Carlo Salvato

Entrepreneurship in Family vs. Non‐Family Firms: A Resource‐Based Analysis of the Effect of Organizational Culture

Organizational culture is an important strategic resource that family firms can use to gain a competitive advantage. Drawing upon the resource–based view (RBV) of the firm, this study examines the association between four dimensions of organizational culture in family vs. non–family businesses and entrepreneurship. Using data from 536 U.S. manufacturing companies, the results show a nonlinear association between the cultural dimension of individualism and entrepreneurship. Further, there are positive linear relationships between entrepreneurship and an external orientation, an organizational cultural orientation toward decentralization, and a long– versus short–term orientation. With the exception of an external orientation, each of these dimensions is significantly more influential upon entrepreneurship in family firms when compared with non–family firms.

The Board of Directors in Family Firms: One Size Fits All?

Boards of directors are governance bodies that serve important functions for organizations, ranging from monitoring management on behalf of different shareholders to providing resources. Board roles and characteristics vary widely among national cultures and, within each country, among different company types. Despite such variety, research on family business boards has been dominated by prescriptions and by the lack of an explicit recognition of family firm types characterized by different governance requirements. We argue that a contingency approach to defining board structure, activity, and roles offers useful guidance in understanding board contributions to family business performance. We develop a theory to show how board characteristics are a reflection of a family firms power, experience, and culture makeup. This theory provides insight into descriptions of existing board choices and prescriptions for family firms interested in starting or adapting their board of directors.

Capabilities Unveiled: The Role of Ordinary Activities in the Evolution of Product Development Processes

In contrast to the prevailing interpretation of capabilities as collectives, this inductive study of product development in a leading design firm highlights the centrality of the myriad ordinary activities that may shape the evolution of capabilities. A detailed comparison of 90 diverse product development processes over a 15-year period shows, first, that mindful microactivities carried out by individuals in and around the organization and at all levels of the organizational hierarchy are central in shaping the content of the product development capability and its dynamic adaptation. Understanding organizational renewal and competitive advantage may hence require a partial shift in focus from capabilities as aggregate entities, to the practical realities of core organizational processes. Second, this more fine-grained perspective leads to a set of insights on how organizational renewal may be partially shaped by timely managerial interventions aimed at encoding successful experiments into higher-level organizational capabilities. Third, higher-level capabilities resulting from the conversion of heterogeneous experiences display higher process homogeneity and a permanent increase in performance, because of stabilization of managerial attention. My findings contribute to unveiling the concept of capabilities, extending prior research on dynamic capabilities and organizational renewal and providing a lens for research on the microfoundations of capability evolution and organizational advantage.

Beyond Collective Entities: Multilevel Research on Organizational Routines and Capabilities

Organizational routines and capabilities are thorny constructs, but their complexity has been largely underappreciated. In this article, the authors illustrate how new and more complex understandings of organizational routines and capabilities can be generated. They do so by breaking them into parts and mapping their interrelationships. Because component parts of routines and capabilities exist at different levels of analysis, the proposal to investigate their multiple relationships contributes to bridging the micro—macro divide in management. Specifically, the authors show how new analytical and methodological techniques can catalyze future research.

Creating Value Across Generations in Family-Controlled Businesses: The Role of Family Social Capital

This article explores the processes through which family-controlled businesses (FCBs) access and recombine resources to match the evolving needs of their business activities. We do so by applying the conceptual lens offered by social capital to the comparative study of four FCBs active in traditional competitive arenas. Our data reveal that these firms’ ability to create financial value over generations does not result from possession of some unique resource, nor from higher-level combinative capabilities; rather, these FCBs have systematically created value through their ability to renew and to reshape their social interactions within and outside the controlling family.

