McKenny, Short, Payne, & Mitchell
Presented by Aaron McKenny
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Processes, practices, and decision-making
styles of entrepreneurial firms. (Lumpkin & Dess,
1996)
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Autonomy
Competitive Aggressiveness
Innovativeness
Proactiveness
Risk Taking
Positive relationship with firm performance
(Rauch, Wiklund, Lumpkin, & Frese, 2009)
◦ Moderately strong relationship
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Increasing research on EO in small family
businesses
◦ EO DimensionsPerformance (e.g., Naldi et al., 2007)
◦ Moderation in small businesses (e.g., Casillas, Moreno,
& Barbero, 2010; Casillas & Moreno, in press)
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Little focus on large family businesses
◦ E.g., Ford, WalMart, Disney, S.C. Johnson
◦ Levels of EO (e.g., Short, Payne, Brigham, Lumpkin, &
Broberg, 2009)
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Two Studies
◦ Study 1 – EOPerformance relationship in large,
publicly-traded businesses
 Does family business status moderate?
◦ Study 2 – Configurations perspective to look for
patterns of EO dimensions
 First study to look at patterns of EO
 Compare family/non-family businesses use of patterns
 Look at performance consequences of pattern use
The moderating role of family business
status
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The characteristics of a firm that are central
to the character of the organization,
distinguish the organization from others, and
endure through time (Albert & Whetten, 1985)
Two, sometimes competing, identities in
family businesses
◦ Utilitarian Identity: Business
 Economic goals of business (Albert & Whetten, 1985)
◦ Normative Identity: Family
 Idiosyncratic goals to family (Tagiuri & Davis, 1992)
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Family has significant, ongoing influence on
normative identity (Arregle, Hitt, Sirmon, & Very, 2007)
Identity emerges from management’s
interactions with most salient stakeholders
(Scott & Lane, 2000; Mitchell, Agle, & Wood, 1997)
◦ Families have urgency, legitimacy, and power
◦ Family may be represented in management
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Competitive Aggressiveness
◦ Aggressive organizational positioning or responses
to defend against competitors, unfavorable industry
trends, and other external threats (D’Aveni, 1994;
Lumpkin & Dess, 2001; Smith, Ferrier, & Grimm, 2001)
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Family businesses are likely to respond in a
way that minimizes the total impact on both
financial and non-financial goals.
Non-family businesses would primarily
minimize the impact on the financial
performance of the company.
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Family business status moderates the
entrepreneurial orientation-performance
relationship among large, publicly-traded
companies.
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Sample
◦ S&P 500 over the years 2001-2003
 75% of the US publicly traded equity (Standard & Poor’s,
2009)
 33% are family businesses (Anderson & Reeb, 2003)
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Unit of analysis
◦ Shareholder letters
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Took three-year averages
◦ Control for year-specific idiosyncrasies
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Firm Performance
◦ Approximation of Tobin’s Q (Chung & Pruitt, 1994)
◦ Ratio of the market value of the firm to the
replacement cost of its assets
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Entrepreneurial Orientation
◦ Content analysis using DICTION 5.0 (Hart, 1990)
◦ Use dictionaries validated to measure EO (Short,
Broberg, Cogliser, & Brigham, 2010)
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Family Business Status
◦ If any member of senior management or the board
of directors was also a member of the founding
family, the company was classified as a family
business (cf., Dyer & Whetten, 2006; Short et al., 2009)
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Control Variables
◦ Firm size, in number of employees (cf. Stam & Elfring,
2008)
◦ Industry sectors (SIC Divisions A-J) (cf. De Clerq,
Sapienza, & Crijns, 2005)
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Two EO dimensions were related to
performance
◦ Competitive Aggressiveness (β=-0.14, p<0.05)
◦ Innovativeness (β=0.13, p<0.01)
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Family business status was related to
performance (β=0.25, p<0.01)
Family business status did not moderate the
EO-Performance relationship
Hypothesis 1 was not supported
Patterns of Entrepreneurial Orientation
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Strategy and Entrepreneurship Literatures
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Strategic groups (Cool & Schendel, 1987)
Generic strategies (Dess & Davis, 1984)
VC investment criteria (MacMillan, Siegel, & Narasimha, 1985)
Entrepreneurial strategy making (Dess, Lumpkin & Covin,
1997)
◦ EO, access to capital and dynamism
2005)
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(Wiklund & Shepherd,
New possibility: Dimensions of EO
◦ Related to, but vary independently (Lumpkin & Dess,
1996)
◦ Different relationships with performance (Rauch et
al., 2009)
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Family business scholars are interested in
family business performance relative to that
of non-family businesses
EO influences firm performance
◦ Patterns of EO may influence firm performance
◦ If family businesses espouse some patterns over
others, this may influence family business
performance
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Hypothesis 2: Patterns of entrepreneurial
orientation can be detected in large, publiclytraded firms.
