Ownership Succession Financing and Entrepreneurial Orientation: the Mediating Role of Long-Term Orientation

Abstract

A significant stream of research has recently tried to increase our understanding of the factors that nurture entrepreneurial orientation (EO) within family firms. Until now, research has not been able to reach consensus (neither theoretically, nor empirically) regarding the effect of family generation in control on EO. It is therefore not clear whether later generations are more or less entrepreneurial oriented compared to their first-generation counterparts. The current paper tries to provide an explanation for the level of entrepreneurial orientation of later generational family firms. We argue that the financing source used for the ownership transfer will have consequences for EO through its effect on long-term orientation (LTO). This premise is based upon insights of the myopic loss aversion framework, which states that a long-term temporal horizon is an important precursor of risk taking behaviour. By doing so, we increase our knowledge regarding the antecedents of EO, thereby answering the call of Kellermanns and Eddleston (2006) to investigate the factors that encourage family firms to behave entrepreneurially across generations.