The Emotional Economy: Power Shifts and their Role in Family Enterprise Success

Abstract

Socioemotional Wealth (SEW) is a multifaceted concept that plays a critical role in the management of family businesses, addressing the non-financial needs of owners by fulfilling their emotional and sentimental requirements. This study investigates the relationship between family commitment and performance in family businesses, with a focus on the moderating role of power imbalance, also referred to as intergenerational authority. Drawing on empirical data from 135 family businesses, the research explores how SEW impacts firm performance and examines whether power imbalances between generations negatively affect family commitment and business outcomes. The findings confirm that while SEW significantly enhances family commitment, power imbalance moderates this relationship, with excessive power imbalance negatively impacting firm performance. This study makes two key contributions: first, it extends the theoretical understanding of SEW in family firms, highlighting the importance of balancing emotional and business objectives. Second, it offers practical insights for family firms, suggesting that a balanced distribution of power among family members is essential for sustaining business performance over time. The study's implications encourage family firms to manage both emotional and organizational dynamics to ensure long-term success.

JEL Classification Codes: A13, L26, L25, D91, D13