Family Firm Configurations for High Performance: The Role of Entrepreneurship and Ambidexterity

Date01 October 2018
Published date01 October 2018
AuthorSascha Kraus,Mathew Hughes,Matthias Filser,Cheng‐Feng Cheng,Man‐Ling Chang,Rainer Harms
DOIhttp://doi.org/10.1111/1467-8551.12263
British Journal of Management, Vol. 29, 595–612 (2018)
DOI: 10.1111/1467-8551.12263
Family Firm Configurations for High
Performance: The Role
of Entrepreneurship and Ambidexterity
Mathew Hughes , Matthias Filser,1Rainer Ha rms, 2Sascha Kraus,3
Man-Ling Chang 4and Cheng-Feng Cheng5
Loughborough University, School of Business and Economics, Loughborough, Leicestershire LE11 3TU, UK,
1University of Liechtenstein, F¨
urst-Franz-Josef-Strasse, 9490 Vaduz, Liechtenstein, 2University of Twente,
Drienerlolaan 5, 7522 NB Enschede, Netherlands, 3´
Ecole Sup´
erieureduCommerceExt
´
erieur, ESCE
International Business School, 10 rue Sextius Michel, 75015 Paris, France, 4National Chung Hsing University,
145 Xingda Road, South District, Taichung 402, Taiwan, and 5Asia University, 500 Lioufeng Road, Wufeng,
Taichung 41354, Taiwan
Corresponding author email: m.hughes2@lboro.ac.uk
The performance drivers of family firms have spawnedconsiderable research interest. Al-
most exclusively this research has relied on independent sets of explanatory variables in
linear analyses. These analyses mask the complex interdependencies that are likely to
exist among key success factors, leading to faulty theory and misspecified implications
for practice. As treatment, the authors propose a configuration approach to family firm
performance that accounts for complex interdependencies among entrepreneurial, inno-
vation and family influence conditions. Using a fuzzy set qualitative comparativeanalysis
of a sample of 129 Finnish family firms, the authors identify sucient conditions with
regard to the existence or absence of antecedent conditions to family firm performance.
These conditions include entrepreneurial orientation, exploration and exploitationactiv-
ities that form causal paths towards family firm performance. To enrich the analysis,
the authors theorize and empirically analyse how these conditions might dier in family
firms with high and low levels of family influence. They deepen the currentunderstanding
of configurations that promote the performance of family firms, oer important implica-
tions for theory and practice, and set new directions for future research on the strategic
management of family firms. The results are also virtually identical and insensitive to
change across subjective and objectiveperformance measures.
Introduction
Family-specific conditions ‘allow many family
businesses not only to reap advantages of conti-
nuity and focus (“exploitation”), but also to reori-
ent themselves when needed (“exploration”)’ (Le
Breton-Miller and Miller, 2006, p. 215). This sug-
gests that high performing family firms tend to
innovate based on both exploitation and explo-
ration, known as ‘ambidexterity’ (He and Wong,
2004; O’Reilly and Tushman, 2013; Raisch and
Birkinshaw, 2008). Literature suggests a positive
relationship between ambidexterity and firm per-
formance (Allison McKenny and Short, 2014;
Moss, Payne and Moore, 2014). Yet we know
little about how ambidexterity configures with
other organizational factors to influence firm per-
formance (Stettner and Lavie, 2014), particularly
when the firm’s context is atypical to that of tradi-
tional, large public and privatefirms that dominate
the current literature (Chang and Hughes, 2012;
Hughes et al., 2010). We propose that exploration
and exploitation alone, and various combinations
thereof, together with additional dimensions can
be antecedents to family firm performance (Junni
et al., 2013). Neglecting such dimensions would
result in an incomplete treatise with inadequate
predictive capacities. This problem is exacerbated
© 2017 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
596 M. Hughes et al.
by investigations that study only the individual ef-
fects of such conditions. To overcome this,thought
must be given to how these conditions configure
together for family firm performance.
