Does family employment enhance MSEs performance?: Integrating socioemotional wealth and family embeddedness perspectives
Section snippets
Executive summary
Despite the overwhelming significance of family employment for micro and small enterprises (MSEs), studies trying to untangle its net effect on performance have found inconsistent results (Olson et al., 2003). We argue that part of this controversy reflects the traditional approach that dates to Parson's work (Parsons, 1952) to separate the kinship-oriented family from the profit-driven business. However, this notion that the family is antithetical to the functioning of the business does not
Family employment in MSEs: a family embeddedness perspective
The prevailing view about the impact of family employment on the performance of MSEs is best understood in the context of the “rational thinking” model that has dominated sociology since Parsons (Parsons, 1959, Parsons and Bales, 1955). This view argues that the pre-industrial family, defined as a large-scale kinship unit providing a mix of economic, social and political functions, changed to a more nuclear form in order to meet the functional requirements of the new industrial economy. As a
Kinship ties, SEW and the performance of MSEs
As mentioned above, research on family businesses has long stressed the unique characteristics that accompany family ties in organizations. A common thread in this literature is the notion that family membership provides the firm not only with employment, but also with a set of non-economic utilities that Gómez-Mejia et al. (Gómez-Mejia et al., 2007) label “socioemotional wealth.” Recent empirical research explains how this set of non-economic utilities affects the strategic outcomes of family
The moderator effect of the nature of family embeddedness
In the previous section we combined the family embeddedness perspective with the SEW approach to argue that family employment has an overall positive impact on the performance of MSEs. By emphasizing the SEW attached to the networks that link relatives, our framework shows the advantages of kinship ties in the context of MSEs.
The framework developed so far does not allow us, however, to investigate how these kinship ties interact with the specificities of each family system to derive
Sample and methodology
Data for our study are drawn from a national survey on SMEs conducted via personal interviews in the Dominican Republic. Originally developed through a grant from the U. S. Agency for International Development and continued with funding from multiple institutions, including the Inter-American Development Bank and the World Bank, this survey constitutes one of the most important efforts to examine the effects of MSEs on the Dominican economy. The survey was first conducted in 1992, and the data
Results
Table 1 shows descriptive and bivariate correlations between the main variables of the study. As is typical for studies on micro enterprises (Chell and Baines, 1998) and in line with previous research on MSEs in the Dominican Republic (Espinal and Grasmuck, 1997), firms in our study are managed in general by adults in their 40s with low levels of formal education. The economic importance of the micro enterprise sector is confirmed by the fact that, despite their small size (almost three
Discussion and conclusions
Research on family involvement in businesses appears to be caught in a jungle of competing theories about the relationship between family involvement and firm performance (Rutherford et al., 2008). The involvement of family members as employees offers a good illustration of this theoretical conversation because it has been depicted as both detrimental and beneficial for firm success.
In order to reconcile both views, our paper adopts an integrated framework that combines the family embeddedness
Acknowledgments
Financial support from the Spanish Ministry of Science and Innovation (grant # ECO2008-05384-E and grant # ECO2009-10891/ECON) is gratefully acknowledged.
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2023, Journal of Family Business StrategyCitation Excerpt :Strong family ties, for example, produce effects on family firms’ EO by influencing access to financial resources (Sieger & Minola, 2017), generating nonfinancial obligations (Arregle et al., 2015), such as reciprocity, a sense of duty and moral burden (Kohli & Kuenemund, 2003), and individual entrepreneurial intentions (Hahn et al., 2021; Matthews, Hechavarria, & Schenkel, 2012). At the same time, the nature of family embeddedness determines the likelihood and degree of conflict (Le Breton-Miller & Miller, 2009), such as between protecting socioemotional wealth and attaining financial goals (Cruz, Justo et al., 2012). Moreover, family embeddedness puts the family at the core of the analysis, jointly considering the family lifecycle, family roles, family values, socially-generated expectations deriving from social and family norms, EO, and entrepreneurship (Aldrich, Brumana, Campopiano, & Minola, 2021).
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