We leverage research on socioemotional wealth (SEW) and implicit theories to develop a novel blended SEW-implicit theory framework that explains why some family firms are more risk seeking or more risk averse. According to implicit theory, individuals perceive reality through their interpretative cognitive filters. Those with an entity theory orientation see reality as relatively fixed or uncontrollable, while those with an incremental-implicit theory orientation tend to perceive reality as malleable and change as leading to positive outcomes. We theorize that family firms with high SEW intensity tend to adopt an entity orientation, whereas those with low SEW intensity tend to adopt an incremental orientation. Accordingly, we propose that the likelihood that family owners hold either orientation is shaped by organizational features associated with SEW intensity, namely (a) the salience of family versus business identity, (b) family founder imprinting, (c) generational stage, and (d) favorable path dependence. In turn, family owners with an entity orientation are less likely to take risks compared to family owners with an incremental orientation. Furthermore, we theorize that a firm’s performance hazard can shift family owners' implicit orientation from entity-based to incremental and vice versa, thereby impacting their risk-taking behavior.

Are green patents granted to family firms perceived more favorably by the market than those granted to non-family firms? Using a sample of 8918 green patents granted to family and non-family firms between 2014 and 2018, our study shows that it depends on the attributes of the green patent. Integrating the green innovation and family firm literatures with signaling theory, we develop a theoretical framework that highlights the need for family firms to balance their pursuit of green innovation with signals of innovation stability and due diligence so as to gain the greatest market value from their green patents. In contrast, we theorize that green patents offer nonfamily firms the greatest gain in market value when they signal innovation radicalness and newness. While our results show that the stock market reaction does not vary significantly between family and non-family firms, when we consider the attributes of green patents, we find that compared to nonfamily firms, family firms with longer green patent grant lags realize a more positive market reaction whereas those with higher patent radicalness experience a more negative market reaction. As such, our study suggests that the types of green patents that garner the greatest market value differ for family and nonfamily firms. The findings are robust to alternate family firm definitions, and additional robustness checks.

We draw from resource orchestration and socioemotional wealth (SEW) arguments to examine radical innovation in multifamily firms. We theorize that the weak coordination mechanism associated with multifamily ownership has a negative effect on the positive SEW-radical innovation relationship. Additionally, we argue that low generational involvement – the number of family generations involved simultaneously in the family firm's top management team – mitigates the negative moderating effect of multifamily ownership. Low generational involvement is a mobilizing mechanism that ensures that the family firm uses its SEW to produce radical innovation. We use a sample of Spanish firms to test our expectations. Our results show that firms realize the positive effect of SEW on radical innovation in concert with the leadership governance mechanism of multifamily ownership and low generational involvement. These results are important in that evidence suggests that radical innovation plays a strong role in family firms' long-term survival, success, and renewal. We conclude our paper with a discussion of the study's theoretical contributions and opportunities for future research.

When the CEO-owner of an SME suddenly dies, who should take over? Integrating the social embeddedness perspective with research on crisis management, we theorize that an SME’s financial health gets progressively worse before it stabilizes and recovers, reflecting an inverse U-shaped relationship between time since the CEO-owner’s sudden death and an SME’s financial distress. We then explore how successors’ family and firm embeddedness moderate this relationship. Using a longitudinal sample of Swedish SMEs, we find general support for our theorizing. While nonfamily successors lead to less financial distress than family successors immediately following a CEO-owner’s sudden death, the opposite occurs in the long-term. Further, successors with high firm embeddedness are associated with less financial distress than those with low firm embeddedness in both the short- and long-term. Additionally, our post-hoc analyses reveal that successors with high firm embeddedness, independent of their family embeddedness, outperform those low in firm embeddedness. Family successors lacking firm embeddedness report the highest financial distress, whereas those with high firm embeddedness experience the lowest. Our social embeddedness perspective on succession after the CEO-owner’s sudden death therefore contends that successor embeddedness explains differences in an SME’s financial health, with the importance of successor firm tenure overshadowing the effect of family status.

We explore business exits in four family business portfolio firms located in Pakistan. Our research objective is to understand why when facing an unexpected situation that violates their expectations (a decline in firm performance), the owners of family business portfolio firms are more likely to retain some businesses in the firm’s portfolio while choosing to exit from one or more other businesses. Results from our qualitative analyses reveal that family business portfolio firm owners prioritize protecting the firm’s legacy business, even if it is underperforming, over pursuing potential future opportunities in satellite businesses, including successful ones. This paradoxical approach can ultimately place the overall business at risk. Our results provide insights regarding the roles of sensemaking and emotions when family business portfolio firm owners identify, evaluate, and then select a course of action to pursue to deal with an unexpected event. We observe that the owners of the family business portfolio firms in our sample engage in a sensemaking process that shapes their understanding of how their emotions of guilt, sadness, and fear—and their related emotional attachment to the firm’s legacy business—affect their business exit decisions. 

