An Exploratory Study of Family Member Characteristics and Involvement: Effects on Entrepreneurial Behavior in the Family Firm

Franz W. Kellermanns, Kimberly A. Eddleston, Tim Barnett, Allison Pearson

Family rms are essential for economic growth and development through new business startups and growth of existing family rms. Entrepreneurial behavior by the CEO is essential for such growth to occur. Entrepreneurial behavior can be inuenced by inherent characteristics of the CEO, such as age and tenure, as well as by the degree of family inuence in the rm, as indicated by the number of generations involved in the business. We assess the empirical relationships of these variables to both entrepreneurial behavior and subsequent rm growth.

Introduction
Entrepreneurial behavior can be a critically important factor in a rms protability and growth (Lumpkin & Dess, 1996; Zahra, 1991, 1996). Firmlevel entrepreneurship may be particularly crucial to a family rm as it strives to identify and take advantage of opportunities in the dynamic and uncertain competitive environment of the 21st century (Sirmon & Hitt,2003).Indeed,family rms that engage in the innovative, proactive, and risktaking behaviors that characterize rm-level entrepreneurship (Miller, 1983) are major contributors to economic development and growth in the U.S. and world economies (Zahra, Hayton, & Salvato, 2004). In spite of this, a consideration of the potential effects of family characteristics and family involvement is largely absent from the general entrepreneurship literature (Aldrich & Cliff, 2003). Indeed, since the seminal work of Miller (1983), much of the entrepreneurship literature has instead focused on the impact of environmental, strategic, and organizational contingencies on rm-level entrepreneurship (Zahra, Jennings, & Kuratko, 1999). Miller (1983) suggests, however, that the

unique characteristics of different types of rms must be considered by researchers as they study rm-level entrepreneurship. A burgeoning literature suggests that family rms are indeed different from other rms due to the unique interplay among individual family members, the family system, and the business system (e.g., Gersick, Davis, Hampton,& Lansberg,1997; Tagiuri & Davis,1996). Further, a more complete understanding of the family rm CEO is necessary because family rms tend to be overly dependent on a single decision maker (Feltham, Feltham, & Barnett, 2005) and senior executives are key in promoting a rms commitment and support of entrepreneurship (Zahra, Neubaum, & Huse, 2000). Thus, it would seem that researchers interested in entrepreneurial behavior in family rms should address (1) how the characteristics of family rm CEOs affect entrepreneurial behavior within those rms, (2) how different levels of family involvement in family rms affect entrepreneurial behavior within those rms, and (3) how entrepreneurial behavior affects organizational growth. There seems to be little doubt that, worldwide, family businesses are critical in spurring
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FAMILY BUSINESS REVIEW, vol. XXI, no. 1, March 2008 Family Firm Institute, Inc.

Kellermans, Eddleston, Barnett, Pearson

economic development and growth by creating and funding new businesses as well as growing existing rms (Astrachan, Zahra, & Sharma, 2003). However, the impact of family involvement on entrepreneurial behavior is uncertain. Many researchers suggest that family rms provide particularly fertile grounds for essential entrepreneurial behavior needed in rm creation and growth (Aldrich & Cliff, 2003). Zahra (2005) identies a variety of reasons that family rms may be adept at entrepreneurial behaviors, including (1) goal congruency between the rm and owners and (2) goal continuity across multiple generations involved in the rm. Family ownership also promotes a long-term planning perspective, necessary for the rm to continue successfully across multiple generations of the family (Zahra et al., 2004). Finally, family rms are often in a unique position to create valuable social capital in the form of lasting relationships with critical organizational stakeholders via the stability of key decision makers in the family (De Carolis & Saparito, 2006). Aligned, continuous goals, long-term perspectives, and valuable social relationships can potentially foster entrepreneurial behavior in the rm. However, in spite of the seemingly rich conditions for entrepreneurial behaviors in family rms, some have argued that the family business context can be a distinct liability for entrepreneurial behavior (e.g., Schulze, Lubatkin, Dino, & Buchholtz, 2001). Perhaps the greatest concern is that in order to protect the rm over the long run, family leaders may become too strategically conservative, thereby minimizing entrepreneurial behaviors. Indeed, because many entrepreneurial ventures fail or take several years to be protable, entrepreneurship poses substantial risks that can threaten the success, wealth, and survival of the rm (Zahra et al., 2000). Risk aversion, stagnation, or strategic comfort zones represent status quo behaviors that are indicative of diminished entrepreneurial behaviors needed to grow the family rm. Thus, the impact of individual family members and overall family involvement in the family rm may be critical to entrepreneurial behavior and
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rm success (Astrachan, 2003). But, as Aldrich and Cliff (2003, p. 574) suggest, very little attention has been paid to how family dynamics affect fundamental entrepreneurial processes. They go on to state:
We need more research on how family systems affect opportunity emergence and recognition, the new venture creation decision, and the resource mobilization process. We need to learn more about the role that family characteristics and dynamics play in why, when, and how some people, but not others, identify entrepreneurial opportunities. (Aldrich & Cliff, 2003, p. 593).

