The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership

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The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership Bart Henssen a,1, Wim Voordeckers b,2,*, Frank Lambrechts b,3, Matti Koiranen c,4 a

HUB-KAHO, KU Leuven Association, Campus Brussel, Warmoesberg 15, BE-1000 Brussel, Belgium Hasselt University, KIZOK, Martelarenlaan 42, BE-3500 Hasselt, Belgium c Jyva¨skyla¨ University School of Business and Economics, P.O. Box 35, FI-40014 University of Jyva¨skyla¨ , Finland b

A R T I C L E I N F O

A B S T R A C T

Article history: Received 26 April 2013 Received in revised form 23 December 2013 Accepted 31 January 2014

This study investigates the relationship between a family business CEO’s autonomy and stewardship behavior. Building on psychological ownership theory, we argue that psychological ownership mediates the autonomy–stewardship relationship. In contrast to prior studies, we differentiate between individual-oriented and collective-oriented psychological ownership as two distinct dimensions of individual psychological ownership. Our results reveal that CEO autonomy is an important determinant of stewardship behavior and that this relationship is only mediated by individual-oriented psychological ownership. Moreover, both individual-oriented and collective-oriented psychological ownership are found to be antecedents of CEO stewardship behavior. ß 2014 Elsevier Ltd. All rights reserved.

Keywords: CEO autonomy Family business Psychological ownership Stewardship behavior

Introduction Stewardship theory argues that top managers are trustworthy, collectivists, and pro-organizational individuals who prefer the organization and its wellbeing as the center of attention under specific situations (Davis, Schoorman, & Donaldson, 1997). One of the best examples of such a specific situation may be the context of a family business. Family businesses are often depicted as firms whose members are bound by kinship, a common history, social status, trust, strong firm identification, and a deep emotional investment in the organization (Davis, Allen, & Hayes, 2010; Corbetta & Salvato, 2004; Gomez-Mejia, Haynes, Nunez-Nickel, Jacobson, & Moyano-Fuentes, 2007; Le Breton-Miller & Miller, 2009). Consequently, executives in family firms are supposed to act as stewards; in other words, they are intrinsically motivated to behave in the interests of the organization, which may lead to lower monitoring costs (Hoopes & Miller, 2006), fewer conflicts

* Corresponding author at: Hasselt University, KIZOK, Martelarenlaan 42, BE-3500 Hasselt, Belgium. Tel.: +32 11 268613. E-mail addresses: [email protected] (B. Henssen), [email protected] (W. Voordeckers), [email protected] (F. Lambrechts), [email protected].fi (M. Koiranen). 1 Tel.: +32 2 300 22 18. 2 Tel.: +32 11 268613. 3 Tel.: +32 11 268693. 4 Tel.: +358 40 501 2631.

(Eddleston & Kellermanns, 2007), and long investment time horizons that result in the development of distinctive core capabilities, competitive advantages, and higher financial returns (Miller & Le Breton-Miller, 2006; Davis et al., 2010). However, ‘‘not all kinds of family-controlled businesses are likely to breed such stewardship’’ (Miller & Le Breton-Miller, 2006, p. 74), which may explain behavioral differences within the group of family firms. Therefore, having a good understanding of the antecedents and situational mechanisms leading to family executives’ stewardship behavior is of utmost importance (Davis et al., 2010). Notwithstanding the importance of this topic, few papers to date investigated empirically the mechanisms and antecedents of stewardship behavior in family firms (a noteworthy exception is Davis et al. (2010), which focused on the antecedents value commitment, trust, and agency perceptions). We address this gap in the literature by examining how CEO autonomy affects stewardship behavior through psychological ownership (PSO) as a mediating variable. Feelings of autonomy and responsibility were recently suggested as a new important determinant of stewardship behavior (Hernandez, 2008, 2012). Indeed, corporate governance structures that give high authority and discretion to the steward-CEO are regarded as positive stimulants to pro-organizational behavior (Donaldson & Davis, 1991). The interpersonal trust in family firms constitutes a strong incentive to offer family executives – and, by extension, non-family CEOs (Karra, Tracey, & Phillips, 2006) – high levels of discretion and autonomy (Davis et al., 2010), making family firms an ideal context

http://dx.doi.org/10.1016/j.jfbs.2014.01.012 1877-8585/ß 2014 Elsevier Ltd. All rights reserved.

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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for investigating this antecedent of stewardship behavior. Hence, stewardship theory suggests that a positive link exists between offering autonomy to a CEO in his or her job and the CEO’s stewardship behavior (Davis et al., 1997, 2010). However, offering CEOs high levels of autonomy does not guarantee stewardship behavior. Generally, the literature that applied stewardship theory to family businesses overlooked the intervening mechanisms or mediating psychological processes that underlie the creation of CEOs’ stewardship behavior, making it difficult to appreciate why some CEOs demonstrate more pro-organizational value-creating attitudes and behavior than others. Therefore, and building on psychological ownership theory, we introduce PSO as a mediating variable in the CEO autonomy–stewardship behavior relationship (Hernandez, 2012). PSO is defined as a state in which individuals feel as though the target of ownership (material or immaterial in nature) or a piece of it is ‘‘theirs’’ (in other words, ‘‘It is MINE!’’) or ‘‘ours’’ (in other words, ‘‘It is OURS!’’) (Pierce, Kostova, & Dirks, 2001, p. 299; Pierce & Jussila, 2010). This paper makes several contributions to the literature on family businesses, stewardship theory, and the theory of PSO. We contribute to the literature on family businesses by focusing on a psychological factor – PSO – that helps explain the relationship between CEO autonomy and behavioral and organizational outcomes in a family firm context. Although some recent studies investigated PSO as a determinant of work attitudes (Sieger, Bernhard, & Frey, 2011) and pro-organizational behavior for family firm employees (Bernhard & O’Driscoll, 2011), none of them focused on PSO of the CEO. We also contribute to the PSO literature stream by introducing and examining two distinct dimensions of PSO: an individual-oriented dimension (‘‘I feel this is mine’’) (further abbreviated as IPSO) and a collective-oriented dimension (‘‘I feel this is ours’’) (further abbreviated as CPSO). Although not formally modeled or tested in prior research, the existence of both distinct dimensions was suggested in prior research (e.g., Van Dyne & Pierce, 2004; Pierce & Jussila, 2010). Furthermore, we refine the stewardship model (e.g., Hernandez, 2012) by adding two dimensions of PSO as direct determinants. The remainder of this paper is structured as follows. We start with a brief theoretical discussion of stewardship theory, IPSO, and CPSO. We derive hypotheses and test them empirically. We conclude with a discussion of the implications of our research. Literature review Stewardship theory and family firms Stewardship theory builds on the assumption that organizational, collectivistic behavior has higher utility for managers than individualistic, self-serving behavior. Even when the interests of the steward and the principal are not aligned, higher value is placed on cooperative behavior and, because this type of behavior serves greater utility, it is considered rational (Davis et al., 1997). Stewardship behavior is created by an ‘‘other-regarding’’ perspective and long-term orientation on the one hand, and an affective sense of connection with others on the other hand (Hernandez, 2012). A steward prefers the organization and its wellbeing (in terms of increasing organizational wealth) as the center of attention. Through the realization of organizational needs, a steward believes that personal needs are met. Hence, the steward’s behavior is aligned with the interests of the principal(s) (Davis et al., 1997). On several occasions, stewardship was applied to family firms because family firm CEOs often display the characteristics of a steward, and stewardship behavior is an important component of the competitive advantage of family businesses (Eddleston & Kellermanns, 2007; Le Breton-Miller & Miller, 2009; Miller, Le

