The Genesis of Transformational Environment and Entrepreneurial Orientation in Family Firms

We research a firm’s entrepreneurial orientation as a function of its ownership structure-i.e., whether the organization is owned and controlled by a family. We claim that this relationship occurs in line with the family firms’ mission to pursue an enlargement of its socioemotional wealth (SEW), which manifests in a leadership environment characterized by its transformational qualities. We propose two items moderate the connection between family ownership and transformational environment: family control (i.e., whether top directors belong to the family) and the involvement of more employees across various hierarchy levels; while we also propose investments in knowledge capabilities moderate the relation between transformational environment and entrepreneurial orientation. Our empirical analysis leverages survey data with 55,540 workers from 180 large firms, on both firm- and employee-levels, and generally confirms our theory. Our study suggests that the entrepreneurial orientation of established businesses has a deep relation to its ownership structure, but that such relationship is contingent on key elements relating to family control as well as investments in knowledge capabilities. In the concluding section, we discuss these and other consequences for theory and practice.