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The role of family in unfolding the process of external corporate venturing in small family businesses

Author

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  • Chitra Singla

    (Indian Institute of Management Ahmedabad)

  • Ludvig Levasseur

    (Indian Institute of Management Bangalore
    Indiana University)

Abstract

The extant literature argues that small family firms with higher family ownership have a lower proclivity toward external corporate venturing (ECV) activities. We contend that this is not true for all small family firms. Some family firms with higher family ownership can have a higher proclivity toward ECV. Focusing on small family firms with 100% family ownership (highest ownership), we argue that there is heterogeneity in terms of the family’s goals (potential gains) and resources among small family firms that can impact these firms’ engagement in the ECV process. On this basis, we present a conceptual model and some propositions that explain why some small family firms pursue ECV opportunities. In particular, we highlight the role of the family in small family firms’ (100% family-owned) engagement in the three stages of the ECV process: motivation, recognition, and evaluation of ECV opportunities. Specifically, we propose that the “potential long-term socioemotional wealth (SEW) gains” (employment of family members and family harmony) and the family’s resources (social capital and reputation) can impact the motivation for—and identification (including recognition and evaluation/assessment) of—ECV opportunities. In sum, we argue that the families that own small family firms might engage in ECV activities with the hope that their potential SEW gains will be realized via ECV. Availability and exploitability of family resources can help the family to move forward in the ECV process.

Suggested Citation

  • Chitra Singla & Ludvig Levasseur, 2023. "The role of family in unfolding the process of external corporate venturing in small family businesses," Small Business Economics, Springer, vol. 61(1), pages 105-126, June.
    • Handle: RePEc:kap:sbusec:v:61:y:2023:i:1:d:10.1007_s11187-022-00677-8
    DOI: 10.1007/s11187-022-00677-8
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    More about this item

    Keywords

    External corporate venturing; Family business; Socioemotional wealth; Resource-based view; Entrepreneurship;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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