The relationship between organizational culture and entrepreneurial orientation in family firms: Does generational involvement matter?

In family firms, organizational culture evolves through an ongoing dynamic process of intergenerational interaction. Previous research has examined the nexus between family organizational culture and entrepreneurial orientation (EO), but has ignored the moderating role that generational involvement could play on this relationship. To address this limitation in the literature and explore the existence of its potential role, this study draws from the Competing Values Framework to examine the extent to which generational involvement shapes the effects of clan culture and hierarchical culture on EO. From a quantitative study of 106 family SMEs, the results show that there is no single cultural path for developing and maintaining long-term family firm’s entrepreneurial orientation. While clan culture fosters higher levels of EO when only one generation is involved, it is hierarchical culture that fosters higher levels of EO when multiple generations are simultaneously involved. This research pinpoints the importance for family firms that wish to ensure long-term entrepreneurial orientation to introduce changes in their cultural patterns when multiple generations are involved. It also reinforces the notions of formalization and control system in family firms, and their importance for long-term EO. This study calls for further empirical research on the potential role of hierarchical culture in setting up professionalization and family governance mechanisms, and to explore how they affect sustainable entrepreneurial family firm.