1042-2587
Copyright 2005 by
Baylor University
E T&P
Four Bases of Family
Business Successor
Commitment:
Antecedents and
Consequences
Pramodita Sharma
P. Gregory Irving
Although successor commitment toward family business has been identified as a key desirable attribute, commitment has been treated as a unidimensional construct in family business research. Drawing on the organizational commitment literature, we propose four bases
of successor commitment to family firm—affective (based on perceived desire), normative
(based on perceived sense of obligation), calculative (based on perceived opportunity costs
involved), and imperative (based on perceived need). A model of antecedents and expected
behavioral outcomes of each of these bases of commitment is developed. Related propositions are presented, as are the contributions to the literature, research and practical
implications.
F
amily members often play a critical role in the creation and survival of new ventures (Aldrich & Cliff, 2003; Astrachan, Zahra, & Sharma, 2003; Learned, 1995). The
combination of patient financial capital, social networks, and human capital provided by
these members increases the probability of survival of new ventures and helps to sustain
the business during poor economic times (Sirmon & Hitt, 2003; Stewart, 2003). However,
not all family members are equally qualified or competent to make a positive contribution to their firms. Perhaps the lack in competence is compensated by their dedication
and commitment toward their firms (Aldrich & Langton, 1998). In this article, we explore
the construct of commitment in the context of next-generation family members.
Research directed toward understanding desirable successor attributes suggests that
it is crucial for these family members to be committed to their business (e.g., Chrisman,
Chua, & Sharma, 1998; Deloitte & Touche, 1999; Handler, 1989; Sharma & Rao, 2000).
Committed family members are more likely to pursue a career in their family firm, be
cooperative in performing their role in the leadership transition, and be satisfied with the
succession process (Dyck, Mauws, Starke, & Mischke, 2002; Handler, 1989; Sharma,
1997). Based on these findings, researchers have sought ways to assess and encourage
next-generation family members’ commitment toward the family business (e.g., Keating
& Little, 1997; Gilding, 2000).
Please send all correspondence to: Pramodita Sharma at [email protected].
January, 2005
13
Despite its recognized importance, there is a dearth of systematic research on nextgeneration family members’ commitment toward their family firms. The family business
literature has treated commitment as a unidimensional construct, with no research
directed to understand the potential differences in its nature or strength. Many questions
remain unaddressed. For example: Are all next-generation family members, who decide
to pursue a career in their family firms, equally committed to these firms? If not, what
underlying bases or mind-sets drive the nature and extent of commitment of these family
members? What factors influence the different mind-sets? What are the behavioral and
performance outcomes of different levels of commitment? This article addresses these
questions.
In contrast to the family business literature, the construct of commitment has received
significant research attention in the organizational behavior literature (e.g., McGee &
Ford, 1987; Meyer & Allen, 1991; Morrow, 1983; Reichers, 1985). After a thorough
review of this literature, Meyer and Herscovitch (2001) defined commitment as a force
experienced as a frame of mind or psychological state that compels an individual toward
a course of action of relevance to one or more targets. Scholars distinguish between the
various targets (foci) and mind-sets (bases) of commitment (e.g., Becker, 1992). Whereas
foci are the entities to which an individual is attached, bases are the motives that engender attachment (Becker, 1992). Meyer and Herscovitch (2001) identified three bases of
commitments rooted in the mind-sets of desire, obligation, and opportunity costs.
Although the organizational commitment literature has made significant progress
toward distinguishing the mind-sets guiding commitment, it continues to struggle along
the following dimensions: (i) finding ways to meaningfully distinguish between commitment based on the mind-sets of desire and obligation, (ii) whether commitment based
on the mind-set of opportunity costs is a uni- or multidimensional construct, and (iii)
to investigate the antecedent factors that lead to each type of commitment (Meyer &
Herscovitch, 2001; Reichers, 1985). In order to gain an understanding of these issues,
scholars urge for a greater need to focus on the nature of the organization in studies on
commitment. For example, Reichers (1985) stated that, “because it is the organization
that is presumed to be the focus of the individual’s commitment, attention to the nature
of the organization seems warranted” (p. 469). In response to such calls, we focus on one
particular form of business organization—the family firm. In particular, we seek to understand the attitudes that compel next-generation members of family-owned businesses to
pursue a career in their family firms. In so doing, we are able to shed some light on the
issues that have been a struggle for the organizational commitment literature.
Drawing on previous research directed toward understanding successors’ perceptions
on the succession process in family firms (e.g., Handler, 1989; Millar, 1995; Sharma
1997), the next section presents examples of four family members who decide to pursue
careers in their family firms. These quotes are indicative of the different mind-sets that
form the basis of their commitment to join their family firms. Next, we draw from the
organizational commitment literature to distinguish between the varying shades of commitment based on these prevailing mind-sets. The antecedents and consequences of each
basis of commitment are discussed and related propositions are presented. The research
and practical implications of these ideas are discussed in the last section.
Identical Focal Behavior, Different Compelling Reasons
In the case of family firm successors, the target of their action is the family business.
The course of action or “focal behavior” that these family members feel compelled to
14
ENTREPRENEURSHIP THEORY and PRACTICE
engage in is to pursue a career in their family business. Despite sharing a common focal
behavior, their reasons for joining their family firms can vary (e.g., Dumas et al., 1995).
The following statements made by four family firm successors during interviews directed
toward understanding their perspectives on the succession process in their firms provide
a glimpse of the differing mind-sets leading to their decision to take up a career in their
family firms (Handler, 1989; Sharma, 1997).
I’m one of the luckiest guys to come out of the University because I haven’t been
slotted into a specific job. We have an item that we manufacture from scratch, we
warehouse it, we wholesale it, and we retail it. I see the business from every angle
and I’m involved in it from every angle. It’s kind of neat to be able to do that. . . . I
love being part of my family business. (Tim in Sharma, 1997, p. 130).