Breton-Miller, & Scholnick, 2008; Zahra, Hayton, Neubaum, Dibrell, & Craig, 2008). For example, stewardship behavior in family firms has been positively linked to higher financial performance as opposed to non-family businesses (Eddleston & Kellermanns, 2007; Le Breton-Miller et al., 2006); lower monitoring costs and related increased resources to invest in the family firm (Hoopes & Miller, 2006); strategic flexibility that enhances organizational performance (Eddleston, 2008; Zahra et al., 2008); and perceived value commitment and trust among family and non-family members (Davis et al., 2010). As a result, family businesses have a high interest in stimulating stewardship behavior among their CEOs because doing so serves both organizational interests and the CEO’s personal interests (because stewards receive intrinsic satisfaction when the business flourishes) (Corbetta & Salvato, 2004; Eddleston & Kellermanns, 2007). Thus, the stewardship framework seems to provide a valuable and viable explanation for collectivistic, organization-centered behaviors that are often observed among family firm CEOs and that contribute significantly to family firms’ performance. As a result, gathering deeper insights into antecedents that lead to CEOs stewardship behavior appears valuable (Corbetta & Salvato, 2004; Davis et al., 2010; Eddleston & Kellermanns, 2007; Le Breton-Miller, Miller, & Lester, 2011). Generally, the literature that applies stewardship theory to family businesses overlooked the mechanisms or processes that underlie the creation of CEO stewardship behavior. Therefore, appreciating why some CEOs demonstrate more pro-organizational value-creating attitudes and behaviors than others is difficult. The next section directly discusses the concept of PSO in a family business context. In addition, we elaborate on two dimensions of PSO that are considered mediators in the CEO autonomy–stewardship behavior relationship: individual-oriented psychological ownership (IPSO) and collective-oriented psychological ownership (CPSO). Psychological ownership and family firms Pierce, Rubenfeld, and Morgan (1991) initially theorized the PSO construct. The core of PSO is a feeling of possessiveness and a strong psychological connection to an object (Pierce et al., 2001). PSO is defined as ‘‘a state in which individuals feel as though the target of ownership, being material or immaterial in nature, or a piece of it is ‘theirs’’’ (Pierce et al., 2001, p. 299). According to Pierce and colleagues, three routes lead to the formation of PSO: the possibility to control a target of possession, acquiring intimate knowledge of the target, and/or investing one’s self in this target. Additionally, PSO is theorized to satisfy (not cause) four human motives (‘‘roots’’): the human need for efficacy and effectance (in other words, to be in control), self-identity (in other words, to derive our self-perception from our (psychological) possessions), place (in other words, to belong somewhere, to feel at home), and stimulation (in other words, to activate or arouse, to store life’s meanings). Of particular importance to this paper is that offering CEOs substantial freedom in their jobs creates for them the opportunity to have a sense of control over the organization (O’Driscoll, Pierce, & Coghlan, 2006; Pierce, O’Driscoll, & Coghlan, 2004). As noted, a sense of control is one of the routes that may lead to PSO (McIntyre, Srivastava, & Fuller, 2009; Pierce et al., 2001, 2004). Therefore, CEOs autonomy and PSO are likely connected. In addition, authors theorized that the aforementioned ‘‘routes’’ and ‘‘roots’’ tightly link PSO to the very essence of what constitutes a family firm (Rantanen & Jussila, 2011). Family-owned firms fulfill family members’ needs for efficacy and effectance, self-identity, social identity, and having a place. The fulfillment of non-economic motives lies at the heart of family businesses (Gomez-Mejia et al., 2007). For example, in family firms, the routes to PSO translate into intimate knowledge

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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of the family firm, investing time and effort into the firm, and having factual or psychological control over the firm – three conditions that are present to a large extent among family owners and by extension among (non-shareholding) non-family CEOs and employees (e.g., Karra et al., 2006; Rantanen & Jussila, 2011; Sieger et al., 2011). Therefore, PSO and the family firm are tightly linked. Additionally, Hernandez (2012) theorized that each of the aforementioned roots of PSO (in other words, the needs for efficacy and effectance, for self-identity, social identity and having a place) is met with mechanisms that lead to stewardship behavior (for example, the control and reward systems manifested in stewardship governance, shared leadership practices, protective behavior toward organizational welfare, and affective mechanisms that develop a sense of emotional attachment). Given this link between PSO and stewardship behavior – argued to fit particularly the family business context (Davis et al., 1997, 2010) – and the importance of PSO to capture the essence of a family business, investigating the role of PSO in family firms is needed. However, whereas PSO has a solid grounding in organizational literature, the PSO construct is relatively new in family firm literature and scant empirical evidence exists on its role in family businesses. Nevertheless, its significance is recognized. For example, Eddleston & Kellermanns (2007) suggested PSO as a mediator between a stewardship philosophy of the family in business and actual stewardship behavior (Corbetta & Salvato, 2004; Zahra, 2003). The literature suggested ‘‘a stewardship philosophy to be common among successful family businesses’’ (Corbetta & Salvato, 2004; Eddleston & Kellermanns, 2007, p. 549), and this stewardship philosophy leads to (family and non-family) CEO PSO, which encourages CEO stewardship behavior (Corbetta & Salvato, 2004; Eddleston & Kellermanns, 2007; Hernandez, 2012; Le Breton-Miller et al., 2011). Sieger et al. (2011) shifted the attention from family members to non-family employees. The latter authors empirically studied affective commitment and job satisfaction among non-family employees, combined with justice perception and PSO and found that PSO mediates the relationship between distributive justice perceptions and both affective commitment and job satisfaction. Bernhard and O’Driscoll (2011) focused on PSO in small, family-owned businesses, combined with leadership style and non-family employees’ work attitudes and behavior. They found that PSO of the organization and the job mediated the relationship between leadership style and affective organizational commitment, job satisfaction, and turnover intentions. In addition, feelings of PSO for the family business mediated the relationship between transformational leadership and organizational citizenship behavior. Individual-oriented and collective-oriented psychological ownership Our thesis is that the mediating effect of PSO in the relationship between CEO autonomy and stewardship behavior needs specification in terms of two distinct dimensions: an individual-oriented dimension (‘‘I feel this is mine’’) and a collective-oriented dimension (‘‘I feel this is ours’’). Although not formally modeled or tested in prior research, the existence of both distinct dimensions was frequently suggested. First, Pierce and Jussila (2010) argued that a clear distinction exists between PSO as an individual-level construct and PSO as a group-level construct. An individual sense of control may lead to an individual having a sense of ownership over the organization, but this feeling is not necessarily shared with others. For the latter, the CEO needs to feel part of a significant group (‘‘us’’) that comes to feel a collectively shared ‘‘ours’’ (Pierce & Jussila, 2010). Pierce and Jussila (2010) argued that the transition between these two distinct levels occurs through an intermediary stage that they describe as ‘‘a shift in his/her personal reference from the self (in

