The role of socioemotional wealth, social capital, and long-term orientation in entrepreneurial orientation of family firms: A conceptual framework

Abstract

Family firms representing prevalent organizational form differ from non-family firms in their entrepreneurial behaviours and attitudes. The goal of this conceptual paper is to theoretically examine three possible predictors of entrepreneurial orientation (EO) that represent main distinguishing features of the family firms: importance of socioemotional wealth (SEW), long-term orientation (LTO), and bonding social capital (BSC). Based on literature review, we present five theoretical propositions constituting a multiple mediator model. First, we suggest positive relationship between importance of SEW and EO. Family enrichment and continuation can positively affect the entrepreneurial activities in order to ensure work for the family members, to develop and extend the business operations and preferably to hand over the firm to next generation. To achieve these goals, owners have to achieve and maintain high level of entrepreneurial activities. However, SEW may also have indirect effect on EO. We consider two mediators – bonding social capital and LTO. Socioemotional wealth, in the form of social bonds and emotional attachment, support coworking experience and harmony, which further translates to trust, shared vision and group cohesiveness. The networks of relationships, which contribute to problem solving and enhance the information flow, lead to ensure the long-term wealth and control over the company. Therefore, we expect that importance of SEW lead to development of bonding social capital, which further positively affects the EO. Socioemotional wealth in form of pursuing non-economic goals (e.g., succession), lead family businesses to prioritize actions, that are oriented on long-term planning horizons. Family firms with long-term orientation should have more capacity to be proactive and engage in innovative activities (i.e., foreseeing the opportunities and threats, long-term investments, or higher investment in R&D). Therefore, we propose importance given to SEW leads to LTO, which further positively influence EO. Although long-term orientation is a frequently proclaimed aspect of family firms, it is not much known how their long-term oriented behaviour affects their strategic orientation. Based on the propositions, we present a multiple mediator model. For each variable in the model, we suggest validated constructs for measurement. Last part of this paper includes limitations and directions for future research.