Title

Narrow-Framing and Risk Preferences in Family and Non-Family Firms

Abstract

Building upon prospect theory’s concept of narrow-framing, we explore family firms’ risk preferences across multiple decisions in corporate entrepreneurship. We argue that family firms’ decisions are less likely to be narrowly framed (more likely to be made as a group rather than in isolation) compared to non-family firms. Examining the interaction between two risky decisions (internationalization and R&D investment) in two samples of publicly traded firms in the USA and China confirms our hypotheses. Family firms appear more likely than non-family firms to diversify risk when making multiple decisions concerning corporate entrepreneurship. However, given inferior performance, risk taking across multiple decisions in family firms is positively related.

Department(s)

Business and Information Technology

Keywords and Phrases

Corporate Entrepreneurship; Family Business; Narrow-Framing; Risk Management

International Standard Serial Number (ISSN)

0022-2380

Document Type

Article - Journal

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2021 Society for the Advancement of Management Studies and John Wiley & Sons, Ltd., All rights reserved.

Publication Date

01 Jan 2021

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