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other words, a personal feeling that the target is MINE) to the group and the inclusions of others (in other words, the personal sense that the target is OURS)’’ (Pierce & Jussila, 2010, p. 813, italics added). Hence, this intermediary stage (individual feelings about the group, ‘‘OURS’’) may appear without reaching the group-level’s ‘‘extended sense of ‘us’’’ stage, which Pierce and Jussila (2010) labeled as collective psychological ownership (in other words, the collective sense of a group that a target is OURS). In this paper, we will focus on the two dimensions of individual psychological ownership (individual-oriented and collective-oriented psychological ownership). Inquiring into psychological ownership as a group-level construct (e.g., Pierce & Jussila, 2010) is beyond the scope of this paper. Second, although prior research did not consider the collectiveoriented dimension as a separate dimension, the concept is implicitly supported in measurement scales for psychological ownership that contain elements of both distinct dimensions of psychological ownership (e.g., Van Dyne & Pierce, 2004). For example, the original measurement scale of PSO developed by Van Dyne and Pierce (2004, p. 449) contains questions that refer to both an individual-orientation (‘‘This is MY organization’’) and a collective-orientation dimension (‘‘This is OUR company’’). An open question is whether both dimensions of individual psychological ownership can exist independently of each other. We argue that CEOs who are trusted – and offered greater autonomy as a result – are likely to reciprocate with similar behavior (Davis et al., 1997; Hernandez, 2012). As such, they may find it easier to consider the family firm as ‘‘ours’’, independently of their feelings of individual-oriented psychological ownership for the family firm. Therefore, we argue that both dimensions of psychological ownership, although they often may covary, may exists independently of each other, i.e., family firm CEOs may experience high levels of collective-oriented psychological ownership without necessarily experiencing high levels of individualoriented psychological ownership and vice versa.1 When studying family businesses – businesses based on a collectivity called ‘‘family’’ (Dyer, 2003) – our awareness is raised for the collective orientation of family firms’ CEOs that may lead to pro-organizational behavior. Rationally, the collective-oriented dimension of psychological ownership (in other words, the personal feeling that ‘‘this is OUR company’’) may potentially lead to different levels of stewardship behavior than the individual-oriented dimension of the construct (in other words, the personal sense that ‘‘this is MY organization’’). Hence, considering both individual-oriented ownership attitudes and feelings that may lead family firm CEOs to behave in the best interest of the firm and CEOs’ collective-oriented ownership feelings is of special relevance in family business research. In summary, we argued that (1) PSO is an important omitted mediating variable in the relationship between CEO autonomy and CEO stewardship behavior and (2) PSO has an individual-oriented and a collective-oriented dimension. The next section elaborates further on these arguments, discusses our overall model, and formulates hypotheses. Hypotheses development Fig. 1 represents our theorized model for the relationships among family firm CEO autonomy, stewardship behavior, and IPSO/CPSO. This section elaborates on the hypothesized relationships. We start building our model by theoretically establishing a 1 The idea that both dimensions of individual psychological ownership can vary independently is also supported by our data in which we find that 17% of the family firm CEOs experience a high level of collective-oriented psychological ownership but a low level of individual-oriented psychological ownership. The opposite combination is found in 11% of the firms in our sample.

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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4

H4 + H2 +

IPSO Stewardship behavior

CEO Autonomy CPSO H3 +

H5 + H1 +

Fig. 1. Theoretical model for the relationships between family firm CEOs autonomy, stewardship behavior, IPSO, and CPSO.

direct relationship between CEO autonomy and stewardship behavior. We then suggest direct relationships between CEO autonomy and IPSO and CEO autonomy and CPSO. We then examine the hypothesized mediating effects of IPSO and CPSO on stewardship behavior. Autonomy and stewardship behavior Although at first sight, that family firm CEOs have a high degree of autonomy seems self-evident, this self-evidence may not be the case because several types of family firm CEOs may find it challenging to gain substantial freedom, independence, and discretion in their job. For example, many family firms in later generations seem to suffer from the ‘‘shadow of the founder’’ syndrome, in other words, ‘‘a prior generation’s excessive and inappropriate involvement in an organization, possibly causing social disruptions in the organization’’ (Davis & Harveston, 1999, p. 311). The interference of the founder with the successor’s leadership may substantially blur the discretion and autonomy of the descendant CEO. Likewise, non-family CEOs may face dominant family shareholders who constantly interfere in business decisions, thereby impeding the necessary CEO empowerment. As such, the expected variation in family firm CEO autonomy levels provides a rewarding context for investigating the autonomy–stewardship relationship. ‘‘Stewardship theorists argue that the performance of a steward is affected by whether the structural situation in which he or she is located facilitates effective action’’ (Davis et al., 1997, p. 25). In this light, Davis et al. (1997) connected CEO autonomy with stewardship behavior. They reasoned, ‘‘a steward’s autonomy should be deliberately extended to maximize the benefits of a steward, because he or she can be trusted’’ (Davis et al., 1997, p. 25). Moreover, Hernandez (2008) argued that the regulation of one’s own actions and a sense of choice promote stewardship. Similarly, Wagner, Parker, and Christiansen (2003) found that employees offered the possibility to participate in decision making, thus giving them more control over their actions, are more likely to act in the best interest of the organization (see also: Liu, Wang, Hui, & Lee, 2012). Thus, a positive relationship may exist between CEO autonomy and stewardship behavior in the sense that CEO autonomy adds to the executive’s stewardship behavior. Hypothesis 1. A family business’ CEO autonomy is positively related to his or her stewardship behavior. Autonomy and individual-oriented psychological ownership Organizational literature suggested that offering CEOs a high level of autonomy can create feelings of possessiveness over certain targets of possession (for example, the family firm) (O’Driscoll et al., 2006; Pierce et al., 2004). Autonomy may give the CEO the possibility of gaining a sense of control over diverse targets of possession (O’Driscoll et al., 2006; Pierce et al., 2004; Liu et al., 2012). These targets become ‘‘his’’ or ‘‘hers’’ (for example, ‘‘this is MY organization’’). In a study of 284 employees and their

