Different social exchange relationships among family members and between family and non-family stakeholders influence individual, group, and family-firm outcomes. Although many studies provide insights into social exchange relationships in family businesses, these studies are scattered across multiple literatures. Using the lens of social exchange theory, we review and organize 74 such studies. After discussing what is known and what gaps remain, we juxtapose our review with new theorizing about social exchanges to elicit research opportunities for family business research and for leveraging the family business context to “give back” to social exchange theory.

Researchers are divided on whether shareholder agreements (SAs) improve or hurt firm value. We offer family firms as a context where SAs add value and explain why; SAs limit "superprincipal" agency conflicts between family owners and other family members. A panel of French firms and a second study of French Initial Public Offerings show shareholders value SAs more in family than in nonfamily firms. Among family firms, SAs add greater value when weak governance undermines family owners' resistance to other family members' demands. Our study helps reconcile competing theory about SAs and distinguishes superprincipal conflicts from other family-firm agency problems.

Family owners monitor managers, attenuating principal–agent conflicts and improving firm performance. However, family owners also appropriate resources, creating principal–principal conflicts that harm firm performance. Although these effects occur simultaneously, research does not explain when one outweighs the other. We theorize that agency costs are minimized when the family's involvement on the board of directors is proportional to its ownership; too little board involvement fuels principal–agent conflicts, and too much fuels principal–principal conflicts. Consistent with our theorizing, evidence from French panel data shows firm performance increases as family board involvement and family ownership jointly increase, and performance is maximized when family board involvement and family ownership are proportional.

The transgenerational entrepreneurship perspective suggests senior-generation leaders with transgenerational control intentions (TCI) innovate to position the next generation for success, but many family firms fail to do so. We introduce transgenerational control uncertainty (TCU) as a theoretical mechanism explaining when TCI enhances innovation behaviors pre-succession. A multi-respondent, multi-time period survey of private German family firms shows that while TCI helps unleash innovation prior to succession, these effects also depend on lowering TCU as reflected in progress through the succession process. Our study suggests TCU might be a useful new construct for explaining other important differences among family firms.

Many family firms deploy strategies and practices to satisfy the needs of family employees. When non-family employees perceive a relational disadvantage compared to family employees, they may lower their evaluation of organizational identity (OI) and, in turn, identify less strongly with the family firm. Because family firms can ill afford to have non-family employees who lack a strong emotional connection with and commitment to the family firm, we explore approaches to foster non-family employees' evaluations of OI. Drawing on organizational identity theory, we find support for three approaches: (1) shifting non-family employees' evaluation of OI by enacting a proactive Corporate Social Responsibility (CSR) strategy, (2) compensating non-family employees for a perceived relational disadvantage by involving them in CSR decision-making, and (3) leveraging non-family employees' context, by drawing on those who share the values of the controlling family. Our theory and results suggest that family firms can deploy different approaches to manage the emotional connection with their non-family employees, which can help explain the observed variation in non-family employees' organizational identification across family firms.

22 Traditional Authority in Social Context: Explaining the Relation between Types of Family and Types of Family-Controlled Business Groups was published in De Gruyter Handbook of Business Families on page 487.

Family firms take different strategic actions because of their desire to grow and preserve socioemotional wealth (SEW), but pursuing SEW also generates what we call SEW resources that deliver advantages in certain contexts. We develop and test this idea with respect to corporate social responsibility (CSR). We theorize that SEW resources such as reputation, strong stakeholder relationships, and long-term orientation help family firms better leverage symbolic CSR to enhance short-term firm performance and better leverage substantive CSR to enhance long-term firm performance. Regression analyses on a 20-year panel of S& P 500 firms provide supportive evidence. Findings indicate that family firms not only “do it differently” to preserve SEW; they sometimes “do it better” because of SEW.

Entrepreneurship declines precipitously across generations in family firms, except in families that convey an entrepreneurial legacy to successors. However, because an entrepreneurial legacy is imprinted on all children, its impact should extend beyond successors. Inductive analysis of data from 26 nonsuccessor adult children from 13 multigenerational German wineries reveals that whether and where—at the firm, within the family's portfolio of firms, or elsewhere—such adult children pursue entrepreneurship depends, in addition to having an entrepreneurial legacy, on family cohesiveness and flexibility. Implications are that whereas entrepreneurial legacies affect all children, whether and where children leverage their legacy depends on the business family behind the family firm.

