The dynamics of psychological ownership in family firms: A new perspective on non-financial value creation.

Abstract

Although family business scholars recently introduced ‘psychological ownership’ as a key non-financial value creator, its exact nature and dynamics in family firms remain unclear. To fill this important gap in the literature, we first critically review the concept, the roots and its associated mechanisms, which as we show, can be found in a family firm context in a unique manner. We then suggest that differences in family businesses performance are driven by the prevalence of feelings of psychological ownership. We break new ground by introducing a multilevel, both individual as collective, model of psychological ownership in family firms. Furthermore, we identify qualitative family business relationships as contributing to feelings of psychological ownership. Thus, we insist on a relational perspective, which up till now remains underdeveloped. Our model offers a more encompassing, multilevel explanation for relational and emotional, value creating processes in family firms. Finally, we trace research and managerial implications and suggest some potential research directions.