I felt touched; I felt needed, but I felt uncertain that this (moving to the family
business) was a good move. . . . He (my father) said that the most important thing
right now is for you as a Stillman is to be visible here because your sister is out.
. . . we need another family member here. And so with that kind of plea I had no choice
in my mind. I couldn’t let the family down. So I dropped everything I was doing and
. . . I just went the next day and started working. (Polly in Handler 1989, p. 117).
At that point we really didn’t know what her (wife’s) involvement was from
a shareholders standpoint. And what we found out was she was heavily involved
to the point where it dwarfed what we were doing personally and all of a sudden
it did change our perspective. . . . It sort of changed our outlook on it (their family
business) . . . that is when we decided we cannot pass this up. (Rob in Sharma, 1997:
131).
I was always afraid of change (working outside of family business). I’ll stick it
out . . . I really think, in a way, being so cowardly. I’ve really been lucky; I’ve done
as well as I have so far. . . . It could have been a lot worse. (Bob in Handler 1989,
p. 114).
Tim joined the business because it offered the task variety and job satisfaction that
he desired and valued. Polly, on the other hand, had made a decision to work elsewhere
until her father indicated that she was needed in the family business. Because of her
father’s request, she felt obligated to join the family firm. Rob and his wife decided to
pursue careers in his in-laws’ firm only after realizing the extent of their ownership stake
in the business, their perceived value of this stake, and the related opportunity cost of not
pursuing careers with the firm. Finally, Bob’s decision to pursue a career in his family
firm was based on his perceived dependence on the firm and lack of confidence in his
ability to pursue a career outside this firm. He perceived the family firm as a safe career
haven.
Although all four of these next-generation family members decided to join their
family businesses, thereby exhibiting the identical focal behavior, the bases or compelling
reasons for their behavior differed considerably. It is quite possible that their subsequent
behaviors in relation to the family business will vary too, having implications for their
effectiveness and for firm performance (cf. Morrison, 1994). For example, it is unclear
whether all these individuals will pursue long-term careers in these firms, or whether each
will exert the same amount of discretionary efforts to ensure the success of the firm. On
this basis, it may be premature to suggest that commitment to pursuing a career in the
family business is desirable without first exploring the nature of that commitment and its
implications for the behavior of next-generation family members.
Drawing from the organizational commitment literature, the next section systematically identifies the different mind-sets that prompt next-generation family members to
January, 2005
15
pursue careers with their family firms. This, in turn, enables us to distinguish between
four different types or bases of family business successor commitment.
Multiple Shades of Commitment
All four successors, whose statements were shared in the previous section, decided
to pursue careers with their respective family business, thus displaying the identical focal
behavior. However, the mind-set that helped to shape the behavior of each individual is
quite distinct and varied. These mind-sets reflect the following types of commitments
(cf. Meyer & Allen, 1991):
Affective Commitment. Affective commitment is based on an individual’s “emotional
attachment to, identification with, and involvement in the organization” (Meyer & Allen,
1991). Thus, affective commitment is characterized by a desire to follow a course of
action of relevance to the target. An individual with a high level of affective commitment
to an organization portrays a strong belief in, acceptance of and an excitement about the
organization’s goals. Such individuals exhibit a strong desire to contribute to these goals,
as there is a perception of alignment between organizational and individual goals. Such
alignment, in turn, leads to a belief that the career aspirations of an individual can be satisfied in the context of the organization.
The relationship of these individuals with the organization is perceived as being based
on an open-ended exchange rather than a narrowly focused transactional contract
(Morrison, 1994). Drawing from political philosophy, Van Dyne, Graham, and Dienesch
(1994) described such relationships as “covenantal” as they are characterized by mutual
trust, shared values, and the pursuit of common ends that are not specifiable in advance.
These individuals define their job obligations in a broad and flexible manner (Morrison,
1994) and tend to be confident in their ability to make a positive contribution to the
organization.
Of the four successors whose statements were shared in the previous section, it was
only Tim who joined his family business out of desire, thereby exhibiting affective commitment to pursuing a career in his family’s business. He seems to value the diversity of
tasks and experiences that a career in his family business offers, clearly identifies with
the business, and is confident in his ability to contribute to every aspect of it.
The typical usage of the term “commitment” in the family business literature is consistent with the definition of affective commitment as used in the organizational commitment literature. For example, Handler (1989) stated that commitment to family
business perpetuation occurs when the family values the business and is willing to work
together to ensure its future. This family value translates into the family’s operating norms
and is practiced through the family members’ sharing, helping, and contributing within
the context of the business (p. 171).
The following statement by 20 year old Mitchell, a next-generation family member
who was interviewed by Handler (1989, p. 171), is indicative of the current usage of the
term “commitment” in the family business literature. It refers to affective commitment
that is based on a strong identification with and emotional attachment to the business,
combined with a desire to contribute.
You’re contributing to the family; you’re helping to reach a goal, you’re getting something done that needs to be done. You can see the progress on the work that you’re
doing, which is always nice when you’re doing work. But I think the underlying thing
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ENTREPRENEURSHIP THEORY and PRACTICE
is that it’s our business. That is what we do; this is something that my father does.
This kind of attitude or thought process is the main thing that made me work for him
more and work hard. (Italics added).
As suggested earlier and discussed in more detail below, there can be other reasons
that compel next-generation family members to pursue careers in their family firms.
Normative Commitment. Normative commitment is based on an individual’s feeling of
obligation to pursue a course of action of relevance to one or more targets (Meyer &
Herscovitch, 2001; Morrison, 1994). In the case of organizational commitment, an individual with high levels of normative commitment would feel obligated to remain with
the organization (cf. Meyer & Allen, 1991), though they may not perceive this negatively.
Rather, they may accept the influencing force and wish to establish and maintain satisfying relationships. As with affective commitment, the focal behavior exhibited in the
case of normative commitment is a decision to pursue a career in the business. However,
unlike affective commitment, the push factor is an experienced obligation to do so rather
than an intrinsic desire to engage in the behavior.