105 direct supervisors, Liu et al. (2012) found that when employees experience freedom, independence, and discretion in their work, their feelings of psychological ownership are enhanced. By having ‘‘more control over the processes of deciding who performs which task, when to perform them, and how to make work related decisions,’’ their job becomes ‘‘theirs’’ (Liu et al., 2012, p. 874). In family firms, a higher propensity exists that the target of possession is the family firm itself because the focus of attention is likely on communalities among family firm stakeholders. That is, family and non-family members in family businesses are bound by their (quasi-) kinship ties, a common history, social status, familiarity, and enduring attachment of its (family) members (Gomez-Mejia et al., 2007; Karra et al., 2006; Kets de Vries, 1993; Littunen, 2003; Sundaramurthy & Kreiner, 2008; Westhead, Cowling, & Howorth, 2001). From this discussion, we deduce that offering family firm CEOs higher levels of autonomy promotes their individual feeling of PSO over the family firm (in other words, IPSO). Therefore, we propose: Hypothesis 2. The autonomy of a family business’ CEO is positively related to his or her individual-oriented psychological ownership. Autonomy and collective-oriented psychological ownership It is our thesis that offering CEOs a higher level of autonomy, and thereby creating for them a heightened sense of control, is also likely to foster collective-oriented psychological ownership (CPSO) next to individual-oriented psychological ownership (IPSO). However, the process suggested to link CEO autonomy with CPSO is different from the process that links IPSO with CEO autonomy. CEOs do not act in a social vacuum; they influence and are influenced by significant others in the firm. CEOs who are trusted – and are offered greater autonomy as a result – are likely to reciprocate with similar behavior to others (Davis et al., 1997; Hernandez, 2012). As such, they may consider more easily the family firm as ‘‘ours’’, thus experiencing CPSO. Insights drawing on self-determination theory (Ryan & Deci, 2000) reinforce this reasoning. Quinn and Dutton (2005) argued that the more actors feel they are building and maintaining high-quality relationships (Bouwen, 1998; Dutton, 2003; Lambrechts, Grieten, Bouwen, & Corthouts, 2009) that enable them to fulfill their needs for autonomy, competence, and connectedness, the more they are likely to engage in repeated energized collective action. Moreover, previous research showed that family firms’ members are apt to build relationships of community and connections (in other words, feelings of ‘‘ours’’) because they are frequently given opportunities to increase autonomy, personal growth, and responsibility (Miller, Lee Chang & Le Breton-Miller, 2009). Therefore, we hypothesize that: Hypothesis 3. The autonomy of a family business’ CEO is positively related to his or her collective-oriented psychological ownership. Stewardship behavior and individual-oriented psychological ownership Individual feelings of ownership over the organization (in other words, IPSO) are often accompanied by an enhanced feeling of responsibility to invest time and energy to advance the organization, to protect and care for this target of possession, and to make personal sacrifices (Pierce et al., 2001). Thus, when the CEO feels IPSO, he or she may find his or her interests aligned with those of the family owners when the latter have the wellbeing of the family business at heart. Additionally, family business literature provides us with indications that IPSO and stewardship behavior are correlated. For example, Eddleston and Kellermanns (2007) pointed out that

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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PSO mediates the relationship between a stewardship philosophy (in other words, giving more CEO autonomy) and stewardship behavior (although they do not formally test the relationship). When a CEO experiences IPSO, the CEO is expected to demonstrate stewardship behavior because feelings of ownership come with ‘‘responsibilities – to protect, to care and make sacrifices for, and to nurture and develop the target of ownership’’ (Pierce et al., 2001, p. 303). A long tradition exists in family business research that supports family firm CEO behavior of this nature, such as loyalty and commitment toward the firm (Sharma & Irving, 2005), protective behavior, responsible behavior (Arre`gle, Hitt, Sirmon, & Very, 2007), and altruism toward family members (Schulze, Lubatkin, Dino, & Buchholtz, 2001; Schulze, Lubatkin, & Dino, 2003). Therefore, based on PSO and family business literature (e.g., Eddleston & Kellermanns, 2007; Wagner et al., 2003), we predict that when the family firm CEO experiences IPSO, he or she is more likely to behave as a steward (Hernandez, 2012). Combining the hypothesized relationships between CEO autonomy–stewardship behavior (Hypothesis 1), CEO autonomy–IPSO (Hypothesis 2), and the previously argued IPSO– stewardship behavior, we suggest that IPSO is an important overlooked mediator in the CEO autonomy–stewardship relationship. We point out that this process is not restricted to family CEOs but may also extend beyond the family (e.g., Davis et al., 2010; Karra et al., 2006; Zellweger, Eddleston, & Kellermanns, 2010). Therefore, we propose that: Hypothesis 4. The individual-oriented psychological ownership of the family business’ CEO toward the family business mediates the relationship between his or her level of autonomy and stewardship behavior. Stewardship behavior and collective-oriented psychological ownership When the family firm CEO experiences CPSO, the interests of family owners and family firm CEOs likely become naturally aligned. That a family firm CEO has CPSO without interest alignment becomes less likely because CPSO is supportive of ‘‘a collective culture that has been presented as an important situational mechanism associated with stewardship in organizations’’ (Davis et al., 2010, p. 1096; Pierce & Jussila, 2010). This collective culture has also been described as clan-based collegiality and a sense of connection that creates an atmosphere of trust and ‘‘our-ness’’ between family owners and family firm CEOs (Davis et al., 2010; Hernandez, 2012; Karra et al., 2006; Ouchi, 1980; Pierce & Jussila, 2010). A natural alignment of interests may be the result, and family firm CEOs with a CPSO are expected to behave as stewards. Feeling like a joint owner (in other words, a collective-oriented psychological owner) and being part of a significant group (in other words, top management members, both family and nonfamily, including family owners) add to a CEO’s willingness to contribute to the greater good of the company. Doing so also meets a CEO’s needs (Davis et al., 1997; Hernandez, 2012). Therefore, the alignment of interests between family owner(s) and family firm CEOs is to be expected when family firm CEOs experience CPSO. Adding up the relationships between the autonomy of family firm CEOs and stewardship behavior (Hypothesis 1), CPSO (Hypothesis 3), and the hypothesized relationship between CPSO and stewardship behavior, we suggest that CPSO constitutes an important overlooked mediator in the (family and non-family) CEO autonomy–stewardship behavior relationship. This reasoning is reflected in the hypothesis:

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Hypothesis 5. The collective-oriented psychological ownership of the family business’ CEO toward the family business mediates the relationship between his or her level of autonomy and stewardship behavior.