What triggers some family rms to embrace and aggressively pursue continued entrepreneurial behaviors while other family organizations become entrenched and stagnant? We set out to address this important question by examining potential antecedents of entrepreneurial behavior in family rms, including the personal characteristics of the CEO (age and tenure), as well as the inuence of the family over time, as indicated by the number of generations involved in the rm. CEO age and tenure may be particularly salient inuences on family rm entrepreneurial behavior because family rm CEOs tend to remain in power much longer than CEOs in nonfamily rms (Gersick et al., 1997), and thus have an enduring impact on the rms organizational culture and entrepreneurial disposition. Generational involvement may also be a key predictor of family rm entrepreneurial behavior given that foundercentered rms often lose their innovative momentum until the second or third generations join the rm, reviving and fostering entrepreneurship (Salvato, 2004). Hereby it is also very important to understand the consequences of entrepreneurial behavior. Although it has often been argued that entrepreneurial behavior affects employment growth at the macro and micro levels (e.g., Chang, 2007; Kirchhoff, Newbert, Hasan, & Armington, 2007), research has yet to show this as a consequence in family rms. However, we believe that as entrepreneurial behavior increases in family rms, organizational growth will likely follow. Indeed, entrepreneurship is believed to be a necessary component of family rm survival,

Effects of Family Member Characteristics and Involvement on Entrepreneurial Behavior

CEO Age

H1-

CEO Tenure

H2+ H4+

Entrepreneurial Behavior
H3+

Employment Growth

Generations in Firm

Controls: Size of Organization CEO Gender

Figure 1 CEO Characteristics and Generational Antecedents of Entrepreneurial Behavior and Growth in Family Firms.

protability, and growth (Salvato, 2004). These relationships are depicted in Figure 1.

Literature Review and Hypotheses

Chua, Chrisman, and Sharma (1999, p. 25) dene the family rm as:
a business governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families.

In short, a family rm must meet three criteria: (1) be governed/managed by family, (2) have a vision for the rm consistent with the strategic direction held by the family, and (3) be potentially sustainable across multiple generations. The family inuence can vary in the organization over time and can be manifested in many different ways in the organization (Astrachan, Klein, & Smyrnios, 2002; Klein, Astrachan, & Smyrnios, 2005).

Both the unique characteristics of individual family members and the nature and extent of family involvement in the rm may affect entrepreneurial behavior at the rm level (Zahra, 2005). In particular, personal characteristics of the CEO may be key factors in predicting entrepreneurial behavior since family rms tend to be overly dependent on a single decision maker (Feltham et al., 2005) and their CEOs tend to remain in power much longer than the CEOs of nonfamily rms (Gersick et al., 1997). Additionally, generational involvement may be a unique predictor of entrepreneurial behavior in family rms given that family members from newer generations tend to be a driving force for change (Kepner, 1991) and innovation (Litz & Kleysen, 2001).

