Profitability goals, control goals, and the R&D investment decisions of family and non-family firms

R&D investments can help build sustainable competitive advantages and improve firm performance as well as foster industry transformations and economic growth. Nevertheless, managers also acknowledge the difficulties associated with managing R&D and the low chances of success of innovation programs. For this reason, researchers have long been interested in understanding how managers make R&D investment decisions and, more specifically, identifying the conditions under which managers are most likely to increase or decrease R&D investments. Research grounded in the behavioral theory of the firm suggests that a primary driver of R&D investment decisions is profitability: when profitability goals have not been met, managers are more likely to initiate a problemistic search through increasing R&D investments. While emphasizing profitability goals and their relationship with R&D investments, prior research largely downplays the role of goals beyond profitability that exist in a significant number of firms (family firms) that are owned and managed by family members whose primary concern is preserving their control over the organization. Research indicates that these family-centered non-economic goals lead family managers to minimize R&D investments and that the coexistence of multiple goals produces highly variable R&D investment behavior in family firms. Yet, how family-centered goals for control and profitability goals enter decision-making in family firms is not fully understood nor has any empirical study directly examined how these two apparently incompatible classes of goals jointly affect R&D investment variations in family firms. In this study, we propose that family managers form distinctive reference points that capture supplier bargaining power and are used to evaluate the degree of external obstruction to their managerial control. Accordingly, we hypothesize that family managers use reference points for profitability and for control jointly when making R&D investment decisions. The empirical analysis of panel data on 431 private Spanish manufacturing firms observed over the period 2000-2006 shows that the importance of profitability and control goals follows a sequential logic in family firms, such that family firms react more strongly to increasing supplier bargaining power when their profitability reference points have been reached. This study extends current understanding of the distinctive organizational processes engendered by family management in business organizations leading to new perspectives and research opportunities at the intersection of the innovation management and family business literatures

The paradoxical and time-varying effects of family ownership on absorptive capacity

We present a theory of family ownership as a driver of the heterogeneity (between-firm differences) and variability (within-firm differences over time) of absorptive capacity (AC). We introduce the concepts of motivation and implementation gaps to explain why, paradoxically, family ownership can cause both upward and downward divergences in AC

A note on family influence and the adoption of discontinuous technologies in family firms

The 4Cs model of command, continuity, community, and connections is useful for examining the effect of family influence on the adoption of discontinuous technologies. However, assuming that family influence differs only in degree rather than kind is naive because such an assumption ignores the likelihood of heterogeneous behaviors among family firms. In this conceptual note, we extend prior work and explain how heterogeneity in the family’s relative emphasis on command, continuity, community, and connections requires that the multifaceted and potentially nonlinear nature of family influence be considered when analyzing strategic decisions concerning family firm innovation

Incumbents’ attitude toward intrafamily succession:an investigation of its antecedents

Incumbents’ attitude toward intrafamily succession (IFS) is a critical individual-level determinant of family firms’ IFS intention, which is, in turn, an important component of family business essence. Knowledge about its antecedents, however, is fragmented and very limited. Drawing on the theory of planned behavior and general attitude literature, hypotheses about the situational and individual antecedents of family firm incumbents’ attitude toward IFS were developed and tested with a sample of 274 Italian family firm incumbents. Results show that incumbents’ attitude toward IFS is indeed influenced by both situational and individual antecedents as well as by their interactions

Family firms in the global economy: toward a deeper understanding of internationalisation determinants, processes and outcomes

Research on the internationalization of family firms has flourished in recent years, yet the mechanisms through which family involvement shapes the determinants, processes, and outcomes of internationalization remain little understood and largely undertheorized. We contribute to research at the intersection of international business and family business by examining the roles of different sources of family firm heterogeneity and the context in shaping the determinants, processes, and outcomes of business internationalization. Drawing on this analysis, we summarize the articles published in this special issue and set out an agenda for further research aimed at advancing a more fine-grained and contextualized understanding of internationalization in family firms

The impact of family involvement on SMEs performance:theory and evidence

By complementing agency theory with behavioral assumptions, we explore the effects of family involvement on SMEs’ performance. We identify three separate dimensions of family involvement and hypothesize non-linear, direct and interaction effects on the performance of an SME. The evidence on 787 SMEs suggests that an inverted U-shaped relationship exists between family ownership and performance, and ownership dispersion among family members negatively affects performance. Balancing family and non-family members in the TMT is found to be beneficial to SMEs’ performance, but the family ratio in the TMT becomes crucial only at high levels of family ownership

Family routines and next-generation engagement in family firms

By focusing on the impact of different types of family routines and how they change, this commentary builds on concepts regarding the influence of perceived parental support and psychological control on next-generation engagement in family firms. Drawing on the organizational routines literature and the family studies literature, I propose that attention to family routines, and how these routines change (or not) over time can reveal additional insights regarding next-generation engagement in the family business

Global burden of human brucellosis : a systematic review of disease frequency

BACKGROUND: This report presents a systematic review of scientific literature published between 1990-2010 relating to the frequency of human brucellosis, commissioned by WHO. The objectives were to identify high quality disease incidence data to complement existing knowledge of the global disease burden and, ultimately, to contribute towards the calculation of a Disability-Adjusted Life Years (DALY) estimate for brucellosis.METHODS/PRINCIPAL FINDINGS: Thirty three databases were searched, identifying 2,385 articles relating to human brucellosis. Based on strict screening criteria, 60 studies were selected for quality assessment, of which only 29 were of sufficient quality for data analysis. Data were only available from 15 countries in the regions of Northern Africa and Middle East, Western Europe, Central and South America, Sub-Saharan Africa, and Central Asia. Half of the studies presented incidence data, six of which were longitudinal prospective studies, and half presented seroprevalence data which were converted to incidence rates. Brucellosis incidence varied widely between, and within, countries. Although study biases cannot be ruled out, demographic, occupational, and socioeconomic factors likely play a role. Aggregated data at national or regional levels do not capture these complexities of disease dynamics and, consequently, at-risk populations or areas may be overlooked. In many brucellosis-endemic countries, health systems are weak and passively-acquired official data underestimate the true disease burden.CONCLUSIONS: High quality research is essential for an accurate assessment of disease burden, particularly in Eastern Europe, the Asia-Pacific, Central and South America and Africa where data are lacking. Providing formal epidemiological and statistical training to researchers is essential for improving study quality. An integrated approach to disease surveillance involving both human health and veterinary services would allow a better understand of disease dynamics at the animal-human interface, as well as a more cost-effective utilisation of resources