Nicholas Mathew, Rajshekhar (Raj) Javalgi, Ashutosh Dixit and Andrew Gross
The purpose of this study is to investigate the effects of emerging market professional service small and medium-sized enterprises’ (PSF SME) internal competencies and…
Abstract
Purpose
The purpose of this study is to investigate the effects of emerging market professional service small and medium-sized enterprises’ (PSF SME) internal competencies and capabilities on their ability to establish relationship value among clients and achieve superior financial performance. This study addresses the paucity of research on emerging market PSF SMEs and their ability to build value for their clients.
Design/methodology/approach
Data were collected from 251 senior managers or owners of PSF SMEs who were from an emerging market economy but had operations in various foreign markets. The two-step structural equation modeling procedure was used to analyze the data and investigate the hypothesized relationships.
Findings
The results show the positive impacts of the PSF SME’s human capital on innovativeness, service capabilities and relationship value. Human capital also had indirect positive impacts on relationship value and financial performance. Service capabilities were found to have a positive impact on relationship value and financial performance. In addition, innovativeness was found to have a positive impact on financial performance.
Practical implications
Emerging market PSF SMEs can gain competitive advantages and build solid long-term relationships with clients in the global marketplace when they focus on strengthening their human capital resources and successfully leveraging their innovativeness and service capabilities.
Originality/value
The study fills a gap in international business and management literature by offering guidance on how emerging market PSF SMEs can effectively use their internal resources and capabilities to build solid relationships with clients, deliver superior services and achieve global marketplace success.
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Bonnie Buchanan, Minna Martikainen and Jussi Nikkinen
In many countries, small and medium-sizes enterprises (SMEs) are primarily responsible for wealth, economic growth, innovation and research and development. In this paper, the…
Abstract
Purpose
In many countries, small and medium-sizes enterprises (SMEs) are primarily responsible for wealth, economic growth, innovation and research and development. In this paper, the authors examine the impact of family ownership and owner involvement on the financial performance of unlisted Finnish SMEs.
Design/methodology/approach
This is an empirical paper using a random sample of 1,137 non-listed Finnish SMEs. Through regression analyses and robustness tests, the authors examine the effects of family management, family and employee ownership and involvement.
Findings
Using profitability measures, the authors find family-owned and controlled SMEs perform significantly better than non-family firms. The number of family members actively involved in daily business operations bears a significant negative relation to firm performance. In contrast, non-family firms in which owners are actively involved, provide comparable returns to family firms, suggesting that in non-family firms active involvement contributes to performance. The authors find that employee ownership in SMEs does not provide an efficient way to compensate employees since more dispersed ownership does not lead to higher performance.
Research limitations/implications
SME employee ownership does not provide an efficient way to compensate employees since more dispersed ownership does not lead to higher performance.
Practical implications
In the case of Finland, family ownership is an effective organisational structure. As the depth of the COVID pandemic remains uncertain, firms with committed ownership are key to the economic recovery.
Originality/value
The authors approach the family ownership and involvement issue from a different angle. Unlike earlier studies, the authors examine the impact of both family ownership and involvement on the financial performance of privately owned SMEs. This paper helps shed light on the role of family ownership and involvement as a possible explanatory factor of overall economic performance.
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The purpose of this paper is to examine the effect of founding-family firms on managerial ability.
Abstract
Purpose
The purpose of this paper is to examine the effect of founding-family firms on managerial ability.
Design/methodology/approach
Founding-family firms are determined by founder and/or family involvement as block holder and as in the firm board. Managerial ability is estimated by data envelopment analysis. Research samples consist of 412 manufacturing firm-years listed in the Indonesian Stock Exchange. Analysis data use random-effect regression as the main analysis and Huber-White regression as an alternative analysis.
Findings
This research finds that founding-family firms have a negative effect on managerial ability. Further, the result shows that lower managerial ability occurred when founding-family firms led by founder and professional CEOs, when other family members involved in the ownership and the board have higher family ownership. It indicates that founding-family firms concern more about family interest, such as family reputation, rather than business needs and best management practice.
Research limitations/implications
Limitation of this research does not occur if the founding-family firms are managed by first, second, third, etc., family generation. Future research expected to consider family generation in founding-family firms management.
Practical implications
This research can be used by founding-family firms in Indonesia as consideration of management policy formulation that can improve managerial ability.
Originality/value
This research provides new evidence if founding-family firms promote lower managerial ability in emerging market such Indonesian market where family businesses are the root of private businesses which have a major contribution to economics.
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Juan David Peláez-León and Gregorio Sánchez-Marín
This study analyses whether human resource management (HRM), through the use of four sets of high-performance work policies (HPWPs) (i.e. selection, training, motivation and…
Abstract
Purpose
This study analyses whether human resource management (HRM), through the use of four sets of high-performance work policies (HPWPs) (i.e. selection, training, motivation and opportunity policies), mediates the relationship between socioemotional wealth (SEW)—defined as a unique set of nonfinancial family goals—and firm financial performance when family firms face a high-risk context.
Design/methodology/approach
Hypotheses were statistically tested using a structural equation modeling (SEM) methodology with a cross-sectional sample of 196 medium-sized and private family firms in a high-risk context in Spain.
