Enterprising in Diverse Country Contexts
Edited by Jennifer E. Jennings, Kimberly A. Eddleston, P. Devereaux Jennings and Ravi Sarathy
Chapter 5: Strategies and motives of family and non-family firms in Brazil: socio-emotional wealth and firm performance in an emerging market
Family business research has been marked by inconsistent findings regarding the influence of the family on the business, which has led to confusion in the field (Rutherford, Kuratko, and Holt, 2008). While family firms might be expected to suffer from fewer governance problems due to the combination of family ownership and control (Fama and Jensen, 1983; Jensen and Meckling, 1976), family firms research in developed countries shows that family firms confront unique problems including nepotism, parental altruism, managerial entrenchment, and stagnation (Schulze, Lubatkin, Dino, and Buchholz, 2001). A family’s ability to exploit minority shareholders in some emerging markets has even led some scholars to describe family firms as ‘villains’ (Morck and Yeung, 2003; Peng and Jiang, 2010). However, some recent research on family firms in emerging markets suggests that due to institutional voids in emerging markets, the family can be a key resource that contributes to firm performance (Khanna and Palepu, 2000; Miller, Lee, Chang, and Le Breton-Miller, 2009). Family control may allow a firm to more efficiently navigate unreliable and fluctuating market rules and government regulations (Park, Li, and Tse, 2006). Family ties can foster trust and social capital, which are valuable in reducing transaction costs when formal market-supporting institutions are lacking (Luo and Chung, 2005).
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