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journa l homepage: www.eUnique interactions among family members and betweenfamily members and the business are expected to createdifferences in rm behavior between family and non-family rms(Chua, Chrisman, & Sharma, 1999). Given the signicant economicand entrepreneurial role of family rms in the United States andworld economies (Astrachan & Shanker, 2003), researchers havemore recently begun to examine how the unique interactions thatsurface with family involvement inuence both entrepreneurshipand strategy in family rms (Kellermanns, Eddleston, Barnett, &Pearson, 2008; Salvato, 2004; Short, Payne, Brigham, Lumpkin, &Broberg, 2009; Zahra, 2005). In terms of entrepreneurship, familyinvolvement is viewed as shaping the innovativeness, risk taking,and proactiveness of rms postures, thereby inuencing howopportunities are recognized and exploited (Casillas, Moren, &Barbero, 2010; Salvato, 2004; Short et al., 2009). Similarly, in termsof strategy, researchers have shown, for example, how familyinvolvement plays a critical role in overcoming competitive threats(Sirmon, Arregle, Hitt, & Webb, 2008), providing a balance ofcohesion and conict in strategic decision-making processes

(Ensley & Pearson, 2005), and determining the value of specicresources to the rm (Chrisman, Chua, & Kellermanns, 2009).

As an important trend within organizational inquiry, research-ers have increasingly acknowledged that neither the recognitionand exploitation of opportunities emphasized by the entre-preneurship eld (e.g., Shane & Venkataraman, 2000) nor thecompetitive positioning emphasized by the strategic managementeld (e.g., Porter, 1980) alone is sufcient for a rm to enjoysustained superior performance. Instead, rms must engage instrategic entrepreneurship simultaneously exploring for futurebusiness domains while exploiting current domains in order toconsistently produce superior performance (Ireland &Webb, 2007;Schendel & Hitt, 2007).

Over the past few years, a series of articles has delved deeplyinto the strategic entrepreneurship concept (Hitt, Ireland, Camp, &Sexton, 2001; Ireland, 2007; Ireland & Webb, 2007; Ireland, Hitt,Camp, & Sexton, 2001; Ireland, Hitt, & Sirmon, 2003; Ketchen,Ireland, & Snow, 2007). These articles have delineated the keycomponents of strategic entrepreneurship (e.g., Ireland & Webb,2007) and have detailed the relationship between strategicentrepreneurship and other important concepts such as wealthcreation (Hitt et al., 2001; Ireland et al., 2001) and collaborativeinnovation (Ketchen et al., 2007). Extant work focuses primarily onstrategic entrepreneurship within the context of large, publiclytraded rms, such as Cisco and UPS (Ireland & Webb, 2007) andRaytheon and Apple (Ketchen et al., 2007). However, this researchhas yet to distinguish the role of family involvement in shapingstrategic entrepreneurship within rms.

Exploration

Exploitation

Familiness

develop a set of propositions describing potential positive and negative implications for strategic

entrepreneurship in family-controlled rms.

2010 Elsevier Ltd. All rights reserved.

We appreciate the help of LaKami Baker, Jim Chrisman, Lloyd Steier, and

Andrew Zacharakis in formulating our ideas.

* Corresponding author. Tel.: +1 405 744 7864; fax: +1 405 744 8956.

E-mail addresses: justin.w.webb@okstate.edu (J.W. Webb),

ketchda@auburn.edu (D.J. Ketchen Jr.), direland@mays.tamu.edu (R.D. Ireland).1 Tel.: +1 334 844 0454; fax: +1 334 844 5159.2 Tel.: +1 979 862 3963; fax: +1 979 845 9641.

1877-8585/$ see front matter 2010 Elsevier Ltd. All rights reserved.doi:10.1016/j.jfbs.2010.04.002Strategic entrepreneurship within famiOpportunities and challenges

Justin W. Webb a,*, David J. Ketchen Jr.b,1, R. DuanaOklahoma State University, Spears School of Business, School of Entrepreneurship, StibDepartment of Management, Auburn University, College of Business, Auburn, AL 3684cDepartment of Management, Texas A&M University, Mays Business School, College St

A R T I C L E I N F O

Article history:

Received 5 November 2009

Received in revised form 11 March 2010

Accepted 6 April 2010

Available online 14 May 2010

Keywords:

Strategic entrepreneurship

Family-controlled rms

A B S T R A C T

A rm engages in strateg

business domains and e

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challenges created when

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key dimensions of identit

entrepreneurship between-controlled rms:

reland c,2

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ntrepreneurship when it simultaneously pursues exploration for future

itation of current domains. Superior performance often results from

eurship. A growing body of literature addresses the opportunities and

rm attempts to stand out in both exploration and exploitation. To date,

ocused on strategic entrepreneurship without distinguishing the role of

to address this gap by theorizing that family involvement, shaped by four

stice, nepotism, and conict, creates differences in the nature of strategic

ily-controlled and non-family rms. Based on these four dimensions, we

usiness Strategy

l sev ier .com/ locate / j fbs

Some family rms appear to excel at simultaneously exploringfor future business domainswhile exploiting current domains. Oneexample is Pursell Farms. Under the leadership of a succession offour family members, the rm has created a series of innovativefertilizers since its inception in the early 1900s. Across the ensuingdecades, Pursell Farms has made a variety of forays outside its corebusiness, such as offering quail hunts, shing, and lodging on itsproperty. In 2001, Pursell Farms took its boldest step to enter a newdomain by creating a high-end golf course. FarmLinks at PursellFarms serves as a business unto itself, as a demonstration project

J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 677768for Pursells new fertilizers, and as a test site for products made byother rms, such as golf carts.

Sheetz, Inc., is another example of a family rm that hasmet thechallenges of strategic entrepreneurship. Formed in 1952 as asingle store, Sheetz today is a chain of over 300 convenience storesspread across six states. Beyond providing traditional goods suchas bread and milk, over time Sheetz has been a pioneer in enteringnew retail domains, such as offering self-service gasoline pumpsand custom-made sandwiches. The rm is currently led by the sonof the founder, and ve family members hold executive positions.More than just examples of diversication, the activities of PursellFarms and Sheetz represent a manifestation of unique operational,cultural, and structural attributes within these rms that allowthem to continuously take advantage of new, value-creatingopportunities (Ireland & Webb, 2007). Beyond anecdotes such asthose surrounding Pursell Farms and Sheetz, consideration offamily rms and their unique features is absent from thediscussion of strategic entrepreneurship.