Hypothesis 3: Family businesses exhibit
different patterns of entrepreneurial
orientation than non-family businesses.
Hypothesis 4: Performance differences exist
among the patterns of entrepreneurial
orientation.
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Same sample and unit of analysis as study 1
Cluster analysis
◦ 5 dimensions of EO (Lumpkin & Dess, 1996)
 Standardized (Z-Score) (cf., Ketchen & Shook, 1996)
◦ Two-stage clustering procedure (Ketchen & Shook,
1996)
 1. Hierarchical Agglomerative Clustering
 Percentage Change in Heterogeneity stopping rule (Hair,
Black, Babin, & Anderson, 2010).
 Ward’s Method combination procedure
 2. K-Means Clustering
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Two clusters found:
◦ First, higher on Competitive Aggressiveness,
Innovativeness, and Proactiveness
◦ Second, higher on Risk Taking and Autonomy
◦ Hypothesis 2 supported
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Higher percentage of family businesses in
first cluster
◦ Hypothesis 3 supported
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First cluster outperforms second cluster
◦ Hypothesis 4 supported
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Multiple definitions of ‘Family Business’
◦ Not all of them classify the same firms the same
way (Chrisman, Chua, & Sharma, 2005)
◦ Future research should replicate using other
measures of family business
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Shareholder letters contain impression
management rhetoric (D’Aveni & MacMillan, 1990)
◦ Most firms engage in impression management
◦ Future studies should try using other data sources
(e.g., intracompany email, training matierials,
meeting transcripts
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Definition of organizational identity is
contested
◦ Albert and Whetten (1985) include an ‘enduring’
aspect
◦ Other studies have offered that an identity can
change over time (e.g., Fox-Wolfgramm, Boal, & Hunt,
1999; Gioia, Schultz, & Corley, 2000; Gioia & Thomas,
1996)
◦ Future research should look at the extent to which
identity reflected in EO is persistent through time
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Generalization and extension of previous EO studies
in family business (Tsang & Kwan, 1999)
◦ Casillas and Moreno (in press) Family Involvement moderated
link between EO and firm growth in small-med companies
◦ We found that this did not hold in large, publicly-traded
companies
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Does the EO-performance relationship behave
differently between large and small family
businesses?
Do the family identities of family businesses from
certain cultures influence the EO-performance
relationship differently?
What role does industry play when understanding the
dynamics of family influence?
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Two patterns of EO dimensions emerged in
large, publicly traded firms
◦ Family businesses were present in both groups
◦ Family businesses made up a greater percentage of
firms in the group with higher competitive
aggressiveness, innovativeness, and proactiveness
◦ Consistent with previous studies
 Family firms lower on autonomy (Short et al., 2009)
 Family firms lower on risk taking (Naldi et al., 2007;
Short et al., 2009)
◦ Future studies should look at why certain firms
espouse some elements of EO over others
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Only just begun to look at EO in family
business
Three key contributions
◦ Illustrate the importance of looking at large,
publicly-traded businesses in family business
research
◦ Identify common patterns of EO espoused by these
businesses
◦ Explore the performance consequences of each
pattern.
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