Relational Embeddedness and Firm Growth: Comparing Spousal and Sibling Entrepreneurs

Integrating relational embeddedness arguments with Penrosean growth theory, we compare the growth of firms run by spousal entrepreneurs with firms run by sibling entrepreneurs. We theorize that trust, identification, and mutual obligations—the three facets of relational embeddedness—are more pronounced in spousal teams than in sibling teams, which provides spousal teams with advantages over sibling teams in generating firm growth. Probing a sample of all private firms in Sweden over a three-year period, we find support for this conjecture. Exploring boundary conditions to this baseline relationship, we also find that firm age weakens the growth advantages of spousal teams over sibling teams and that industry experience heterogeneity within the entrepreneurial team reinforces these growth advantages. These results provide important contributions for research on firm growth, the social embeddedness of firms, entrepreneurship, and family business.

[1]  Matthew W. Rutherford,et al.  Exploring the relation between family involvement and firms' financial performance: A meta-analysis of main and moderator effects , 2012 .

[2]  Celia V. Harquail,et al.  Organizational images and member identification. , 1994 .

[3]  M. Wright,et al.  Entrepreneurship and growth , 2013 .

[4]  Susan M McHale,et al.  Sibling Relationships and Influences in Childhood and Adolescence. , 2012, Journal of marriage and the family.

[5]  Nadine Kammerlander,et al.  The Impact of Shared Stories on Family Firm Innovation , 2015 .

[6]  Raphael Amit,et al.  How Do Family Ownership, Control, and Management Affect Firm Value? , 2006 .

[7]  Carolyn Y. Woo,et al.  Initial Human and Financial Capital as Predictors of New Venture Performance , 1994 .

[8]  R. Blatt,et al.  Tough Love: How Communal Schemas and Contracting Practices Build Relational Capital in Entrepreneurial Teams , 2009 .

[9]  Jurgita Sekliuckiene,et al.  Entrepreneurial orientation and new venture performance: the moderating role of network types , 2019, European J. of International Management.

[10]  J. Bloodgood,et al.  Citizenship Behavior and The Creation of Social Capital in Organizations , 2002 .

[11]  Clare M Stocker,et al.  Sibling conflict in middle childhood predicts children's adjustment in early adolescence. , 2002, Journal of family psychology : JFP : journal of the Division of Family Psychology of the American Psychological Association.

[12]  M. Lubatkin,et al.  Agency Relationships in Family Firms: Theory and Evidence , 2001 .

[13]  Jim Lee,et al.  Family Firm Performance: Further Evidence , 2006 .

[14]  Harold C. Livesay,et al.  Entrepreneurship and the growth of firms , 1995 .

[15]  Colin F. Camerer,et al.  Creating Expectational Assets in the Laboratory: Coordination in 'Weakest- Link' Games , 1994 .

[16]  William S. Schulze,et al.  Exploring the Agency Consequences of Ownership Dispersion Among The Directors of Private Family Firms , 2003 .

[17]  Toby E. Stuart.  Interorganizational alliances and the performance of firms: A study of growth and innovation rates i , 2000 .

[18]  G. Brody,et al.  Sibling relationship quality: its causes and consequences. , 1998, Annual review of psychology.

[19]  Karl Wennberg,et al.  Regional Influences on the Prevalence of Family Versus Non-Family Start-Ups , 2013 .

[20]  Rita Gunther McGrath,et al.  Defining and developing competence: A strategic process paradigm , 1995 .

[21]  Alec Johnson,et al.  Bootstrapping in small firms: An empirical analysis of change over time , 2006 .

[22]  James J. Chrisman,et al.  Sources of Heterogeneity in Family Firms: An Introduction , 2012 .

[23]  Timothy B. Folta,et al.  Hybrid Entrepreneurship , 2010, Manag. Sci..

[24]  Nigel Nicholson,et al.  Family Wars: Classic Conflicts in Family Business and How to Deal with Them , 2008 .

[25]  J. Coleman.  Foundations of Social Theory , 1990 .

[26]  Toni M. Whited,et al.  Endogeneity in Empirical Corporate Finance1 , 2013 .

[27]  Rosemary L. Batt,et al.  MANAGING CUSTOMER SERVICES: HUMAN RESOURCE PRACTICES, QUIT RATES, AND SALES GROWTH , 2002 .

[28]  Matthias Almus,et al.  Growth of New Technology-Based Firms: Which Factors Matter? , 1999 .

[29]  D. Buchanan,et al.  Power, politics, and organizational change: winning the turf game , 2008 .

[30]  Ross L. Matsueda,et al.  コントロ-ル理論と分化的接触理論の検証--因果モデルを用いて(American Sociological Review.,Vol.47,1982) , 1989 .

[31]  A. Alchian,et al.  The Firm Is Dead; Long Live the Firm A Review of Oliver E. Williamson s The Economic Institutions of Capitalism* , 1988 .

[32]  Marianna Makri,et al.  Diversification Decisions in Family-Controlled Firms , 2010 .

[33]  Colin Camerer,et al.  Not So Different After All: A Cross-Discipline View Of Trust , 1998 .

[34]  Raphael Amit,et al.  Financial Performance of Family Firms , 2014 .

[35]  D. Harrison,et al.  What's the difference? Diversity constructs as separation, variety, or disparity in organizations. , 2007 .

[36]  Howard E. Aldrich,et al.  The Structure of Founding Teams: Homophily, Strong Ties, and Isolation among U.S. Entrepreneurs , 2003, American Sociological Review.

[37]  P. Davidsson,et al.  Measuring Growth: Methodological Considerations and Empirical Results , 2006 .