The variance among family rms is a challenge for scholarsinterested in assessing strategic entrepreneurship in the familyrm context as is the fact that an agreed-upon denition of a familyrm remains elusive (Chrisman, Chua, & Sharma, 2005). Recently,family rms have been differentiated based upon the level offamily ownership (Anderson & Reeb, 2003; Villalonga & Amit,2006), which inuences how family members interact amongthemselves and with the business. As such, scholars have morerecently discussed family involvement as ranging from familycontrol (i.e., a majority ownership that allows the family to controlthe rms decision-making processes) to varying degrees of familyinuence (i.e., a substantial ownership stake that allows the familyto inuence, but not control, the rms decision-making processes)to zero family inuence such as exists in non-family rms (Sirmonet al., 2008). Because family control provides a clear demarcationwith non-family rms as well as a fundamental base forunderstanding how families inuence a rms approach tostrategic entrepreneurship, we focus on family-controlled rms.3

As our specic focus, family-controlled rms represent thesubset of family rms in which the family has ultimate, unilateralcontrol in the rms decision-making processes (Nordqvist, 2005).4

As opposed to family-inuenced rms in which the familysinterests are strongly counterbalanced by that of non-familymembers, the familys interests dominate in family-controlledrms. While non-family managers may exist within family-controlled rms, the decisions, especially those in regard to majorstrategic actions, are ultimately made by the family. As such, the

3 Given cultural and institutional differences, the nature and evolution of family

rms differs across countries (Burkart, Panunzi, & Shleifer, 2003). As an additional

caveat, given that our research builds largely from research pertaining to Western

companies, an important boundary condition to establish is our research focuses on

typical Western family rms.4 As noted, our analysis draws upon the recent distinction between family control

and family inuence (Chrisman et al., 2005; Sirmon et al., 2008). Our use of the term

family-controlled rms differs from that of scholars who use the same

terminology without the actual distinction of unilateral control of the family in

decision-making processes (e.g., Oswald, Muse, & Rutherford, 2009; Yoshikawa &

Rasheed, 2010).unique interactions among family members and between familymembers and the business manifest most strongly and unbiased(e.g., by non-family members) in family-controlled rms.

In examining what makes family involvement unique andvaluable, scholars have studied various factors that inuence theinteractions among familymembers and between familymembersand the business. Four foci of family involvement research includethe examination of issues pertaining to identity (e.g., Milton, 2008;Shepherd &Haynie, 2009; Sundaramurthy & Kreiner, 2008), justice(e.g., Lubatkin, Ling, & Schulze, 2007; Van der Heyden, Blondel, &Carlock, 2005), nepotism (e.g., Padgett & Morris, 2005; Vinton,1998), and conict (e.g., Ensley, 2006; Ensley & Pearson, 2005;Sorenson, 1999). Each of these factors inuences how familymembers interact among themselves and with others in thebusiness. In turn, the unique interactions that inuence familyinvolvement, specically in the context of family control, inuenceknowledge sharing and other key activities that underlie strategicentrepreneurship.

While other factors may potentially inuence the interactionsthat dene family involvement, such as personalism (Carney,2005), we base our analysis on the four foci of identity, justice,nepotism, and conict for a number of reasons. First, burgeoningresearch streams within the family rm domain (1) suggest thatthese four foci are important factors shaping family involvement,and (2) provide a solid base to inform of our analysis. Second, astrong complementary base of knowledge for each factor existsoutside of the family rm domain to facilitate the synthesis of ourarguments. Finally, the nature of how these four factors interact toinuence family involvement, and in turn strategic entrepreneur-ship, is sufciently complex to narrow our lens.

We proceed as follows to reach our objective of buildingknowledge about strategic entrepreneurship within family-con-trolled rms. First, we describe three elements of strategicentrepreneurship developing an appropriate mindset, ndinga balance between exploration and exploitation, and continuousinnovation that are highlighted as vital within the extantliterature and that appear relevant in considering family-con-trolled rms. In this section, we also distinguish strategicentrepreneurship from complementary concepts, including strat-egy, entrepreneurship, and entrepreneurial strategies. Second, wedescribe four key dimensions identity, nepotism, justice, andconict that distinguish family-controlled rms from non-familyrms. Third, we juxtapose the components of strategic entre-preneurship with the components of familybusiness interactionin order to develop ideas about the nature of strategic entre-preneurship within family-controlled rms as well as the uniqueopportunities and challenges these rms confront when pursuingstrategic entrepreneurship.

1. Elements of strategic entrepreneurship

Firms desiring to continuously create wealth cannot rely oneither strategy or entrepreneurship alone, but instead mustsuccessfully engage in strategic entrepreneurship (Ireland et al.,2003). Strategy enables a rm to extract value from existingdomains, such as Pursell Farms and Sheetz Inc., apparently havedone in their respective core markets of fertilizer production andconvenience stores. However, protable niches evolve, shift, anddisappear rapidly in todays economy (Bettis & Hitt, 1995; Ireland&Hitt, 1999). Thus, a rm focused solely on strategymight becomethe most effective producer within a decaying and perhaps even adying market. In contrast, entrepreneurship facilitates identica-tion of opportunities in the form of new niches and ways to servethem such as Pursell Farms entry into the golf course businessand Sheetz Inc.s entry into the custom sandwich business.Without an effective strategy to create competitive advantage in

J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 6777 69pursuing these entrepreneurial opportunities, a rm will soonexperience imitation by competitors whose offerings will erode itsprots. Pursell Farms created a competitive advantage by using itsown fertilizers to create a uniquely lush golf course. Sheetz, Inc.,leveraged information technology to create custom sandwichesvery quickly; a connection that mighty McDonalds famously wasunable to make with its ill-designed Made for You system. Thus,both strategy and entrepreneurship are each necessary but notindividually sufcient to promote sustained wealth creation.Moreover, these two elements must work in concert in order fora rm to continuously create value as the foundation for superioreconomic performance.

Drawing on extant strategic entrepreneurship research, wefocus our attention on three elements (i.e., developing anappropriate mindset within the rm, nding a balance betweenexploration and exploitation, and continuous innovation) that arehighly relevant to family-controlled rms. These elements capturethe three primary phases through which strategic entrepreneur-ship manifests. More specically, strategic entrepreneurshipbegins with an appropriate mindset among executives. Thedecisions that are then made within this mindset shape theexploration/exploitation processes, or rm-level actions. Thebalance of exploration and exploitation results in the key outcomeof continuous innovation. Next, each element is considered morefully.

One of the most daunting challenges involved in pursuingstrategic entrepreneurship is developing an appropriate mindsetwithin the rm that can balance short- and long-term objectives(Ireland et al., 2003). A mindset refers to the cognitive frameworksthrough which new and existing knowledge is interpreted andused to inform decisions such as those regarding strategy andentrepreneurship (cf. Baron, 2007). Historically, mindsets havebeen built around singular distinctions, such as Federal Expressemphasis on speed and McDonalds emphasis on consistency.Todays executives are forced to ndways to embrace a broader setof capabilities as central to the organizations well-being withoutallowing its mindset to become schizophrenic. Executives mustrapidly shift mental gears between creative exploration andprecision-focused exploitation (Busenitz, 2007). As described byIreland et al. (2003), evidence is accumulating that rms led byexecutives who are skilled along these dimensions are betterpositioned to facilitate their rms wealth creation activities thanthose that are not (cf. Brorstrom, 2002; Miles, Heppard, Miles, &Snow, 2000).

