Firms within Families
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Firms within Families

Enterprising in Diverse Country Contexts

Edited by Jennifer E. Jennings, Kimberly A. Eddleston, P. Devereaux Jennings and Ravi Sarathy

Firms within Families: Enterprising in Diverse Country Contexts investigates this ‘double embeddedness’ of business ownership and management through two illuminating sets of empirical studies. Part I focuses upon the family-oriented goal of socio-emotional wealth and its association with a firm’s strategic orientations, strategies and performance. Part II examines strategies and experiences at the work–family interface and their implications for an owner-manager’s psychological well-being. Both parts feature diverse studies from the United States, Switzerland/Germany, China, Brazil, and India.
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Chapter 6: Strategies and motives of family and non-family firms in India: unexpected differences and similarities

Ravi Sarathy, K. Kumar and Kimberly A. Eddleston

Extract

There is much debate in regards to whether family firms have a competitive advantage over non-family firms (Miller, Le Breton-Miller, Lester, and Cannella, 2007; Villalonga and Amit, 2006). While some research portrays family firms as outperforming their non-family counterparts due to the family’s strong commitment, social capital and long-term perspective (Miller, Le Breton-Miller, and Scholnick, 2008; Sirmon and Hitt, 2003), other research suggests that the tendency of family firms toward conservative strategies and risk aversion puts them at a disadvantage (Bertrand and Schoar, 2006; Morck and Yeung, 2003). Researchers also debate whether family firms have an advantage or disadvantage in emerging markets (Gedajlovic, Carney, Chrisman, and Kellermanns, 2012). While they may have an advantage in such contexts because of their family’s social capital and stability (for example, Luo and Chung, 2013; Miller, Lee, Chang, and Le Breton-Miller, 2009), they could be ill-equipped to compete in such markets due to their resistance to change and emphasis on family control (for example, Bertrand, Mehta, and Mullainathan, 2002). This chapter explores the strategies and motives of privately held family and non-family firms in India, whether the strategies and motives of family firms vary from those of non-family firms—and, consequently, whether family firms possess a performance advantage relative to nonfamily firms.

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