The dynamics of family controlled firms has been deeply studied for years (Auken & Van Werbel, 2006; Chirico & Nordqvist, 2010). Authors usually distinguish between advantages and disadvantages of family businesses (Chrisman, Steier, & Chua, 2006; Habbershon & Williams, 1999; Kets de Vries, 1993). These pros and cons are linked with the dynamics of the businesses and, particularly with their owners’ behavioral decisions. Moreover, family firms owners’ attitudes shape the emotional endowment of family firms, and thereby their SEW. So, emotions occupy an essential place in the family business field. In this vein, Kets de Vries (1993) cites as positive emotions of family firms the desire for firm's continuity, greater resilience in hard times, and family pride of continuity leadership, among others. On the other hand, as bad sensations of this type of firms, he mentions nepotism, confusing organization, and paternalistic rules.

Understanding SEW as the intrinsic and inextricable emotional endowment that all family businesses have, it can be considered that it is conformed by positive and no so positive emotions. Nevertheless, in the first research about this topic, SEW was conceptualized as a positive emotional endowment (Gómez Mejia et al., 2007). According to this article, SEW can be identified in family firms in a variety of related forms, such as perpetuating family name, values, control, and employment; need for belonging, affect, and intimacy; preservation of family firm social capital; ability to exercise authority; preservation of the family dynasty; continuous with the family lifestyle; the fulfillment of family obligations based on blood ties rather than on strict criteria of competence and the opportunity to be altruistic to family members. Cennamo et al. (2012) and Berrone et al. (2010) also only consider positive dimensions of SEW.

However, there are emotions and feelings that cannot be understood as positive, like stress, conflicts with nonfamily relatives, specifically brothers and sisters-in-law, siblings’ rivalry, the mixture of family and business’ problems, etc.

Regarding these “no so positive” emotional aspects, some authors have written different articles about what they call “dark side” of SEW (Kellermanns, Eddleston, & Zellweger, 2012) or about the positive and negative SEW valences (Zellweger & Dehlen, 2011).

In this regard, Kellermanns et al. (2012) argue that if family firms’ owners take SEW as the main frame of reference, they could jeopardize both firm survival and its contributions to stakeholders. They make reference to the term “valence” that was first defined by Feldman Barrett (1996) to categorize emotions, distinguishing between SEW dimensions that could be positively and negatively valenced. These authors also postulate that family control and strong family identification can cause family members a dependence feeling to the firm. Moreover, they assume that SEW dimensions with negative valences will reduce family members’ arrangement of performing proactive stakeholders engagement.

Zellweger and Dehlen (2011) also differentiate between positive and negative SEW valences in the context of firm valuation, and argue that in both cases this differentiation has consequences in the subjective valuation process that family business owners make. So they extrapolate valences to firms’ valuation processes. On the one hand, positive valence indicates that continued investing in that firm is the best option. And on the other hand, negative valence indicates a preference to leave and to sell the firm.

Miller and Le Breton-Miller (2014) make a different assumption. They argue that there are two types of SEW priorities: restricted and extended. They postulate that restricted SEW is centered in family priorities and could run counter to the firm and the interests of nonfamily stakeholders. By contrast, extended SEW would be centered on the long run and on the family, the business and on all its stakeholders at the same time.

Actually, all the above research analyzes the same issue, although distinct authors call it differently: positive and negative SEW valences (Kellermanns et al., 2012; Zellweger & Dehlen, 2011), or restricted and extended SEW (Miller & Le Breton-Miller, 2014). Indeed, they are referring to different forms of categorizing the same thing, that is, the good and not so good emotions and relations in family firms that shape SEW, and that lead to different levels of this emotional endowment.

It is possible to assume that there are no different types of SEW. It is simpler than this. There are positive emotions, situations, and relationships that lead to a major SEW, and negative ones that lead to a lower SEW. What is important is to identify what aspects or situations lead to different SEW levels. Thereby, it is necessary to distinguish between positive and negative (or no so positive) situations that can lead to higher or lower SEW.

Moreover, it is imperative to highlight that wealth could be major or lower, but not negative. Thus, SEW will always have positive values. This is easier to understand if we think in the SEW dimensions proposed by Berrone et al. (2012). If a dimension does not exist, it would take the value zero but it would not be negative.

Table 2 shows different situations in family firms that lead to different SEW levels.

It is firmly rooted that family firms pursue more nonfinancial goals than nonfamily firms (Chrisman, Chua, & Litz, 2003). Specifically, family firms pay major attention to noneconomic objectives related to the family itself (Westhead & Howorth, 2007).