[38]  D. Shepherd,et al.  Are we Comparing Apples with Apples or Apples with Oranges? Appropriateness of Knowledge Accumulation across Growth Studies , 2009 .

[39]  D. Rubin,et al.  The central role of the propensity score in observational studies for causal effects , 1983 .

[40]  Joseph T. Mahoney,et al.  Resources, Capabilities and Entrepreneurial Perceptions , 2007 .

[41]  M. Wiersema,et al.  Top Management Team Demography and Corporate Strategic Change , 1992 .

[42]  Ken G. Smith,et al.  A Multidimensional Model of Venture Growth , 2001 .

[43]  Sharon M. Danes,et al.  Family Business-Owning Couples: An EFT View into Their Unique Conflict Culture , 2004 .

[44]  D. Shepherd,et al.  Swinging a Double-Edged Sword: The Effect of Slack on Entrepreneurial Management and Growth , 2011 .

[45]  Robert S. Nason,et al.  From Longevity of Firms to Transgenerational Entrepreneurship of Families , 2012 .

[46]  P. Greene,et al.  Resource needs and the dynamic capitalism typology , 1997 .

[47]  J. Barney.  Firm Resources and Sustained Competitive Advantage , 1991 .

[48]  N. Horton.  Multilevel and Longitudinal Modeling Using Stata , 2006 .

[49]  Johan Wiklund,et al.  The Effect of Small Business Managers’ Growth Motivation on Firm Growth: A Longitudinal Study , 2008 .

[50]  Jeffrey H. Dyer,et al.  The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea , 2003 .

[51]  Sabine B. Rau,et al.  Entrepreneurial legacy: Toward a theory of how some family firms nurture transgenerational entrepreneurship , 2015 .

[52]  Richard H. Lester,et al.  Family and Lone Founder Ownership and Strategic Behaviour: Social Context, Identity, and Institutional Logics , 2010 .

[53]  Mike W. Peng,et al.  The Growth of the Firm in Planned Economies in Transition: Institutions, Organizations, and Strategic Choice , 1996 .

[54]  Johan Wiklund,et al.  The Varying Effects of Family Relationships in Entrepreneurial Teams , 2013 .

[55]  S. Shane.  Hybrid Organizational Arrangements and Their Implications for Firm Growth and Survival: A Study of New Franchisors , 1996 .

[56]  Joseph T. Mahoney,et al.  Edith Penrose's (1959) Contributions to the Resource‐based View of Strategic Management , 2004 .

[57]  Joseph Galaskiewicz,et al.  Networks and Organizational Growth: A Study of Community Based Nonprofits , 2006 .

[58]  Howard E. Aldrich,et al.  A Life Course Perspective on Occupational Inheritance: Self-employed Parents and their Children , 2007 .

[59]  Karl Wennberg,et al.  Why Family Matters: The Impact of Family Resources on Immigrant Entrepreneurs’ Exit from Entrepreneurship , 2016 .

[60]  Petra E. Todd,et al.  Matching As An Econometric Evaluation Estimator , 1998 .

[61]  Harbir Singh,et al.  Learning and protection of proprietary assets in strategic alliances: building relational capital , 2000 .

[62]  Luca Grilli,et al.  Founders' human capital and the growth of new technology-based firms: A competence-based view , 2005 .

[63]  Michiel Verver,et al.  Toward a Kinship Perspective on Entrepreneurship , 2018 .

[64]  Paul Brewerton,et al.  Organizational Research Methods: A Guide for Students and Researchers , 2001 .

[65]  J. Brüderl,et al.  Network Support and the Success of Newly Founded Business , 1998 .

[66]  Leonore Davidoff.  The sibling relationship and sibling incest in historical context , 2018 .

[67]  Thomas H. Brush,et al.  The free cash flow hypothesis for sales growth and firm performance , 2000 .

[68]  M. Olson,et al.  The Logic of Collective Action: Public Goods and the Theory of Groups , 1969 .

[69]  Danny Miller,et al.  Filling the institutional void: The social behavior and performance of family vs non-family technology firms in emerging markets , 2009 .

[70]  B. Ingoldsby,et al.  Exploring Family Theories , 2003 .

[71]  Gary A. Ballinger,et al.  Using Generalized Estimating Equations for Longitudinal Data Analysis , 2004 .

[72]  Brent D. Beal,et al.  The Embeddedness of Organizations: Dialogue & Directions , 1999 .

[73]  Sharon Belenzon,et al.  Married to the firm? A large‐scale investigation of the social context of ownership , 2016 .

[74]  D. Chambers,et al.  A sociology of family life : change and diversity in intimate relations , 2012 .

[75]  Johan Wiklund,et al.  Internal versus External Ownership Transition in Family Firms: An Embeddedness Perspective , 2013 .

[76]  L. Melin,et al.  “Business Growth”—Do Practitioners and Scholars Really Talk about the Same Thing? , 2010 .

[77]  C. Vandenberghe,et al.  Entrepreneurship Theory and Practice , 2015 .

[78]  Daniel Halvarsson,et al.  Are high-growth firms one-hit wonders? Evidence from Sweden , 2015 .

[79]  Yi Jiang,et al.  An institution-based view of international business strategy: a focus on emerging economies , 2008 .

[80]  P. Davidsson,et al.  Arriving at the high growth firm , 2003 .

[81]  J. Houdaille,et al.  Population and Development Review — Vietnamese casualties during.the American war , 1996 .

[82]  James N. Baron,et al.  Building the Iron Cage: Determinants of Managerial Intensity in the Early Years of Organizations , 1999 .