An exploration of cooperative stakeholder engagement and risk‐taking behavior in privately held family firms

Abstract

AbstractThis study explores the impact of cooperative engagement with nonfamily employees, consumers, and communities on risk‐taking behavior of privately held, long‐lived family firms. We posit that cooperative relations can build and reinforce connectedness among the family and nonfamily stakeholders which, in turn, can lead to increased risk‐taking. More specifically, the increased stability from widespread cooperative nonfamily engagement will positively moderate risk‐taking behavior by amplifying the influence of family involvement in privately held family firms. Using a unique survey of long‐lived, privately held family firms, we find support for our hypotheses: cooperative engagement interacts with the essence of family involvement to amplify risk‐taking. This study contributes to the stakeholder engagement and family firm literatures and offers managerial and policy implications by underscoring the benefits of cooperative engagement as it enhances risk‐taking of family firms, a precursor of growth.