Reconsidering socioemotional wealth: A Smithian-inspired socio-economic theory of decision-making in the family firm

Justin B Craig, Scott Newbert

Research output: Contribution to journalArticleResearchpeer-review

Abstract

It is widely understood that business-owning families pursue socioemotional wealth (SEW) primarily to satisfy their desire for control over the firm. Unfortunately, due to the private nature of the gains SEW-based decisions are intended to generate, its pursuit is unlikely to serve the interests of those other stakeholders on which the business depends. In response, we draw upon Adam Smith’s classic arguments from An inquiry into the nature and causes of the wealth of nations and The theory of the moral sentiments to develop a normative theory of decision-making in family business that balances the pursuit of self- and other-regarding interests. We propose that only those families that strive to generate socio-economic (rather than socioemotional) wealth are likely to survive in the long-run.
Original languageEnglish
Article number100353
Number of pages14
JournalJournal of Family Business Strategy
DOIs
Publication statusE-pub ahead of print - 17 Jul 2020

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