Methodology Sample and data collection The empirical data presented here are based on a selfconducted survey among a sample of 111 family firms in Finland. The respondents were the CEOs of small, mid-size, and large family-owned businesses in Finland. Family firms were identified by their listing on the official state-governed list of family firms by the Ministry of Trade and Industry of Finland, which uses the following criteria to identify family firms: (1) the majority of votes is in the possession of the natural person(s) who established the firm, in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the possession of their spouses, parents, or child’s or children’s direct heirs; (2) the majority of votes may be indirect or direct; (3) at least one representative of the family or kin is involved in the management or administration of the firm; and (4) listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or his or her families or descendants possess 25% of the right to vote as mandated by their share capital (Finnish Ministry of Trade and Industry, 2006, p. 37). Based on these criteria, we retrieved a list of all mid-size and large family firms in Finland and a representative sample conducted together with Statistics Finland of small family businesses in Finland. We sent out 1200 questionnaires to family firm CEOs based on a random sample of small, mid-size, and large family firms. One hundred and eleven questionnaires were returned, a response rate of 9.25%, which is in line with previous studies on upper echelons (Schulze et al., 2003) and on psychological ownership of top executives (Sieger, Zellweger, & Aquino, 2013). We conducted additional tests for non-response bias. More specifically, we compared data from early and late respondents to test whether late respondents resembled more non-respondents than early respondents (Oppenheim, 1966). Using independent samples t-tests, we found no significant differences in the mean scores of our variables, indicating that non-response bias was not a major concern in our study (Geletkanycz, 1998; Hambrick, Geletkanycz, & Fredrickson, 1993). To control for potential problems of common method bias, we employed different procedural and statistical techniques following the guidelines of Podsakoff, MacKenzie, Lee, and Podsakoff (2003). First, before sending them, the survey items on the questionnaire were reviewed among a group of family business scholars (improving validity). Where possible, we used previously translated and tested survey items and measurement scales. The possibility of translation errors was accounted for by cross-checking using a group of family business scholars. The English version of the questionnaire was pilot tested on a small sample of three family firm CEOs and feedback was incorporated into the final version. Second, questionnaires were addressed to the CEO of the company (protecting respondent anonymity and reducing evaluation apprehension). A cover letter was added that stated the goals and importance of the research, the expected return date of the questionnaire, a guarantee of confidentiality, researchers’ contact information, and the option to receive the results of the research. Third, to address potential problems related to self-reporting, we conducted a Harman’s single factor test (Harman, 1967; Podsakoff & Organ, 1986) to investigate whether the majority of

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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the variance can be explained by a single factor. The basic assumption of this test is that if a substantial amount of common method variance is present, either a single factor will emerge from the factor analysis or one factor will account for the majority of the covariance in the independent and the criterion variables (Podsakoff & Organ, 1986). The test included 17 individual items for CPSO, IPSO, CEO autonomy, and CEOs stewardship behavior. An exploratory factor analysis with the 17 items led to a four-factor solution that explained 66.60% of the total variance. The first factor explained only 32.26% of the total variance, providing evidence that no single factor accounts for the majority of the variance observed. Furthermore, the results of a varimax rotated principal component analysis showed that the three items assessing stewardship behavior and the six items measuring autonomy all grouped into different variables. The results of these procedural and statistical techniques suggested that common method bias is not a major problem in the current study (Podsakoff et al., 2003). Measures Dependent variables Stewardship behavior. CEOs’ stewardship behavior was measured using the Davis et al. (2010) three-item measure of stewardship (see Appendix A) (Cronbach’s alpha: 0.74). The main reason for using these questions from Davis et al. (2010) that focused on the leaders of the organization and not on the individual CEO is that the measure lends itself very well to applying an often used indirect questioning technique to mitigate the effects of social desirability bias (Fisher, 1993; Fisher & Tellis, 1998). Similar to all self-reported prosocial behavior, self-reported stewardship behavior (acting pro-organizationally as otherserving steward) is particularly prone to social desirability bias (Fernandes & Randall, 1992). In other words, social desirability bias – ‘‘systematic error in self-report measures resulting from the desire of respondents to avoid embarrassment and project a favorable image to others’’ (Fisher, 1993, p. 303) – is ‘‘one of the most pervasive response biases’’ in survey data (Mick, 1996, p. 106), compromising their validity (Zerbe & Paulhus, 1987; Steenkamp, De Jong, & Baumgartner, 2010). Because of the high chance of socially desirable responses from CEOs regarding their stewardship behavior, we opted for indirect questioning instead of direct questioning. Typically, respondents are asked to answer questions/score items about how another person or group similar to them thinks or acts in a particular situation. This approach allows respondents to openly describe the thoughts or actions of a similar group, thereby revealing more truthfully their own opinions or behavior because they use the latter as their reference point. The Davis et al. (2010) scale items allow CEOs to score items regarding how their organization’s leaders (a similar group of which they are ‘‘de facto’’ the main leaders) act concerning stewardship behavior (a social-sensitive topic prone to social desirability bias), thereby revealing more truthfully their actual stewardship behavior. Independent variables IPSO and CPSO. Both dimensions of psychological ownership (IPSO and CPSO) are measured using a seven-point Likert scale (1 = strongly disagree, 7 = completely agree) created by Van Dyne and Pierce (2004). We also added the statements, ‘‘I act as though this organization is ‘ours’’’ and ‘‘I act as though this organization is ‘mine’’’ to the original scale. These items add an additional layer of actual behavior to the scale. From a theoretical perspective, we suggest that this approach is a valuable addition. When a feeling of PSO is accompanied by actual behavior, it is even more credible that IPSO and CPSO are in place. For example, CPSO has been defined as a feeling of ‘‘our-ness’’ combined with actions toward

the target of possession (Pierce & Jussila, 2010, 2011). Therefore, adding the statement, ‘‘I act as though this organization is ‘ours’’’ seemed obvious. A similar logic applies to IPSO. After conducting principal component factor analysis with varimax rotation, we found the statement, ‘‘Most of the people that work for this organization feel as though they own this company’’ to load poorly; thus, we excluded this item. Our factor analysis revealed two factors that could be labeled as individual-oriented and collectiveoriented psychological ownership, in line with our theoretical argument that individual psychological ownership has two distinct dimensions. The Cronbach’s alphas are 0.82 and 0.83 for CPSO and IPSO, respectively (see Appendix A). Autonomy. Autonomy has been measured in several ways. For example, O’Driscoll et al. (2006) measured autonomy as part of the work environment structure of the employee. However, building on Davis et al. (1997) and Hernandez (2008, 2012), we measured autonomy as a perception by the CEO about the levels of authority and discretion that are offered by the family firm. These levels of authority and discretion are based on the interpersonal trust present in the family firm and function as a corporate governance instrument (Davis et al., 2010). Our measure for CEO autonomy was derived using the six items on perceived autonomy from the Job Characteristics Inventory developed by Sims, Szilagyi, and Keller (1976). Respondents were asked to indicate on a seven-point Likert scale the extent to which they agreed with the statements (for example, ‘‘I have the freedom to do almost everything I want in my job’’; 1 = strongly disagree 7 = completely agree). The Cronbach’s alpha is 0.86. The scale items can be found in Appendix A. Control variables We included a total of three control variables to reduce variance extraneous to the research question that may hamper interpretation. First, we controlled for firm size, which was measured – correcting for skewness – by the natural logarithm of the number of employees. Second, firm age (Sieger et al., 2011) was included – correcting for skewness – as the natural logarithm of company age. Third, we included as a control variable whether the CEO holds shares of the company (Yes = 1; No = 0) (Culpepper, Gamble, & Blubaugh, 2004; Van Dyne & Pierce, 2004). These three control variables were included because they can relate to our variables of interest (Chi & Han, 2008; Culpepper et al., 2004; Pierce et al., 1991; Sieger et al., 2011; Van Dyne & Pierce, 2004). To test the possibility of other extraneous variables that might correlate with several variables in our model, we additionally controlled for the generation in charge of the management in the family firm and for the generation that holds the majority of the shares in the family business. The reason is that founders may have different levels of autonomy, stewardship behavior, IPSO, or CPSO than nextgeneration CEOs (Pierce et al., 2001; Pierce & Jussila, 2010, 2011). Because our small dataset limited the options for the inclusion of additional control variables, we controlled for these variables separately and found that the results were only marginally different (cf. Bernhard & O’Driscoll, 2011). Therefore, the only results presented are those with the aforementioned three control variables. Analysis We used ordinary least squares regression analysis to test the direct effects in our model. Furthermore, we followed Baron and Kenny (1986) to test our mediating effects and tested the significance of these effects using the Sobel test (MacKinnon, Lockwood, Hoffman, West, & Sheets, 2002; Sobel, 1982, 1986). For mediation to be present, four conditions must be satisfied: (1) the independent variable must have an effect on the dependent variable; (2) the independent variable must have an effect on the mediator; (3) the mediator must have an effect on the dependent

