Academic journal article Journal of Managerial Issues

Family Firm Knowledge Integration and Noneconomic Value Creation

Academic journal article Journal of Managerial Issues

Family Firm Knowledge Integration and Noneconomic Value Creation

Article excerpt

Family firm literature hinges upon the overarching assumption that the involvement of a group of individuals who are members of the same family will alter firm operations. The desires and aspirations of the family entity result in the development of noneconomic goals which differ substantially in magnitude and nature from noneconomic goals in nonfamily firms (Chrisman et al, 2003; Chrisman et al, 2013; Gomez-Mejia et al, 2007). The influence of family centered goals on systems of governance and the accumulation of resources has received attention, yet additional work remains. In one such study, Chrisman et al. (2013) develop a framework and explore the goal formation and setting process, how noneconomic goals affect decision-making, and the relationship between noneconomic goals and resource acquisition. The authors conclude that identification of the antecedents affecting how family firms perform on noneconomic goal metrics, rather than only studying the consequences of having such goals, is important to advance the field and that various theoretical approaches should be considered.

The successful attainment of noneconomic goals within family firms is proposed as part of the organizational learning process, and the theoretical underpinnings of the knowledge-based view (Chirico and Salvato, 2008; Chirico and Salvato, 2016; Zahra et al, 2007) provides a specific, employable approach to study this segment of organizational learning. An important concept within the knowledge-based view of the firm is the ability of a firm to integrate knowledge internally, since this allows the organization to realize the latent value of such knowledge (e.g., Eisenhardt and Santos, 2002). Several attributes of knowledge, including the characteristics of individuals participating in the process, may enhance or obstruct the ease of knowledge mobility. Recently, authors have attempted to better understand how distinctive features of family businesses are reflected in the ways knowledge is transferred and integrated through time and potentially amongst generations of the controlling family. In 2008, Chirico and Salvato provided a theoretical model of knowledge integration in family firms to explain the development of dynamic capabilities as they are affected by knowledge integration. The authors successfully tested their model (Chirico and Salvato, 2016) as a way to explain product development in family firms and show how knowledge integration relates to dynamic capabilities within family firms. Chirico and Salvato's (2008) conceptualization of knowledge integration aligns well with successfully meeting noneconomic goals of family firms, yet their model does not fully capture contextual relationships as outlined in existing knowledge-based and family firm theorizing. To that end, a critical extension of research on the attainment of noneconomic goals in family firms is to complement and expand the Chirico and Salvato (2008; 2016) model by studying how knowledge integration affects the attainment of noneconomic goals. Thus, the purpose of this study is to answer the following research question, "How does the integration of knowledge in the family firm affect the firm's ability to meet noneconomic goal performance expectations?"

The findings contribute to three areas of literature simultaneously: family business, organizational knowledge, and firm performance. First, the work enhances these literatures by introducing the knowledge-based view and knowledge integration as a mechanism to explain a family unit's performance on noneconomic goals in family firms. Understanding how noneconomic goals are realized is important for family firms because the attainment of these goals can oftentimes be more difficult and costlier than the attainment of financially based economic goals (Beckhard and Dyer, 1983). Additionally, it is important to understand how these types of goals are achieved, because their realization allows for the accumulation of socioemotional wealth, the nonfinancial part of family firms that is believed to be a defining characteristic (Gomez-Mejia et al, 2007). …

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