Predictors of Entrepreneurship in Family Firms

This study investigates the main predictors of entrepreneurship in small and medium-sized family firms. Based upon literature review and a pilot case study, hypotheses are developed, relating several individual and organizational antecedents of entrepreneurship to three different family firm types. Most of the hypotheses are confirmed by an analysis carried out on a large random sample of small and medium-sized Swedish family firms. Further studies addressing the determinants of entrepreneurship in family firms and practitionersņ advice aimed at enhancing entrepreneurship in such companies would hence benefit from targeting their efforts on the specific family firm types they address.

The Role of Micro-Strategies in the Engineering of Firm Evolution

This paper proposes a model of strategic evolution as a sequence of intentional recombinations of a companys Core Micro-strategy with new resources and organizational routines. A Core Micro-strategy is defined here as the established system of interconnected routines, micro-activities and resources that can be traced through most of a companys strategic initiatives. The paper is based on two comparative case studies and on theories of evolution in social and cultural systems, intraorganizational ecology and the resource-based view of the firm. The resulting model advances the existing literature on strategy evolution by (1) incorporating a more direct and salient role of managerial leadership within processes of strategic evolution, (2) incorporating a central role for micro-level processes through which management can directly and intentionally shape strategic evolution, and (3) proposing recent developments in the resource-based view of the firm as a suitable theoretical framework with which to explain the processes in which strategic evolution is rooted. The model also contributes to the dynamic capabilities perspective by offering a microprocessual interpretation of their workings. The resulting view of dynamic capabilities suggests that they operate more through repeated recombination patterns of stable organizational factors, than through disruption of existing practices. The paper describes the empirical evidence which emerges from analysis of the two case studies; the two descriptive models of strategy evolution inductively built on the cases; the theoretical model resulting from cross-case analysis and iteration between the two grounded models and theoretical frameworks.

A farewell to the business: Championing exit and continuity in entrepreneurial family firms

What factors influence exit from the founders business and subsequent entrepreneurial renewal in a generational family firm? Guided by this research question, we trace the development of the Italian Falck Group from its inception as a steel company in 1906 – ascension as the largest privately owned steel producer in Italy – losses in the 1970s and 1980s leading to business exit from steel industry in the 1990s – followed by successful entry in the renewable energy business. A combination of insights from the literature and triangulation of data from multiple primary and secondary sources leads to the development of a model describing how inhibitors of exit from the founders business can be transformed into facilitators of change. The critical role of farsighted ‘family champion of continuity’ is found central in redirecting the family from its anchoring in past activities to focus on future entrepreneurial endeavours. While the commitment to the founders business continues, the family champion aided by business savvy and astute non-family executives ably modifies its meaning of ‘continuity of the founders business’ from ‘steel production’ to ‘continuity of the entrepreneurial spirit of the family’, hence preserving the institutional identity. Insights from this study can help generational family firms which plan to exit from a failing course of action to regenerate so as to create trans-generational value.

Research on Accounting in Family Firms: Past Accomplishments and Future Challenges

Accounting practices in family firms, although displaying evident unique features, have received relatively little attention as distinct from their equivalents in publicly held firms. This may have hampered conceptual advancements in both the accounting and the family business literatures. In this article the authors first assess accounting areas in which the “family entity” plays a distinct role and elaborate on important characteristics of these phenomena. They also report evidence suggesting that additional research efforts may illuminate both unresolved issues in the accounting literature and so-far-neglected dimensions of the family business entity. Finally, the authors examine several different avenues for research at the accounting—family business interface and identify common themes among them.

Transitional Leadership of Advisors as a Facilitator of Successors’ Leadership Construction

Succession literature addressed factors affecting the development of successors’ leadership skills. Yet the role professional advisors play in this process is not well understood. This study contrasts the detailed descriptions of four advisor-directed leadership development processes, to suggest a grounded theory of how advisors can facilitate the construction of successors’ leadership. Adopting an insider–outsider approach to the collection and analysis of ethnographic data, the study revealed that the assumption of a transitional leadership role by advisors—an interim leadership held by the advisor while supporting the successor’s leadership development—was critical to moving the succession process forward.