Findings
The results indicate that the relationship between SEW and financial performance in family firms is fully mediated by the use of HPWPs, especially by training and motivation HR policies. The importance given to preserving SEW influences the use of four sets of HPWPs when family firms show clear evidence of being confronted by a financial decline (i.e. a high-risk context). However, to improve their financial results to avoid the firm's failure and thus the loss of their SEW, only those HR policies that focus on training and motivation made a significant and positive contribution to the firm financial performance.
Originality/value
This study contributes to the literature on family firms and HRM by adopting an alternative theoretical framework to understand how the importance of nonfinancial family goals may affect employee structures and management policies, thereby improving financial performance in family firms.
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Arch G. Woodside, Gábor Nagy and Carol M. Megehee
This chapter elaborates on the usefulness of embracing complexity theory, modeling outcomes rather than directionality, and modeling complex rather than simple outcomes in…
Abstract
This chapter elaborates on the usefulness of embracing complexity theory, modeling outcomes rather than directionality, and modeling complex rather than simple outcomes in strategic management. Complexity theory includes the tenet that most antecedent conditions are neither sufficient nor necessary for the occurrence of a specific outcome. Identifying a firm by individual antecedents (i.e., noninnovative vs. highly innovative, small vs. large size in sales or number of employees, or serving local vs. international markets) provides shallow information in modeling specific outcomes (e.g., high sales growth or high profitability) – even if directional analyses (e.g., regression analysis, including structural equation modeling) indicate that the independent (main) effects of the individual antecedents relate to outcomes directionally – because firm (case) anomalies almost always occur to main effects. Examples: a number of highly innovative firms have low sales while others have high sales and a number of noninnovative firms have low sales while others have high sales. Breaking-away from the current dominant logic of directionality testing – null hypothesis significance testing (NHST) – to embrace somewhat precise outcome testing (SPOT) is necessary for extracting highly useful information about the causes of anomalies – associations opposite to expected and “statistically significant” main effects. The study of anomalies extends to identifying the occurrences of four-corner strategy outcomes: firms doing well in favorable circumstances, firms doing badly in favorable circumstances, firms doing well in unfavorable circumstances, and firms doing badly in unfavorable circumstances. Models of four-corner strategy outcomes advance strategic management beyond the current dominant logic of directional modeling of single outcomes.
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Shital Jayantilal, Sílvia Ferreira Jorge and Paulo Alcarva
Family businesses are essential to the global economy but often grapple with family-related issues, especially during succession. This study explores how governance tools like the…
Abstract
Purpose
Family businesses are essential to the global economy but often grapple with family-related issues, especially during succession. This study explores how governance tools like the family protocol (FP) mitigate conflicts by setting standards for family firm management and continuity. Pioneering the use of game theory and adverse selection setups in family business governance, this research uncovers FP determinants.
Design/methodology/approach
This research employs game theory and adverse selection setups to delve into the strategic decision-making processes of stakeholders in family firms. The authors break new ground by applying principal–agent theory (PAT) to family business governance structures. This innovative approach uncovers the determinants of the FP, enhancing the authors’ understanding of family firm dynamics.
Findings
The authors emphasize the importance of custom governance structures, such as the FP, in managing complex family-business interactions. These structures mitigate conflicts and promote smoother transitions during succession, ensuring family firm continuity. This study identifies key determinants, and these results will aid founders, families and practitioners in achieving smoother transitions, ensuring family firm continuity.
Originality/value
This research pioneers game theory and PAT applications in family business governance, shedding light on the effectiveness of customized governance mechanisms. By identifying FP determinants, the authors contribute to a deeper understanding of family firm dynamics. The findings have practical implications for founders, families, practitioners and consultants, promoting the long-term success and harmony of family firms in the global economy.
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Edem M. Azila-Gbettor, Ben Q. Honyenuga, Robert Jan Blomme and Ad Kil
This review assesses state of knowledge by critically comparing empirical literature on relationships between corporate governance and performance with regards to listed and…
Abstract
Purpose
This review assesses state of knowledge by critically comparing empirical literature on relationships between corporate governance and performance with regards to listed and unlisted family business.
Design/methodology/approach
The study applies a systematic review approach to assess 159 corporate governance and performance studies on family business published in peer-reviewed journals between 2000 and 2016.
Findings
Results from the review demonstrate heterogeneity in definition of family business, limited study of indicators of ownership and board dimensions of corporate governance in unlisted family businesses and over concentration on financial measures by listed family business studies. Possible solution was offered for potential research gaps.
Originality/value
This is the first review that comprehensively compares studies in listed and unlisted family business from the perspectives of corporate governance. Findings from this review may contribute to promoting research in corporate governance in the context of listed and unlisted family businesses.
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This chapter identifies research advances in theory and analytics that contribute successfully to the primary need to be filled to achieve scientific legitimacy: configurations…
Abstract
This chapter identifies research advances in theory and analytics that contribute successfully to the primary need to be filled to achieve scientific legitimacy: configurations that include accurate explanation, description, and prediction – prediction here refers to predicting future outcomes and outcomes of cases in samples separate from the samples of cases used to construct models. The MAJOR PARADOX: can the researcher construct models that achieve accurate prediction of outcomes for individual cases that also are generalizable across all the cases in the sample? This chapter presents a way forward for solving the major paradox. The solution here includes philosophical, theoretical, and operational shifts away from variable-based modeling and null hypothesis statistical testing (NHST) to case-based modeling and somewhat precise outcome testing (SPOT). These shifts are now occurring in the scholarly business-to-business literature.