Family Firm CEO Age

Entrepreneurial behavior is contingent on intrinsic characteristics of the organizational decision maker, that is, the CEO (Levesque & Minniti, 2006). The age of the CEO is considered a key antecedent of entrepreneurial behavior (Levesque & Minniti, 2006). Based on time allocation theory
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(Becker, 1965), Levesque and Minniti (2006) argued that a CEOs entrepreneurial efforts will decline over time. As CEOs grow older, they may limit decision making to commonly held norms of industry behavior, rather than seeking unique, yet risky, strategic directions (Hambrick & Finkelstein, 1987). Younger entrepreneurs have been found to adjust their expectations faster in response to new information than do older entrepreneurs, supporting the notion that older entrepreneurs are more complacent than their younger counterparts (Parker, 2006). For example, age has been found to be signicantly negatively correlated with innovation and risk taking (Stewart, Watson, Carland, & Carland, 1999). Age may be a particularly salient predictor of entrepreneurial behavior in family rms since their CEOs often become preoccupied with succession issues as they age (Feltham et al., 2005). As succession grows nearer, the aging CEO may place greater importance on a smooth, seamless transition than on the need to pursue entrepreneurial endeavors. Further, because leaders of family rms are often motivated to build a lasting legacy for their children, they often become conservative in their decisions because of the high risk of entrepreneurial ventures (Morris, 1998) and their fear of losing family wealth (Sharma, Chrisman, & Chua, 1997). Therefore, as CEOs of family rms age, they may naturally become less innovative and risky and also become more focused on succession issues and maintaining family wealth, thereby reducing their entrepreneurial behavior. Hypothesis 1. The age of the family rm CEO will be negatively related to entrepreneurial behavior.

Family Firm CEO Tenure

Will the tenure of the CEO in the organization be benecial or harmful to the pursuit of entrepreneurial behaviors in the family rm? There is some argument that long CEO tenures inspire entrepreneurial behavior. This perspective is based on the belief that long tenures allow the CEO to accumulate a wealth of knowledge and experience, making him or her better able to select
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appropriate entrepreneurial behaviors, thereby reducing risk while also pursing aggressive change (Levesque & Minniti, 2006). Long CEO tenure may also allow the CEO to build valuable relationships among organizational constituents. These relationships may give the CEO more knowledge and comfort to pursue the risky decisions necessary to entrepreneurship. Alternatively, dominant, singular leadership over long tenures may make employees less likely to question ideas and practices (Zahra et al., 2004). Long tenures may create an internal organizational environment that sties the creativity and innovativeness that result from cognitive conict, the much needed and healthy questioning of ideas and concepts (Kellermanns & Eddleston, 2004). For example, CEOs with longer tenure have been found to be more likely to conform to industry norms, presumably because their rm-specic human capital keeps them from compromising the comfortable status quo (Finkelstein & Hambrick, 1990). Indeed, in a canonical analysis of family rm variables, Zahra (2005) found that CEO tenure was negatively related to innovativeness in his study of more than 200 family rms. Zahra (2005) also found that CEO tenure in family rms was inversely associated with risk taking. It appears that when family businesses are highly dependent on the CEO, suboptimal decisions can result because the family business has not planned for change or the leader dominates decision making (Feltham et al., 2005). The identity of CEOs with long tenure may become so interwoven with the family rm that the objectivity of the decision-making process is strained (Daily & Dollinger, 1992). Indeed, entrepreneurial family rms appear to continuously question and change their cultural patterns and ways of doing business (Hall, Melin, & Nordqvist, 2001). In contrast, the executive succession literature has shown that new top management is positively related to strategic change and innovation (Kesner, Shapiro, & Sharma, 1994). Therefore, family rm CEOs with long tenure may display less entrepreneurial behavior than their newer counterparts because of their resistance to change and support for the status quo.

Effects of Family Member Characteristics and Involvement on Entrepreneurial Behavior

Hypothesis 2. The tenure of the family rm CEO will be negatively related to entrepreneurial behavior.

