Socio‐emotional Wealth Preservation and Alliance Success in Family Firms: The Role of Political Instability and Alliance Management Capability
| Published date | 01 April 2023 |
| Author | Omar Al‐Tabbaa,Abdalhamed Nasr,Nadia Zahoor,Muthu De Silva |
| Date | 01 April 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12626 |
British Journal of Management, Vol. 34, 915–941 (2023)
DOI: 10.1111/1467-8551.12626
Socio-emotional Wealth Preservation and
Alliance Success in Family Firms: The Role
of Political Instability and Alliance
Management Capability
Omar Al-Tabbaa,1Abdalhamed Nasr,2Nadia Zahoor3and Muthu De
Silva4,5
1Leeds University Business School, University of Leeds, Leeds, LS2 9JT, UK, 2University of Hudderseld,
Hudderseld, HD1 3DH, UK, 3Hunter Centre for Entrepreneurship,Strathclyde Business School, University of
Strathclyde, Glasgow, G4 0QU,UK, 4Birkbeck, University of London, London, WC1E 7HX, UK, and
5InnoLab, University of Vaasa, Vaasa, 65101, Finland
Corresponding author email: busofoa@leeds.ac.uk
Socio-emotional wealth preservation (SEW-P) can create a dilemma for family rms
when seeking to establish strategic alliance: how to manage the need to establish strate-
gic alliances aimed at obtaining complementary network-based resources (the economic
dimension) with the fear that such a move may jeopardize family control and domina-
tion (the SEW dimension). To address this dilemma (also labelled as a ‘mixedgamble’),
we theorized that the concern to preserve SEW (i.e. SEW-P) can contribute to family
rms’ alliance success being dependent on the leverage of alliance management capability
(AMC). We also propose that SEW-P can act as an organizational cognitiveenabler for
AMC. Yetthe positive association between SEW-P and AMC will become stronger when
family rms operate in a politically unstable environment. Wetested these hypotheses us-
ing a unique dataset collected from 302 family rms operating in a politically unstable
environment (the Libyan context), and the analysis lends support to our model and pre-
dictions. Overall, the study advancesthe alliance theories and family business literature
by adding new insights that explain the effect of non-nancial priorities of family rms,
and related contingencies, in predicting alliance success.
Introduction
An important theme that cuts across most of the
family business literature is the concept of socio-
emotional wealth (SEW) (Gómez-Mejía and
Herrero, 2022; Hughes et al., 2018). This refers to
the collective set of non-economic benets (includ-
ing self-identication, personal pride and satisfac-
tion, and the sense of a family asset to be passed
along) that family members receive from the
business they own (Miller and Le Breton-Miller,
2014). This, in turn, drives family businesses to
engage in maintaining ‘family inuence and the
perpetuation of the family dynasty’ (Gómez-Mejía
et al., 2007, p. 106). Accordingly, concern for SEW
preservation (or SEW-P) is believed to be a ‘real
point of reference for family decisions and behav-
iors’ (Sciascia, Mazzola and Kellermanns, 2014,
p. 132), thus inuencing their strategic orienta-
tion and preference (Gómez-Mejía et al., 2007;
Hernández-Perlines et al., 2021; Shi, Connelly and
Li, 2022). While the extant research has investi-
gated the connection between SEW-P and various
organizational decisions, such as diversication,
internationalization, R&D investment and acqui-
sition (for a review, see King et al., 2021), we still
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of BritishAcademy
of Management.
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distri-
bution and reproduction in any medium, provided the original work is properlycited.
916 Al-Tabbaa et al.
lack knowledge of the role of SEW-P in family
rm alliances (Chirico et al., 2019; Debellis et al.,
2021), which is the focus of this study.