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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Table 1 Means, standard deviations (SD), and Pearson’s correlations.

1 2 3 4 5 6 7

CPSO IPSO Autonomy Stewardship behavior Company age (ln) Company size (ln) CEO shares

Mean

SD

1

2

3

4

5

6

17.70 27.08 33.93 15.89 3.66 3.63 0.80

3.01 5.97 5.91 2.84 0.75 2.08 0.40

1 .323** .078 .362** .139 .052 .187

1 .428** .375** .196* .202* .162*

1 .266* .069 .289* .150

1 .021 .144 .191*

1 .467** .346**

1 .331**

Listwise N = 84. * p < 0.05. ** p < 0.01.

Table 2 Regression analysis results-mediating effect of IPSO on stewardship behavior. Variables

Model 1

Model 2

Model 3

Dependent variable

Stewardship

IPSO

Stewardship

Control variables Company age (ln) Company size (ln) CEO shares

0.394 0.179 1.287

Independent variable/mediator Autonomy IPSO Constant F-statistics R2 Sobel test

14.076 1.146 0.052

Model 5

0.490 0.084 1.042 0.433**

**

Model 4

0.128y

*

0.062 0.152y 9.670** 5.297** 0.154 z = 2.219; p < 0.05

**

12.404 10.211** 0.187

11.559 3.823y 0.071

0.046 0.153y 7.848y 2.627* 0.181

Listwise N = 84. * p < 0.05. ** p < 0.01. y p < 0.10.

variable, which is tested by investigating the simultaneous effect of the mediator and the independent variable on the dependent variable; and (4) the effect of the independent variable on the dependent variable has to be significant and weaker than under (1) (partial mediation) or become non-significant (full mediation) when simultaneously investigating the effects of the independent variable and the mediator on the dependent variable (Baron & Kenny, 1986). To address possible multicollinearity issues, we found that variance inflation factors did not exceed 1.37 and the condition index did not exceed 19.50, suggesting that multicollinearity was not a concern. We conducted a Breusch-Pagan/Cook-Weisberg test (BandP test) and a White test (Breusch & Pagan, 1979; White, 1980). Based on the results of these tests, we decided to use robust standard errors to correct for potential heteroskedasticity problems. We used the Ramsey test to look for model misspecification problems and concluded that our model was specified correctly (Ho: model has no omitted variables; F = 2.15; Prob > F = 0.1006) (Ramsey & Alexander, 1984). Results Main results Our median Finnish firm is 35 years old, has 19 employees, and in 80% of the cases, the CEO has shares in the company. Table 1 displays the zero-order correlations for the variables of interest combined with their statistical significance, means, and standard deviations. Tables 2–5 present the results of our regression analysis, which is the core of this paper and provides an answer to whether the data support our hypotheses. The results are presented as a model

only with the control variables, followed by a model of the effect of the independent on the dependent without the control variables, and, finally, a column with the full model. Hypothesis 1 is supported: the autonomy of family business CEOs is positively related to stewardship behavior (Table 2, model 3). We also find support for Hypothesis 2, which proposed a positive relationship between CEO autonomy and CEO IPSO (Table 2, models 2). Hypothesis 3 is not supported: CEO autonomy does not lead to CPSO (Table 3, model 2). Hypothesis 4 is supported (Table 2, models 1–5) and predicted that the effect of the autonomy of family firm CEOs on CEO stewardship behavior is mediated by the CEO’s level of IPSO. Following the definition for full or partial mediation (Baron & Kenny, 1986), the data show full mediation by

Table 3 Regression analysis results – direct effect of IPSO on stewardship behavior. Variables

Model 1

Model 2

Model 3

Dependent variable Stewardship behavior Control variables Company age (ln) Company size (ln) CEO shares

0.394 0.179 1.287

Independent variable IPSO Constant F-statistics R2

14.076** 1.146 0.052

0.544 0.119 1.076

0.178** 11.056** 9.498** 0.141

0.172** 8.825* 3.197* 0.174

Listwise N = 84. y p < 0.10. * p < 0.05. ** p < 0.01.

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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Table 4 Regression analysis results-mediating effect of CPSO on stewardship behavior. Variables

Model 1

Model 2

Model 3

Dependent variable

Stewardship

CPSO

Stewardship

Control variables Company age (ln) Company size (ln) CEO shares

0.394 0.179 1.287

Independent variable/mediator Autonomy CPSO Constant F-statistics R2 Sobel test

Model 4

Model 5

0.535 0.191 0.686

14.076** 1.146 0.052

0.040

0.128y

16.354** 0.491 0.006

11.559** 3.823y 0.071

0.115y 0.324* 6.262* 6.255** 0.188 z = 0.678 non-significant

0.093 0.335** 5.002 3.044* 0.216

Listwise N = 84. * p < 0.05. ** p < 0.01. y p < 0.10.

Table 5 Regression analysis results – direct effect of CPSO on stewardship behavior. Variables

Model 1

Dependent variable

Stewardship behavior

Control variables Company age (ln) Company size (ln) CEO shares

0.394 0.179 1.287

Independent variable CPSO Constant F-statistics R2

14.076** 1.146 0.052

Model 2

Model 3

0.623 0.277 0.773 0.341** 9.848** 7.452** 0.134

0.353** 7.745y 2.999* 0.182

Listwise N = 84. * p < 0.05. ** p < 0.01. y p < 0.10.