The second dimension of strategic entrepreneurship on whichwe focus is nding a balance between exploration and exploitation(Ireland et al., 2003; March, 1991). Exploration is a process thatinvolves variation, search, creativity, experimentation, and theintegration of diverse knowledge stocks (March, 1991). Morespecically, exploration involves sorting through potential oppor-tunities to identify areas of future activity for the rm. The successof this effort manifests in the rms ability to create wholly newsources of effectiveness and to establish new competitive niches(March, 1991).

To facilitate exploration, a rm gathers knowledge from outsideits borders to supplement its own knowledge stocks. Other rmsthat are acquired, alliance partners, and possibly even promisingstartups that the rm supports through corporate venture fundsare examples of outside sources (Ireland &Webb, 2007). Building adiverse knowledge base enables a rm to expand its competitiverepertoire. An expanded repertoire is vital for success duringperiods of upheaval and unpredictability because executivescannot know in advance the responses their rms will need toenact. A rms absorptive capacity skills affect the degree to whichthese efforts positively contribute to value creation (Zahra &George, 2002).In contrast, exploitation is a process that emphasizes rene-ment, speed, precision, and a focus on existing competencies.Relatively more concerned with efciency than effectiveness,exploitation success manifests itself in incremental enhancementsthat enable the rm to outperform its competitors in establishedniches. In exploitation, the rm primarily builds and uses existingknowledge stocks to satisfy immediate demands in the externalenvironment. Although rms can pursue external transactions toenhance their exploitation activities, rms use these transactionsto complement existing competencies as opposed to building newcompetencies.

Although challenging, rms seeking to continuously create valuemust try to balance exploration and exploitation. The goal ofbalancing exploration and exploitation is to meet short-termobjectives while being prepared to adapt when shifts occur in theexternal environment, such as a change in the fundamentaltechnology base of the rms industry. Overemphasizing exploita-tion leaves rms susceptible to sudden shifts while overemphasiz-ing exploration creates inefciencies thatmayundermine the rmscompetitiveness in existing markets (Levinthal & March, 1993).

The third key element, continuous innovation, is the fundamen-tal pathway through which strategic entrepreneurship positivelycontributes to a rms ability to create wealth. Ideally, theentrepreneurship discussed above provides a steady pipeline ofincrementally and radically new ideas whose value is thenextracted via the rms strategy. Given the shifting competitivelandscape, continuous innovation is founded on a balance ofexploration for new domains and exploitation of existing domains.

The concept of strategic entrepreneurship is related to butdistinct from the concepts of strategy, entrepreneurship andcorporate entrepreneurship, and entrepreneurial strategies. Fami-ly rm strategy represents an important stream of family rmresearch (e.g., Astrachan, 2010; Chrisman, Steier, & Chua, 2008;Craig & Moores, 2005). Strategy involves a plan through which arm integrates and coordinates resources and actions to createcompetitive advantage (Hitt, Ireland, & Hoskisson, 2010). Strategicentrepreneurship is a unique form of strategy in which a rmrealizes sustainable competitive advantage does not rest upon anysingle source of competency; rather, sustainable competitiveadvantage depends upon a rms ability to develop a stream ofcontinuous innovation to stay ahead of competitors. Because of therms need to continuously innovate, the operations, culture, andother organizational challenges of strategic entrepreneurship arevastly different than in rms relying upon a single source ofcompetitive advantage (i.e., brand name or exclusive access to keydistribution channels) (Ireland & Webb, 2007).

The intersection of entrepreneurship, and specically corporateentrepreneurship, and family rm research has also gainedincreasing momentum (e.g., Casillas et al., 2010; Kellermanns &Eddleston, 2006; also see special issues of entrepreneurship-related family rm research in Entrepreneurship Theory and Practiceand Journal of Small Business Management). Entrepreneurship is theprocess through which individuals recognize and exploit oppor-tunities (Bygrave & Hofer, 1991). Similarly, corporate entre-preneurship is the process through which individuals inestablished rms recognize and exploit opportunities (Sharma &Chrisman, 1999). Corporate entrepreneurship can take variousforms, such as the development of new products or processes,innovation of a rms strategy, and innovations to the organizationof the rm (Covin & Miles, 1999). The difference between(corporate) entrepreneurship and strategic entrepreneurship isthat the concern of (corporate) entrepreneurship is the recognitionand exploitation of specic opportunities, whereas strategicentrepreneurship is to organize in a way that the rm can takeadvantage of a stream of entrepreneurial opportunities overextended periods of time.

wJ.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 677770Entrepreneurial strategies are strategies through which rmsrecognize and exploit opportunities as a means through which togrow. For example, franchising may be viewed as one type ofentrepreneurial strategy as rms expand by leveraging a provenbusiness format across geographic markets (Combs & Ketchen,2003). Similarly, a rm may also use innovation, cooperative ordiversication strategies, or mergers and acquisitions as meansthrough which to recognize and exploit entrepreneurial opportu-nities. Entrepreneurial strategies may serve as one means throughwhich rms implement facets of strategic entrepreneurship.However, the key difference between entrepreneurial strategiesand strategic entrepreneurship is that strategic entrepreneurshipemphasizes both exploration and exploitation whereas entrepre-neurial strategies are primarily exploitation oriented.

In going forward, we examine the strategic entrepreneurshipprocess in family-controlled rms, as illustrated in Fig. 1. As will bediscussed, within family-controlled rms at least four concepts(identity, justice, nepotism and conict) shape the mindsetthrough which knowledge is interpreted and used to informmanagerial decisions. By inuencing the rms mindset, the effectsof family control cascade throughout the strategic entrepreneur-ship process, potentially creating differences with non-familyrms.

2. Family control: a unique inuence on strategicentrepreneurship

Family-controlled rms are characterized by a high degree offamily ownership, management, and the intention to maintainfamily involvement in the rm (cf. Chua et al., 1999). Because of its

Fig. 1. Strategic entrepreneurshipmanagerial and ownership inuence, the family represents aunique bundle of resources (i.e., familiness) that may act as asource of competency and/or rigidity (Habbershon and Williams,1999). As such, family control creates unique opportunities andchallenges vis-a`-vis strategic entrepreneurship. The value createdor lost because of the familys bundle of resources depends on thenature of interactions within the family and between the familyand business (Habbershon, Williams, & MacMillan, 2003).

2.1. Four key dimensions

Below, we discuss a number of key dimensions that frame thecomplex system of interactions within the family and between thefamily and business. Specically, we are interested in how family/rm identity, nepotism, justice, and conict play roles in formingthe unique bundle of resources that derive from family involve-ment.We focus on this set of dimensions for a couple reasons. First,the dimensions are highlighted as important in the family businessliterature and broader research on social relations. While thesedimensions inuence social relations within both family-con-trolled and non-family rms, we will discuss how family controlalters each dimensions inuence on interactions among familymembers and between family members and the business. Theseinteractions create important differences between the mindsets(and subsequent actions that are taken as a result of the mindsets)within family-controlled and non-family rms. Second, whileother dimensions may affect interactions among family members,we focus only on those dimensions that are also highly relevant tostrategic entrepreneurship. Identity, nepotism, justice, and conicthave the potential to inuence how knowledge is communicated,interpreted, and transformed into desired outcomes. Because ofthis, the individual dimensions are expected to inuence the abilityfor rms to explore and exploit.