Polly, whose statement was shared in the last section, provides an example of a nextgeneration family member’s normative commitment to pursue a career in the family firm.
She joined the business at the request of her father. She noted that, although she was not
convinced that it was a good decision for her to join her father’s business, she felt
“touched” and “needed” and unable to “let the family down.” Another family business
successor, interviewed by Millar (1995), voiced similar reasons for joining his father’s
business:
I had finished university in 1977 and went to work for . . . (a large multinational firm)
for four years. Basically my father came to me and said if you don’t get in and help
out with this thing (family business), he was just going to unload it because it turned
into too much to bear. . . . My father was getting on in age and I guess he felt that if
he didn’t have me in there, he would just unload the whole thing. Why go through
all this if there is no interest within your own family . . . to see the thing through. So
basically, we had a meeting prior to Christmas 1980 and I made my decision pretty
much over the Christmas time frame, and joined . . . (the family business) in March
of 1981. (Tim in Millar, 1995, pp. 2–3).
Like Polly, Tim felt a sense of obligation toward his parents and their business, which
in turn, prompted his decision to join his family business.
Although the organizational commitment literature struggles with the question of
“whether affective and normative are truly distinguishable forms of commitment” (Meyer
& Herscovitch, 2001, p. 305), the close interaction of kinship ties in family firms provides a ripe context for distinguishing between these two forms of commitment (Stewart,
2003). Whereas affective commitment is motivated by a desire to contribute or a sense
of “wanting to” pursue a focal behavior, the foremost motivator in normative commitment is a feeling of obligation or a sense of “ought to” behave in a certain manner. This
sense of obligation may be relatively difficult to find in nonblood related employeremployee relationships. However, it is quite prevalent in family firms as a sense of duty
or obligation toward the family plays a key role in the career decisions of family
members.
Continuance Commitment. Continuance commitment is based on an individual’s
awareness of the costs associated with leaving an organization (Meyer & Allen, 1991).
January, 2005
17
This type of commitment is based on the “cost-avoidance” mind-set. There is some disagreement concerning whether continuance commitment is a uni- or multidimensional
construct (McGee & Ford, 1987; Meyer & Herscovitch, 2001). Whereas some studies
(e.g., Dunham, Grube, & Castenada, 1994; Ko, Price, & Mueller, 1997) suggest that continuance commitment is unidimensional, others provide evidence for the presence of two
dimensions (e.g., McGee & Ford, 1987; Meyer, Allen, & Gellatly, 1990). One dimension
reflects perceived sacrifices or costs associated with leaving. The second dimension is
the recognition of a lack of alternative employment opportunities.
The statements of family firm successors presented in the previous section suggest
that both dimensions of continuance commitment influence successors’ commitment to
pursuing careers in the family business. Rob and his wife became interested in joining
his wife’s family business only after learning the value of it and realizing the significant
opportunity cost involved in not pursuing this course of action. Such calculative commitment is based on perceptions of the cost involved with or the threatened loss of investments or value associated with not engaging in a particular behavior (Meyer &
Herscovitch, 2001). In family firms, these are often investments that are built up over
time and are not transferable to other settings. Habbershon and Williams (1999) refer to
such unique competencies as the “familiness” of a firm. Thus, individuals perceive that
remaining in the family business is the best course of action to ensure their claim to the
accumulated investments is retained. In the case of Rob and his wife, the decision to
pursue careers in the family business was not based on an overarching feeling of “wanting
to” (as would be the case in affective commitment) or “ought to” (as in normative commitment). Rather, the primary mind-set guiding their behavior was a feeling of “having
to” and the perceived cost of foregoing stakeholder claim or value had they chosen not
to join the family firm.
Contrary to Rob and his wife, Bob’s reasoning for joining his family’s firm was based
on his self-doubt and uncertainty concerning his ability to successfully work outside this
business. His comments (shared in the previous section) provide a strong sense of his
feeling a “need to” pursue a career in his family business. Evidence of such uncertainty
concerning one’s abilities has been noted amongst family firm successors. These sentiments are noted in another successor’s reflections shared by Handler (1989):
I couldn’t ask for a better job than I’ve got. Where else can a 33 year old come and
run a business with 900 employees? And I always am a little bit concerned about
whether I would have been able to have succeeded and achieved outside of the
family’s environment. There’s no doubt about it. That’s always something that I think
most people in family businesses think about. Whether they believe they would have
been as successful outside (Ted in Handler 1989, p. 122).
Handler observed that, although Ted appears to feel happy about his decision to join
his family firm, there also appear to be “twinges of doubt about his ability outside the
family environment” (Handler, 1989, p. 121). Vinton (1998) also noted that young heirs
who leapfrog nonfamily employees to get coveted positions in family firms tend to experience self-doubt. These individuals feel guilty for their positions being the result of their
bloodlines and wonder whether they could succeed outside the protected family business
environment (Vinton, 1998). In order to clearly distinguish this type of commitment from
that based on the mind-set of cost avoidance, we label this dependence-based commitment imperative commitment.
Although both calculative and imperative commitment may be considered cost- or
constraint-based forms of commitment that result from the perceived lack of better opportunities available outside the firm, they differ in the following way. Calculative commit18
ENTREPRENEURSHIP THEORY and PRACTICE
ment is a consequence of a perception that remaining in the family business is the best
of a number of attractive opportunities available, whereas imperative commitment is
based on a perception that remaining in the family business is the only alternative, or the
least bad of a number of unattractive alternatives. In other words, calculative commitment is based on a belief that pursuing an alternate course of action will result in loss of
investments, whereas imperative commitment is based on the perception that there is no
alternative course of action that is available.
In summary, we suggest that successors’ decision to pursue careers in their family
business can be influenced by four distinct mind-sets, revealing the following four shades
of commitment:
Affective commitment is based on a strong belief in and acceptance of the organization’s goals, combined with a desire to contribute to these goals, and the confidence
in one’s ability to do so. In essence, the successor “wants to” pursue such a career.
