Does Family Matter in Business?
In the current competitive landscape, it is essential for firms to effectively manage their relationships with nonmarket stakeholders such as politicians and communities. Firms pursue various nonmarket strategies, undertaking activities that shape the political and social aspects of the nonmarket environment in order to contribute to competitive advantage.
However, the majority of research has explored how institutional, industry and firm-level factors drive nonmarket strategy, focusing on economic or financial motives such as improved performance, access to critical resources and increased shareholder's value as the ultimate goals of nonmarket strategy. This focus offers less depth about the nuances in nonmarket antecedents across firm types, and until now little has been offered in relation to family firms - the most common organizational form around the world
New research considering the ubiquity of family ownership and its significant role in the business as well as the importance of nonmarket strategies for the competitive advantage of any organization, offers new insight into an important yet overlooked topic—the role of family motives in nonmarket strategy. Researchers examined the impact of family ownership on the likelihood of firms adopting the International Organization for Standardizations' ISO 14001 criteria – a recognised and respected framework used by organisations to measure their environmental impact.
According to Professor Tazeeb Rajwani, co-author of the study, the desire to preserve socioemotional wealth and the firm's own survival through generations drives family-owned firms to pursue legitimacy by conforming to institutional expectations, such as the ISO 14001 criteria.
Drawing on institutional perspective, the research suggests the desire to preserve socioemotional wealth and survival through generations drives family-owned firms to pursue family legitimacy through conforming to institutional expectations. Using data from 161 Chinese firms, it shows that family ownership exerts a positive impact on ISO 14001, and that this effect is stronger when firms are located close to large cities. Similarly, a more pronounced impact of family ownership on ISO 14001 occurs when family name is part of the firm's name. Given the prevalence of family firms and the underdevelopment of formal institutional channels in emerging markets, family ownership, location, and firm name can provide valuable cues regarding sustainability and could be added to other evaluation criteria or proxies for sustainability rankings or for making sustainable financing and purchase decisions
The research also has practical implications for investors, demonstrating the rising importance of nonmarket strategies and nonfinancial goals. This insight is crucial for investors in family-owned and family-managed firms. These investors, whose interest is profit maximization, must be aware of the influence of non-financial objectives on strategic decisions in family firms. Family members with controlling stakes in the firm may push strategic decisions that resonate with their socioemotional aspirations but are not directly associated with profitability.
To access the full paper, read “Does family matter? Ownership, motives and firms’ environmental strategy’, https://doi.org/10.1016/j.lrp.2022.102216
Professor Tazeeb Rajwani
Professor of International Business and Strategy / Head of Department of Strategy and International Business
Tazeeb Rajwani is a Chaired Professor in International Business and Strategy and Head of the Department of Strategy and International Business at Surrey Business School. He is also Visiting Professor at Cranfield School of Management and Fellow at University of Edinburgh. He was previously Professor of International Business and Strategy, Director of Executive Education, Director of Postgraduate Programmes, member of the Senior Management team and member of the Advisory Board at University of Essex. Prior to joining Essex, he was an Associate Professor (Reader) in Strategic Management, Director of Executive MBA and Director of Creating Strategic Advantage (CSA) Executive Programme at Cranfield School of Management. He holds or has held visiting faculty positions at London Business School, Kings College London, University of Warwick, University of Oxford, University of Edinburgh, University of Notre Dame, University of Peking, Strathmore University, ESMT, Queens University, University of Anáhuac, Royal Holloway (University of London), ALBA, Hult International Business School, American University of Beirut, Swiss Hotel Management School and University of Nottingham. He has been a Director of Strategy at a high-tech start-up. Prior to these roles he held a senior management position at KPMG Corporate Finance, where he was an Innovation Champion and member of the Thought Leadership group at KMPG International. His unique role at KPMG also included managing large complex projects globally with a particular focus on Corporate Finance.
An awarding winning researcher and leading global authority on geopolitics, he has written over 50 academic papers, books, chapters, reports and white papers on topics of strategic management, political risk, nonmarket strategy, corporate political activity, corporate social responsibility and business model innovation. His work appears in Organization Science, Journal of International Business Studies, Journal of World Business, Journal of Management Studies, Academy of Management Perspectives, Global Strategy Journal, Strategic Organization, Long Range Planning, Journal of Product Innovation Management, Groups & Organizations Management, British Journal of Management, Management International Review, Journal of International Management, Journal of Business Ethics, International Journal of Management Reviews, Journal of Business Research, Organizational Dynamics, Business Horizons, International Business Review and European Management Journal. His research has been reported in the press, including the The Times, Irish Times, BBC, Forbes, Al Jazeera and Financial Times. He has published a highly acclaimed book contracted by Oxford University Press on 'Aligning for Advantage: Competitive Strategies for the Political and Social Arenas' and a 'Routledge Companion to Non-Market Strategy'. He is the Associate Editor at Journal of International Management (ABS 3*), Co-Editor-in-Chief at Multinational Business Review (ABS 2*), editorial board member of Journal of Management Studies (ABS 4*), Journal of World Business (ABS 4*), British Journal of Management (ABS 4*), Long Range Planning (ABS 3*), Journal of Business Research (ABS 3*), Irish Journal of Management (ABS 1*), Journal of Asia Business Studies (ABS 1*) and reviews regularly for Journal of Management Studies, Organization Science, Journal of World Business, Journal of International Business Studies, Strategic Organization, Business and Society, Journal of International Management, Long Range Planning, British Journal of Management, and other leading world class journals. He has also been involved in a £1.2M ESRC grant focused on AI and economic growth.
As a recipient of various teaching awards from highly respected universities, he has gained a broad range of executive teaching experience, e.g. IT, energy, casinos, consumer goods, insurance, automotives, pharmaceuticals, aerospace, banking, hospitality and several government bodies. He has taught and facilitated many discussions with executives from major organisations such as Oracle, KPMG, PwC, IBM, EDF Energy, Royal Sun Alliance, Philips, Saudi Aramco, Qatar Petroleum, HSBC, Coca Cola, Henkel, Jaguar Land Rover, UK Trade and Investment (UKTI), EY, National Bank of Kuwait (NBK), HP, Gulf bank, Co-operative Retail Bank, Telekom Malaysia, South African Airways, Adani Group, Ministry of Defence (MOD), Central Bank of Nigeria, Avon and Somerset Probation Trust, Actavis, Groupe Aeroplan, Stanbic Bank, China Aviation Industry Corporation (AVIC), Nigerian Deposit Insurance Corporation, Rank Group, United Nations (UN), Quadrangle, Cisco Systems, Oxford Nanopore Technologies and others. He has facilitated senior management and board level workshops and runs executive programs on corporate strategy, strategic leadership and international business in Asia, Europe, the Middle East, Africa and North America.
He has previously studied at the University of Surrey, University of Nottingham, University of Cambridge (Visiting PhD scholar) and has a PhD from Imperial College London. He is also an active member of Strategic Management Society, Academy of International Business and Academy of Management. He is Fellow of Royal Society of Arts (FRSA), Member of World Economic Forum (WEF) Expert Network, Fellow of Higher Education Academy (FHEA) and Fellow of the Chartered Management Institute (FCMI) where he was also board member for their Learning strategy task group (2011-2015).