We offer a caveat prior to elaborating on these points. Our ideasare intended to apply to typical family-controlled rms. AsWeick(1979) noted, a theory or model can only have two of these threetraits: general, accurate, and simple. The literature provides uswith a basis to develop a model that is general and simple; thisleads to some sacrices regarding accuracy in that while manyrms will be accurately described by the model, a subset will not.Certainly there are outliers to the general trends and relationshipsdescribed below. However, our arguments deal with the majorityof family-controlled rms and are not intended to deal withoutliers. Later, we discuss a number of reasons why exceptions toour generalizations exist.

Family/rm identication refers to a cognitive or emotionalattachment that an individual has with a group based upon sharedattributes (Nahapiet & Ghoshal, 1998). Identication may occur

ithin family-controlled rms.when an individual is placed within a certain group (Moreland,1985). Identication may also lead individuals to choose mem-bership in certain groups and avoid membership in other groups.Over time, an individuals identication can strengthen as s/hebecomes socialized to other dening characteristics such as thegroups values, traditions, and so on. Individuals draw a level ofself-worth and distinctiveness from their group attachments(Dutton, Dukerich, & Harquail, 1994; Turner, 1975). As such,individuals are inherently motivated to cooperate with othermembers and to pursue the groups best interests with theintention of maintaining the groups source of distinctiveness(Ashforth & Mael, 1989; Turner, 1975).

For a family member, the family identity emerges at the time ofbirth. In essence, birth grants membership to an individual withinthe family, creating an attachment based on, at the very least, ashared name and lineage. For most people, the identicationstrengthens over time as the child is socialized into the family. Thenurturing process strengthens the emotional attachment children

J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 6777 71have for their families. Furthermore, the socialization processthrough which parents and other family members teach childrennorms, values, beliefs, and history and traditions that dene thefamily strengthens the childrens cognitive attachment to thefamily (Collins, Maccoby, Steinberg, Hetherington, & Bornstein,2000; Leaptrott, 2005).

Family members can also identify with a family rm. An initialfamily rm identication may emerge as a result of the stronginterlinkages between the family and the rm. Family membersmay perceive the rm to be of great utility and importance topreserving the distinctiveness of the family identity, embodied inthe rms familial name, values, external relationships, politicalties, and so forth (Burkart, Panunzi, & Shleifer, 2003). A separate,salient rm identity can also form based on a unique vision, goals,rm-specic history and traditions to which the family memberbecomes socialized over time (Jaffe, 1988; Kets de Vries, 1993).Importantly, non-family members can identify with the attributesthat dene family rms (Haugh & McKee, 2003).

Nepotism refers to favoritism granted toward family membersgiven their kinship ties; commonly, nepotism is observed in hiringand promotion processes (Padgett & Morris, 2005). Nepotismmanifests in family rms, for example, when awarding a positionin the rm to a family member without considering non-familycandidates. As summarized by Vinton (1998), families pursuenepotistic behaviors for a number of reasons, including the desireto maintain inuence in the rm as well as stable relationshipswith key suppliers and customers, family members shorterlearning curves, and the probability of being able to clearlycommunicate operational rules and routines.

Nepotism can also have negative consequences. Hiring familymembers without considering non-family members potentiallyoverlooksmore qualied candidates (Vinton, 1998). In fact, blindlyhiring family members can result in inexperienced and poorly-qualiedmanagers leading the rm (Kets de Vries, 1993). Negativeconsequences extend beyond leadership and managerial issues.Evidence suggests that non-family employees perceive nepotismas unfair, the family member beneciary is viewed as lesscompetent, and non-family employees provide less workplacesupport to the beneciary (Padgett & Morris, 2005).

Justice refers to the perceived fairness of outcomes andprocesses. Two forms of justice distributive and procedural are salient to the organizational context. Distributive justicerefers to the fairness of outcomes (Adams, 1963). Scholars haveprimarily examined distributive justice from an equity perspec-tive wherein individuals compare their inputs and outcomes toreferent others such as other employees in the rm and theindividuals own inputs/outcomes in other contexts (Colquitt,Conlon, Wesson, Porter, & Ng, 2001; Gilliland, 1993). Individualsperceive that distributive justice has occurred when their ratio ofinputs to outcomes is equivalent to that of their referent others.Selection or hiring decisions, performance appraisals, salaryadjustments, and promotions are examples of signicant organi-zational outcomes.

Procedural justice refers to the fairness of the processes thatlead to the distribution of outcomes (Lind & Tyler, 1988). A numberof conditions characterize fair processes such as: (1) the processeshave been consistent across individuals and across time; (2)individuals have voice in the process; and (3) information isconveyed before and after the distribution of outcomes to explainthe process (Konovsky, 2000; Leventhal, Karuza, & Fry, 1980).

Perceptions of fair treatment have positive implications forrms. In ameta-analysis of 183 studies, Colquitt et al. (2001) founddistributive and procedural justice each to be positively related tooutcome satisfaction, job satisfaction, organizational commitment,evaluation of authority, organizational citizenship behaviors, andlack of withdrawal. Furthermore, the perception of injustice and itsnegative consequences can persist until justice is re-established(Ambrose & Cropanzano, 2003).

Justice concerns arise in family-controlled rms for a number ofreasons. As Lubatkin, Ling, and Schulze (2007, p. 960) note,controlling families not only have the authority to unilaterallyalter the terms of existing allocation agreements with familyemployees, their parental altruism also gives them incentive to doso. The presence of nepotism, taking perquisites, and other actionsby family members that draw on the rms resources can beperceived as unfair by non-family employees, especially when thefamily members lack expertise and knowledge, neglect theirresponsibilities, and fail to exert adequate levels of effort relative toother non-family employees (Kets de Vries, 1993). For example, anownermay choose to place her son into amanagerial position soonafter he joins the rm. Non-family employees that have worked formany years and nowmust report to the sonmay perceive him as anindividual who has not paid his dues (Martinko, Douglas, Ford, &Gundlach, 2004) and may view their own opportunities foradvancement in the family rm as unfairly limited because of suchnepotistic activity.

