Competitive Advantage Development in Family Firms by Transforming Entrepreneurial Orientation Into CSR: Evidence From Spain

Competitive Advantage Development in Family Firms by Transforming Entrepreneurial Orientation Into CSR: Evidence From Spain

Unai Arzubiaga (University of the Basque Country (UPV/EHU), Spain), Julen Castillo-Apraiz (University of the Basque Country (UPV/EHU), Spain) and Jesús Manuel Palma-Ruiz (Universidad Autónoma de Chihuahua, Mexico)
DOI: 10.4018/978-1-5225-8012-6.ch006

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Introduction: Motivation, Goals, And Contributions

The disposition toward entrepreneurship appears crucial for firm survival and success (Covin & Wales, 2012) since it is considered as an antecedent of entrepreneurial behavior (Zellweger & Sieger, 2012) and competitive advantage development (Cruz & Nordqvist, 2012). For capturing this firm-level entrepreneurial attitude, Miller (1983), as well as Covin and Slevin (1991), developed the entrepreneurial orientation (EO) construct, which has generally been conceived as an organizational experience associated to the company´s methods, processes, and decision-making activities (e.g. Hughes & Morgan, 2007). For more than two decades, EO has been studied in the entrepreneurship literature, and it has been linked to family firms (FF) in the last few years (Alayo, Maseda, Iturralde, & Arzubiaga, 2019; Bauweraerts & Colot, 2017; Hernández-Linares & López-Fernández, 2018; Hernández-Perlines, Moreno-García, & Yáñez-Araque, 2017), although they are the most extended type of firms all around the world (Hiebl, Quinn, Craig, & Moores, 2018).

The importance of family firms has gained full recognition in recent years in both highly industrialized (De Massis, Frattini, Pizzurno, & Cassia, 2015) and developing countries (Mazzi, 2011) due to their capacity to create employment, considerable contribution to the gross domestic product (GDP), and their particular ability to create wealth (Randerson et al., 2015). Data for the United States of America (USA) and Europe demonstrate this point. In the USA, 80 to 90% of all firms are family-run, accounting for 57% of private sector employment and 63% of the total USA GDP. In Europe, family firms are 85% of all firms, accounting for six out of ten private sector positions and contributing 65% of private sector GDP (Björnberg, Elstrodt, & Pandit, 2015). Although this is significant, the importance of FF may be even more significant from a qualitative point of view (Basco, 2013). In fact, in addition to the “cross-generational” nature of FF, which provides greater economic stability, this type of entity is usually fundamental in local development and social cohesion, transmitting skills, and local structures, amongst other things (Gedajlovic, Carney, Chrisman, & Kellermanns, 2012). Therefore, research into FF has increased considerably over the last 20 to 30 years (Dawson & Mussolino, 2014; López-Fernández, Serrano-Bedia, Pérez-Pérez, Hernández-Linares, & Palma-Ruiz, 2017).

Although there have been different approaches to define FF, researchers have generally agreed on the particular characteristics of these firms (Chirico, Sirmon, Sciascia, & Mazzola, 2011). The interaction of two particular systems, the family and the company, can influence this type of entity, creating several particular FF characteristics (Chirico & Salvato, 2008). Thus, as well as having long-term strategies, FF usually have a strong group identity and family values, making the firm its particular social environment (Schepers, Voordeckers, Steijvers, & Laveren, 2014). Also, members of the FF usually have a particular emotional connection with the company, which reinforces their commitment to its survival. This commitment is often reflected in a tendency to avoid risky strategies and represents a vital characteristic of these firms (Berrone, Cruz, & Gomez-Mejia, 2012). All in all, these particular characteristics based on the interaction between the family and the company denotes the difference between family and nonfamily firms, which may affect the style of management (Le Breton-Miller & Miller, 2006), entrepreneurship (Goel & Jones III, 2016), and strategic decision making (Sciascia, Mazzola, & Chirico, 2013).

Key Terms in this Chapter

Family Firms: A family or a group of families with ownership participation in the firm, and family leadership and involvement in management.

Corporate Entrepreneurship: Corporate entrepreneurship or strategic entrepreneurship may be understood concerning simultaneous opportunity and advantage-seeking behaviors with the purpose of creating a competitive advantage.

Competitive advantage: Firms develop competitive advantages by implementing strategies that exploit their internal strengths, through responding to environmental opportunities, while neutralizing external threats and avoiding internal weaknesses.

Triple Bottom Line: CSR can be accomplished in three main areas, each one focused on different activities: social, economic, and environmental activities.

IBEX35: Refers to the stock market index of the Bolsa de Madrid, which is Spain's principal stock exchange.

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