Normative commitment is based on feelings of obligation to pursue a career in
the family business. By pursuing a career with the family firm, the successor attempts
to foster and maintain good relationships with the senior generation. In short, successors with high levels of normative commitment feel that they “ought to” pursue
such a career.
Calculative commitment is based on successors’ perceptions of substantial opportunity costs and threatened loss of investments or value if they do not pursue a career
in the family business. Successors with high levels of calculative commitment feel
that they “have to” pursue such a career.
Imperative commitment is based on a feeling of self-doubt and uncertainty of the
ability to successfully pursue a career outside the family business. Individuals with
high levels of imperative commitment perceive that they lack alternatives to a career
in the family business. The underlying mind-set in this case is a “need to” pursue
such a career.
Successor Commitment: Antecedents and Consequences
Having presented the four bases of commitment, each guided by a different mindset, but all leading to the next-generation family members’ decision to pursue careers in
their family firms, we now turn to a discussion of antecedents of each base of commitment and a consideration of the potentially different behavioral consequences. A proposed model of these antecedents and consequences is depicted in Figure 1.
Antecedents of the Four Types of Successor Commitment
Affective Commitment. The underlying mind-set in the case of affective commitment is
a desire to pursue a focal behavior. Individuals can experience this mind-set when they
perceive an alignment between: (a) identity of self and that of an organization, and (b)
career interests and opportunities available in the organization. When such alignments
are perceived, individuals become involved in, and recognize the value-relevance of pursuing a career in the organization, thereby exhibiting affective commitment. Each of the
antecedent factors is elaborated below:
(a) Identity alignment: Social identity theory (Tajfel & Turner, 1985) suggests that
individuals classify themselves and others into social categories, and have multiple identities (e.g., brother, manager, church member). When there is an alignment of two or more
January, 2005
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Figure 1
Four Bases of Family Business Successor Commitment: Antecedents and
Expected Outcomes
a. Identity alignment
a. Familial norms wrt
gender & birth-order
Affective
Commitment
“Desire Based”
P2a, b
P3a, b
b. Social costs
a. Exposure to
alternate career
paths
b. Perceived lack of
marketable skills
P5
P6b
b. Institutionalization
of norms
a. Financial costs
P6a
P1a, b
b. Career interest
alignment
P4a, b
Normative
Commitment
“Obligation
based”
Calculative
Commitment
“Opportunity
cost based”
Imperative
Commitment
“Need based”
P5
P5
Focal Behavior
“Next-generation’s
decision to pursue
career in family
business”
Discretionary
behavior
“Exerting efforts
beyond the call of
duty”
P6c
P5
P6d
identities, a strong feeling of pull toward the focal entity is experienced. Conversely, if
the multiple identities or values associated with each are sufficiently distinct, feelings of
“cognitive dissonance” or anxiety are experienced as the identities clash (cf. Festinger,
1957). According to Ashforth and Mael (1989), individuals who identify with an organization see themselves as personifying the organization. In other words, their selfidentity is aligned with the organization, leading to a belief in the organization’s goals
and a desire to contribute toward the achievement of these goals.
In the context of family firms, many family members have been found to derive their
sense of self and identity from their firms (Rosenblatt, de Mik, Anderson, & Johnson,
1985). The family business constitutes an important center of activity in the lives of
family members, many of whom use the firm to define their place in their community
and the world at large (McGivern, 1978). Members of the senior generation in family
firms have been found to communicate, both in a verbal and nonverbal manner, their
pride in, attachment to, and a sense of satisfaction from having pursued a career in their
family business (Levinson, 1971). Such behavioral modeling by the senior generation
can have a strong influence on the next generation’s sense of pride and identity with the
family firm.
Conversely, if members of the next generation identify more strongly with an institution other than their family or family firm, they are likely to experience a lack of
convergence of work and family roles (Lobel, 1991) and not have the desire to pursue a
career in their family firm. Thus, to the extent the next generations’ sense of self is aligned
with their family firms, we can expect them to exhibit higher levels of affective commitment. It follows that,
20
ENTREPRENEURSHIP THEORY and PRACTICE
P1a: Family business successors will exhibit higher levels of affective commitment
(mind-set of desire) to pursuing a career within the family business when their
individual identity is strongly aligned with their family firm.
(b) Career interest alignment: The theory underlying the multiple commitments literature suggests that an individual may simultaneously feel attached to different entities
(e.g., Morrow, 1983; Reichers, 1985). Wiener and Vardi (1980) provided empirical
support for the simultaneous existence of career, job, and organizational commitment, as
well as, potential conflicts among these different foci. Thus, next-generation family
members’ career interests and values may either be aligned with or discrepant from their
family firms. Research on family business successors has indicated that, when they perceive a fit between their career interests and opportunities available in their family firm,
these individuals exhibit a keen desire to pursue a career in these firms and devote their
energies to making a positive contribution to it (e.g., Handler, 1989; Sharma, 1997). In
other words, positive outcomes have been observed when these family members perceive
an alignment between their career interests and opportunities available for them in their
family firms. These individuals also have a propensity for putting in extra effort that goes
beyond the call of duty. From this reasoning, it follows that,
P1b: Family business successors will exhibit higher levels of affective commitment
(mind-set of desire) to pursuing a career within the family business when they
perceive that their career interests are aligned with opportunities afforded to
them by their family business.
Normative Commitment. This form of commitment is based on a mind-set of obligation
or a feeling that an individual “ought to” pursue a particular course of action. In the organizational commitment literature, it refers to a sense of loyalty to an organization and an
internalized belief that loyalty is important (Morrison, 1994). According to Meyer and
Herscovitch (2001), this mind-set develops as a result of the internalization of norms
through socialization. In the context of family firms, socialization processes are guided
by the prevailing family norms regarding the expected roles of family members, particularly with respect to gender and birth-order, within their firm (Todd, 1985), and the
extent to which these norms are ingrained and institutionalized in a family. These
processes, in turn, influence the extent of obligation that next generation family members
may feel toward their family firm. Thus, two factors that might be antecedents to normative commitment are: (a) familial norms related to gender and birth-order, and (b) institutionalization of norms.