IPSO, and the Sobel test indicates that this mediation is significant (z = 2.219, p < 0.05). Table 3 confirms the direct effect of IPSO on stewardship behavior, a necessary condition for mediation. Because CEO autonomy does not lead to CPSO, Hypothesis 5 is not supported. CPSO does not mediate the relationship between CEO autonomy and CEO stewardship behavior (Table 4, models 1– 5). Conditions 1, 3, and 4 in the mediation model were supported. We found a positive relationship between CEO autonomy and stewardship behavior (Table 2, models 1 and 3). Additionally, the simultaneous effect of CPSO and CEO autonomy on stewardship behavior was significant (Table 2, model 5). We also regressed CPSO on stewardship behavior because we wanted to confirm the suggestion in the literature on whether CPSO leads to stewardship behavior (Pierce & Jussila, 2010, 2011). We found a positive significant relationship (Table 5, models 1–3). However, because the relationship between CEO autonomy and CPSO was missing (condition 2; Baron & Kenny, 1986), not all of the conditions were met to find mediation (Baron & Kenny, 1986). Non-mediation was confirmed by the Sobel test (Table 4). Thus, both CEO autonomy and CPSO lead to stewardship behavior, but CPSO does not act as a mediator between the CEO autonomy–CEOs stewardship behavior relationship. Additional robustness checks In the previous sections, we assumed that the results for family CEOs and non-family CEOs would be similar. We suggest that the

family firms in our sample have a strong tendency to regard nonfamily CEOs as so-called ‘‘extended family’’ (in other words, clanbased involvement that exceeds the nuclear family and that fosters trust among family and non-family members), for which similar processes apply as their family member counterparts (Karra et al., 2006; Ouchi, 1980; Pagliarussi & Rapozo, 2011). However, we tested this assumption using t-test analysis and found differences in the mean of family and non-family CEO IPSO and stewardship behavior. t-Test analysis revealed that family CEOs have significant higher levels of IPSO and stewardship behavior. No significant differences were found in the mean of family and non-family CEO level of autonomy and CPSO. Hence, family members and nonfamily members seem not to have significantly different substantial freedom with which they are provided (in other words, level of autonomy) and their level of CPSO, but differ in their level of stewardship behavior and IPSO. However, both family and nonfamily have quite high levels of IPSO and stewardship behavior, suggesting that ‘‘extended family’’ processes could be at work (Karra et al., 2006). Therefore, we executed additional regressions models in which we added a dummy variable to capture family CEO versus non-family CEO status. The results of this additional regression model are similar to our main findings.2 An additional question could be whether actual ownership instead of psychological ownership drives the relationships found in this paper. However, literature and research extensively showed that formal ownership and psychological ownership, although related constructs, have different foundations (a feeling versus a state), routes (for example, intimate knowledge, self-investment, and control over the target; Pierce et al., 2001), and consequences (for example, affective commitment) (Pierce et al., 2001; Pierce & Jussila, 2011; Bernhard & O’Driscoll, 2011; Rantanen & Jussila, 2011; Liu et al., 2012). Although actual ownership could lead to feelings of psychological ownership, it not necessarily does (Pierce et al., 2001). This issue is illustrated by the low correlations between ownership and psychological ownership found in our data (see Table 1). The correlation between our variables ‘‘CEO shares’’ and CPSO is 0.187 (p = 0.088) and between ‘‘CEO shares’’ and IPSO is 0.323 (p = 0.003). Moreover, psychological ownership may exist in the absence of formal ownership or formal ownership may exist without the presence of feelings of psychological ownership (Sieger et al., 2013). An example of the latter may be 2 We did not have the family versus non-family status of the CEO available for all firms in the sample. Using this control variable reduces the sample size to 74 cases. Therefore, we decided not to include this control variable in the main regression models in ‘‘Main results’’.

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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found when the family firm has several owners who are not involved in its management or treat the firm as a passive investment (Rantanen & Jussila, 2011; Chua, Chrisman, & Sharma, 1999). Finally, because a theoretical relationship may exist between CPSO and IPSO, we also tested multiple mediation models in which we introduced both mediators simultaneously. The results (not reported) were qualitatively the same as the individual models. Discussion and conclusion Theoretical implications During the past decade, an extensive body of research examined the factors that distinguish successful family firms from less successful ones (e.g., Eddleston, Kellermanns, & Sarathy, 2008). Prior research suggested that stewardship behavior might be a specific resource that can contribute positively to achieving a competitive advantage in family firms (Davis et al., 2010). Although family firms are said to be a fruitful arena for the development of stewardship relationships, why top executives in family firms behave or do not behave as stewards remains a puzzle. Our findings put some pieces of the puzzle on the table and show that family firm CEOs with high levels of autonomy assigned to them are more likely to behave as stewards (Hypothesis 1), which is in line with the hypothesized relationship between autonomy and stewardship behavior in Davis et al. (1997). In the context of family firms, this relationship should be of particular importance because the ‘‘characteristics of family business appear to be a great fit with good stewardship, which involve individuals supporting a firm-level rather than an individual level view of organizational governance’’ (Davis et al., 2010, p. 1095). However, stewardship behavior is certainly not self-evident in family firms, but is the result of a diverse set of antecedents (Davis et al., 2010). Consequently, the question of whether family CEOs behave as stewards or not (e.g., Chrisman, Chua, Kellermanns, & Chang, 2007) seems a far-stretched simplification of a much more complex debate. Therefore, we examined CEO autonomy as a new determinant of stewardship behavior in family firms. Our results confirm that offering substantial discretion to family firm CEOs should maximize the benefits of a steward (Davis et al., 1997). Hence, we contribute to a better understanding of the conditions under which family firm CEOs demonstrate pro-organizational value-creating attitudes and behaviors. In this paper, we modeled and found empirical support for the existence of two distinctive dimensions of psychological ownership as an individual-level psychological state: individual-oriented and collective-oriented psychological ownership. Although implied in measurement scales of psychological ownership (e.g., Van Dyne & Pierce, 2004) and suggested by Pierce and Jussila (2010) in their proposal of a three-stage process explaining psychological ownership that moved from the individual to the group level, we know of no prior empirical work that explicitly theorized or tested the multi-dimensional nature of individual-level psychological ownership. However, distinguishing between the two dimensions of individual psychological ownership is important for at least two reasons. First, if the goal is to build and validate a research instrument (see Van Dyne & Pierce, 2004; Pierce & Jussila, 2010) that grasps as much as possible the psychological ownership construct in all of its richness and complexity, accounting for both its multidimensional (individual-oriented, collective-oriented) and multi-level (individual, group) nature is necessary. In this way, empirically assessing the evolutionary stage of the construct in