Not all family firms may enjoy the same suc-
cess in exploration and exploitation (Sharma and
Salvato, 2011). Performance dierences may be
due to dierent realizations of the family context,
leading to agency problems (Carney, 2005) and
dierent emphasis on the non-financial objectives
that shape family firm strategy (Berrone, Cruz and
Gomez-Meija, 2012; Frank et al., 2010; G´
omez-
Mej´
ıa et al., 2007). This is a product of family
influence, or ‘familiness’, a resource unique to a
family firm because of the interactions between
the family, its individual members and the busi-
ness (Habbershon, 1999). Familiness brings forth
a family business identity that has grown histor-
ically and can alter the firm’s ability to innovate
(Frank et al., 2010). Specifically, greater family in-
fluence can lead to strategies not conducive to en-
trepreneurship or performance unless systemati-
cally mitigated (Carney, 2005). As such, a linear
analysis of factors antecedent to family firm per-
formance risks understating patterns of interde-
pendencies and particularly when accounting for
the context of each family firm (by wayof their de-
gree of familiness). Instead, a configuration of fac-
tors might be at play in explaining the success of
high-performing family firms beyond just the pres-
ence of exploration or exploitation.Family firm lit-
erature points to not onlyfamily influence, but also
entrepreneurial orientation (EO) as further com-
ponents of such a configuration.
Entrepreneurial orientation is a strategic ori-
entation consisting of risk-taking, innovativeness
and proactiveness (Covin and Slevin, 1989; Miller,
1983). Family firm researchers have linked EO to
superior performance (Craig et al., 2014; Cruz and
Nordquist, 2012). However, scholars also report
that family influence can compromise EO by di-
minishing the appetite for risk-taking, prioritizing
the family’s financial and social well-being (Naldi
et al., 2007), parochial interests (Miller et al., 2015)
and their desire to maintain and protect control
over the business (Carney, 2005). The theoreti-
cal background of these findings appears to be
grounded in agency logic and principles associated
with the preservation of family influence.
This collective ambiguity surrounding the
composition of exploration, exploitation and
EO as likely drivers of performance in family
firms indicates that a non-traditional approach is
necessary to analyse their relationship more eec-
tively. We use a configuration analysis grounded
in fuzzy-set qualitative comparative analysis
(fsQCA) to resolve this ambiguity by categorizing
these performance antecedents into groups of
family firms that exhibit high and low levels of
family influence. Our research question is: What
are the sucient configurations of antecedents
(EO, exploration and exploitation, and family
influence) to family firm performance?
This study oers three contributions. First,
we use configuration theory and draw together
expectations from agency and socioemotional
wealth (SEW) theories of family firms to set out
new propositions about configurations of family
firms’ EO, exploration and exploitation activities
and how these might contribute to family firm
performance under high and low levels of family
influence. We contribute to theory by revealing
the unexpected substitutability of EO and explo-
ration, the primacy of adaptive theory to explain
configurations and its use in explaining family firm
performance in ways agency and socioemotional
logics fail to do, and reveal the local character of
configurations of family firm performance and
when specialization might be better than am-
bidexterity. Second, the study oers an empirical
contribution by providing new data on specific
configurations of exploration and exploitation,
EO and family influence as causal conditions that
yield high performance for family firms. Finally,
the study oers a further empirical contribution by
extending the fsQCA method into the family firm
literature, illustrating how quantitative data on
family firms can be converted by Boolean algebra
to facilitate more nuanced empirical analysis than
is available through more traditional quantitative
methods (Ragin, 2000; Woodside, 2010a, 2010b).
The power of this approach lies in its ability to de-
termine sucient conditions within several causal
paths (configurations) that elicit a desired out-
come. As a general contribution, we evidence that
fsQCA results are robust acrosssubjective and ob-
jective performance measures to increase scholars’
and managers’ confidence in fsQCA results.
Configurational nature of family firm
performance
We first illustrate the performance impact of EO
and then argue that performance is driven by
© 2017 British Academy of Management.

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