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Financial Attitudes in Family Firms: The Moderating Role of Family Commitment

Authors

  • Christian Koropp,

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    • Christian Koropp was postdoctoral researcher at the Institute of Technology Management at the University of St. Gallen and is now working as consultant for small and medium-sized firms.
  • Dietmar Grichnik,

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    • Dietmar Grichnik is a professor of entreprenurship and director of the Institute of Technology Management at the University of St. Gallen.
  • Franz Kellermanns

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    • Franz W. Kellermanns is a professor of management at the University of Tennessee and an associated Professor at WHU (Otto Beisheim School of Management) in Germany.

Address correspondence to: Dietmar Grichnik, Institute of Technology Management, University of St. Gallen, Dufourstrasse 40a, St. Gallen 9000, Switzerland. E-mail: dietmar.grichnik@unisg.ch.

Abstract

This study investigates how family commitment moderates whether and how financial knowledge, positive experience with debt suppliers, and economic goal orientation affect owner–managers' attitudes toward debt financing in family firms. Using a sample of 280 German family firms, we find significant relationships between both financial knowledge and positive experience with debt suppliers and owner–managers' financial attitudes toward debt. Our findings show that family commitment moderates these relationships such that high family commitment increases the impact of prior experience with debt suppliers, though the effect of economic goal orientation is lowered and reversed. Overall, we contribute to research on financial decision making, capital structure, and social capital in family firms.

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