(a) Familial norms related to gender and birth-order: The significant influence of
the prevailing family beliefs on an individual’s attitudes, values, and behaviors considered acceptable or unacceptable has received extensive research attention (e.g., Asakawa,
2001; Barling, Kelloway, & Bremerman, 1991). When there is widespread familial acceptance of the expected role of family members in a family business based on their gender
and birth-order, such practices come to be accepted as “right” or “acceptable” way of
doing things. These norms may require one or more members of the next generation to
pursue a career in their family firm and assume its leadership.
There may be significant variation in the norms accepted by different families (Todd,
1985). For example, the practice of primogeniture, where the parental estate is passed on
to the eldest son, who is expected to take over the leadership role, is broadly recognized
and remains a popular mode of inter-generational leadership transfer in many family firms
(Todd, 1985). In other instances, the norm of co-parcenary prevails, which entails an
equal division of the parental estate among all male descendents (Chau, 1991). In these
January, 2005
21
cases, all male members are expected to contribute to the firm. In still other cases, families may be guided by the norms of equality amongst siblings, with senior generation
family members expecting all next-generation family members to actively participate and
benefit from their family business (Todd, 1985). Finally, families for whom liberty and
independence across generations is the guiding norm may not expect any of the nextgeneration family members to pursue a career in their family firms (Todd, 1985). In such
cases, the firm is treated as a career choice of one generation but is not expected to be
carried forward into the future generations.
The following comment from Larry, who is the eldest of four siblings, indicates how
prevailing family norms influence next-generation family members’ career decisions.
Larry took over the leadership of the family business from his father.
I felt that I had that option communicated to me by my father . . . since I was four
years old. . . . I always felt that it was reasonably clear that it (the family firm) was
there in a more old fashioned sense to the eldest in a preference to the others. I didn’t
really have an assessment as to whether that was fair or not but I always felt that.
And whether that was the way it was meant to be communicated or not, I don’t know.
But I always felt that was the way it was communicated (Larry in Millar, 1995a,
p. 6).
As is evident from this statement, familial norms strongly influence the socialization
processes in family firms and the career choice made by next-generation family members.
Those expected to assume the leadership of their firms feel a strong sense of reciprocity
and an obligation toward maintaining the accepted norms and family traditions. It follows
that,
P2a: Family business successors will exhibit high levels of normative commitment
(mind-set of obligation) to pursuing a career within the family business when
doing so is consistent with the prevailing familial norms regarding their
expected role in the business based on their gender and/or birth-order.
(b) Institutionalization of norms: Although some family members may unquestioningly accept the prevailing norms, others may find them frustrating and unfair, especially
if they are relegated to positions they dislike. This could occur in the case of either a
“chosen heir” who may be reluctant or uninterested in taking over the leadership of the
firm, or younger offspring who seek leadership roles where such roles are determined by
the prevailing norms of primogeniture (cf. Barnes, 1988).
Although next-generation family members may disagree with and feel a need to “disembed” from the prevailing cultural norms, such a task carries heavy costs in lost legitimation and risks of nonconformity (Stewart, 1990, 2003). If the business has been in the
family for multiple generations, and the practice of who takes over in each generational
transition is well established and institutionalized, it becomes even more difficult to
go against the established traditions and accepted roles. In these instances, the nextgeneration family members are likely to feel obliged and succumb to the pressures of
the prevailing familial norms when making career decisions related to the family firm.
It follows that,
P2b: Family business successors will exhibit high levels of normative commitment
(mind-set of obligation) to pursuing a career within the family business when
the expected role in the business based on gender and/or birth-order, has been
followed for multiple generations in their family business.
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ENTREPRENEURSHIP THEORY and PRACTICE
Calculative Commitment. Calculative commitment develops when individuals perceive
that they will lose a valued investment or specific rewards if they do not pursue a particular course of action (cf. Meyer & Herscovitch, 2001). Next-generation family
members are certainly not bereft of self-serving behaviors (Schulze et al., 2001; Stewart,
2003). For some, the decision to pursue a career in their family firm may be guided by
their perceptions of the financial and/or social opportunity costs involved for not doing
so. Each of these antecedent factors is discussed below.
(a) Financial costs: Research in the behavioral economics literature has repeatedly
revealed that, in comparison to an opportunity to acquire an object, people value dearly
what they already possess or own (Issacharoff, 1998; Kahneman, Knetsch, & Thaler,
1990; Thaler, 1980). Labeled as the “endowment effect,” this propensity for possessiveness for an object and the perception of its value has been found to increase with the
duration of ownership and the amount of sunk costs incurred over time (Issacharoff, 1998;
Knetsch, 1989).
In the context of family firms, family members often have property rights accorded
to them based on their position within the family (Schulze et al., 2001; Ward, 1987). As
the junior-generation family members are born into these rights to the family business,
the endowment effect theory would suggest that many of these members would perceive
the business to be a valuable asset due to the duration of ownership and the family’s sunk
costs in the business (Shepherd & Zacharakis, 2000). It is quite possible that these individuals would perceive losing their status and/or the value of their investment if they did
not pursue employment in the family business.
Family has been found to be an important source of capital for new venture start-ups
(e.g., Astrachan et al., 2003; Learned, 1995). Familial ties infused with norms of reciprocity have been found to act as group insurance against the failure of new ventures
(Stewart, 2003). Next-generation family members may perceive that it is important to
pursue a career in their family firms to ensure their rights to this capital or guard against
the future failure of their firm.
