Understanding the antecedents of family influence in the family firm

Abstract

PurposeWhat makes family influence so influential in the family firm? Time and again, research studies point to family influence as a factor that significantly impacts decision-making in the family business, thus highlighting the need to investigate the variables which cause family influence to be so powerful. The purpose of this study is to explore the construct of family influence in the family firm, under an integrative lens that combines insights from Institutional Theory and the Resource-Based View.Design/methodology/approachThe quantitative approach was used using a 35-item survey measuring 6 constructs, where data collection yielded a total of 206 completed surveys included in the data analysis. Data were analyzed using SmartPLS (3.0) and results were appropriately reported.FindingsThe findings of this study propose that the two theoretical perspectives can be useful in explaining how various factors are able to intensify family influence on strategic family firm decisions like internationalization. Specifically, the lack of resources, government support, managerial knowledge and capability in foreign markets represent serious barriers that render the family firm more reliant on and subjected to family influence. Similarly, informal institutions like the fear of failure in foreign markets and uncertainty avoidance often make the family firm more dependent on, and accepting of, family influence.Originality/valueThe path analysis undertaken in this study has empirically depicted how resource-related and institution-based forces can together augment the effects of “family influence,” making it a more powerful and prohibitive factor in the internationalization decision, thus offering an insightful interpretation of these results and valuable practical and theoretical implications.