Procedural justice may be used to ameliorate concerns thatsurface when distributive justice cannot be fully satised(Brockner & Wiesenfeld, 1996; Konovsky, 2000). However,procedural justice concerns can also manifest in family-controlledrms that actually augment perceptions of unfair treatmentstemming from a lack of distributive justice. Family-controlledrms often avoid using formalized procedures that could provideclarity to non-family employees concerning selection, promotion,and procedures for determining pay raises (Daily & Dollinger,1991; Gomez-Mejia, Nunez-Nickel, & Gutierrez, 2001; Lubatkinet al., 2007). Family rms are also relatively centralized, leavingkey decision-making responsibilities to a small group of familymembers that closely guards its decision processes (Daily &Dollinger, 1991). Non-family employees have less opportunity tovoice their concerns in family-controlled rms and receive littleinformation from family members as to the parameters that areimportant in decision-making processes. Collectively, the lack ofclear formalized procedures, a voice for non-family employees, andincomplete communication from family to non-family employeesregarding decision processes can create a climate of proceduralinjustice.

Conict refers to sources of difference between parties that leadto disagreement (De Dreu & Weingart, 2003). For example,individuals may differ based on demographic dimensions, educa-tion, experience, propensity to take risks, identication withcertain groups, and cognitive biases. These sources of differencemay lead to disagreements based on each partys understandings,opinions, and beliefs. Negative consequences, such as animosity,inability to arrive at a consensus, and withholding relevantinformation from the decision process can surface when sources ofdifference are interpersonal in nature. This form of conict hasbeen referred to as affective or relationship conict (Jehn, 1994,1995). In contrast, some researchers suggest that task-related orcognitive conict, such as disagreements concerning how best toallocate resources or choosing a course of action, can lead to morecomprehensive decision processes and ultimately more effectivedecisions (Amason & Sapienza, 1997). Despite these expectations,meta-analytic results suggest that cognitive conict is negativelyrelated to the performance of decision-making teams, possiblybecause of the ease with which cognitive conict can transitioninto affective conict (De Dreu & Weingart, 2003).

There is evidence that groups can promote cognitive conictand avoid affective conict through trust (Simons & Peterson,2000), behavioral integration (Mooney, Holahan, & Amason, 2007),and mutuality (Amason & Sapienza, 1997). Trust reduces affectiveconict because if group members trust each other, they will be

J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 677772more likely to accept stated disagreements at face value and lesslikely to misinterpret task conict behaviors by inferring hiddenagendas or personal attacks (Simons & Peterson, 2000, p. 104).Behavioral integration, dened as the ability of a team tocollaborate and work as a unit (Mooney et al., 2007), favors adecision-making approach in which members consistently shareinformation and collectively discuss issues on a continuous basis.Members can work through a number of smaller disagreementsrather than coming together after signicant periods to discussmajor differences. Mutuality, or the extent to which members of agroup share in the rewards of the decision-making process(Amason & Sapienza, 1997), also reduces the potential for affectiveconict in that members realize they share an end goal with theircounterparts. This ensures that team members serve each othersbest interests, even if disagreements exist about how to achievethe end goal. This realization can keep members focused on thetask and distance themselves from interpersonal differences.

In family-controlled rms, the family comprises the keydecision-making group. Higher levels of trust, on average, existamong family members. Also, family-controlled rms have highbehavioral integration and mutuality. High behavioral integra-tion may be expected to derive from the familys strong identity,which promotes cooperation, and group norms that increase thelevel of comfort for sharing information (Ensley & Pearson, 2005).High mutuality is tied to the familys ownership stake. Given thatthe family possesses a majority ownership stake in family-controlled rms, members share signicantly in the rewards therm earns through its operations. High trust, behavioralintegration, and mutuality all decrease the opportunity foraffective conict to surface in decision-making processes offamily-controlled rms.

The dominating presence of the family in the top managementteam of family-controlled rms decreases cognitive conict.Family members are likely to be quite homogeneous in theirknowledge, experiences, and preferences regarding rm-leveldecisions. In fact, families often promote fromwithin the family topreserve existing routines and mindsets. Maintaining controlwithin a homogeneous group of family members, however, limitsthe extent to which effective decisions can be made. Nordqvist(2005) argues that groupthink may emerge over time as familymembers come to share similar mindsets, shun outsidersopinions, and rely on simplistic decision-making heuristics.Therefore, family-controlled rms often avoid the negativeimplications of affective conict but fail to accrue the functionalbenets of cognitive conict.

2.2. Contrasting family-controlled and non-family rms along the key

dimensions

As discussed, family control of a rms decision-making groupalters the processes through which decisions are made as well asthe outcomes reached. Unique identity, nepotism, justice, andconict issues arise in family-controlled rms, shape the familysmindset, and alter the decision-making processes in the rm. It isalso important to point out that each of these issues also exists innon-family rms, although in different forms. For example,identity issues can shape mindsets and decision-making pro-cesses in both family-controlled and non-family rms. In non-family rms, executives may identify with various sources ofdistinctiveness for the rm. On the one hand, a non-familyidentity rooted generally in the rms history of being atechnology leader, an innovator, a customer-responsive rm,or a provider of high-quality products may motivate the rm toconsistently seek new ways to preserve its identity. As such, therm is likely to support entrepreneurial activities to identify newopportunities, even if those opportunities exist outside thedomain of the rms core competencies. On the other hand, a non-family identity may also be rooted more specically in the rmshistory of being an industry niche leader or a leader in a particulartechnology. As the external environment shifts and the rmsniche becomes absorbed by the broader industry or the rmstechnology becomes obsolete, this more dened non-familyidentity can deter entrepreneurial activities that can allow therm to reinvent itself (i.e., expand beyond its core niche ortechnology) (Barney et al., 1998). In summary, a non-familyidentity can either support or undermine a balance of strategicand entrepreneurial activities, depending on how the identity isdened.

Nepotism can also occur in both family-controlled and non-family rms. In non-family rms, managers are often afforded acertain degree of freedom in hiring and rewarding employees.However, we expect nepotism and the potential for negativeconsequences to surface more commonly in family-controlledrms given the familys control over the framing and use ofdecision processes. In non-family rms, other actors may exist to(1) preemptively counter decisions inappropriately favoringcertain people or (2) monitor the recipients of nepotistic benetsto control negative consequences.

Justice issues, too, differ between family-controlled and non-family rms. The ability and willingness for families to makedecisions that disproportionately favor family interests and towithhold information regarding decision processes increasesjustice issues. By denition, family-controlled rms have a familyunit with potential dominance in decision-making processes(Klein, Astrachan, & Smyrnios, 2005). In non-family rms, it isless common to have centralized, powerful groups (Gersick, Davis,Hampton, & Lansberg, 1997) that disproportionately draw uponresources to the rest of the rms detriment (although perhaps tothe principals detriment). The centralized control and dominanceof family-controlled rms can decrease participative decision-making processes (Eddleston & Kellermanns, 2007). Becauseparticipation is important to establishing procedural justice andovercoming cases in which distributive injustice may arise infamily-controlled rms (Van der Heyden et al., 2005), thelikelihood of perceived injustice is enhanced in family-controlledrms. While justice issues exist in non-family rms, one mightexpect instances of injustice to be less widespread and certainlynot perceived as a centralized family group taking advantage of allnon-family employees.