Various strategies have been used to retain family labor within the firm. For example,
family members may be paid higher than their market value or earning power (Burkart,
Panunzi, & Shleifer, 2003; Leyton, 1970). This practice encourages dependence of these
family members on the family firm as they get accustomed to a standard of living that
they cannot support by pursuing a career outside the boundaries of their family firm.
Stewart (2003) referred to this strategy as a “golden handcuff.” Regardless of the tactics
used to tie next-generation family members into pursuing a career in their family firms,
this discussion leads us to the following proposition:
P3a: Family business successors will exhibit higher levels of calculative commitment (mind-set of have to) to pursuing a career within the family business when
they perceive their family business to be of significant financial value.
(b) Social costs: Of course, it is not only economic investments in the business that
may be lost by not pursuing a career in the family business. Successful family firms can
have significant accumulated wealth and potential for providing nonpecuniary benefits
to family members, such as participation in and ability to influence social, political, and
cultural events (Burkart et al., 2003; Demsetz & Lehn, 1995). Next-generation family
members, therefore, may also fear the loss of investments that are social in nature.
Significant research has been directed toward understanding social capital and its positive role in organizations and the success of an individual’s career (e.g., Bolino, Turnley,
& Bloodgood, 2002; Lin, 2001). Defined as the “sum of actual and potential resources
January, 2005
23
embedded within, available through, and derived from the network” (Nahapiet &
Ghoshal, 1998, p. 243), social capital is a highly important resource that provides information, resources, and access to markets, among other things (Sirmon & Hitt, 2003).
Derived from relationships among individuals and organizations, it is created and sustained over time through long-term relationships (cf. Bolino et al., 2002). One of the key
benefits of family firms is the possibility of the transfer of relationships or social capital
across generations (Stewart, 2003). As this capital is important for the successful operation of existing firms or the creation of new ventures, pursuing a career in the family firm
may be perceived as an important step to ensure continued support from the social networks of the previous generation and built-up social capital. Thus,
P3b: Family business successors will exhibit higher levels of calculative commitment (mind-set of have to) to pursuing a career within the family business when
they perceive significant social costs of not doing so.
Imperative Commitment. Imperative commitment develops when a next-generation
family member feels bound to the business by the perception of a lack of career alternatives. Carson, Carson, and Bedeian (1995) use the term “occupational entrenchment” to
describe such factors that bind an individual to a job or career choice. In the context of
family firms, the perception of not having career options available for them outside their
family firm can be caused by their: (a) limited exposure to alternate career paths, and/or
(b) perceived lack of marketable skills. We elaborate on each of these below.
(a) Limited exposure to alternate career paths. Social learning theory (Bandura,
1977) suggests that parents’ employment has a strong influence on the occupational
choices of their children (e.g., Barling, 1990). Children, particularly sons, have been
found to follow the occupational path of their fathers (Mortimer, Lorence, & Kumka,
1986). If next-generation family members have only been exposed to career paths within
their family firms through their parents’ employment and those in their immediate
domain, they will find it easier to adopt such a career as it lies within their zone of
comfort. In contrast, careers outside the business may appear rife with uncertainties
involving extensive “liabilities of newness” (Stinchcombe, 1965).
Evidence of the impact of social learning on career choices of younger generation
family members can be found in the following statement made by 20 year old David in
Handler (1989, p. 108):
I find that . . . all my friends. . . . regardless of if there’s a family business or whatever . . . want to do whatever their family wants to do just by virtue of the fact that
that’s what they know. I could never see myself as being a doctor. I have one relative that’s a doctor and none of my parents’ friends are doctors . . . Business is something that I’ve grown up with, and it seems totally normal to me as a way of life and
as what people do.
To the extent that family members have limited exposure to alternate careers and
believe that they have few alternatives outside of the family business, one would expect
these individuals to feel a “need” to retain employment with the family business.
P4a: Family business successors with a limited exposure to alternate career paths
outside their family business will exhibit higher levels of imperative commitment (mind-set of need to) to pursuing a career within the family business.
(b) Perceived lack of marketable skills. Family businesses act as convenient summer
or part-time employment locations for younger family members in their teenage and
24
ENTREPRENEURSHIP THEORY and PRACTICE
formative years. Although family business leaders report that involving family members
in their business complicates their jobs (Ford & McLaughlin, 1986), they encourage such
participation (Mass Mutual, 1995), as it allows them to “keep an eye on their youngsters”
while simultaneously satisfying their offsprings’ desire to take up employment. Although
initiated by convenience, such opportunities introduce junior-generation family members
to the prevailing culture of their family firms (Dyer, 1986). Moreover, they gain firmspecific knowledge (Cannela, Jr. & Shen, 2001). Over time, their learning curves shorten
and familiarity with the business increases. As their experience with the firm increases,
these family members may come to believe that the family firm is the only feasible outlet
for their particular skill sets. Although next-generations’ perceptions may or may not
accurately reflect the reality, the actions they pursue and displayed behaviors are based
on them (Habbershon & Astrachan, 1997; Weick, 1979). Thus, although the skills possessed by next-generation family members may be transferable outside the context of
family firms, if they do not perceive this to be the case, they will perceive that alternative careers are not available to them and find themselves bound to the firm by imperative commitment.
Dispositional factors might also contribute to the perception that potential successors
lack externally marketable skills (Blau, 2001). In a study of 232 employees in a variety
of occupations, Irving, Coleman, and Cooper (1997) found continuance commitment to
be positively related to external locus of control. That is, employees who believed they
had little control over their environment were more likely to experience a feeling of being
stuck in their current occupation (Luthans, Baack, & Taylor, 1987). Based on these
factors, it follows that,
P4b: Family business successors who perceive they lack externally marketable skills
will exhibit higher levels of imperative commitment (mind-set of need to) to
pursuing a career within the family business.