This is closely related with the SEW issue, to the extent that it is supposed that a major SEW would imply a major emotional importance in the decision-making process. Thereby, it is interesting to analyze if SEW varies along time. Because if SEW changes along time, different decisions would be made depending on the importance given to the emotional component of the family firm. Some authors have dealt with the question of emotional considerations’ variations along time (Gómez Mejia et al., 2007; Westhead, 2003; Zellweger et al., 2011). So, it could be assumed that emotional perceptions, and therefore SEW, change along time.

Nevertheless, in all the articles mentioned above, there is no distinction between ownership and management, and authors mix both concepts when they talk about SEW. For example, Gómez Mejia et al. (2007) postulate that “losses in socioemotional wealth should weigh less heavily on a family firm's willingness to give up control as it moves from stage one [founding-family owned and managed firms] through stage three [extended-family owned, professionally managed firms].”

This nondifferentiation could lead to mistakes, to the extent that ownership and management might not be in the same hands. We mean that it may happen for example if the firm's ownership was in hands of the first generation, and by contrast, control was held by subsequent generations. In these cases, there will be controversial factors to determine the firm SEW, because some of them (the ones related to ownership) will increase this wealth, and others (the ones related to management) will move in the opposite direction. And conversely, that is, the firm's ownership could be in subsequent generations and the firm's control could be in the founder's hands. The main thing, in our opinion, is to consider all the different possible combinations of ownership and management.

So, SEW variations over time should be analyzed, since there might be a double perspective: ownership and management. Ownership is understood as participations’ possession and management is understood as power of leadership.

Thereby, it is quite important to make this distinction to delve deep into this issue and to clarify it. For example, Le Breton-Miller and Miller (2013) make reference to ownership and management, as different aspects. Nevertheless, they consider that founder firms are founded, owned, and run, postfounder family firms are family owned and run, and cousin consortia have dispersed family ownership and sometimes are nonfamily managed. So, these authors do not analyze the different possibilities that result from mixing different combinations of ownership and management stages.

Regarding family firms’ ownership, it had been demonstrated that first-generation family firms are more concerned with emotional goals than next generation ones (Westhead, 2003), and thereby their SEW is higher (Gómez Mejia et al., 2007). So, when the founding family controls the firm, the emotional endowment of that firm is deeper (Schulze, Lubatkin, & Dino, 2003). Stockmans et al. (2010) also postulate that when successive generations enter the family firm, businesses objectives become as important as emotional objectives, downplaying familiar considerations.

So, it has been empirically proved that SEW is related to the ownership's stage (Gómez Mejia et al., 2007). But, does SEW change with business management?

If we talk about management, we are referring to the decision-making process, and thereby to the CEO. So, it is very important to identify who the CEO is, and which his or her value perceptions are. Regarding family firm's management, Villalonga and Amit (2006) distinguish between the CEO's generation. That is, they identify founder CEOs, descendant CEOs, and external CEOs. These authors postulate that founder CEOs create value for family firms, while the other CEOs do not. Moreover, Chrisman, Chua, and Litz (2004) add that founder CEOs could pursue other than financial goals.

So, according to these authors’ postulations (Chrisman et al., 2004; Villalonga & Amit, 2006), we argue that the CEO's stage in a family firm is linked with the amount of SEW that it presents.

In short, the amount of SEW in a family firm changes along time and depends on two factors: ownership and management. Both of them influence the emotional endowment, and although their connection with SEW is very similar, they are not exactly the same. So, SEW could vary due to ownership factors and/or due to management factors, as expressed in Fig. 2. The combination of these factors might lead to very different results.

Figure 2.

SEW and different combinations of ownership and management.

(0.12MB).

Source: Own elaboration.

Starting from the idea that differences exist among family firms and family owners, heterogeneity can be assumed among family firms and also among their owners (Melin & Nordqvist, 2007). Two equal family businesses do not exist. Each family business has different behaviors and organizational characteristics (Berrone et al., 2012). Even having similar characteristics regarding profitability, leverage, target market and clients, or form of management, two family firms are completely different. This fact means that results from one family business cannot be generalized to another, as these would not be equivalent.

Therefore, we start from a heterogeneous group of companies. However, despite the discrepancies in the literature regarding the conceptualization of family firm, due to the nonexistence of a universally accepted definition of family business (Astrachan & Shanker, 2003; Astrachan, Klein, & Smyrnios, 2002; Litz, 1995), there is some unanimity in qualifying a business as familiar or nonfamiliar. Mainly, the analyzed characteristics to classify a business as a familiar one are ownership, control, and the desire of business continuity along time (Vallejo Martos, 2005).

Considering that we start from a diverse group of businesses, the challenge is even greater when once assumed that we are working with a heterogeneous group of family businesses, we move to the Socioemotional Wealth that they present. In this regard, it can be said that the SEW is an intangible element, which is not visible, but nevertheless, it is perfectly perceptible in the corporate environment and culture.