The signicance of addressing this gap is height-
ened by the fact that research has hitherto shown
that SEW-P can have a double-edged sword ef-
fect on family rms’ performance. On the one
hand, the willingness to preserve the values that
characterize the shared objectives and vision of
such businesses can result in a higher degree of
workforce cohesiveness and commitment, which
potentially creates advantages that lead to high
performance (Hillebrand et al., 2020). By con-
trast, the desire to protect the identity and secure
transgenerational control of the rm can develop
a risk-averse mindset and even ‘dysfunctional
conservatism’ (Miller and Le Breton-Miller, 2014)
towards external opportunities (Chirico et al.,
2019; Lohe, Calabrò and Torchia, 2021). This is
because the decision-making process can be com-
promised by conicting agendas (e.g. to maintain
control, family members may avoid protable
investments and initiatives that may be perceived
as threatening their values and control) that can
eventually undermine growth potential (Gomez-
Mejia et al., 2017; Gómez-Mejia et al., 2022).
Applying this dilemma to the strategic alliance
in family rms, two critical gaps can be identied.
First, the association between SEW-P and the
success of strategic alliances remains ambiguous.
This ambiguity is due to the issue of how family
businesses can balance their need to establish
inter-organizational relationships aimed at ob-
taining complementary network-based resources
(Lahiri, Mukherjee and Peng, 2020) with their fear
that such a move may jeopardize family control
and domination. This is because of family rms’
belief that external parties are likely to intervene
in their decision-making process and manipulate
their priorities of SEW-P (Bouncken et al., 2020).
Addressing this gap is necessary to explain why
some family rms, while focusing on the pro-
tection of the non-economic utility (Leitterstorf
and Rau, 2014), are able to engage in success-
ful alliance, regardless of their concerns over
losing control (Chirico et al., 2019). Second, little
is known about the effect of institutional crises
on family business alliances (Prügl and Spitzley,
2021; Wang et al., 2020). In 2011, the Arab Spring
erupted, causing the removal of several political
regimes in the Middle East and creating a new
era of institutional chaos and social insecurity
that affected the entire business sector in many
countries (Elbanna et al., 2020). While the liter-
ature suggests that rms in such an environment
would seek an alliance as a mechanism to enhance
resilience (e.g. by sharing resources and informa-
tion) (Korbi, Ben-Slimane and Triki, 2021), there
is ambiguity on how the operation within a polit-
ically uncertain/unstable environment can shape
the behaviours of family rms that embark on
alliances. More specically, such a condition raises
questions of how family rms might react when
encountering the double uncertainty (linked to the
unstable external environment and concerns over
losing family control when establishing links with
external entities) (Chaib Lababidiet al., 2020). For
instance, Gils et al. (2004) found that perceived
environmental uncertainty – or the inability of a
rm to accurately assess its external environment
and the changes that may occur in it (Milliken,
1987) – can create an internal tension between the
desire to preserve family SEW versus the need to
adopt a new strategy suited to deal with uncertain
times. Also, the extant literature has highlighted
the importance of taking an environmental con-
tingency view when studying family businesses
(Naldi et al., 2013; Sirmon and Hitt, 2003). Partic-
ularly how these contingencies (e.g. the absence of
the political system) can shed light on the incon-
sistent impact of SEW and its prioritizing effect
on organizational behaviour (Firray et al., 2018).
To address the above-mentioned gaps, we drew
on the SEW-P and alliance management capabil-
ity (AMC) concepts to explain how family rms
can manage the need to establishstrategic alliances
aimed at obtaining complementary network-based
resources (the economic dimension) with the fear
that such a move may jeopardize family control
and domination (the SEW dimension). AMC is
a constellation of organizational skills and man-
agement routines that enable a rm to exchange
credible and relevant information, harmonize the
relationship and build social capital with their al-
liance partners (Dhaundiyal and Coughlan, 2022;
Schilke and Goerzen, 2010). To validate our the-
orizing, we used a unique dataset collected from
302 family rms operating in a politically unstable
environment (the Libyan context).
Our study makes two key theoretical contribu-
tions. First, it answers the call to investigate the
role of SEW consideration in the behaviour of
family rms when engaged in a strategic move
that can be seen as a mixed gamble (potentially
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of British
Academy of Management.
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