In contrast to family-controlled rms, the key decision-makinggroup in non-family rms is generally comprised of a moreheterogeneous set of individuals. Generally considered morehighly skilled managers, non-family rm executives often bringtogether diverse demographic, functional, experiential, andcognitive lenses (Lee, Lim, & Lim, 2003; Lin & Hu, 2007). Together,non-family rms executives possess a much wider scope ofknowledge than the decision-making group in family-controlledrms. The heterogeneity of the key decision-making group servesto induce cognitive conict. A relatively higher potential forcognitive conict exists in non-family rms caused by functionaland/or experiential differences (cf., Li & Hambrick, 2005). Highcognitive conict helps to maintain a wide lens of awarenessthroughout the decision process. Rather than prematurely settleon a few possible solutions, cognitive conict among a non-familyrms executives is likely to trigger amore comprehensive processin which an exhaustive set of solutions is thoroughly examined.The presence of higher cognitive conict, however, also intro-duces the potential for affective conict in non-family rms (DeDreu & Weingart, 2003). As such, decision-making processes innon-family rms may be undermined by individuals withholdinginformation or the inability to achieve consensus (Jehn, 1994,1995).

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J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 6777 733. Strategic entrepreneurship within family-controlled rms

As described above, the nature of identity, nepotism, justice,and conict differ between family-controlled and non-familyrms. In Table 1, we highlight important potential positive andnegative implications of these differences for strategic entre-preneurshipwithin family-controlled rms. These implications aredeveloped below, wherein we discuss specically how familycontrol affects a rms mindset and, hence, the balance betweenstrategic and entrepreneurial actions. Although they are presentedseparately, the positive and negative implications could exist side-by-sidewithin a rm, providing an interesting internal tension andstruggle. To provide a foundation for future empirical research, wealso offer a series of propositions within this section.

Firms pursue strategic entrepreneurship to deal with theincreasing temporariness of competitive advantage. A mindsetsupportive of strategic entrepreneurship seeks to balance strategicand entrepreneurial objectives, meaning that rms in which thismindset exists simultaneously explore for future domains whileexploiting current domains (He & Wong, 2004; March, 1991).Success in both domains depends on innovation, which beginswith the integration of two ormore previously separatematrices ofknowledge (Smith & Di Gregorio, 2002). As the objective ofexploration, radically new innovations (i.e., wholly new sources ofactivity without strong ties to existing bodies of knowledge) arecreated by integrating a large number and diversity of knowledgematrices. In contrast, as the objective of exploitation, incrementalinnovations (i.e., those that build off of an existing core body ofknowledge with only slight modication) derive from thecombination of fewer and more homogeneous matrices.

Family-controlled rms potentially have unique advantages inachieving strategic entrepreneurship relative to others. These

Table 1Some key dimensions of familybusiness interaction and their implications for str

Dimension Nature within family-controlled rms Potential

entrepren

Family/rm

identity

As the family is the dominant, if not only, voice

of the top management team, the familys

values dene and permeate the rm

Strong lo

members

prosperit

Nepotism Nepotism is more common than in other rms,

as is the potential for negative consequences

Unity and

exploitat

family af

experime

Justice Lack of formalized procedures, voice for non-family

employees, and communication from family to

non-family employees create justice concerns

Informal

family m

underlies

Conict Avoid the negative implications of affective

conict but risk missing out on benets of

cognitive conict

Lack of a

and enab

and exploadvantages are tied to the four dimensions developed above. Interms of identity, exceptionally strong loyalty to the rm canmotivate family members to ensure the rms long-termprosperity via strategic entrepreneurship (Burkart et al., 2003).Nepotism is generally viewed as a practice with negative effects;but, the unity and consistency of purpose achieved throughnepotistic promotions can enhance exploitation efforts (Vinton,1998). Meanwhile, the relative security of family afliation mayencourage family members running rms to engage in theexperimentation that underlies exploration (Ireland & Webb,2007).

The informal approach to justice adopted in family-controlledrms can facilitate, at least among family members, theexperimentation that underlies exploration (Lubatkin et al.,2007). Finally, in terms of conict, the lack of affective conictin family-controlled rms prevents distractions and enables astrong focus on both exploration and exploitation (Ensley &Pearson, 2005). Overall, while some non-family rms developstrong cultures, the deep and rich ties embedded in some family-controlled rms provide a level of commitment that other rmswould struggle tomatch. If channeled toward supporting the needsof strategic entrepreneurship, family control offers powerfuladvantages. These notions lead us to expect that:

Proposition 1. Loyalty, nepotism and informal justice are positivelyrelated to the exploration aspect of strategic entrepreneurship within

family-controlled rms.

Proposition 2. Affective conict is negatively related to the explora-tion aspect of strategic entrepreneurship within family-controlled

rms.

Proposition 3. Commitment among family members creates advan-tages for family rms to the extent that this commitment supports

strategic entrepreneurship.

There are potential downsides to family control as well. Tosustain near-term competitiveness, rms often simplify theirroutines to increase efciency (Levinthal & March, 1993). Infavoring such exploitation activities, rms are susceptible to shiftsin the external environment that drastically change the technologyof a niche and hence, the advantages that are likely to lead tocompetitive success. One possibility is that family control willincrease the emphasis on exploitation, thereby undermining thebalance between strategic and entrepreneurial activities. There areseveral reasons for this.

First, the unique familybusiness interactions in family-controlled rms constrict awareness of the key decision-makinggroup (i.e., the family) to incrementally new opportunities. Thespecic familybusiness interactions of nepotism and conict in

ic entrepreneurship in family-controlled rms.

itive implications for strategic

ship

Potential negative implications for

strategic entrepreneurship

to the rm can motivate family

nsure the rms long-term

strategic entrepreneurship

Inertia that undermines strategic

entrepreneurship can arise from the tight

alignment of family and rm identities

sistency of purpose enhances

fforts; the relative security of

ion encourages the

ion that underlies exploration

Non-family members tend to withhold

their energy and creativity when the

rewards are dispensed based on family

membership rather than work performance

roach can facilitate, among

ers, the experimentation that

loration

Perceived injustice among non-family

employees, discouraging them from

innovative thinking and behavior

ive conict prevents distractions

strong focus on exploration

ion

Lack of cognitive conict inhibits the

creativity needed for innovative

thinking and behaviorfamily-controlled rms result in a lack of heterogeneity in thedecision-making group. In turn, a lack of heterogeneity decreasesthe potential for radically new innovations by limiting the quantityand diversity of knowledge available. More specically, nepotismcan create a decision-making group whose members share similarknowledge, experiences, and cognitive biases. Moreover, lowcognitive conictmay lead to groupthink and limit the need for thefamily to seek external knowledge to resolve differences. Cases inwhich the familymay be characterized as homogeneous in regardsto beingmore open-minded and receptive to external opinions canperhaps enhance levels of innovation in the family-controlled rm.However, the similar knowledge, experiences, and cognitive biasesstill limits the familys absorptive capacity by dening how thefamily searches, the scope of the familys searches, the ability of thefamily to make connections between separate bodies of knowl-edge, and the ability to transform and apply this knowledge in newways (c.f., Zahra & George, 2002). As such, in this scenario, family-

J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 677774controlled rms are less aware of radically new opportunities andinstead choose familiar, strategically proximal opportunities forcompeting (i.e., those that build on the rms existing strategy andcompetencies) (Nordqvist, 2005). As perhaps an inadvertentconsequence, family-controlled rms may prefer strategic objec-tives relative to entrepreneurial objectives. These ideas provide abasis to predict that:

Proposition 4. To the extent that family control creates a homoge-neous group of decision makers, a family-controlled rm will tend to

emphasize exploitation and de-emphasize exploration.