In any case, in this section, we point out which are the major challenges of the SEW approach that could be summarized in broad strokes into two: on the one hand, the different emotional endowment of each type of business and, on the other hand, the quantification of this emotional component.

Regarding different emotional endowment, as it is said by Zellweger and Dehlen (2011), different family firms have different emotional endowments, and thereby, different SEW. This can greatly hinder the creation of a standard model to analyze the emotional endowment of these businesses. In addition, individualized firm studies would have to be made because the results obtained for a business could not be extrapolated to another.

Moreover, we argue that not only SEW endowment differs between family business, but also SEW perceptions differ between family firms’ owners. This is even more complicated than the previous defiance, because it would be necessary to study owners’ perceptions, and this cannot be done but only at the individual level.

Therefore, the SEW issue in a firm could be analyzed as a whole, by observing the business culture and by surveying the CEO. While, if the owners’ perceptions would like to be analyzed in more detail, it would be necessary to study the individual behaviors and reactions of each of them.

The other big challenge that the SEW concept presents is its quantification. As it was said above, it is an abstract concept, and so its measurement is complicated.

Different proxies have been used to quantify SEW. The most common one has been the ownership stake in the hands of family members (Berrone et al., 2010; Gómez Mejia et al., 2007). The more the ownership is in family hands, the more is the influence of the family in firms’ decisions. So, these authors postulate that a major ownership would imply a major SEW. Another point of view has been considering family status as a measurement of SEW (Gómez-Mejia et al., 2010).

In this vein, Berrone et al. (2012) go beyond their peers. They distinguish between different SEW dimensions and proposed a set of items based on previous research to measure them. They add that the proposed items need to be tested and pass psychometric procedures. Thereby, the research of Berrone et al. (2012) could be the first step to empirically measure SEW directly. But what about financial quantification? It seems that it has to be assessed as an intangible asset, but nothing has been done up till now.

Summarizing, researchers have some challenges to improve this approach: different SEW for different businesses and its quantification. So, future research is needed to resolve these issues.

The main goal pursued with this article was a major comprehension of the SEW approach.

For achieving our objective, we have first analyzed the SEW approach looking for a definition of it, starting from the seminal article of Gómez Mejia et al. (2007) to the most current ones (Miller & Le Breton-Miller, 2014; Vandekerkhof et al., 2014). We have gathered the different definitions of this term. Moreover, we have suggested a more comprehensive definition of SEW, trying to conceptualize it in the most appropriate way by compiling the attributes cited in previous research.

This paper also discusses some controversial questions regarding the SEW: the differences between SEW and Emotional Value (EV), the situations that lead to a major or a lower SEW, and SEW variations along time due to ownership and management. We also discuss two aspects that constitute the main challenges of this approach.

As we have expressed in “Controversial questions related to SEW” section, we consider it necessary to distinguish between SEW and EV. The SEW is an exclusive endowment of family firms (Berrone et al., 2010). But, emotional aspects of nonfamily firms cannot be ignored. There are people working in nonfamily firms, and people have feelings and emotions. So, there would be an emotional endowment in nonfamily firms. Thereby, SEW and EV are not the same and they have to be used as different concepts.

Otherwise, the simplification that we have made about positive and negative SEW valences (Kellermanns et al., 2012; Zellweger & Dehlen, 2011) and restricted or extended SEW (Miller & Le Breton-Miller, 2014) can lead to the search of similar goals. We mean that researchers should focus on how different situations affect the socioemotional endowment of family businesses. In this way, family firms could learn how to face these situations and how to cope with them.

Furthermore, we find out the need for distinguishing between ownership and management in order to analyze SEW variations along time. In this vein, it could be interesting to develop an empirical study to analyze the effects on SEW on different combinations of control and management.

Regarding the challenges that the SEW approach presents, we cite two as follows: the different SEW endowment of family firms and its quantification. The solutions for these challenges are not easy, and they will require further research. So, for analyzing these issues, it is necessary to make individualized studies of family firms. And namely, for the SEW quantification, we think that the proposal of Berrone et al. (2012) constitutes a first step that has laid the base to further develop the empirical part of the SEW approach.

The SEW approach is relatively new and is still in its infancy, so numerous contributions have to be made to improve it. Nevertheless, by analyzing the existing literature that deals with this concept, it could be said that research is advancing in this field. As we said before, diverse knowledge areas have been related with the SEW approach: business management and business valuation, diversification, and performance, among others. So it is true that SEW has important implications and consequences for family businesses. Thereby, SEW can be considered as the most important paradigm in the family business field (Berrone et al., 2012) and more research has to be developed to improve this theory.

The aim of this paper was to delve deep into the SEW approach to achieve major knowledge of it. We also want to encourage more research regarding the controversial questions mentioned. So, the next step should be analyze empirically the polemical issues we propose.

The authors declare no conflict of interests.