Families are constituted by shared memories and a common history. Research shows that talk about the past constitutes between 25% and 33% of the dinner conversation around the family table (Beals & Snow, 2002; Blum-Kulka, 1993, 1994; Perlman, 1984). Much of this conversation involves sharing experiences of the recent (i.e., “what did you do today?”) or distant past (i.e., “remember our vacation to Niagara Falls?”). More critical to the family constitution, however, are those conversations in which family members recount events outside the lived experience of any of the individuals at the table. These vicarious memories are the foundational elements of collective memory. Shared vicarious memories define the family as a distinct social entity with coherence and continuity over time and space (Pratt & Fiese, 2004). Family business researchers are only beginning to appreciate the theoretical and empirical value of viewing the family business through the lens of family memory and history. We gain considerable insight into the nature and constitution of family businesses by systematically analyzing what, and how, families remember and forget. The collection of papers that comprise this special issue on History-Informed Family Business Research is premised on this assumption. From these articles, we see a broad range of historical methodologies applied to a diverse array of family businesses. We also see how intractable issues that have troubled family business research over the years achieve a new clarity when viewed through the lens of the past and how it is remembered. The intent of this essay is to elaborate on the value of history-informed family business research and demonstrate how it can address persistently thorny issues in our discipline. We organize the essay into three sections, drawing on the studies in this special issue to illustrate points in each section. In the first section, we demonstrate how adopting a historical perspective can help us address the recurring definitional question, what is a family business? Our answer rests on the recursive relationship between historical memory as a practice and the family as a social entity. Like all social entities, families are a product of, and shaped by, their history. However, as active authors of their history, families have a higher degree of agency over how their history is told. It is the dynamic interaction of family practices of remembering and how remembering shapes the sense of family that defines a family business. Defining family businesses as a process of historical reconstruction rather than as a set of static properties (e.g., Chrisman et al., 2012) offers a different ontological perspective that defines a family business by how its members reconstruct family boundaries in ongoing acts of remembering. We elaborate on this recursive dynamic between the past and the family’s construction of the present and future in the first section. In the second section, we show how history and memory can help us address the recurring question of how family businesses balance the demands of being a business, on one hand, and the demands of being a family, on the other. To answer this question, we focus on the processes by which informal memories become 1157491 FBRXXX10.1177/08944865231157491Family Business ReviewSuddaby et al. research-article2023

Cross-country research finds mixed performance effects of family involvement in management (FIM) but consistently positive performance effects of family involvement in ownership (FIO). We argue that cross-country differences in institutional trust and trust in family can help explain this discrepancy. We reason that trust in family normalizes family managers’ use of firm resources to satisfy family needs. In contrast, institutional trust orientates family managers’ attention toward improving firm performance. A meta-analysis supports our theory: greater trust in family increases and greater institutional trust reduces the gap between FIM and FIO's performance effects across countries.

Our purpose in this editorial is to draw attention to the powerful but undertheorized role played by traditions in family businesses. Our core argument is that traditions are the foundational element of successful family businesses. As we elaborate here, we believe that family business success and longevity are directly correlated with the capacity to successfully manage the creation, maintenance, and intergenerational transmission of traditions. Because of their unique nature, family business tensions are often intergenerational in character and, thus, rest on the family business’s capacity to integrate past, present, and future. We examine two key family business tensions in this editorial. The first is the tension between the need to maintain the business or innovate. De Massis et al. (2016) refer to this tension as the “innovation paradox,” but for reasons that will become obvious later, we refer to it as the Theseus paradox, a classic thought experiment from ancient Greek philosophy premised on the mythological hero best known for killing the Minotaur. The second is the tension between the need to honor the founder’s vision of the firm or adapt to the vision of the children. While this tension is commonly labelled as an issue of succession, we view the tension as broader and deeper than mere succession and term this tension the Oedipus paradox, a reference to another character of Greek myth who, in his efforts to save his city, unwittingly kills his father. While the two paradoxes derive from broader tensions of continuity versus change, they differ in that the first is premised on theories of path dependence and the second is premised on theories of imprinting. Traditions are the primary mechanism by which these tensions are navigated in family businesses. While research has acknowledged traditions as a distinguishing characteristic of family businesses (Lumpkin et al., 2008), the construct of traditions is only weakly theorized. In the absence of a strong theoretical frame, however, the empirical evidence of the role played by traditions in navigating these essential tensions of the family business remains unclear. We initiate the process of theorizing traditions in this editorial. We begin by describing how the hybrid structure of traditions as both structure (what gets transmitted across generations) and agency (the process of transmission) creates the opportunity to view traditions both as essentialist constructs that endure through time and as subjective constructs that are constantly being reinterpreted in an ever moving present. We then introduce the literature on rhetorical history that provides a framework explaining how the process of reinterpreting the past to manage the present actually occurs. Finally, we use this emergent theoretical framework to explain how traditions are used to resolve the Theseus paradox and the Oedipus paradox in family businesses.