février 5, 2021

Fall and revival of family businesses. An explanation based on socio-emotional wealth and owner-manager’s entrepreneurial sins and cognitive emotions

Par samibasly

This research aims at observing how the owner-manager’s sins and emotions influence the pursuit of socio-emotional goals and how these goals might cause the family firm’s fall and also allows it to recover after a tough crisis. More precisely, the present paper first highlights consequences of greed and hubris, two distinctive entrepreneurial characteristics, first in terms of firm’s performance decline, and then in terms of the implied shame and guilt experienced by the owner-manager, which eventually lead to firm’s survival. The research that we present in this paper focuses on a unique case study carried out in a participant observation setting. The firm studied in this research experienced a severe crisis, which could have led to its failure. However, this crisis resulted in a number of crucial evolutions in firm’s management and governance. Our research contributes to our knowledge about SEW in family firms by substantiating the impact of affect-related and socio-emotional goals on the resilience capacity of family firms. On the one hand, the firm in our study passed through a fall sequence, explained by greed and hubris, which manifested by the lack of professionalization and the unrestricted pursuit of family-centric SEW resulting in the consumption of firm’s assets and financial resources. On the other hand, our study reveals a revival sequence justified by the feeling of guilt, which acted as a driving force for a retrenchment strategy carried-out by the family owner-manager and which pushed him to moderate his pursuance of SEW goals.

Basly, S. and Bachir Bendaoud, H. (2020). “Fall and revival of family businesses. An explanation based on socio-emotional wealth and owner-manager’s entrepreneurial sins and cognitive emotions”. Gestion 2000, Vol. 37, n°4.