Best Among the Worst or Worst Among the Best? Socioemotional Wealth and Risk-Performance Returns for Family and Non-family Firms Under Financial Distress

Gómez-Mejia L.R., Chirico F., Martin G., Baù M.

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How does family firms behave in conditions of fnancial distress? How does the social emotional considerations of the family affect the risk propensity of the firm?

A firm’s proactive engagement in risk, which has been deeply intertwined with the entrepreneurship literature, is essential to sustaining a firm’s long-term competitive advantage.

Drawing on behavioral agency’s mixed gamble logic in a family firm context, the present study offers a theoretical framework examining how firm risk returns differ in the contexts of distressed (the worst) and nondistressed (the best) family and nonfamily firms.

We predict that family control moderates the risk taking-performance relationship. That is, compared with nonfamily firms, a mixed gamble featuring the prospect of socioemotional and financial losses leads family firms to extract higher financial returns from risk taking when in financial distress, but lower financial returns when they are not in financial distress. Our theoretical expectations are supported using a matched sample of Swedish firms.


  • Gómez-Mejia, L R., Chirico, F., Martin, G., Baù, M. (in press). Best Among the Worst or Worst Among the Best? Socioemotional Wealth and Risk- Performance Returns for Family and Non-Family Firms Under Financial Distress. Entrepreneurship: Theory & Practice.
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