Generations Involved in the Family Firm

When multiple generations are involved in the family rm, the organization has greater input and a variety of individual perspectivesboth valuable assets for entrepreneurial ideas. Newer generations tend to push for new ways of doing things (Kepner, 1991) and are often the driving force behind innovation (Litz & Kleysen, 2001) and entrepreneurial activities (Salvato, 2004). Although founders of family rms often base their rms on innovative ideas, over time they may lose their entrepreneurial edge (Corbetta, 1995; Salvato, 2004). The involvement of subsequent generations increases the rms chance that entrepreneurial opportunities will be identied and pursued (Salvato, 2004). As Salvato explains, the founder alone may nd it difcult to have innovative ideas without the fresh momentum added to the rm by second-generation members (2004, p. 73). Several researchers suggest that multigenerational family involvement increases the chances that entrepreneurial opportunities will be recognized (Salvato, 2004) and entrepreneurial behavior fostered (Gersick et al., 1997). Indeed, a stewardship theory lens would suggest that the cohesion between the family is fostered and opportunities are sought out to provide for crossgenerational sustainability and growth (e.g., Davis, Schoorman, & Donaldson, 1997; Eddleston & Kellermanns, 2007). A recent empirical study (Zahra, 2005) is consistent with this view, nding that the more generations of the family involved in a family rm, the more the rm focused on innovative behaviors. The involvement of multiple generations may foster entrepreneurial behavior because newer generations may put greater emphasis on enhancing business growth so as to ensure the rms survival. Indeed, family rm survival through multiple generations requires renewal through innovation (Hoy, 2006) and

greater focus on maintaining and enhancing business growth (McConaughy & Phillips, 1999). Multiple-generation rms must adapt to changes in their environments by rejuvenating and reinventing themselves over time if they are to sustain the same level of growth and nancial inheritance of the previous generation (Jaffe & Lane, 2004). Furthermore, serial business families, families that repeatedly recreate new family business ventures, appear to be able to harness the fresh motivation and entrepreneurial spirit of each generation (Kenyon-Rouvinez, 2001). Accordingly, the involvement of multiple generations may increase entrepreneurial behavior because newer generations may be a driving force for change and innovation and they may also be more likely to perceive the importance of entrepreneurial behavior to the long-term survival of the rm. Hypothesis 3. The number of generations involved in the family rm will be positively related to entrepreneurial behavior.

Entrepreneurial Behavior and Firm Growth

Entrepreneurship involves innovation and new venture creation (Steier, Chrisman, & Chua, 2004). More specically,entrepreneurship centers on recognizing and exploiting opportunities by reconguring existing and new resources in ways that create an advantage (Zahra, 2005, p. 25). Entrepreneurial behavior is essential for rms to adapt and respond to environmental changes, such as consumer preferences, competitor actions, and technological developments. For example, Zahra and colleagues (2000) discussed how entrepreneurship can help a rm acquire new capabilities, launch new businesses, develop new revenue streams, and improve rm performance, protability, and growth. In this way, entrepreneurial behavior is seen as an important element in the survival and growth of family rms because it helps create jobs and wealth for family members (Kellermanns & Eddleston, 2006a).
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Kellermans, Eddleston, Barnett, Pearson

For example, an innovative strategy has been found to benet a family rms competitive market position (McCann, Leon-Guerrero, & Haley, 2001). Entrepreneurial behavior may promote the continuity and success of the family rm by increasing revenue streams and protability that thereby encourage growth in employment (Kellermanns & Eddleston, 2006a). Indeed, Salvato (2004) argues that entrepreneurial behavior is important to family rm survival, protability, and growth. Without entrepreneurial behavior, family rms will likely become stagnant, thereby limiting the potential for rm success and growth in the future. Hypothesis 4. Entrepreneurial behavior will be positively related to rm growth.

dents were given multiple options related to growth, ranging from a decrease in growth to increases in 2% increments up to 12% or more. Indeed, not only has entrepreneurial behavior in general been associated with employment growth at the macro and micro levels (e.g., Chang, 2007; Kirchhoff et al., 2007), it is widely utilized in measuring the success of small-scale businesses (e.g., Rauch, Frese, & Utsch, 2005).

Method
Our sample frame consisted of 232 family rms associated with the family business centers of two U.S. universities in the Northeast. The surveys were directed to the CEO, and as part of a larger data-collection effort the CEO was asked to distribute the questionnaires to other family members within the family rm. Overall, 50 CEOs returned surveys, representing a 21.4% response rate at the CEO level of analysis.

