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The relationship between entrepreneurial orientation and firm performance: Influence of family governance

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  • Lee, Tingko
  • Chu, Wenyi

Abstract

A growing number of recent studies highlight an avenue of entrepreneurship in family business. Previous studies have examined the relationship between entrepreneurial orientation (EO) and firm performance, and generate inconsistent results probably due to the omission of the moderating role of family governance. To explicitly address this gap, this study investigates how entrepreneurial orientation (EO) influences firm performance in the contingencies of family and nonfamily firms by considering the influence of family governance. Built on agency theory and stewardship theory, the empirical findings of this study show that EO is positively associated with the concurrent and sustaining performance of firms, and such positive relationships are particularly strong when family ownership is combined with active family management and control; while in passive family governance, the EO-performance relationship becomes insignificant. These findings suggest that the potential advantages of EO can be better realized in family firms because active family governance alleviates agency problems and facilitates stewardship within firms when family CEOs, family top management, family chairpersons, and family directors are in presence.

Suggested Citation

  • Lee, Tingko & Chu, Wenyi, 2017. "The relationship between entrepreneurial orientation and firm performance: Influence of family governance," Journal of Family Business Strategy, Elsevier, vol. 8(4), pages 213-223.
    • Handle: RePEc:eee:fambus:v:8:y:2017:i:4:p:213-223
    DOI: 10.1016/j.jfbs.2017.09.002
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    2. Martínez Bobillo, Alfredo & Rodríguez Sanz, Juan Antonio & Tejerina Gaite, Fernando, 2021. "Explanatory and predictive drivers of entrepreneurial orientation and innovation capacity: Evidence from family enterprises," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    3. Tomasz Ingram & Katarzyna Bratnicka-Myśliwiec & Teresa Kraśnicka & Izabella Steinerowska-Streb, 2022. "Entrepreneurial Orientation as a Determinant of Sustainable Performance in Polish Family and Non-Family Organizations," Sustainability, MDPI, vol. 14(24), pages 1-25, December.
    4. Gómez-Mejía, Luis R. & Herrero, Inés, 2022. "Back to square one: The measurement of Socioemotional Wealth (SEW)," Journal of Family Business Strategy, Elsevier, vol. 13(4).
    5. María del Pilar Casado-Belmonte & María de las Mercedes Capobianco-Uriarte & Rubén Martínez-Alonso & María J. Martínez-Romero, 2021. "Delineating the Path of Family Firm Innovation: Mapping the Scientific Structure," Review of Managerial Science, Springer, vol. 15(8), pages 2455-2499, November.
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    7. Tomasz Ingram & Katarzyna Bratnicka-Mysliwiec, 2021. "Organizational Resilience and Family Firm Performance: The Role of Socioemotional Wealth," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 523-540.
    8. Muhammad Shakeel & Li Yaokuang & Ali Gohar, 2020. "Identifying the Entrepreneurial Success Factors and the Performance of Women-Owned Businesses in Pakistan: The Moderating Role of National Culture," SAGE Open, , vol. 10(2), pages 21582440209, May.
    9. Héctor Cuevas-Vargas & Neftalí Parga-Montoya & Rudy Fernández-Escobedo, 2019. "Effects of Entrepreneurial Orientation on Business Performance: The Mediating Role of Customer Satisfaction—A Formative–Reflective Model Analysis," SAGE Open, , vol. 9(2), pages 21582440198, June.
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    11. Islam, Nazrul & Wang, Qidong & Marinakis, Yorgos & Walsh, Steven, 2022. "Family enterprise and technological innovation," Journal of Business Research, Elsevier, vol. 147(C), pages 208-221.

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