Donald O. Neubaum

Entrepreneurship in Medium-Size Companies: Exploring the Effects of Ownership and Governance Systems

Corporate entrepreneurship (CE), which embodies a company’s innovation and venturing activities, is necessary in today’s competitive markets. CE is important for organizational renewal, the creation of new business, and improved performance. CE, however, requires strong and continued support from the company’s top executives. Data from 231 medium-size manufacturing companies show that commitment to CE is high when: (1) executives own stock in their company; (2) the board chair and the chief executive officer are different individuals; (3) the board is medium in size; and, (4) outside directors own stock in the company. The relationships between the ratio of outside directors and CE, and institutional ownership and CE, are mixed. CE is also positively associated with future company performance.

Culture of Family Commitment and Strategic Flexibility: The Moderating Effect of Stewardship

The ability of family firms to identify and respond to changes in their external environments can be a key source of competitive advantage leading to success and survival. Some research, however, has suggested family firms are conservative and often lack the ability to adapt to their changing competitive environments. Using data from 248 family firms, we found a family firms culture of commitment to the business is positively associated with its strategic flexibility—the ability to pursue new opportunities and respond to threats in the competitive environment. Further, we found stewardship–oriented organizational culture positively moderated the family commitment–strategic flexibility relationship.

Institutional Ownership and Corporate Social Performance: The Moderating Effects of Investment Horizon, Activism, and Coordination

Scandals at Enron and WorldCom have thrust debates concerning corporate governance and corporate social performance (CSP) to the forefront of the minds of shareholders, managers, and public policy makers. Relying on the theory of stakeholder salience, the authors suggest that institutional owners’ investment horizons, as well as the frequency and coordination of institutional owners’ activism, moderate the institutional ownership -CSP relationship. Data collected in 1995 and 2000 from the Fortune 500 firms show that long-term institutional ownership is positively associated with CSP and that the frequency and coordination of activism interact with long-term institutional holdings to positively affect CSP 3 years later.

Social Issues in the Family Enterprise

In this introduction, we discuss social issue research in the management and family business literatures, focusing on ethics, corporate social responsibility, and philanthropic practices of family enterprises. Next, we introduce and highlight four articles accepted for publication. The editorial concludes by presenting future research questions at the social issues—family business interface. Our review of 35 articles, as well as those included in this Special Issue, suggest that family businesses are more attuned and attentive to social issues and stakeholders than nonfamily business. Noneconomic motivations (e.g., reputation, socioemotional wealth, and stewardship) appear particularly salient to family enterprises.

Stewardship Climate Scale: An Assessment of Reliability and Validity

While stewardship theory is often used to explain family business outcomes, no prior empirical study has used a validated measure of stewardship. We, therefore, surveyed 846 managers and subordinates from 221 family and nonfamily firms in the United States and Australia to develop a reliable and valid Stewardship Climate Scale. We found family firms have a stronger stewardship climate and the relationship between stewardship climate and performance is mediated by innovativeness, and the effects of stewardship are stronger in family firms, confirming the value of stewardship theory, and our scale, when explaining family business outcomes.

Tax avoidance, financial experts on the audit committee, and business strategy

We examine whether financial expert audit committee members tailor their approach to overseeing the corporate tax planning process according to the firms business strategy. We predict and find that such directors encourage defender‐type firms (characterized partially by high risk aversion) to engage in more tax avoidance activities and prospector‐type firms (characterized partially by innovation and risk seeking) to scale back on tax avoidance, relative to the opposing strategy type. We also find that both accounting experts and non‐accounting financial experts on the audit committee contribute to our results to some extent, although the effects of non‐accounting financial experts present more consistently. Overall, our results suggest that financial experts on the audit committee tend to play more of an advising role for defenders and more of a monitoring role for prospectors, relative to one another.

Customer-Oriented Innovation and Firm Performance

The service-dominant logic of marketing suggests that customer-oriented innovation should be an essential focus for any firm; however, there is limited literature on the relative impact of customer-oriented innovation on firm performance in comparison with other dimensions of innovation. We integrate the service-dominant logic of marketing with the resource-based view of strategy to examine the relative importance of customer-oriented innovation on firm performance. By analyzing data from 765 managers from 52 business units of 19 large U.S. corporations, we find that customer-oriented innovation and offering-oriented innovation are both significantly associated with firm performance, while operations-oriented innovation is not. We discuss the implications of our findings for the service-dominant logic of marketing, resource-based view of strategy and measurement of innovation.

