Family Business Review

Considering the heterogeneity of family firm behaviors as reflecting the values, biases, and heuristics of individuals, we discuss the implications of the psychological foundations of management in family firms. We develop a conceptual framework for investigating how the values, biases, and heuristics of family and nonfamily members affect strategic decision-making and the outcomes of family firms. To advance the field, we put forward some relevant questions and offer a future research agenda at the intersection of the psychological foundations of management and family business.

We present a model of family firm performance that tests the notion that strategic decision comprehensiveness plays a pivotal role in family business decision quality and performance. With insights derived from upper echelons theory, our model further proposes that two key decision maker traits associated with an individual’s information-gathering process—risk-taking propensity and need for cognition—influence strategic decision comprehensiveness and have indirect effects on both study outcomes. Study results using a time-lagged sample of family firm leaders provide broad support for our proposed model and provide insight into the performance and decision-making heterogeneity present in family firms.

This study examines the influence of individual owner-manager values on the different dimensions of socioemotional wealth in family firms. We argue that values of owner-managers in family firms are one of the underlying motivators for socioemotional wealth behavior and used structural equation modeling to test the assumed connection. The results of our data set with 1,003 cases show, in accordance with Schwartz’s value dimensions, that social- and person-oriented values influence different dimensions of the FIBER scale. Our findings help understand the importance of individual values, advance socioemotional wealth research, and contribute to the understanding of family firm behavior.

Drawing on (mostly) medium-sized and unlisted Polish firms, this study explores the influence of the interaction between founder-controlled family firms and managerial overconfidence on corporate social responsibility (CSR). We demonstrate that founder-controlled family firms show low levels of CSR engagement. This suggests that families try to limit CSR activities that could challenge their control and thus their socioemotional endowment. Moreover, overconfident executives in these firms tend to exhibit superior CSR performance. Consequently, the family’s preference for control can be mitigated by overconfident executives who underestimate the family’s control risk and focus on building reputation by acting socially responsible.

In this study, we build on upper echelons theory and insights from psychology to suggest that CEO Machiavellianism is manifested in the alliance behaviors of family firms. Specifically, we argue that more Machiavellian chief executive officers (CEOs) seek out strategic alliances—as doing so provides opportunities to manipulate, control, and exploit others—and that their tendency toward manipulative and controlling behaviors results in less sustainable alliances. We also argue that the effect of CEO Machiavellianism on the engagement and sustainability of strategic alliances is affected by operating in family firms. Since the owning family often intervenes and mitigates any concerns regarding the organization or its leadership, we argue that any concerns that alliance partners have regarding more Machiavellian CEOs will be weaker as family ownership increases; as such, we argue that as family ownership increases, the positive relationship between CEO Machiavellianism and strategic alliance engagement will be more strongly positive while the negative relationship between CEO Machiavellianism and alliance sustainability will be less strongly negative. Our study presents and tests a theory of how more Machiavellian CEOs affect the decisions surrounding strategic alliances by providing a novel antecedent of the decisions surrounding strategic alliances in family firms. We find support for our arguments with a sample of Standard & Poor’s 500 firms.