Independent variables. Entrepreneurial behavior was assessed with four items on a 7-point Likert scale. The measures were adapted from a seven-item scale developed by Miller (1983). Although other measures of entrepreneurial behavior exist in the literature (e.g., Zahra, 1996), we chose to utilize an adaptation of the Miller measure due to its better t to the family rm context and its ability to produce meaningful inferences for smaller organizations (Kellermanns & Eddleston, 2006a). The measure demonstrated acceptable reliability, with an alpha of 0.86. Tenure was measured via a self-report question asking how many years the individual had worked in the family rm. Age was similarly assessed via self-report. Lastly, we asked CEOs to indicate the number of generations currently working in the family rm (Kellermanns & Eddleston, 2006a). Control variables. Two controls were used in this study. First, we controlled for CEO gender since entrepreneurial roles are more often associated with men than women (Olson, Zuiker, Danes, Stafford, Heck et al., 2003). Second, we controlled for organizational size based on sales, since larger sales may allow the family rm to accumulate more organizational slack, which in turn may positively affect the ability to engage in entrepreneurship. Results
The means, standard deviations, and zero-order correlations are shown in Table 1. The highest observed VIF equaled 1.64 and the highest value of the condition index equaled 24.84, far below

Measures
All items and the associated alphas of the constructs are reported in the Appendix.

Dependent variable. Employment growth was measured via a subjective self-reported assessment since objective measures relating to growth or other performance dimensions are often not available or obtainable from smaller, privately owned rms (Love, Priem, & Lumpkin, 2002). Prior research has shown that such subjective selfassessments are highly correlated with objective data (Dess & Robinson, 1984; Love et al., 2002; Venkatraman & Ramanujam, 1987). The respon6

Effects of Family Member Characteristics and Involvement on Entrepreneurial Behavior

Table 1 Descriptive Statistics and Correlations Variables 1. 2. 3. 4. 5. 6. 7. Size (Sales) CEO Age CEO Gender Company Tenure Generations Involved Entrepreneurial Behavior Employment Growth Mean 4.39 52.65 0.77 22.4 1.68 14.22 2.76 SD 1.47 8.10 0.42 10.21 0.55 6.54 2.22 1 0.09 0.33* 0.27 0.18 0.38** 0.32* 2 3 4 5 6

0.36** 0.51*** 0.27 0.11 -0.11

0.41** 0.12 0.13 0.14

0.35** 0.31* -0.09

0.45*** 0.29

0.53***

N = 50 p < 0.10 * p < 0.05 ** p < 0.01 *** p < 0.001

Table 2 OLS Regression Employment Growth Model 1 Control Size (Sales) CEO Gender Independent Variables CEO Age Company Tenure Generations Involved Entrepreneurial Behavior R2 Adjusted R2 F N = 50 p < 0.10 * p < 0.05 ** p < 0.01 *** p < 0.001 0.31* 0.04 Employment Growth Model 2 0.29* 0.18 -0.13 -0.31 0.36* 0.104 0.085 5.573* 0.264 0.180 3.152* Employment Growth Model 3 0.14 0.21 -0.10 -0.39* 0.17 0.51*** 0.440 0.361 5.62*** Entrepreneurial Behavior Model 4 0.30* 0.16 -0.07 0.16 0.36** 0.355 0.290 5.50***

values that might suggest multicollinearity concerns (Tabachnick & Fidell, 1995). We tested the hypotheses via multiple regression analysis. The results are shown in Table 2. We tested four models. In Model 1, we controlled for size and gender.Although the size effect was signicant (b = 0.31, p < 0.05), CEO gender did not affect employment growth. To assess full or partial mediation of the hypothesized relationships, we tested three more models. First (Model 2), we regressed employment growth in family

