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Socioemotional wealth’s implications in the calculus of the minimum rate of return required by family businesses’ owners

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  • Mª José Martínez Romero

    (University of Almería)

  • Alfonso A. Rojo Ramírez

    (University of Almería)

Abstract

This paper demonstrates that the minimum rate of return (k e ) required by family business shareholders is inversely related to the emotional endowment presented in these firms. After reviewing the socioemotional wealth (SEW) literature, we find empirical support to justify that different SEW dimensions influence k e . Findings from a population of 207 family firms show that the identification of family members with the firm and the renewal of family bonds with the firm through dynastic succession have consistently negative impacts on k e , while family control and influence have significantly positive impacts on k e .

Suggested Citation

  • Mª José Martínez Romero & Alfonso A. Rojo Ramírez, 2017. "Socioemotional wealth’s implications in the calculus of the minimum rate of return required by family businesses’ owners," Review of Managerial Science, Springer, vol. 11(1), pages 95-118, January.
    • Handle: RePEc:spr:rvmgts:v:11:y:2017:i:1:d:10.1007_s11846-015-0181-9
    DOI: 10.1007/s11846-015-0181-9
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    Cited by:

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    2. Fábio Frezatti & Diógenes Souza Bido & Daniel Magalhães Mucci & Franciele Beck & Ana Paula Capuano Cruz, 2023. "The Impact of the Management Control System on the Family Business’ Intention to Maintain the Organization for Future Generations," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1145-1176, June.
    3. Vanessa Weimann & Maike Gerken & Marcel Hülsbeck, 2020. "Business model innovation in family firms: dynamic capabilities and the moderating role of socioemotional wealth," Journal of Business Economics, Springer, vol. 90(3), pages 369-399, April.
    4. Katrien Jansen & Anneleen Michiels & Wim Voordeckers & Tensie Steijvers, 2023. "Financing decisions in private family firms: a family firm pecking order," Small Business Economics, Springer, vol. 61(2), pages 495-515, August.
    5. Hernández-Perlines, Felipe & Covin, Jeffrey G. & Ribeiro-Soriano, Domingo E., 2021. "Entrepreneurial orientation, concern for socioemotional wealth preservation, and family firm performance," Journal of Business Research, Elsevier, vol. 126(C), pages 197-208.

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    More about this item

    Keywords

    SEW; Minimum rate of return; Total value; Emotional value; Financial value;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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