Family Firm Goals and Their Influences on Firm Opportunism: A Utility Perspective

Abstract

Purpose–Although prior studies on family firms have contributed considerably to the understanding of family firm goals and their impacts on firms’ decision making, there is little known about how the family systematically influence socioemotional wealth (SEW), how economic wealth (EW) and SEW correlate to each other, and how managers trade off the gains of one type of wealth and the losses of the other when playing mixed gambles. To fulfil these voids, the present research develops a model to examine the influences of generations, siblings, family cohesion, and owner-managers seniority on SEW and the moderation effects of ownership and owner-managers on these influences. Building on the utility theory, this research addresses the correlation between EW and SEW and investigates how they affect firms’ opportunism. Design/methodology/approach – Data were collected through a questionnaire survey of owner-managers of family firms in Yiwu City, China. Findings – (1) Generations and family cohesion are positively related to SEW; (2) Seniority is negatively related to SEW; (3) EW and SEW have a positive inter-correlation; (4) SEW is positively associated with opportunism; (5) EW and SEW have an interaction effect on opportunism; (6) Owner-managers moderates the relationship between seniority and SEW; and (7) Ownership moderates the relationship between seniority and SEW and the relationship between SEW and opportunism.