rms onto CEO age, company tenure, and generations involved. Although CEO age did not have a signicant impact on employment growth, tenure was marginally signicant (b = -0.31, p < 0.10), and generations involved showed a signicant relationship with employment growth (b = 0.36, p < 0.05), thus providing initial partial support for Hypotheses 2 and 3, but not for Hypothesis 1. We also tested if the hypothesized main effects existed on entrepreneurial behavior (Model 4). Here, only generations involved was found signicant
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(b = 0.36, p < 0.01), while both CEO age (b = -0.07, ns) and company tenure (b = 0.16, ns) were not. This suggested that only the relationship between generational involvement and employment growth was mediated by entrepreneurial behavior, which did not support Hypothesis 1 and only partially supported Hypothesis 2. Indeed, Model 3 conrms full mediation, supporting Hypothesis 3. When entrepreneurial behavior (b = 0.51, p < 0.001) is added to the main effects (supporting Hypothesis 4), generational involvement loses its signicance (b = 0.17, ns) indicating full mediation. In addition, company tenure was signicant in this step (b = -0.39, p < 0.05). Since the data were collected via a crosssectional survey design, common method bias was a potential problem. To address this concern, we performed a test suggested by Podsakoff and Organ (1986) and entered all items of the main effect variables in a factor analysis. Two factors emerged that explained 67.8% of the variance. The rst factor consisted of the four entrepreneurial behavior items and explained 47.5% of the variance, while the remaining three single indicator items explained 20.3% of the variance. Since no single method factor emerged, common method variance did not appear to be a signicant problem. In addition, we performed checks for potential nonresponse biases by dividing our respondents into early and late respondents. This procedure is performed under the assumption that late respondents are more similar in nature to nonrespondents than early respondents. No statistical differences between the early and late respondents were observed, which suggests that nonresponse bias was not a major problem (e.g., Kanuk & Berenson, 1975). To further mitigate concerns, we compared our overall sample with two national samples in terms of respondent age, gender, and size. A comparison with the 1997 National Family Business Survey (NFBS) (Winter, Danes, Koh, Fredericks, & Paul, 2004) and the Federal Reserve Boards 2003 Survey of Small Business Finances (SSBF) (Winter, Fitzgerald, Heck, Haynes, & Danes, 1998) revealed that our respondents were similar in age and
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gender composition to CEOs in the national sample. However, the respondent rms tended to be signicantly larger in size. Since we control for size effects, however, we do not believe this to be a signicant concern in our study.

Discussion
Our study provided the rst empirical test in family rms of the age hypothesis proposed by Levesque and Minniti (2006) and expands on work from Zahra (2005) by testing antecedents of entrepreneurial behavior as well as its growth consequences in a holistic model. Our ndings were mixed. Overall, the entrepreneurial behavior of family rm CEOs was strongly related to our performance variable, employment growth. As such, this study adds to ndings in the family rm literature that have linked corporate entrepreneurship to important outcome variables like nancial performance in family rms in particular and nonfamily rms in general (e.g., Barrett & Weinstein, 1998; Gudmundson, Tower, & Hartman, 2003; Lumpkin & Dess, 1996; Zahra, 1996, 2005). Contrary to expectations, we did not nd a signicant relationship of CEO age with either entrepreneurial behavior or employment growth. It is possible that this may be a unique nding for family rms. Although entrepreneurial behavior in general may be strongly associated with age, it is possible that pressures in family rms may mitigate such an effect. So even if a family rm member becomes a CEO at a young age, he or she may not have the power to enact entrepreneurial behavior; such may be the case in family rms organized as cousin consortiums (Gersick et al., 1997). Accordingly, future research may want to examine the effect of the ownership share of the CEO on entrepreneurial behavior. Alternatively, because the welfare of the entire family is at stake, the family rm CEO may not lose the desire for entrepreneurial behavior as he or she ages. Knowing that the benets of his or her behavior will accrue to future generations of the family, the CEO may be highly motivated to continue to pursue entrepreneurial ventures.

