Research by: Saima Samdani, HamidUllah, Shahid Jan Kaka Khel, & Daniel Dupuis
EXECUTIVE SUMMARY
Family firms, characterized by the involvement of family members in ownership and management, constitute a significant portion of the global economy. These firms often possess distinctive characteristics that set them apart from their non-family counterparts and significantly contribute to wealth and employment generation. According to the report conducted by Accenture (2019), family firms generate 70% of GDP contributions to the world economy and about 60% of employment around the globe. The family firm has a sense of uniqueness and has different governance structures, exposure, and an approach to risk. The emphasis of family firms is more than financial returns maximization; these firms mainly focus on enhancing and maintaining non-financial wealth. This non-financial wealth of a family business is known as socioemotional wealth (SEW). The SEW is the involvement and commitment of the family members in their business that ultimately results in value creation. It has gained considerable attention in the last decades as a substantial development in a family business and is used extensively by scholars to analyze family firms. Recognizing the importance of socioemotional wealth in pursuing corporate success is critical. The intangible aspects of shared values and emotional ties significantly shape the identity and longevity of a family business. These emotional ties give rise to a sense of purpose and commitment in family members and employees as they become deeply rooted in the organizational culture. However, the essence of socioemotional wealth does not exist in isolation. Instead, it intertwines seamlessly with the financial aspect of the business. Persistent earning, a critical component of sustained prosperity, emerges as the bridge between emotional wealth and tangible success. The ability of a family firm to generate consistent and resilient financial returns ensures its survival and enhances its capacity to preserve and strengthen socioemotional bonds over time. Although studies have indicated the socioemotional effect on other variables, such as performance, R&D, internationalization, and risk, there is a need to pay closer attention to the socioemotional wealth effect on sustainable earnings of family firms.
This study investigated the SEW on sustainable earnings and is based on a sample family firms of Asian emerging countries over the period of 2010-2019. Results from the analysis show that SEW has been an important ingredient in making the family firms attractive both in the short and long run persistent earnings. The results are in conformance with those obtained by scholars, for both developed and emerging country cases. The other conventional variables included in the model generated the expected signs and results. These findings imply that SEW is an important element of the strategy other than financial ones to attract sustainable profits and this is particularly true for emerging economies where there is much to be done by family firms in that respect. In future studies, researchers can contribute to a deeper understanding of the complex relationship between socioemotional wealth and persistent earnings by comparative analysis across various types of family businesses, considering factors such as size, generation, and industry focus. Studies can also focus on potential moderating variables that might influence the relationship between socioemotional wealth and persistent earnings.
To cite this article: Samdani, S., Ullah, H., Khel, S. J. K., & Dupuis, D. (2023). Socioemotional wealth and sustainable earnings: Evidence from emerging markets. International Journal of Social Science Archives, 6(3).
To access this article: http://www.ijssa.com/index.php/ijssa/article/view/180
About the Journal
International Journal of Social Science Archives is an international peer-reviewed bi-annual academic research journal, which provides the best platform for researchers and scholars all over the world to share the latest findings. Authors are encouraged to submit complete, unpublished, original, and innovative works in all social science fields. The journal focuses on, but not limited to the following topics: sociology, political science, education, linguistics, tertiary education, economics, psychology, peace and conflict studies, management science, law, social work, and related disciplines.
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