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Family firms' socio-emotional wealth influences their choices

Family businesses are not just about profits—they're about preserving family identity, influence, and legacy. This study investigates how these non-financial factors, collectively known as socioemotional wealth (SEW), influence family firms' decisions. The researchers have refined the SEW measurement from the FIBER model to the more accurate FIRE model.

Refining the socioemotional wealth scale

The purpose of this research was to improve the measurement of SEW in family firms. The original FIBER model, which included dimensions like family control and emotional attachment, was updated to the FIRE model. This new model better reflects the emotional dynamics within family businesses, ensuring more precise analysis and understanding.

"We faced significant challenges in capturing the intricate emotional and relational dynamics within family firms," explained Mattias Nordqvist, one of the researchers. "Our research highlights the importance of considering emotional, social and relational aspects in business strategies, especially in family firms. This approach can lead to more sustainable and long-term fulfilling business practices."

Key research findings:

• Control remains within the family: Family firms prioritize retaining control, influencing major strategic decisions.
• Emotions impact decisions: Emotional connections to the business significantly impact decision-making processes.
• Legacy preservation is important for generational owners: Ensuring the business stays within the family for future generations is a central goal, sometimes more important than immediate financial success.

Future research directions

This study underscores the critical role of emotional factors in family business decisions, suggesting numerous avenues for future research. Further studies could explore how these emotional dynamics affect other areas, such as employee satisfaction and customer loyalty. Understanding SEW better can also guide non-family businesses in adopting similar emotional strategies for improved outcomes.

Meet the researchers:

• Lucia Naldi: Jönköping International Business School, CeFEO - Centre for Family Entrepreneurship and Ownership, Jönköping University
• Mattias Nordqvist: House of Innovation, Stockholm School of Economics, Jönköping International Business School, CeFEO - Centre for Family Entrepreneurship and Ownership, Jönköping University 
• Francesco Chirico: Jönköping International Business School, CeFEO - Centre for Family Entrepreneurship and Ownership, Jönköping University; Department of Management, Macquarie University
• Luis Gómez-Mejia: W. P. Carey School of Business, Arizona State University
• Blake E. Ashforth: W. P. Carey School of Business, Arizona State University
• Richard Swartz: Jones Graduate School of Business, Rice University
• Leif Melin: Jönköping International Business School, CeFEO - Centre for Family Entrepreneurship and Ownership, Jönköping University