Effects of Family Member Characteristics and Involvement on Entrepreneurial Behavior

Our ndings pertaining to CEO tenure in the organization only partly supported our hypotheses. Organizational tenure was not related to entrepreneurial behavior by the CEO. However, organizational tenure of the CEO was negatively related to employment growth. Our ndings are thus somewhat consistent with Zahra (2005), who found CEO tenure to be negatively related to investments in new technologies and innovation. A possible explanation for the nding is that the behavior of longer-tenured CEOs may be reecting greater caution as they focus on succession issues,which in turn would lead to lower growth. The nonsignicant main effect on entrepreneurial behavior further suggests that many constraints may be imposed on the CEO by the family, which may limit his or her engagement in such behavior. Our hypothesis relating to generational involvement received strong support. Indeed, the relationship between generational involvement and employment growth was fully mediated by entrepreneurial behavior in family rms. As such, generational involvement was the only strong predictor of entrepreneurial behavior in our family rm sample. This is an important nding, since the main effect of generational involvement on corporate entrepreneurship has been found nonsignicant at the rm level (Kellermanns & Eddleston, 2006a), indicating the importance of individuals to make innovation in organizations a reality (Kanter, 1983). Indeed, some researchers suggest that the involvement of family in the rm can cause potential agency conicts resulting from the ongoing paternalistic care some family members receive, regardless of their contribution to the rm (e.g., Schulze et al., 2001). If, indeed, examples of dysfunctional altruism exist in the family rm, this could be even more problematic in multigenerational family rms. Here, excessive altruism may result in free riding and shirking that could substantially hinder the entrepreneurial efforts of the family rm. However, this is not what we found in this study. Generational involvement increased entrepreneurial behavior. As such, our ndings add to the growing evidence that although agency costs in family rms exist, they may be lower than

agency costs in nonfamily rms (Chrisman, Chua, & Litz, 2004). Indeed, if reciprocal altruism and stewardship behavior are present in family rms (e.g., Davis et al., 1997; Eddleston & Kellermanns, 2007), a positive impact on entrepreneurial behavior, growth, and success of the family rm can be expected. Our study therefore contributed to the literature in two ways. First, we added to the growing corporate entrepreneurship literature (e.g., Barrett & Weinstein, 1998; Levesque & Minniti, 2006; Lumpkin & Dess, 1996; Sharma & Chrisman, 1999; Zahra, 1996) by following Millers (1983) early call for research into the impact of rm types on entrepreneurial behavior. Indeed, we were able to show that unique family rm characteristics impact entrepreneurial behavior. Second, we added to the literature on entrepreneurial behavior in family rms (e.g., Hall et al., 2001; Kellermanns & Eddleston, 2006a; Zahra, 2005). Specically, we contributed to initial research focusing on CEO behavior (Zahra, 2005).

Limitations and Implications

Before discussing the implications of our ndings, a few limitations of our study should be noted. As mentioned in the method section, our study employed a cross-sectional design. Accordingly, we cannot infer causality in our study. Common method bias is also a limitation of our study, although the test for common method bias did not indicate signicant concerns (Podsakoff & Organ, 1986) and the unambiguous nature of the selfreports for age, tenure, and generational involvement should reduce the potential for common method bias. However, future studies should investigate the relationship between entrepreneurial behavior and growth via a longitudinal design. Additional measures of growth should also be examined, such as growth in market share and prot margins. A further limitation of our study is the small sample size and the sample origination in the northeastern United States. A small sample size may always cause a Type II error (Mazen, Graf, Kellogg, & Hemmasi, 1987). However, since the
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majority of our hypotheses were supported, this does not seem to be a signicant concern in this study. Furthermore, we compared our sample with larger national studies and found that the organizations in our sample were larger than the national average; thus, our generalizability may be more prevalent for larger family rms. Entrepreneurial behavior has been identied to be of paramount importance for the U.S. economy (e.g., Chang, Kellermanns, & Chrisman, 2007), and given the dominance of family rms in the United States and other economies (e.g., Chua, Chrisman, & Chang, 2004), it is crucial to understand entrepreneurial behavior in family rms. Indeed, our study adds to the developing research in this area (Kellermanns & Eddleston, 2006a; Zahra, 2005). However, future research needs to develop a better understanding of the facilitating conditions in family rms that allow such behavior. In this regard, future research may want to extend the current research by initially focusing on more organizational-level predictors. Furthermore, future empirical research needs to expand the content domain of corporate entrepreneurship. Although our article focuses exclusively on entrepreneurial behavior within the rm, this area of investigation needs to be expanded to include new ventures that are facilitated by the family (Steier, in press). In addition, other variables such as family support and norms (Chang et al., 2007) and nancial, contact, and resource support (Dyer & Handler, 1994) could be investigated as antecedents of entrepreneurial behavior in family rms. It would also be benecial to identify and understand inhibitors that curb entrepreneurial behavior. For example, Kellermanns and Eddleston (2004) and Eddleston and Kellermanns (2007) identied relationship conict as a devastating strategy process. Indeed, it is likely that such negative forms of conict and the lack of its proper management (Kellermanns & Eddleston, 2006b) would signicantly reduce entrepreneurial behavior. In addition, constraints such as nancial and time pressures may mitigate entrepreneurial behavior in family rms (Dyer, 1992). In particular, succession and its management may be a potential avenue of future research per10