A strong motivation to preserve the family identity also canserve to undermine a balance of strategic and entrepreneurialobjectives. Family members are motivated to preserve a strongfamily (or family rm identity) and the features that make thisidentity distinctive (c.f., Dutton et al., 1994). A strong identity maysupport strategic activities and allow the rm to gain a source ofcompetitive advantage. For example, rms canmake fast decisionsby limiting the scope of opportunities to amore carefully-speciedset as dened by their identity (Barney et al., 1998). An identityalso may serve as an attractive, consistent image of theorganization to its various stakeholders, including customers,employees, investors, and suppliers (Dutton & Dukerich, 1991;Kogut & Zander, 1996). In doing so, an identity has positivereputational effects and can serve as a sustainable competitiveadvantage (Stimpert, Gustafson, & Sarason, 1998). However, whilesupporting strategic activities, a strong family identity can alsodeter entrepreneurial activities that push the rm into differentdomains in that such moves create uncertainty about identity(Shepherd & Haynie, 2009). A likely exception would be a rmwhose identity is centered on being entrepreneurial. In general,however, we expect that:

Proposition 5. To the extent that the familys identity itself is notexploration oriented, the strength of the family identity relative to the

business identity is positively related to exploitation and negatively

related to exploration.

The balance of strategic and entrepreneurial objectives infamily-controlled rms is also undermined when such rms havean inability to effectively explore. As noted previously, creatingradically new innovations through exploration requires integrat-ing numerous, diverse knowledge matrices. This knowledge mayderive from various sources, including by examining emergingtechnologies in the external environment or experimentation withexisting technologies that the rm has not previously examined(Ahuja & Lampert, 2001). While the awareness and motivation topursue radically new innovations is often driven by the leadershipand vision of the rm (especially in family-controlled rms), theactual exploration occurs within the rm. As such, the success ofexploration depends on family and non-family employees. Becauseexploration is highly uncertain, risky, and generally only leads tolong-term outcomes (March, 1991), the process magnies thejustice issues perceived by non-family members within family-controlled rms. Non-family members may be reluctant toparticipate in exploration processes given the uncertain natureof these ventures and fear that the ventures (and the employeesposition) may be terminated when the family loses interest(Barnett, 2003). Furthermore, the uncertainty of rewards and howthose rewards are granted with respect to exploration mayundermine effective knowledge transfer between those non-family members that are involved in exploration and thecontrolling family. Thus, we predict that:

Proposition 6. The extent to which non-family members are con-cerned about justice is negatively related to those individuals procliv-

ity to pursue exploration activities.Our arguments suggest that many family-controlled rms ndit difcult to balance strategic and entrepreneurial objectives,perhaps helping to explain why less than half of family rmssurvive into the second generation (Birley, 1986; Lee et al., 2003).In some cases, however, it is clear that family-controlled rms canperform effectively for extended periods. When might we expectthe positive implications of family control to outweigh thenegative implications? Research on strategic entrepreneurshipassumes an increasing temporariness of competitive advantages.However, some industries remain characterized as slow-cyclemarkets, in which sources of competitive advantage are sustain-able for longer periods of time (Williams, 1992). Sustainabilitymayderive from patents, proprietary technologies, or favorable accessto factor or product markets. In slow-cycle markets, long-termsuperior performance is principally a function of awell-establishedand attractive competitive position.

Family-controlled rms competing in slow-cycle markets maybecome less competitive and efcient if they continuously favorentrepreneurial activities. In a complementary vein, family-controlled rms may also proactively avoid dynamic, fast-cyclemarkets. Many family-controlled rms do not have growthaspirations and prefer to exploit opportunities in smaller nichesto derive stable sources of income. These smaller niches may beshielded from broader market dynamism, allowing family-controlled rms to sustain their competitive advantage as thefoundation for superior returns. Therefore, in some cases, family-controlled rms can prosper for at least some period of time byfocusing on exploitation-oriented strategic activities withoutnecessarily having to emphasize exploration-oriented entrepre-neurial activities. We suspect that empirical inquiry would revealthat these cases are becoming rarer as markets become moredynamic due to international competition, advances in informa-tion technology, and related trends (Ireland and Hitt, 1999).Consideration of the relative dynamism of markets leads us toexpect:

Proposition 7. Family-controlled rms within stable markets are lessaffected by struggles with exploration than are family-controlled rms

within dynamic markets.

The familys growth and aspirations also may enhance the needfor exploration activities, even in stablemarkets. If a rm is dividedamong the founders multiple children and the children desirestable or increasing cash ows from the business, the family rmsperformance must necessarily multiplicatively grow. Exploitationwithin a stable market may be insufcient to meet the growingfamilys heightened goals. As such, an important caveat to thepreceding proposition follows as:

Proposition 7a. Assuming a stable market, growth in the familysaspirations increases the family-controlled rms struggles with ex-

ploration.

Another issue is how certain changes in family-controlled rmsover extended periods of time inuence the relationships we havediscussed. Family members may come to possess differentinterests as the business is passed through multiple generations,from a single controlling owner to a sibling partnership to a cousinconsortium (Gersick et al., 1997). Under a controlling owner whoalso serves as the parent of a nuclear family, the familys identity islikely to remain focused on a core set of values. However, as thebusiness passes through generations, the strength of the familyidentity and family members homogeneity decrease. Sons anddaughters of the original controlling owner can marry into newfamilies, study at universities and colleges away from family forextended periods, and gain experience by working for otherbusinesses before, if ever, returning to the family business.

J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 6777 75Each of these events helps to mold family members values,knowledge, and interests beyond what was available or dened inthe founding nuclear family. With each generation, the familybecomes increasingly fragmented. Family members identity mayshift from the founding nuclear family to their own nuclear family,to the rm, or some other completely separate entity. Similarly,increasing diversity of knowledge and experiences in the familycan increase heterogeneity of its decision-making members andconict regarding strategic decisions. To the extent that the familycan avoid an impasse in the decision-making process caused byaffective conict (Goodstein, Gautam, & Boeker, 1994), theincreasing heterogeneity of the group can increase the diversityof ideas that are debated, and the potential for cognitive conictwithin the group is likely to keep the group from settling on sub-optimal decisions. Scholarly inquiry into the positive and negativeimplications of these evolutionary patterns has the potential toyield interesting insights. Building on extant knowledge aboutdecision-making, our initial expectation is that:

Proposition 8. To the extent that the group of decision makers withina family-controlled rm becomes heterogeneous over time, and as-

suming the heterogeneity of the group leads to cognitive conict and

not affective conict, the rm will be better able to pursue strategic

entrepreneurship.