Consequences of Four Types of Successor Commitment:
In addition to developing in different ways, the bases of commitment delineated in
this article also result in different consequences. We now examine the expected outcomes
of affective, normative, calculative, and imperative commitment in terms of both focal
(pursuing a career with the family business) and discretionary behaviors (efforts beyond
the call of duty) (Organ, 1988). It is important to make this distinction because, although
all forms of commitment regardless of their basis should be related to the propensity to
pursue the focal behavior, their effects on discretionary behaviors will likely demonstrate
more variability. Furthermore, research has suggested that it is these discretionary
behaviors that influence the effectiveness and performance of successors in family firm
(Rosenblatt et al., 1985; Van Dyne et al., 1994).
Commitment Types and Focal Behavior. Regardless of the mind-set that forms the basis
of their commitment, by its very nature, committed next-generation members will be
compelled to join their family firms. However, the strength of the commitment-behavior
relationship will likely vary as a function of the basis of that commitment. Thus, the probability of pursuing a long-term career with the family firm might differ depending on the
nature of the next-generation family members’ commitment.
Recent meta-analytic research by Meyer, Stanley, Herscovitch, and Topolnytsky
(2002) suggests that although commitment regardless of its basis is associated with lower
turnover, affective organizational commitment is most strongly (negatively) related to
January, 2005
25
turnover intentions, followed by normative commitment, and then continuance commitment. Further examination of the subcomponents of continuance commitment revealed
that the sacrifice (investments) subcomponent (or, in our terms, calculative commitment)
was more strongly related to turnover intentions than was the lack of alternatives subcomponent (or imperative commitment).
On the basis of these findings, we would expect that affective commitment would be
more strongly related to the successors’ focal behavior of pursuing a long-term career in
the family business, than will normative, calculative, and imperative forms of commitment. However, a change in antecedent factors that produce a particular base of commitment will cause a ripple effect on the glue holding the next-generation family member
to the family firm. This indicates a temporal dimension of commitment as the ebb and
flow of factors changes over time. Although we believe this to be an important topic for
future study, it is beyond the scope of this article as we focus on developing a basic model
of the antecedents and consequences of different bases of next-generation family
members’ commitment to pursuing a career with the family firm. Based on these arguments, we propose that,
P5: Successor commitment, regardless of the mind-set on which it is based, will be
positively related to the likelihood of pursuing a career in the family business.
Commitment Types and Discretionary Behavior. The distinction among the various
bases of commitment is not only important with respect to the commitment-focal behavior relationship, but there is reason to believe that the relations between commitment and
discretionary behaviors will also vary as a function of the basis of commitment. Terms
such as organizational citizenship (Organ, 1988), extra-role (Van Dyne & Cummings,
1990), and pro-social (Brief & Motowidlo, 1986) have been used to describe behaviors
that go above and beyond the call of duty. Organ (1990) describes such behaviors as contributions that participants choose to proffer or withhold without regard to considerations
of sanctions or formal incentives. Although not explicitly rewarded in organizations, these
discretionary behaviors are critical for effective organization functioning and firm performance (Van Dyne et al., 1994). In the case of next-generation family members who
are essentially future leaders of their family firm, discretionary behaviors that involve
“going the extra mile” have a significant influence on the firm. These individuals become
role models for other employees in the organization, thereby setting the standards for
acceptable norms of behavior within the firm.
With respect to discretionary behaviors, we expect differential effects in the relationship between the four bases of commitment and discretionary behaviors exhibited by
next-generation family members. These relationships are likely to be more pronounced
than commitment-focal behavior relations. In a study of commitment to organizational
change, Herscovitch and Meyer (2002) found that, whereas higher levels of affective and
normative commitment were associated with cooperation with and championing of the
change effort, continuance commitment was unrelated to either of these variables.
Instead, continuance commitment was only weakly related to compliance with the change
effort. These results suggest that, at least in the context of organizational change, the components of commitment relate differentially with the discretionary behaviors necessary
for successful change. Given that similar results can be found in the organizational behavior literature (Meyer et al., 2002), we expect to find differential relations between the four
bases of successor commitment and discretionary behaviors exhibited by these family
members.
26
ENTREPRENEURSHIP THEORY and PRACTICE
Affective commitment is based on a family member’s strong identification with, and
desire to contribute to, their family business. Moreover, these family members strongly
believe that they have the ability to contribute to their firm’s success. Thus, affective commitment will likely exhibit the strongest positive link with discretionary behaviors displayed by these family members of any basis of commitment.
Normative commitment is based on a sense of obligation that family members feel
toward the family and business. It is largely based on expectations that the family has
for their role in the business rather than an intrinsic desire to contribute to the firm.
Although family members with higher levels of normative commitment may conform to
the expected familial desires and norms, they are less likely than affectively committed
individuals to exert efforts beyond the call of duty due to their lack of interest alignment
with the firm and its activities. These family members are likely to view their position in
their family business as their birthright that provides them high job security. So, unless
they possess high degrees of intrinsic work ethic, their motivation toward exerting efforts
beyond their call of duty will be limited. Instead, they may try to find ways to coast
through their workdays devoting minimal time and effort to the firm and may take on the
role of “plateaued” managers (Malone & Jenster, 1992). Thus, while we expect to find
differences in the extent of discretionary behaviors exhibited by normatively committed
next generation members based on their inherent work-ethic, such behaviors will be
weaker than those displayed by affectively committed individuals.
Calculative commitment is based on successors’ perceptions of the substantial value
of the firm and feelings of self-interest to protect their claim to this value. Although some
successors may take a passive role of simply keeping a watch on their claims, others may
be motivated to ensure that the opportunity is fully exploited and the value of their claim
is maintained or increased. Thus, the former types of successors may find ways to coast
through their workdays, whereas the latter ones may participate more actively in the firm
engaging in discretionary behaviors. While we expect to find differences in the extent of
discretionary behaviors exhibited by next-generation family members who join their
family firms due to calculative commitment, such behaviors will be weaker than those
displayed by affectively committed individuals.
