Department/School

Entrepreneurship

Date of this version

2011

Document Type

Working Paper

Keywords

Family enterprises, organizational adaptation, exploration and exploitation, ambidexterity

Abstract

Ambidexterity, the ability of firm to balance the need to explore for new and novel and exploit its existing knowledge, skills and capabilities has become an important issue for firms in these volatile times. What‘s been missing from this discussion is consideration of how the unique character of family enterprises influences their investments in exploration or exploitation? In this paper we develop a theoretical model to explain how the governance and ownership characteristics of a family enterprise impact the family enterprise‘s investments in exploration and exploitation activities. We contribute to the literature on family enterprises by proposing that certain governance characteristics such as the tenure of the generation in control, the proportion of senior management positions controlled by the family, the dispersion of family ownership and the transfer of control to the younger generation will all have certain effects on the investments in exploratory activities. Building on the relational view of family enterprises, we suggest that the characteristics of their relations with their employees and outside partners will influence the level of investments in exploratory and exploitative activities. Our theoretical standpoint within the context of organizational adaptation also shows that the two seemingly contradictory theories of stewardship and agency can be reconciled.

Citation/Other Information

This working paper is distributed for purposes of comment and discussion only. Its contents should be considered to be preliminary and may not be reproduced without permission of the copyright holders.

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