A substantial stream of research has examined how strategic decision making in family-controlled firms is driven by a concern for safeguarding its socioemotional wealth (SEW), or the “affect related value embedded in the family firm” (Gomez-Mejia et al, 2007: 108). Proponents of this theory argue that because family owners and strongly identify with their firm (Cannella, Jones & Withers, 2015; Deephouse & Jaskiewicz, 2013), they routinely prioritize non-economic goals. In this study, we propose an alternative framing based on social identity. Using a panel study of private Swedish firms, we develop theory and find support for our claim that the concern for social identity gives family firms incentives to pursue penetration strategies and make related acquisitions in their core markets, and to offset the risks of that strategy by making diversifying unrelated) in peripheral markets. A reversal of this strategy when financial implications are averse supports the conclusion that family firms are not loss averse. Implications for BAM-based models of SEW are addressed.