Imperative commitment is based on successors’ perceived dependence on the family
firm for a job. These individuals may have joined the family business because of their
inability to find employment outside the family firm. Whether based on reality or perception, these successors are less likely to effectively manage their family firms, as they
are likely to be suffering from feelings of insecurity and low self-efficacy. Moreover, they
may have sub-par abilities to effectively manage a business. Thus, we expect imperative
commitment to be the weakest basis of commitment in terms of motivating an individual to exert efforts needed to effectively manage a family firm. Based on these ideas we
propose:
P6a: Affective commitment will have the strongest positive relations with discretionary behaviors on the part of successors that lead to the effective functioning of the family business.
P6b: As compared to affective commitment, normative commitment will have
weaker relations with discretionary behaviors on the part of successors that
lead to the effective functioning of the family business.
P6c: As compared to affective commitment, calculative commitment will have
weaker relations with discretionary behaviors on the part of successors that lead
to the effective functioning of the family business.
January, 2005
27
P6d: As compared to affective commitment, imperative commitment will have very
weak or even negative relations with discretionary behaviors on the part of successors that lead to the effective functioning of the family business.
Conclusion
In this article, we set out to understand the following questions related to successors’
commitment toward their family firms: Will all next generation family members who
decide to pursue a career in their family firms be equally committed to these firms? What
underlying mind-sets drive their commitment? What are the influencing factors and consequences of different bases of commitment?
Research conducted to understand the perspectives of these family members with
regard to their succession experiences suggests that successors join their family firms for
a multitude of reasons (Handler, 1989; Sharma, 1997). Organizational commitment
research helped us to identify four different mind-sets that drive the commitment of successors. These are: affective (based on desire), normative (based on obligation), calculative (based on opportunity costs), and imperative (based on need). We proposed a model
outlining the antecedents and consequences of the different bases of successor commitment (Figure 1). We also proposed that, although the different bases of commitment result in similar commitment-focal behavior relations, they will produce varying levels of
discretionary behavior, which in turn, lead to varying levels of effectiveness and firm
performance.
Contributions: This article contributes both to the organizational commitment and
family business literatures. The organizational commitment literature has struggled to find
ways to meaningfully distinguish between affective and normative commitment, and to
understand the dimensionality of continuance commitment. The close alignment between
kinship- and market-based contracts in family firms allows for the development of greater
understanding of the differentiation between affective and normative commitment, and
also highlights the two dimensions of continuance commitment, labeled here as calculative and imperative. Whereas the organizational commitment literature has largely been
directed toward nonkinship based organizations wherein organizational membership is
nearly always voluntary (cf. Morrow, 1983), family firms are a context in which the norms
of kinship may dominate the market principles of relational exchanges (cf. Stewart,
2003). Thus, this context aids in developing clarity with respect to the dimensional issues
that have continued to confound organizational commitment researchers.
Our contributions to the family business literature are even more significant. This literature has treated “commitment” as a unidimensional construct with no effort devoted
to understanding the antecedents or behavioral consequences of different bases of commitment. This article takes the first step toward untangling the shades of successor commitment by proposing that: (a) different mind-sets can guide next-generation family
members’ decisions to pursue a career in their family firms; (b) each base of commitment
is a product of different antecedents; and (c) there are varying behavioral consequences
produced by the different bases of commitment.
Research Implications: The propositions in this article suggest four areas for future
research. First, there is clearly a need to conduct empirical studies to understand the
prevalence of each basis of successor commitment and test the model of antecedents and
consequences. For this purpose, measures will need to be developed for the variables in
the model. Measures for the different bases of commitment are well established (cf. Allen
& Meyer, 1996) and the model has been demonstrated to generalize across a variety of
28
ENTREPRENEURSHIP THEORY and PRACTICE
contexts such as commitment to organizational change (Herscovitch & Meyer, 2002),
occupational commitment (Irving et al., 1997), and customer commitment to service
providers (Bansal, Irving, & Taylor, forthcoming). However, these measures will need to
be modified for this context. Additional measures for the antecedent and outcome variables will need to be developed and validated before a test of the model can be effectively conducted.
Second, this article discusses only pure cases of commitment by proposing bivariate
relations between various components of commitment and other variables. In reality, different bases of commitment can exist simultaneously, as commitment often develops by
means of multiple motives (Meyer & Herscovitch, 2001). For example, the mind-sets of
desire and obligation can coexist, particularly in a family business context. There will be
a need to extend the proposed model to understand the interactive effects of the different bases of commitment.
Third, commitment can change over time and there is a need to develop mechanisms
to understand the effects of temporal changes in the levels of the different bases of
commitment experienced by an individual. Fourth, although we have focused here
on understanding the mind-sets underlying successors’ commitment to their family
firms, variations of this model from the perspective of other family members joining existing and new ventures should be undertaken. Such efforts will reveal the extent to which
the ideas presented in this article are generalizable and help to make the model more
robust.
Practical implications: There are both short- and long-term practical implications
of the ideas we have presented in this article. They provide an immediate challenge to
the widely held belief that successor commitment is always good for family businesses.
Instead, it is suggested that whether successors’ commitment to family business is good
or not really depends on what mind-set underlies the commitment and why this family
member decided to pursue a career in family firm.
In the longer term, once the model presented in this article is empirically tested and
further developed, we can move toward developing a commitment profile or index for all
family members. This will aid in making career decisions for next-generation family
members, succession decisions for senior-generation family members, and decisions concerning the extent to which entrepreneurs decide to involve other family members in their
ventures.
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Pramodita Sharma is a professor at the School of Business and Economics, Wilfrid Laurier University.
P. Gregory Irving is a professor at the School of Business and Economics, Wilfrid Laurier University.
An earlier version of this article received the 2002 Best Unpublished Research Paper Award from the Family
Firm Institute. We are grateful for helpful comments of Jim Chrisman, Patricia Frishkoff, Dennis Jaffe, John
Meyer, Scott Turner on earlier versions of this article. We also appreciate the funding support received from
Social Sciences and Humanities Research Council of Canada (SSHRC) for this project.
January, 2005
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