Preserving Socioemotional Wealth in Family Firms: Asset or Liability? The Moderating Role of Business Context

Authors

  • Lucia Naldi,

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    • Lucia Naldi is an Associate Professor at Jönköping International Business School, Box 1026, 551 11 Jönköping, Sweden.
  • Carmelo Cennamo,

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    • Carmelo Cennamo is an Associate Professor at the Bocconi University, Department of Management and Technology, Via Roentgen, 20136 Milano, Italy.
  • Guido Corbetta,

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    • Guido Corbetta is a Professor at the Bocconi University, Department of Management and Technology, Via Roentgen, 20136 Milano, Italy.
  • Luis Gomez-Mejia

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    • Luis Gomez-Mejia is a Professor at the Texas A&M University, Department of Management, Mays Business School, 420 C Wehner Building, 4221 TAMU, College Station, Texas 77843-4221, USA.

Please send correspondence to: Lucia Naldi, tel.: (46) 36-101852; e-mail: Lucia.naldi@jibs.hj.se, to Carmelo Cennamo at carmelo.cennamo@uniboccon.it, to Guido Corbetta at guido.corbetta@uniboccon.it, and to Luis Gomez-Mejia at lgomez-mejia@mays.tamu.edu.

Abstract

We ask whether choices aimed at preserving socioemotional wealth (SEW) represent an asset or a liability in family-controlled firms. Specifically, we consider one major SEW-preserving mechanism—having as chief executive officer (CEO) a member of the controlling family—and hypothesize that this choice is (1) an asset in business contexts, such as industrial districts, in which tacit rules and social norms are relatively more important, but (2) a potential liability in contexts like stock exchange markets, where formal regulations and transparency principles take center stage. The results from our empirical analysis confirm these hypotheses.

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