4. Implications

To this point, our analysis has centered on family-controlledrms. However, research suggests that differences exist (1) amongfamily-controlled rms and (2) between family-controlled andfamily-inuenced rms. Corbetta and Salvato (2004) provide acommentary distinguishing between rms with controllingfamilies that are self-serving agents versus those with familiesthat are self-actualizing stewards. The authors suggest thatfamilies whose interests are self-actualizing, or more closelyaligned with the rm, as opposed to self-serving are able topromote entrepreneurial activities by increasing goal congruenceand reducing information asymmetry between the family and non-family employees. Research will benet by examining thepsychological, family, and social factors that lead families to beself-actualizing versus self-serving.

Although outside this works scope, family-inuenced rms areanother important typeofrmwherein the familyplaysakeyrole. Ina family-inuenced rm, a family owns a substantial ownershipstake that allows it to shape the rms decision-making processes(Anderson & Reeb, 2003; Villalonga & Amit, 2006). However, thefamily does not have unilateral control as in family-controlled rms(Nordqvist, 2005). Evidence suggests that non-family managers infamily-inuenced rms can counterbalance family managers ininuencing strategic actions (Sirmon et al., 2008). Many relation-ships between phenomena that scholars examine in management,and the family business domain specically, are characterized bysome degree of balance, illustrated with curvilinear relationships.For example, both Anderson and Reeb (2003) and Sciascia andMazzola (2008) nd that family inuence (i.e., a balance of familyand non-family members in the decision-making process) leads tohigher rm performance than that in either family-controlled ornon-family rms. Sciascia, Mazzola, Astrachan, and Pieper (2010)alsopoint to a curvilinear relationshipbetween family inuence anda rms level of international entrepreneurship. We expect that asscholars examine themore complex interactions of family and non-family members in family-inuenced rms, results will likely pointto some balanced effect (i.e., curvilinear relationship) of family andnon-family members on rm outcomes.

The degree of inuence varies widely across family-inuencedrms; thismakes providing general characterizations of such rmsa tenuous task. Rather than rely on rough proxies, such asownership stakes andmanagerial presence, that do not capture theactual decision-making processes, Astrachan, Klein, and Smyrnios(2002) developed the F-PEC scale that captures family inuencebased on the sub-dimensions of power, experience, and culture.Preliminary results suggest that the F-PEC scale provides a reliablemeans through which to examine family inuence (Klein et al.,2005). While the direct relationship between family involvementmeasured via the F-PEC scale and rm performance is unclear(Rutherford, Kuratko, & Holt, 2008), we believe, as our modelsuggests, that family involvement plays an important role indetermining the rms mindset and actions, thereby indirectlyinuencing performance (see also Sirmon et al., 2008). The F-PECscale may serve as an important tool through which scholars candistinguish the effects of family control and inuence on strategicentrepreneurship in family rms.

Even in family-controlled rms, an important moderator to ourgeneral model may be the generational composition of the family(Gersick et al., 1997). For example, research suggests that newforms of conict may arise as new generations enter the familybusiness, with sibling rivalries and cousin consortiums bringdiffering values, interests, and perspectives into the decision-making process (Gersick et al., 1997; Schulze, Lubatkin, & Dino,2003; Sorenson, 1999). In addition, research also points to theemergence of multiple sub-family identities that may obscure asingle family identity guiding the family rm (Klein, 2008). Asidentity, conict, nepotism, and justice issues change with newgenerations, how family involvement inuences strategic entre-preneurship in family-controlled rms may also change. Animportant point to be considered with the involvement of newgenerations, however, is whether these transitions also introducenon-family managers to the decision-making process as somefamily managers sell their stake or otherwise leave the rm(Schulze et al., 2003).

In terms of practical implications, familybusiness interactionsin family-controlled rms present signicant obstacles to efforts tosuccessfully engage in strategic entrepreneurship. As discussed,explorationwithin family-controlled rms can be undermined by alack of conict in the family decision-making group and justiceissues that hinders knowledge transfer. Sirmon and Hitt (2003)highlight alliances as key sources of knowledge and resources tocomplement that within family-controlled rms. As such, alliancescan facilitate family-controlled rms efforts to recognize andexploit opportunities (Sirmon & Hitt, 2003) without requiring thefamily to relinquish control of their rm.

A second force that can serve as an obstacle to effective strategicentrepreneurship in family-controlled rms is the identity held bythe family. The family often gains a source of distinctiveness fromthe rm, and family members are motivated to preserve theiridentitys distinctiveness. As such, the familys motivation topreserve a source of distinctiveness can lead to inertial forces thatsubsequently cause the family to overlook changes in the externalenvironment that make their rms source of distinctivenessobsolete (Ford & Ford, 1994). As the group in family-controlledrms that possesses the power and resources needed to institutechange, however, change is only likely to occur through the actionsof the family (cf. Greenwood & Suddaby, 2006). The familymust bewilling to experiment in new markets that can provide valuableknowledge and experience while perhaps not tarnishing the rmsreputation and identity in its core markets. In fact, the family canenter new markets by forming an entirely new and separateidentity. For example, in some cases Marriott uses other identitiesto enter new markets, captured in the names of the rms hotelssuch as Faireld Inn and Springhill Suites. By using different namesand logos (i.e., two key sources of identity), Marriott can expandinto newmarkets and pursue new opportunities without publicly

J.W. Webb et al. / Journal of Family Business Strategy 1 (2010) 677776changing its identity (or tarnishing its core identity if theseperipheral activities fail).

5. Conclusion

There is growing recognition that rms long-term successdepends on strategic entrepreneurship simultaneously exploitingcurrent domains while exploring for new domains. Examples suchas Pursell Farms and Sheetz, Inc., offer anecdotal evidence thatsome family-controlled rms excel at meeting these dualchallenges. However, previous research on strategic entrepreneur-ship has yet to distinguish the role of family involvement inshaping strategic entrepreneurship. Because there are importantand inherent differences between family-controlled rms andthose rms without family involvement, it seems that the extantknowledge about strategic entrepreneurship does not fully revealthe situation confronted by family-controlled rms. In response,we have sought to help ll the gap between what we know andwhat we need to know about strategic entrepreneurship infamily-controlled rms. We hope that our ideas stimulateadditional research at the intersection of family rms and strategicentrepreneurship.

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Strategic entrepreneurship within family-controlled firms: Opportunities and challengesElements of strategic entrepreneurshipFamily control: a unique influence on strategic entrepreneurshipFour key dimensionsContrasting family-controlled and non-family firms along the key dimensions

Strategic entrepreneurship within family-controlled firmsImplicationsConclusionReferences