What Does It Take to Join the Club? An Evolutionary Perspective of Dismissal in Family-Controlled Firms

2019.01.10
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Speaker: Dr. Qian Gu(Georgia State University)

Topic:	Good Deeds Done in Silence: Legitimacy Management, Stakeholder Conflict, and Quiet Giving by Chinese Firms
Time&Date:	13:00-14:15 pm, 2019/1/18 (Friday)
Venue:	Room 619, Teaching A
Speaker:	Dr. Qian Gu(Georgia State University)
Abstract:	This study explores whether and under what conditions a socioemotional bond, defined as a relationship that is based on affect, trust and respect, can be formed between the controlling families and the professional CEOs at family-controlled firms. Taking an evolutionary perspective that attends to the dynamics of their relationship over time, we propose that the controlling families can develop a socioemotional bond with professional CEOs who have served for a substantive period of time in the family-controlled firms or have gone through transformational events together with the controlling families. We further propose that this socioemotional bond makes the controlling families treat these CEOs more like family members, such that it will not only reduce these professional CEOs’ risk of dismissal but also weaken the effect of firm financial performance on their dismissal decisions. Using data from a sample of family-controlled firms in Taiwan from 1999 to 2013, we find empirical evidence consistent with our theoretical predictions. Our study contributes to the understanding of the relationship between controlling shareholders and professional managers by advancing an evolutionary perspective that accommodates the possibility for the controlling shareholders to develop a socioemotional bond with professional CEOs, at least in the context of family-controlled firms.