taining to entrepreneurial behavior in family rms (Sharma, Chua, & Chrisman, 2005; Stavrou, 1999). If there are multiple potential successors within the family rm, or if it is foreseeable that the family rm will need to generate revenue and provide employment for future generations, entrepreneurial behavior may be more likely. However, if no successor is available, the CEO may lack incentives beyond his or her personal motivation to engage in such behavior. Future research may also want to consider the type of entrepreneurial behavior that is initiated by the CEO. Although initial research on radical change has been conducted in family rms (Hall et al., 2001), more research on incremental change (Quinn, 1980) and strategic initiatives is needed (Floyd, Ortiz-Walters, Wooldridge, & F., forthcoming). Indeed, no studies to date have addressed this topic in family rms. Lastly, we need to discuss the implications of our study to the growing body of literature on family-based social capital in family rms (Arregle, Hitt, Sirmon, & Very, 2007; Bubolz, 2001; Dyer, 2006). Particularly, our nding pertaining to the direct effect of generational involvement on entrepreneurial behavior of the CEO suggests that the family can be the source of social capital (Bubolz, 2001) and innovation. By having multiple generations involved, the family is in a position of power that allows the family to better control decision making and implementation (Arregle et al., 2007) and may thus facilitate entrepreneurial behavior. As such, generational involvement can be seen as an integral component that allows for the creation of familiness in family rms (Habbershon & Williams, 1999; Habbershon, Williams, & MacMillan, 2003). In conclusion, the study of entrepreneurial behavior of family rm CEOs can provide additional insights in understanding why some family rms grow while other family rms stagnate. Our study showed that organizational tenure and generations involved were important predictors of entrepreneurial behavior and employment growth. Indeed, our study suggests that the entrepreneurial behavior of CEOs is a key factor in explaining employment growth in family rms.

Effects of Family Member Characteristics and Involvement on Entrepreneurial Behavior

Appendix: Scale Items and Reliabilities

Construct Independent Variables Entrepreneurial Behavior Items Over the past three years, our rm has pioneered the development of breakthrough innovations in its industry Our rm has introduced many new products or services over the past three years Our rm has emphasized making major innovations in its products and services over the past three years Our rm has emphasized taking bold, wide-ranging actions in positioning itself and its products or services over the past three years How many generations are currently working in the family rm (one generation, two generations, three generations) Worked in the family rm since: ____ (ll in) Age: ____ years Gender: ____ Male ____ Female Please indicate growth in employment over the past three years: ____ No growth or decrease in growth ____ Less than 2% ____ 2.00%3.99% ____ 4.00%5.99% ____ 6.00%7.99% ____ 8.00%9.99% ____ 10.00%11.99% ____ 12.00% or more a 0.86

Generations Involved Tenure Age Gender Dependent Variable Employment Growth

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Dr. Franz W. Kellermanns, Mississippi State University, PO Box 9581, Mississippi State, MS 39762; fkellermans@cobilan.msstate.edu. Dr. Kimberly A. Eddleston, College of Business Administration, Northeastern University, 319 Hayden Hall, Boston, MA 02115-5000; K.eddleston@neu.edu. Dr. Tim Barnett, Mississippi State University, PO Box 9581, Mississippi State, MS 39762; Tim.barnett@msstate.edu. Dr. Allison Pearson, Mississippi State University, PO Box 9581, Mississippi State, MS 39762; Allison.pearson@msstate.edu.

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