt a family communication perspective and specifically use the concepts of conversation and conformity orientation developed by Fitzpatrick and Ritchie (1994) as well as the typology of family communication archetypes developed by the same authors to explain the innovative behavior of firms in which the families are involved. We propose that the two family communication orientations affect innovativeness differently, thus determining variations in innovativeness among family firms.We believe that our article has four valuable contributions to make to the literature. First, we offer a strong theoretical basis to differentiate within the family firm population in terms of innovativeness. One major criticism of family business scholarship is that family firms have been treated as a homogeneous population (Melin & Nordqvist, 2007). Many scholars implicitly acknowledge heterogeneity in family firms, but rarely study the phenomenon accordingly (Chrisman, Chua, & Sharma, 2003). We draw on two theoretical constructs from the family communication literature that we suggest helps to untangle differences in innovativeness between family firms: conversation and conformity orientations (Fitzpatrick & Ritchie, 1994). …

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

Drawing on social identity theory, we explore the respective roles of social identity and status in the initiation and diffusion of entrepreneurial entry, as a social identity- and status-negotiati...

Through the lens of stakeholder theory, this article deepens our understanding of financial and nonfinancial performance outcomes in family firms across multiple stakeholder categories, including the family level of analysis. Based on this foundation, we develop a typology of performance relationships between performance outcomes: overlapping, causal, synergistic, and substitutional. We argue that these relationships, when used between constructive (positive) performance outcomes, are able to increase stakeholder satisfaction, which in turn increases organizational effectiveness. Through this analysis, we extend the common one-dimensional and cause-effect understanding of performance in family firms and move toward a comprehensive stakeholder performance perspective, which provides insights for increasing organizational effectiveness of family firms.

This paper develops an organizational identity–based rationale for why family firms strive for nonfinancial goals. We show that the visibility of the family in the firm, the transgenerational sustainability intentions of the family, and the capability of the firm for self–enhancement of the family positively influence the importance of identity fit between family and firm as well as the family's concern for corporate reputation. We suggest that the concern for corporate reputation leads the family to pursue nonfinancial goals to the benefit of nonfamily stakeholders. We also discuss reinforcing feedback loops in these processes.

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.

The present paper develops an explanation of non-pecuniary performance of firms, which extends current ethical and financial rational and encompasses multiple levels of stakeholder analysis. Drawing from social identity theory and the literature on organizational reputation, we show that identity overlaps between managers and organizations create an incentive to protect and build corporate reputation, thereby motivating managers to produce non-pecuniary performance outcomes that satisfy reputation forming stakeholders. We suggest that the link between identity overlaps and the incentives to build and protect corporate reputation is moderated by the type of the manager's commitment and provide empirically testable propositions for our claims. We use the family business, a particularly high identity overlap organization, as a context to explore our arguments.

Integrating organizational conflict and upper echelon theory, this paper develops a conceptual model to examine how team diversity contributes to performance in nascent entrepreneurial firms. We hy...

New venture boundary decisions are less concerned with an efficient allocation of assembled resources and more with assembling resources to create value. We draw on and extend resource management m...

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.

While it is taken for granted that the work Edith Penrose has been influential in the development of the resource-based theory (RBT) of strategic management, this relationship has not subject to su...

Resources outside of the boundaries of a firm are increasingly accessed and leveraged for growth, but this has been largely unaccounted for in theoretical development. We draw on Penrose’s Theory o...

Employing resource-based theory, we address the family’s provision of human capital to firms within the family by examining the impact of family human capital breadth (heterogeneity) and depth (bus...

Organizational size is an important factor contributing to the heterogeneous nature of corporate entrepreneurship (CE). We focus on explicating size-based differences in CE and integrating them into new theoretical development. Through a search of the contemporary CE literature, we argue that there has been a tendency toward examining CE dimensions within the context of large public firms, even though they represent a relatively small proportion of the firms that engage in CE activities. Drawing on resource-based theorizing, we identify how size confers CE competitive advantages via slack resources and resource structuring processes, but disadvantages via bureaucratic structures and resource bundling. Aware of these weaknesses, we suggest that small firms are more likely to utilize CE for growth to overcome liabilities of smallness, while large firms are more likely to utilize CE for learning to overcome liabilities of inertia. We thereby provide greater specificity to CE research and stimulate new theoretical development with a forward-looking CE research agenda that incorporates the role of organizational size.