Formal HRM in family SMEs: the role of family-centered goals and family governance

Abstract

This paper aims to investigate the antecedents of formal human resource management (HRM) in private family firms. Specifically, we adopt a socio-emotional wealth perspective to predict the relationship between family-centered noneconomic (FCNE) goals and formal HRM practices. In addition, we rely on the extension of the behavioral theory, i.e., the attention-based view of the firm, to understand the moderating effect of family governance practices (FGPs) on the relation between FCNE goals and formal HRM practices. Based on analyses of a sample of 293 Belgian privately-held family small and medium enterprises, we find that the pursuit of FCNE goals is associated with less formal HRM practices. In addition, simultaneously engaging in FGPs while pursuing FCNE goals reverses this negative effect.