Family Business Research: Roads Travelled and the Search for Unworn Paths:

The June 2018 issue of Family Business Review (FBR) featured a collection of discussions of five of the most cited articles in the history of FBR (i.e., articles published more than 10 years ago, but since 2000) that have individually and collectively significantly shaped the boundaries and content of the domain over the past decade. In their accounts reflecting on their original pieces, the distinguished authors retold their personal war stories of the often difficult path toward getting their work published and reflected on how and why their work has had such a significant impact on the field. I had the honor and distinct pleasure of providing feedback on the draft manuscripts some of these scholars provided for the special issue, and with the aid of my colleagues Peter Jaskiewicz and Wim Voordeckers, we provided two brief summaries of this impactful work. Distilling the gained insights from these seminal articles and attempting to convey the extent of their contribution to the domain of family business research was a humbling and deeply gratifying experience. To read their stories and witness, albeit with the benefit of at least 10 years passing, how these researchers conceived, developed, refined, and published their groundbreaking or influential work was truly inspiring. The most impressive, and perhaps defining, aspect of the subsequent influence of these works was the breadth of their theorizing and number of streams of research each paper contributed to or spawned. Multiple fields of inquiry within the domain of family business research benefitted from and built on their pioneering work. Furthermore, these commentaries presented interesting insights by looking back, and looking forward. This experience also led me to think about the domain of our field, how and why it has evolved over the past several decades, and in what new directions we should head. This editorial will attempt to take a similar past and future perspective by presenting some ideas on “how we got here” as well as a few thoughts and suggestions on “where we should be going.” As part of that issue, FBR Editor Tyge Payne (2018) presented an editorial in which he described the complexities and distinctions associated with the field and offered a number of valuable possibilities for future research. In his editorial, Payne rightly notes that the field of family business research “represents a large set of interrelated subfields that are bound together by the recognition that families, as owners and operators, can have a unique influence on a wide variety of business activities and outcomes” (p. 167). Based on such a view, one can easily envision the field of family business research like a multicolored and multipatterned quilt of constructs, antecedents, and outcomes stitched together by the common thread of the family’s involvement in the ownership, governance, and management of their businesses. However, we know that efforts to advance the theoretical development of a field requires the identification of dependent variables examined within its domain (Chua, Chrisman, & Steier, 2003). As suggested by Chua et al. (2003), the efficacy of family business decisions and actions can only be judged by the extent to which those decisions and actions contribute to the achievement of the family firm’s goals and objectives. By taking inventory of the critical variables within the family business domain, the depth, breadth, and 792948 FBRXXX10.1177/0894486518792948Family Business ReviewNeubaum research-article2018

Agents, Stewards, and Capabilities: A Review

Relying on stewardship and agency theory arguments, Miller and Le Breton-Miller (2006) developed 15 propositions focused on the relationship between four dimensions of family business governance (i.e., the level and mode of family ownership, family leadership, the involvement of family members in the business, and the planned or actual participation of later generations in the family business) and the development of key resources and capabilities (e.g., R&D, patient capital, long-term orientation, reputation, and social capital) and subsequent financial performance. From an agency theory perspective, Miller and Le Breton-Miller argue that family businesses can represent an ownership structure where the interests between owners and managers can be advantageously aligned to lower agency costs and improve financial performance. They also suggest that stewardship attitudes, such as intrinsic motivation, identification with the organization, and a deep emotional commitment to the family firm and its success, will be particularly prevalent among the family leaders in family businesses. These stewardship attitudes can foster a long-term orientation, the development of valuable distinctive capabilities, and improve financial performance, especially when several members of the family are involved in the management of the firm. Miller and Le Breton-Miller (2006), however, caution that under certain governance settings, such as excessive family ownership or managerial control, family CEOs, or poor monitoring from independent or nonfamily board of directors, family business owners can potentially exploit the interests of minority owners or act imprudently, diminishing financial performance. However, other aspects of family governance can contribute positively to financial performance. The intention of the family to keep the firm in the family over subsequent generations, for instance, will augment the stewardship attitudes of family business leaders and lead to actions consistent with the long-term success of the firm (i.e., financial conservativism, reputation, and social capital building) and steps to preserve the tacit knowledge that exists within the family and the firm (i.e., executive apprenticeships, and building a stable, loyal top management team and strong corporate culture).

Documenting the "Family Effect" on Family Business Research

Neubaum, DO (reprint author), Florida Atlantic Univ, Coll Business, Dept Management Programs, 777 Glades Rd, Boca Raton, FL 33431 USA.dneubaum@fau.edu