Research on the acquisition behavior of family firms has produced conflicting theoretical arguments and mixed empirical findings on their propensity to acquire related or unrelated targets. While previous work has mainly focused on firm-level variables, this study examines the environment in which family firms operate and the institutional context where acquisitions take place. Drawing on the mixed gambles logic of the behavioral agency model, we theorize that family firms are more likely than nonfamily firms to undertake related acquisitions when they operate in uncertain environments to avoid losses to the family’s current socioemotional wealth. However, family firms are more likely to undertake unrelated acquisitions, when the environment is uncertain but the target operates in a similar and more developed institutional context where prospective financial gains are more predictable. Overall, building on a sample of 1,014 international acquisitions, our study offers important contributions to the literature on family firms and acquisitions.

Drawing on the experiences of 18 Australian Indigenous female entrepreneurs (AIFE), we use a grounded theory approach to understand their entrepreneurial development in the face of adversity. Informed by the concept of adversity quotient (AQ), our findings reveal that Indigenous female entrepreneurs do experience a range of adversities stemming from their gender and ethnic background. We examine the role that AQ – specifically, an individual’s ability to deal with adverse situations – has in allowing Indigenous entrepreneurs to leverage contingencies to establish a business. We find that business success is enabled by Indigenous entrepreneurs seeking to control the situation through endurance and persistence and taking ownership to improve their situation. We contribute to the existing underdog entrepreneurship literature by developing a model of adversity encountered by AIFEs.

Building on social identity theory, we theorize and find that in a merger, paired family firms are better able to retain employees and improve postmerger performance compared to other merger pairs. We contribute to social identity theory by theorizing better postmerger performance as mediated by job security for family firm combinations. We also contribute to the job security and M&A literature by examining how job security and postmerger performance vary based on the paired social identity of owners. In addition to identity similarity, the type of identity also matters in mergers. We argue that family owner social identity similarity fosters greater integration between merging parties while allowing family owner pairs to retain some autonomy through their employees, thereby maximizing postmerger performance. Our data on private Swedish firms, complemented by eleven qualitative interviews across five countries and three continents, confirm that family mergers outperform other merger combinations via job security. In a supplementary critical experiment examining industry dissimilarity, we compare the socioemotional wealth perspective–which emphasizes loss aversion and predicts family firms’ unrelated diversification avoidance–to the social identity theory. Consistent with social identity theory, our results show that both job security and postmerger performance improve with unrelated family firm mergers.

Research Summary: This work explores the intersection of strategic entrepreneurship and craft-based ventures, focusing on the integration of materiality, authenticity, and tradition in the creation of competitive advantage. Craft, historically rooted in artisanal, small-scale production, has evolved into “advanced craft,” requiring high expertise while also engaging with modern economic goals such as scaling, technological adoption, and global value chains. Craft-based strategic entrepreneurship embraces creativity and innovation, alongside traditional values and high-quality production, to engage with the modern economy without the alienating effects of industrialization. We highlight how craft entrepreneurs balance the pursuit of innovation with the preservation of authenticity and heritage. By examining the materiality, authenticity, and tradition embedded in craft, our work contributes to the understanding of how these elements influence competitive advantage and the broader relationship between economy and society in entrepreneurial ventures.

Managerial Summary: We offer practical insights for owners and managers in craft-based ventures seeking to balance tradition with modern business strategies. As the craft sector evolves into “advanced craft,” entrepreneurs must integrate artisanal expertise with scalable operations, technology adoption, and global market engagement. We highlight how successful craft ventures maintain high quality, authenticity, and cultural heritage while embracing strategic entrepreneurship practices like innovation, planning, and partnerships with larger organizations. For owners and managers, the key takeaway is the importance of preserving the unique values of craftsmanship—such as materiality, authenticity, and tradition—while also adopting modern tools like advanced technology and marketing strategies to scale and compete. By understanding these dynamics, craft-based businesses can enhance their competitive advantage, foster meaningful customer engagement, and navigate challenges like technological disruption and market expansion without losing their core identity.

In this study, we seek to understand firm behaviour during times of crisis, with a particular focus on family firms in different contexts. We theorize that family control mitigates (i.e. negatively moderates) the relationship between economic crisis and the layoff of employees, resulting in a higher propensity of family firms to retain their employees during a crisis compared to their nonfamily counterparts. Furthermore, taking a closer look at family firms, based on their location, we argue that family firms in rural regions are more likely to adopt measures leading to involuntary job turnover than family firms in urban areas due to a higher sensitivity to the loss of socioemotional wealth following a business closure. Relying on a panel dataset of Swedish private firms active in the period 2004-2012, our study contributes to a better understanding of family firms as employers in different contexts.