A Cross-Cultural Study of the Underlying Meaning of Socioemotional Wealth and its Impact on Family Business Entrepreneurial Behaviour

Abstract

The purpose of this investigation was to understand the underlying meaning of socioemotional wealth and its impact on family business entrepreneurial behaviour. The concept of socioemotional wealth proposes that aspects of the firm that meet the family's affective needs are the primary point of reference in decision making within the family business context. Thus, this study aimed at explaining how family business events influence the socioemotional wealth of the family, and why a family business needs to behave heterogeneously to preserve this wealth. The primary focus of the research was to understand this social and emotional dynamic behind the entrepreneurial behaviour of family businesses. <br/> The investigation consisted of an explanatory multiple case research involving small and medium-sized family businesses from Australia and Chile. The sample for the case studies represented contrasting settings and provided information about family businesses with different cultural backgrounds, generational stages, histories and challenges. Data analysis consisted of an inductive-deductive process that was based on critical realism, which allowed the development of a contextualised explanation of the cases' narrative. <br/> Overall, this investigation made progress in explaining (a) the dynamic behind the socioemotional wealth formation, (b) the factors capturing this wealth and (c) the way it impacts on family firms' entrepreneurial behaviour. The study showed that socioemotional priorities evolve over time, confirming the dynamic nature of this construct. It also showed that some priorities, such as transgenerational intention, have a positive impact on entrepreneurial behaviour, while others, such as avoiding family conflict, have the opposite effect. Accordingly, the evolving nature of the socioemotional priorities would explain the changes in firms' entrepreneurial behaviour. This study also made an initial approximation to confirm that the importance of each socioemotional wealth driver depends on the context the family firm faces, and distinguished which of them are based on either the family or the business systems. <br/> Finally, in relation to practical implications, the findings showed that family businesses managers (family and/or non-family members) should develop new criteria for decision making, by complementing the traditional rational/economic view when making decisions with socioemotional wealth elements. They should balance family interest and business efficiency to reach lasting success.