The role of familial socio-political forces on new venture creation in family business

Abstract

Purpose

New venture (NV) creation is critical to the growth and long-term survival of business groups. The purpose of this paper is to investigate the NV creation process in family business (FB) context and examine the influence of familial socio-political considerations and dynamics on venture creation processes.

Design/methodology/approach

The paper employs a triangulation technique drawing from the extant literature, observations from 25 in-depth interviews of FB leaders and insights from two FB practitioners and abductive reasoning to theorize on the NV creation process and the influence of socio-political considerations and dynamics within family.

Findings

The results show that there are four distinct stages of the NV creation process in FB context. Familial socio-political considerations and dynamics greatly influence the NV creation process. These considerations and dynamics vary according to the socio-political clout enjoyed by the proposer. Leadership’s predisposition to the proposer and the proposer’s socio-political clout in the family determine whether an NV proposal leads to venture creation.

Research limitations/implications

The study extends NV creation literature by suggesting that in addition to the economic rationale, socio-political considerations play a critical role in venture creation decisions. Future research can validate the findings with quantitative analysis.

Practical implications

FB members must garner strong socio-political support for their NV proposal. FB leaders must ensure that their NV proposal evaluation and resource allocation decisions are not unduly influenced by the proposer’s socio-political clout.

Originality/value

The study views the NV creation process in FB context from the lens of familial forces at play. It identifies four distinct stages of the NV creation process and examines the role played by familial socio-political considerations and dynamics during each stage.

Citation

Bhatnagar, N., Ramachandran, K. and Ray, S. (2018), "The role of familial socio-political forces on new venture creation in family business", Cross Cultural & Strategic Management, Vol. 25 No. 4, pp. 550-577. https://doi.org/10.1108/CCSM-06-2017-0075