9

transitioning from the individual level to the group level also becomes possible (e.g., Pierce & Jussila, 2010). Second, it allows for more nuanced or fine-grained theory-building efforts concerning psychological ownership. To date, the intermediary stage, through which psychological ownership transitions from an individual to a group level state, is hardly understood. Treating that stage as a distinctive measurable dimension of individual psychological ownership (in other words, CPSO) might be a promising way forward. In addition, we refined the stewardship model by adding a mediating psychological factor that sheds additional light on the CEO autonomy–stewardship relationship and that argues in favor of stewardship argumentations in family businesses (e.g., Davis et al., 1997, 2010; Chrisman et al., 2007; Corbetta & Salvato, 2004; Eddleston & Kellermanns, 2007; Le Breton-Miller et al., 2011). Recently, Hernandez (2012) suggested PSO as a mediator between psychological and structural factors (for example, cognitive and affective mechanisms, control and reward systems) on the one hand and stewardship behavior on the other hand. Eddleston and Kellermanns (2007) also suggested a similar relationship in a family business context and proposed PSO as a mediator between a stewardship philosophy and stewardship behavior. Our paper built further on this concept to come to a model that connects a family business CEOs’ level of autonomy, stewardship behavior, IPSO, and CPSO. We extended the insights of the aforementioned authors by introducing into the equation and testing what we suggest to be two clearly theoretically and empirically distinct dimensions of PSO: IPSO and CPSO. In support of this thesis, we found different results for IPSO and CPSO. For example, our data showed that family firm CEOs’ level of autonomy led to an individual-oriented feeling of ownership but not to a collective-oriented one. In addition, CPSO does not mediate the CEO autonomy–stewardship relationship but is found to be a direct antecedent of stewardship behavior. The reason why we did not find a significant positive relationship between the level of CEO autonomy and CPSO might well be that other variables, which we did not measure, also positively impact on the development of CPSO. For example, drawing on self-determination theory, we suggest that the opportunity to fulfill one’s needs for competence (i.e., the desire to effectively deal with the environment) and relatedness (i.e., the wish to build positive relationships with others, to care for others and the feeling to be cared for) might also be determinants of the individual feeling of ‘‘ourness’’ and collective energized action (e.g., Ryan & Deci, 2000; Quinn & Dutton, 2005). Our results show that, for IPSO formation, the level of experienced autonomy among family firm CEOs, which widens their opportunity to gain control over the family business, seems decisive. Moreover, we found that both IPSO and CPSO led to family firm CEOs’ stewardship behavior, which is in line with the suggested relationship by Hernandez (2012). However, we refined the model of Hernandez (2012) by arguing that this relationship exists for different reasons when considering the two distinct dimensions (IPSO and CPSO) of psychological ownership. Therefore, our findings reveal that the antecedents and consequences of IPSO and CPSO can differ significantly. Practical implications Our results also have important practical implications. We explained before that CEO autonomy in family firms may be hampered by the ‘‘shadow of the founder’’ syndrome in later generation family firms (Davis & Harveston, 1999), often leading to a pattern of increasing conflicts. Our results reveal another harmful mechanism for family firm conduct in addition to the conflict issue: lower CEO autonomy leads to less feelings of psychological ownership and lower levels of stewardship behavior. Therefore,

Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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family firms going through a generational succession phase and their consultants should pay much more attention to avoid a founder shadow effect, preserve the stewardship governance model and consequently, sustain the competitive advantages of the family firm. Similarly, non-family CEOs may face dominant family shareholders who interfere in business decisions, deteriorating CEO autonomy. The establishment of family governance institutions such as a family council may provide ‘‘a mechanism for nonfamily CEOs to encourage family participation in the business without fearing intrusiveness in their own activities’’ (Blumentritt, Keyt, & Astrachan, 2007) and, consequently, may be an essential instrument to reach and maintain a high degree of CEO autonomy.

Appendix A. Scale items, factor loadings, and reliabilities

Construct

Item

FL

a

Individual oriented psychological ownership

This is MY organization I feel a very high degree of personal ownership for this organization I sense that this is MY company It is hard for me to think about this organization as MINE (reversed) I act as though this organization is MINE

0.71 0.69

0.83

Collective oriented psychological ownership

I sense that this organization is OUR company This is OUR company I act as though this organization is OURS

0.79

Autonomy

I have the freedom to exercise my job as a CEO I have the freedom to do almost everything I want in my job I have the opportunity to think and act independently I have control over my own work pace I have the opportunity to exercise my job as a CEO independently from the Board of Directors I have the opportunity to exercise my job as a CEO independently from others

0.79

Our organization’s leaders have initiatives that serve the company’s interests more than their own I believe that our organization’s leaders have initiatives that are credible and attractive The leaders of our organization take a long-term more than short-term approach to business

0.86

Limitations This study has some limitations that may provide interesting avenues for future research. First, our cross-sectional research approach places constraints on the direction of the causal effects we found. However, previous theoretical work lends abundant support to the subsequent causal relationships presented in our model, which eases causality concerns (Eddleston & Kellermanns, 2007; Hernandez, 2012; Pierce & Jussila, 2010; Wagner et al., 2003). Second, other mediating (or moderating) variables may exist of which we have no knowledge. These variables may provide additional explanations for the effects we found and calls for further research on variables that may help shed light on the relationship between the autonomy and stewardship behavior of family firm CEOs. For example, investigating whether a situation that leads to CEO autonomy may moderate the autonomy–stewardship relationship would be interesting. A founder CEO will more naturally achieve high CEO autonomy as a consequence of his majority ownership whereas a descendant or non-family CEO may receive high autonomy as a result of his or her trusting relationships with the key stakeholders of the firm. Third, in the hypotheses development section we argued for a positive relationship between increased autonomy and a heightened sense of control. Future research might benefit from linking autonomy also with the two other routes leading to PSO (acquiring intimate knowledge of the target and/or investing one’s self in this target) and the roots or human motives of PSO (need for self-efficacy, self-identity, having a place) (Pierce et al., 2001). Fourth, the relationships in our sample might be driven by the fact that the focus of this study rests on the CEO as the main leader of the organization. However, because any bias affects our entire sample in a similar fashion – either enhancing or mitigating possible relationships in the same way – we believe that this problem is not major. Finally, family firms are a very valuable context to investigate the autonomy–stewardship relationship and the mediating effect of psychological ownership. It would be an interesting avenue for future research to investigate whether our findings also hold for samples of nonfamily firms. In summary, this study added insight into the important question why some top executives in family firms behave as stewards, while others do not. CEOs with high levels of autonomy assigned to them are more likely to behave as stewards and this relationship is mediated by their individual-oriented psychological ownership. However, many intriguing questions could be inferred from our study such as for example ‘Which are the determinants of feelings of CPSO?’ and ‘Why do some family firm CEOs have a high level of CPSO and a low level of IPSO while others show the opposite combination?’. An answer on these questions is called for to further enhance our understanding of behavioral differences in family firms.

Stewardship behavior

0.86 0.75 0.79

0.82

0.89 0.84

0.86

0.78 0.89 0.87 0.77

0.54

0.74

0.87

0.73

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Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012

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Please cite this article in press as: Henssen, B., et al. The CEO autonomy–stewardship behavior relationship in family firms: The mediating role of psychological ownership. Journal of Family Business Strategy (2014), http://dx.doi.org/10.1016/j.jfbs.2014.01.012