Best Among the Worst or Worst Among the Best? Socioemotional Wealth and Risk-Performance Returns for Family and Non-family Firms Under Financial Distress

Luis R. Gómez-Mejia, Francesco Chirico, Geoffrey Martin and Massimo Baù

Entrepreneurship Theory and Practice, 2023, vol. 47, issue 4, 1031-1058

Abstract: A firm’s proactive engagement in risk, which has been deeply intertwined with the entrepreneurship literature, is essential to sustaining a firm’s long-term competitive advantage. Drawing on BAM’s mixed gamble logic in a family firm context, the present study offers a theoretical framework examining how firm risk returns differ in the contexts of distressed (the worst) and nondistressed (the best) family and nonfamily firms. We predict that family control moderates the risk taking-performance relationship. That is, compared with nonfamily firms, a mixed gamble featuring the prospect of socioemotional and financial losses leads family firms to extract higher financial returns from risk taking when in financial distress, but lower financial returns when they are not in financial distress. Our theoretical expectations are supported using a matched sample of Swedish firms.

Keywords: family firm; risk taking; financial distress; firm performance (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/10422587211057420 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:47:y:2023:i:4:p:1031-1058

DOI: 10.1177/10422587211057420

Access Statistics for this article

More articles in Entrepreneurship Theory and Practice
Bibliographic data for series maintained by SAGE Publications ().