Strategic entrepreneurship and performance: an institutional perspective on Indian family businesses
Journal of Entrepreneurship in Emerging Economies
ISSN: 2053-4604
Article publication date: 26 October 2020
Issue publication date: 12 November 2021
Abstract
Purpose
There is a growing consensus that entrepreneurial activity is essentially a collective family endeavour, with some configuration of family involvement in business (FIB) working better than others. This paper aims to examine the effects of FIB on strategy and financial performance (FP), drawing from the institutional theory for the Indian family businesses.
Design/methodology/approach
The sample comprises of 105 pharmaceutical companies listed on the Bombay Stock Exchange for FY2013–2017. A two-way random effects panel model was invoked to examine the relationship between FIB and strategy, as well as the intermediating effect that strategy has on the FIB-FP link.
Findings
On average, the family has a high ownership concentration, with the founders predominantly holding the chief executive officer (CEO) and chair positions. The econometric results highlight that the founder’s descendants adopt a conservative strategy. A significant positive moderating effect of strategy on FIB-FP link was observed for the descendants as the largest owners, CEO and board chair. The presence of a professional CEO and independent chair, however, leads to an intervening adverse impact on FP. The ownership-management-governance configurations highlight that some combinations of family and non-FIB leads to better performance than others.
Originality/value
The study provides a plausible explanation for the conflicting evidence on the direct FIB-FP relationship through the strategy intermediation. The institutional perspective emphasizing the identity and role family members play in terms of strategy provides an unconventional epistemological underpinning to the present research.
Keywords
Citation
Gill, S. (2021), "Strategic entrepreneurship and performance: an institutional perspective on Indian family businesses", Journal of Entrepreneurship in Emerging Economies, Vol. 13 No. 5, pp. 1080-1118. https://doi.org/10.1108/JEEE-01-2020-0013
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited