The propensity toward inter-organizational cooperation in small- and medium-sized family businesses

Journal of Family Business Strategy 2 (2011) 57–68

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The propensity toward inter-organizational cooperation in small- and medium-sized family businesses Daniel Pittino *, Francesca Visintin Department of Economics and Statistics, University of Udine, Via Tomadini 30/a, 33100, Udine, Italy

A R T I C L E I N F O

A B S T R A C T

Article history: Received 22 November 2010 Received in revised form 23 March 2011 Accepted 23 March 2011

The goal of ths paper is to explore the propensity toward inter-organizational cooperation in small- and medium-sized family businesses as compared to non-family businesses, and to assess the factors that could influence the establishment of collaborative agreements at the family-business level. We apply transaction governance theories and resource-based views as theoretical perspectives to analyze a sample of 272 Italian family and non-family small- to medium-sized enterprises. Results suggest that family firms are less likely to establish cooperation agreements as compared to non-family firms. Among family firms, cooperation propensity is influenced both by the generation in charge and by the stage of the succession process. Our results contribute to the family business literature, indicating that the interorganizational strategies of family firms are influenced both by the dynamics of trust formation and by the characteristics of the family-business resource configuration. ß 2011 Elsevier Ltd. All rights reserved.

1. Introduction In the last two decades, inter-firm cooperation strategies have received increasing attention in the literature. This interest has been justified by the strategic behavior of both large and small firms. On the one hand, big companies, in the pursuit of flexibility, have realized processes of outsourcing (e.g., Gilson, Sabel, & Scott, 2009; Roijakkers & Hagedoorn, 2007), replacing hierarchy with ‘‘hybrid forms’’ of governance, i.e., intermediate forms between markets and hierarchies (Adler, 2001; Williamson, 1991); on the other hand, small- and medium-sized enterprises (SMEs) have employed cooperation strategies to enhance their competitiveness in the global markets, improving their endowments of resources and competences. Inter-firm cooperation among SMEs has also been shown to provide access to new business opportunities, allows for the exploitation of synergies, and promotes learning and innovation (Street & Cameron, 2007). However, despite its theoretical and empirical relevance, the theme of inter-organizational cooperation with specific reference to family firms has received little attention so far, although recent research suggests a growing interest in the topic (e.g., Memili, Chrisman, Chua, Chang, & Kellermanns, 2011). This gap in the literature is rather surprising because the distinctive traits of family firms, particularly in terms of owners’ goals and organizational governance, are likely to have a relevant influence on

* Corresponding author. Tel.: +39 0432249230; fax: +39 0432249229. E-mail addresses: [email protected] (D. Pittino), [email protected] (F. Visintin). 1877-8585/$ – see front matter ß 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.jfbs.2011.03.005

cooperation attitude and behavior (e.g., Gallo, Arino, Manez, & Cappuyns, 2002; Roessl, 2005). As proposed by Lester and Cannella (2006), for example, family ties may have an important role in the maintenance of community-based inter-organizational networks. In developing their assumptions, the authors establish an interesting comparison with the classic work of Burt on interorganizational networks (1979, 1992), suggesting that familybased inter-organizational cooperation emphasizes certain features, such as shared values, trust, norms of reciprocity, and mutual support, that do not emerge in the structural view of networks. It is therefore reasonable to assume that the inter-organizational cooperation behavior of family firms may be different than the behavior of non-family firms because of the importance that family businesses place on these community-level factors. The impact of family firms’ features on cooperation strategies is likely to be even more pronounced in SMEs, where the overlap between ownership, governance and management is wider and the strategic leadership of the family has a direct impact on the company behavior because it is not mediated by extensive hierarchical structures and bureaucratic norms. In this research, we analyze in particular the influence of the family on the propensity toward the establishment of a cooperation agreement. Thus, we do not focus on the governance and management of existing cooperative relations, but on the decision to cooperate. In particular, we recognize that a family firm’s traits have a favorable impact either on the governance and functioning of existing cooperation agreements or on the setup of cooperation relationships with organizations belonging to the same communi-

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ty. These features may be an essential component of the competitive advantage of family firms because they can effectively rely on assets created through highly embedded relationships (for example, with local suppliers, customers, and support organizations) (Sirmon & Hitt, 2003). We assume, however, that these traits may also either hinder or slow down the establishment of new cooperation agreements or the identification of partners external to the family business community. This can be a problem, for example, when the capacity to find new partners is crucial for the competitiveness or even the survival of the firm, or when the reliance on established networks limits the access to new knowledge and creates resistances to change (e.g., Grabher, 1993; Uzzi, 1997). In this research, we will therefore test the previous assumptions comparing the propensity to cooperate of family and non-family SMEs and explore more in depth the factors that influence the cooperation propensity within family SMEs. We aim, therefore, at providing a contribution to fill the gap in the empirical literature on family business inter-organizational cooperation, and in doing so, we try also to contribute additional insights to the empirical studies on the determinants of collaboration among SMEs (e.g., Simons & Royer, 2006; Street & Cameron, 2007; Van Gils & Zwart, 2009) that so far have only marginally considered the family dimension. Our study may have also theoretical and managerial implications for the family business field. On the one hand, this research sheds additional light on the distinctive traits of family businesses by viewing the propensity to cooperate as an outcome of ‘‘familiness,’’ namely, the bundle of resources and capabilities that emerges from the complex interaction between family and business (Habbershon & Williams, 1999; Habbershon, Williams, & McMillan, 2003; Sirmon & Hitt, 2003); on the other hand, the research may help family business managers to recognize and address specific constraints and opportunities in the development of cooperation-based competitive advantages. Moreover, because development policies for SMEs are often aimed at the promotion of inter-organizational cooperation and networking (Huggins, 2000; Kingsley & Malecki, 2004; Rosenfeld, 1996), this perspective can provide interesting suggestions to design appropriate measures and incentives that foster effective external growth strategies. We carry out an empirical analysis on a sample of 272 Italian SMEs, investigating differences between family and non-family firms in the propensity to cooperate. We then focus on a sub-sample of family firms and analyze the existence of different attitudes toward cooperation according to various family business features: the top-management-team composition, the generation involved, and the succession process. We adopt the definition of family firm provided by Westhead and Cowling (1999). A company may be defined as a family business if a family controls the company through the majority of voting shares, the family is represented in the entrepreneurial and management team, and the entrepreneur perceives the business to be a family firm and plans to transmit business ownership and management to the subsequent generations. As previously mentioned, our focus is on SMEs, which we choose to define according to the definition of the European Union (European Commission, 2003) as those enterprises with more than 10 employees and less than 250 employees. For the purposes of this research, we adopt a broad definition of inter-organizational cooperation that encompasses each process by which organizations work together to achieve a common goal (Smith et al., 1995). The work is structured as follows: in Section 1, we outline the two theoretical approaches that we consider relevant for the understanding of inter-firm collaboration propensity in family

business: (1) the theories on transaction governance mechanisms (under this label, we purposefully include a broad set of theoretical arguments that is not limited to the transaction costs economics but also includes theories on inter-organizational trust and relational embeddedness) and (2) the resource-based view of strategy. In Section 2, we present the peculiar characteristics of family businesses that, according to the reviewed theories, can influence the attitude of family firms toward cooperation and illustrates the hypotheses. Section 3 reports the methods and the main characteristics of the sample. In Section 4, we describe and discuss the empirical findings. In the last section, we draw conclusions, highlighting the main implications and limitations of our study and suggesting future directions for research on this topic. 2. Theoretical overview on inter-organizational cooperation propensity The research on inter-firm cooperation adopts several conceptual frameworks and addresses various aspects of the phenomenon, ranging from the strategic and organizational goals of the cooperation (e.g., Dyer & Singh, 1998; Oliver, 1990) to the appropriate governance forms (e.g., Gulati & Singh, 1998; Ring & Van de Ven, 1994). We focus on the antecedents of the strategic decision to cooperate (Gulati, 1995; Vlaar, Klijn, Arino, & Reuer, 2010), analyzing the family firm’s propensity to establish collaborative relationships with other firms. As we shall see, there are two main theoretical frameworks that can be effectively applied to explain the attitude toward inter-firm cooperation among family firms, namely, the theories on comparative transaction governance mechanisms and the resource-based view. 2.1. Transaction governance arguments The main theoretical perspective within the first approach is the transaction costs theory. According to this theory, the decision to set up a cooperation is a result of the economic evaluation of alternative forms of transaction governance; the costs associated with various transaction governance structures are the critical factors that determine the chosen organizational form. Interorganizational alliances fall between the pure or ideal types; the hierarchy on one side and the market on the other side (Balakrishnan & Koza, 1993; Buckley & Casson, 1988; Hennart, 1988; Hennart & Reddy, 1997; Kogut, 1988; Powell, 1990). ‘‘Pure’’ transaction cost theory has been criticized for considering each transaction as an independent event to explain merely routine situations (Ghosal & Moran, 1995) and for emphasizing only the comparative cost efficiency of the alternatives, undervaluing the effect of trust on the decision of entering and managing a cooperation (Doz & Prahalad, 1991; Ring & Van de Ven, 1992). Therefore, it is useful for our purposes to broaden the scope of the analysis to other transaction governance approaches that also consider relational and social factors. First of all, repeated interactions are considered to have both an impact on the loyalty of the parties and on the propensity to adopt opportunistic behaviors. Economists have defined the phenomenon in different ways, such as ‘‘relational contracting,’’ (Williamson, 1991) ‘‘quasi-firm arrangements,’’ (Eccles, 1981) and ‘‘process-based trust.’’ (Zucker, 1986). According to this line of reasoning, trust has been identified as a ‘‘facilitator’’ of market and quasi-market interactions and emerges only in the post-formation phase of cooperation. However, to properly understand the role of trust in the choice of alternative transaction governance mechanisms, we should consider the phenomenon of ‘‘initial trust formation,’’ namely, the

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trust that develops between the potential participants in a cooperation agreement before the relationship starts. According to Rousseau, Sitkin, Burt, and Camerer (1998, p. 395) we can define trust as ‘‘a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behaviors of another.’’ The importance of trust in fostering cooperation propensity can be understood when assuming a cognitive perspective; McKnight, Cummings, and Chervany (1998), in particular, split the concept of trust into two constructs: (1) the trusting intention, that is, as suggested by Currall and Judge (1995), the willingness of an individual to depend on another person in a specific situation; (2) the trusting beliefs, that is, as suggested by Mayer, Davis, and Schoorman (1995), the idea that other persons are benevolent, competent, honest and predictable. Both factors are influenced by the interplay of three groups of subfactors (Bowlby, 1982; Meyerson, Weick, & Kramer, 1996; Shapiro, 1987). Initial trust formation would occur, according to the authors, as a consequence of the combination of three factors: (1) the disposition to trust, developed during childhood within the relationship between a child and his/her caregiver(s); (2) institution-based trust, namely, a feeling of security based on the existence of safety nets, institutional structures and guarantees; and (3) first (cognitive) impressions. The disposition to trust derives from both a so-called ‘‘faith in humanity,’’ according to which a person believes that others are typically well-meaning and reliable, and a trusting stance, which is the belief that regardless of whether people are reliable or not, one will obtain better interpersonal outcomes. The second sub-factor is affected both by the normality of the situation (Garfinkel, 1963) and by the faith in the functioning of structural conditions (promises, contracts, regulations and guarantees) (Shapiro, 1987). The feeling that a situation is normal has been shown to be influenced also by the sharing of values and beliefs that often occurs within local communities, strongly tied networks, and industrial districts (Piore & Sabel, 1984; Sabel, 1991; Sabel & Zeitlin, 1985; Uzzi, 1997). The third sub-factor, cognitive impressions, deals with the cognitive processes of unit grouping (people tend to trust those who belong to their group—organizations, associations, community, etc.), reputation categorization (people are likely to trust those people with a good reputation, deriving both from professional competences and honesty, benevolence and predictability) and stereotyping (making generalizations based on either gender or other categories such as religion and professional status). These sub-factors contribute to the formation of trust at the interpersonal level, and in inter-organizational relationships they typically occur between ‘‘boundary-spanning’’ individuals who act on behalf of their organizations and develop a dyadic relationship. Once the dyadic relationship is established, trust may transfer from the interpersonal-individual level to the inter-organizational collective level through a process of institutionalization that involves routines, role definitions, and norms of behavior (Zaheer, McEvily, & Perrone, 1998). Therefore, trusting beliefs and trusting intention both influence the formation of the initial level of trust through the cognitive process of the boundary-spanning individuals. In turn, the initial levels of trust influence the choice between different forms of transaction governance, influencing the assessment of transaction costs at the organizational level. Let us define the transaction costs as being composed of (1) search costs; (2) contracting costs; (3) monitoring costs and (4) enforcement costs (Dyer, 1997). We could argue that, as the initial trust level increases, the potential participants in a relationship predict that they will bear lower search costs and contracting costs (for example, when they have to assess the reliability of the counterpart) and also lower monitoring costs when they have to control for possible opportunistic behavior.

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The assessment of lower ‘‘ex ante’’ transaction costs, other things being equal, expands the range in which cooperation as a transaction governance form has an economic advantage as compared to market and hierarchy. In sum, the initial level of trust has an impact on cooperation propensity because it influences the area of economic efficiency of cooperation as a transaction governance form. Moreover, according to the relational embeddedness perspectives on transaction governance, the initial perception of trust may become the most important if not the only parameter to be considered in the inter-organizational cooperation decision (Gulati, 1995). According to Granovetter (1985, 1992), relational embeddedness stems from personal relationships that people have developed with each other through a history of interactions and is very important in the formation of shared values and beliefs at the community level. These effects are particularly evident in the local systems of enterprises, such as industrial districts or local clusters, that several authors have described as characterized by an atmosphere and an institutional context that ‘‘naturally’’ fosters inter-organizational cooperation. 2.2. Resource-based view arguments The transaction governance explanation for cooperation propensity does not, however, properly capture the strategic dimension of the relationships between organizations. Thus, it can be effectively complemented by the contribution stemming from a resource-based view of inter-organizational cooperation (Eisenhardt & Schoonhoven, 1996). The resource-based view of cooperation focuses on the value maximization of a firm through pooling and using valuable resources. Consistent with the original formulation of the resource-based view (Barney, 1991; Peteraf, 1993), firms are attempting through cooperation to find the optimal resource boundary through which the value of their resources is better realized than through other resource combinations (Das & Teng, 2000). Resource-based cooperation strategies can be differentiated in exploitation and exploration strategies (Levinthal & March, 1993; Koza & Lewin, 1998; Rothaermel & Deeds, 2004). Cooperation strategies for resource exploitation aim at creating value through the joint use of a set of resources, assets, or capabilities already under the control of the firm. Examples of these strategies include licensing agreements and transfers of know-how. Cooperation strategies for resource exploration aim at jointly creating a new, valuable pool of resources through processes of searching and learning. Examples of these strategies include joint R&D projects. These two types of cooperation strategies have different antecedents. Exploitation strategies require the existence of a set of resources that can be effectively transferred from one organization to the other within the cooperation; to be effectively transferred, resources need to be easily valuable by the partners. If we refer, for example, to resources in terms of knowledge or technologies, we observe, as did Contractor and Ra (2002), that the more difficult it is to put an overall value on a technology or knowledge bundle, the more difficult it is to share it with a possible partner, who can be fearful of ‘‘paying too much’’ or being subject to unfavorable contract conditions. Moreover, ‘‘deeply embedded knowledge, much of which may be uncodified or sometimes even inarticulable even to its possessor organization, is difficult to value, because the overall capability is diffused over several individuals, locations, and even other partner organizations.’’ (Contractor & Ra, 2002, p. 17). We can therefore argue on the one hand that inter-organizational cooperation based on resource exploitation is easier when the resources involved are easily valuable and have a low degree of organizational embeddedness.

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On the other hand, exploration-based cooperation is aimed at generating a new, valuable pool of resources through an interorganizational joint effort. The inter-organizational pool of resources must therefore have the requisites of scarcity, imperfect imitability, and the absence of substitutes (Barney, 1991). Resources with such ‘‘strategic’’ characteristics can be developed only through a highly uncertain and complex process of exchange between partners (Peteraf, 1993). This strategic process can only be started when the firm has a sufficient amount of slack resources to commit to the search and exploration process (Sirmon, Hitt, & Ireland, 2007). According to the definition by Nohria and Gulati (1996, p. 1246), ‘‘organizational slack is the pool of resources in an organization that is in excess of the minimum necessary to produce a given level of organizational output. Slack resources may include excess inputs such as redundant employees, unused assets, and unnecessary capital expenditures’’. The propensity to establish exploration-based cooperation is thus positively affected by the availability of organizational slack in the resources that can be committed to the search processes. 3. Hypotheses development Based on the reviewed theoretical arguments, we argue that the distinctive features of family firms are likely to influence the propensity to cooperate, through their impact on both transaction governance choices and resource-based decisions. 3.1. Family versus non-family firms 3.1.1. Transaction governance rationale If we focus on the transaction governance dimension, family firms differ from non-family firms in the dynamics of initial trust formation, both at the individual and organizational level, as family members’ values and norms often influence their business decisions (e.g., Astrachan, Klein, & Smyrnios, 2002; Habbershon et al., 2003; Klein, Astrachan, & Smyrnios, 2005; Zahra, Hayton, & Salvato, 2004; Zahra, Hayton, Neubaum, Dibrell, & Craig, 2008). A typical attitude that a family transfers to the firm is the idea that relationships are the building blocks of organizational structure. The importance of relationships is reflected in the concept of reciprocal altruism, which may be defined as family members’ willingness to provide assistance and support to other members without expected returns; altruism is an essential component of the stewardship attitude among family firm members (Corbetta & Salvato, 2004; Eddleston & Kellermanns, 2007). Family firms’ norms of reciprocity can be interpreted in light of the anthropological theory of kinship (Good, 1996; Stewart, 2003). Kinship is ‘‘the network of relationships created by genealogical connections and by social ties modeled on the ‘natural’ relations of genealogical parenthood.’’ (Keesing, 1975, p. 13, emphasis added) Kinship relationships are the opposite of market relationships because they rely on long-term generalized reciprocity rather than on short-term balanced reciprocity; consequently, kinship, leveraging on the relational dimension of embeddedness, is essential in the formation of trust and in the subsequent establishment of social capital, i.e., ‘‘the ability of actors to secure benefits by virtue of membership in social networks.’’ (Portes, 1998, p. 6) Therefore, owner-managers of family firms often choose whom to include in their networks on the basis of so-called ‘‘axes of solidarity,’’ such as kinship itself, but also ethnicity, community and political affiliation (Carney, 2005; Granovetter, 1994). Those factors form the basis for interpersonal trust and sustain transactions that involve unspecified obligations and reciprocity over uncertain time horizons. These transactions are modeled on

the archetype of the ‘‘community’’ in contrast to the archetype of the ‘‘bureaucracy.’’ (Astrachan, 1988) Engaging in communitybased transactions, family firms may develop significant competitive advantages, for example, obtaining privileged access to resources or developing term business relationships with a low potential of opportunism (Sirmon & Hitt, 2003). However, the predominant reliance on kinship and community considerations in social relationships may result in significantly lower degrees of trust toward other actors who are not part of the family community. In other words, ‘‘the more one can trust only family members the lower is generalized trust,’’ (Alesina & Giuliano, 2009, p. 3); this suggests that there is an inverse relationship between strength of family ties and generalized trust (particularly a disposition to trust and institution-based trust) among the actors in the society (Alesina & Giuliano, 2007, 2009; Banfield, 1958; Putnam, 1993). If we translate these considerations to a transaction-governance level, we could assume that family firms, because of their generally lower propensity to develop initial trust toward actors outside their communities, bear higher transaction costs because they need a larger amount of time and information to perform the search, contracting and monitoring activities. Consequently, other things being equal, the area of the efficiency of hierarchy as a transaction-governance mechanism is broader in family firms than it is in non-family firms. Social control and long-term relations between family members and also between family members and other family firm employees often lead to situations where a favorable transaction atmosphere exists, with significant reductions of transaction costs as compared to external alternatives (Memili et al., 2011; Royer, Simons, Boyd, & Rafferty, 2008). When family firms opt for external alternatives in the governance of transactions, they will rely on relational embeddedness evaluations and privilege partnerships with members of the same community. In sum, on the one hand, family firms exhibit preferences for interpersonal loyalty and long-term commitment, which create a favorable environment for cooperation management in the postformation phase and with those who are recognized as members of the same community (Roessl, 2005). On the other hand, the importance of kinship and community considerations may drastically limit the range of possible partners, thus hindering the collaboration propensity in the pre-formation phase of cooperation. 3.1.2. Resource-based view rationale Considerations stemming from the resource-based view of cooperation may also contribute to justify a distinctive behavior of family businesses as compared to non-family businesses. Important components of the resource endowment of family firms are (1) the human and intellectual capital, comprising people skills and capabilities, employees’ commitment, and firm-specific tacit knowledge; (2) the financial capital, including financial resources that are ‘‘patiently’’ invested without threat of liquidation; and (3) the social capital embedded in a selected set of network relationships (Sirmon & Hitt, 2003). These resources are characterized by two features: (1) a high level of embeddedness and tacitness, as they are closely intertwined with family firm organizational routines and cannot be codified in written procedures or artifacts; and (2) scarcity and non-redundancy, as family firms tend to avoid organizational slacks in their resource endowments (Carney, 2005; Daily & Dollinger, 1992, 1993). Therefore, the degree of tacitness and embeddedness of resources may limit the possibility to engage in exploitationbased cooperation because it is difficult for both the family firm and the potential partner to bargain over the value of resources that should be used in the cooperation (unless the partner belongs

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to the same community). The reluctance to build organizational slacks may also limit the propensity to start exploration-based cooperations, which require a certain amount of unused resources that must be committed to the search processes. Thus, on the basis of the previous arguments, family businesses will be less prone to the establishment of inter-organizational cooperation agreements in comparison to their non-family counterparts. We therefore propose the following: Hypothesis 1. Family firms exhibit a lower propensity to cooperate than do non-family firms. 3.2. Antecedents of cooperation propensity within family firms We must bear in mind that family firms are not a homogeneous group; they differ according to several dimensions of family influence, including, among others, the role of the family in ownership, governance and management bodies, the family generation involved in the business, the structure and composition of the dominant coalition, and the congruence between family and organizational culture (e.g., Astrachan et al., 2002; Dyer, 2006; Gersick, Davis, Hampton, & Lansberg, 1997; Klein et al., 2005; Lansberg, 1999). Different ways and different degrees of family influence may thus generate different attitudes toward cooperation. 3.2.1. Family influence on strategic decisions The first dimension we consider within this perspective is the influence of the family in the strategic decisions that can be approximated by the proportion of family members active in the top management team (Astrachan et al., 2002). According to the theoretical perspectives on top-management-team demography (Hambrick, 1994), organizational strategies reflect the values and beliefs prevailing in the top management team; these values and beliefs can, in turn, be predicted by observing top-managementteam composition in terms of demographic characteristics. We may thus assume that the higher the influence of the family members in the top management team in terms of relative composition, the higher the likelihood that the values and beliefs of the family itself are reflected in the business decisions. Therefore, in the decisions about inter-organizational cooperation, the influence of family members should enhance the importance of kinship and community-based variables, leading to a more selective attitude toward the potential partners. We may therefore propose the following: Hypothesis 2. The proportion of family members in the top management team is inversely proportional to the propensity to cooperate.

3.2.2. Generation in charge The generation leading the business is another important factor of family influence on cooperation decisions because the leaders have a fundamental role in shaping and maintaining the organizational culture (Schein, 1983); in family firms, this role may influence the degree of cohesion and consensus of the members of the organization around the family values. A particular situation occurs when the generation in charge is the founding generation: the founder plays a special role in creating harmony and cohesion by generating a common purpose among family members and other employees and by establishing the dominant attitudes, norms and values (Davis & Harveston, 1999; Kets de Vries, 1993; Kets de Vries & Miller, 1986; Schein, 1983). Theoretical reflection also points out that first-generation family firms exhibit a higher level of cohesion around family values

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and higher ‘‘in-group’’ trust, representing the stereotype of the ‘‘clan family firm’’ (Dyer, 2006). We may therefore assume that the cohesion effect created by the founding generation tends to diminish with subsequent generations because family businesses led by second, third or later generation are more likely to assume the form of ‘‘siblings partnership’’ or ‘‘cousin consortium’’, in which the potential for disagreement, competing interest and conflict is higher (Davis & Harveston, 1999; Gersick et al., 1997; Lansberg, 1999) and also because subsequent generation leaders may be less able to exclusively leverage the firm’s internal resources, which are often closely intertwined with the founder’s personality and which may rely more on signals and support from the external environment (Cruz & Norqvist, 2007; Zahra et al., 2004). Thus, we expect that the cohesion around family values emphasizing the importance of kinship and community is more pronounced in founder-led family firms and declines with the subsequent generations; as a consequence, propensity to cooperation should increase in family firms led by the second generation and beyond. Moreover, in founder-led firms, it is more likely that organizational resources are characterized by high degrees of tacitness because in first-generation firms, knowledge and capabilities are usually ‘‘embodied’’ in the entrepreneur rather than codified and distributed throughout the organization (Kogut & Zander, 1992; Polanyi, 1966). As a consequence, cooperation agreements aimed at resource exploitation strategies are less likely to take place in founder-led firms. We can thus formulate the following: Hypothesis 3. The propensity to cooperate increases as family firms continue across generations. 3.2.3. Succession process Another important factor of family influence is related to the dynamics of the succession process, which we define as the process aimed at ensuring a competent family leadership for the company across generations (Le Breton-Miller, Miller, & Steier, 2004). The effective management of succession requires the answer to a wide range of questions: legal problems, financial and ownership aspects, leadership implications, and needs for strategic renewal and reorientation (e.g., Barach & Gantisky, 1995; Cabrera-Suarez, 2005; Lansberg, 1999; Royer et al., 2008; Sharma, Chrisman, & Chua, 2003). Because of the special nature of family business, these issues are closely intertwined with emotional dynamics at the interpersonal level, involving not only the incumbent and the successor(s) but also other family and non-family actors (Le Breton-Miller et al., 2004; Miller, Steier, & Le Breton-Miller, 2003). The transfer of leadership between incumbent and successor also involves the interpersonal transfer of entrepreneurial and business knowledge (Cabrera-Suarez, 2005). The tacit component of this knowledge is often the main resource that sustains the family firm’s competitive advantage (Sirmon & Hitt, 2003); therefore, its effective transfer is crucial for the family business survival. At the same time, as pointed out by theories on organizational knowledge, the transfer of tacit knowledge is extremely difficult, and given the nature of knowledge itself, is possible only through its application in practice, undergoing a slow and costly process (Brown & Duguid, 1998). Thus, following a resource-based perspective, we argue that the uncertainty and the complexity of the succession process may limit the propensity to cooperate. On the one hand, it is likely that small family firms undergoing succession processes do not have a sufficient amount of slack resources to cope simultaneously with two difficult processes such as succession and exploitation-based cooperation. For example, slack resources in terms of time and

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entrepreneurial attention must be used to face the uncertainty arising from the management of the succession and cannot be committed to the search processes required by cooperativeresource exploration projects. However, given the complexity of the knowledge transfer during the succession process, it may be difficult for the successor to properly understand the value of the family firm’s resources, or there may be a disagreement between incumbent and successor over the value of organizational assets. This may therefore limit the possibility to contract with potential partners the use of firm resources in exploitation-based cooperation. We therefore argue the following: Hypothesis 4. The propensity to cooperate is lower in family firms undergoing a succession process. 3.2.4. Moderating effect of the generation in charge We could, however, assume that the effect of the succession also depends on the leading generation involved. In particular, it is likely that as generations proceed, the level of knowledge and experience transferred during the succession process decreases (Astrachan et al., 2002). In particular, the shift from the first to the second generation is likely to be more critical compared to subsequent successions. For example, the founder’s succession may have a deep impact on the social phenomena in family business through the so-called ‘‘founder’s shadow’’ effect. ‘‘Although the founder may not continue to work in day-to-day operations (. . .) the founder may nevertheless interfere with the successor’s leadership and control by continuing to make or influence the critical decisions in the family firm. When the founder remains active in the business, tasks may not be clearly defined, leading to a blurring of individuals’ authority and responsibility.’’ (Davis & Harveston, 1999, p. 314) ‘‘In addition, when the founder departs, the knowledge of critical routines and operational procedures that have not yet been fully institutionalized is gone.’’ (Davis & Harveston, 1999, p. 320) These arguments suggest that the management of the first- to the second-generation succession is characterized by higher levels of uncertainty on organizational processes as compared to subsequent successions in which, as pointed out by Kets de Vries (1993), problems are more related to money, ownership and control. We therefore suppose that different generations in charge lead to different levels of uncertainty in the succession process that

in turn influence the willingness of the family firm to engage in inter-organizational cooperation. Thus, we can formulate the following: Hypothesis 5. The effect of the succession on the propensity to cooperate is influenced by the generation in charge of the business. The logic behind the hypotheses is summarized in the conceptual model in Fig. 1. 4. Research design: data, variables, and analysis technique 4.1. Sample and dataset The hypotheses were tested on a sample of 272 small- to medium-sized enterprises operating in the Friuli Venezia Giulia region (located in the northeastern part of Italy). The sample was randomly selected from the population of member SMEs of a local entrepreneurial association (Confindustria Udine). Data were collected during the period from September 2008 to March 2009 by a team of five trained master’s degree students in business administration with the support of the staff of the entrepreneurial association. Information was gathered using a structured questionnaire divided into three sections: the first section was devoted to the collection of general data about the firm, with questions on ownership structure, top-management-team composition and leadership generation and succession; Section 2 was about the firm’s strategic posture, and Section 3 addressed the theme of inter-organizational cooperation, investigating the existence of collaboration agreements established at the time of the research and up to three years before, the goals of collaborations and the governance forms of the agreements. The questionnaire was submitted either to the entrepreneur or to one of the members of the entrepreneurial top-management team. In the first stage of the research, firms were contacted by email to verify their willingness to take part in the survey. Out of 662 firms contacted, 285 agreed to participate after three rounds of contacts. The questionnaire was administered through phone interviews to 110 firms and through personal interviews to 139 firms, whereas 26 firms returned the filled questionnaire by e-mail. Thirteen questionnaires were excluded from the analysis because of missing data. Non-respondent bias was assessed through an analysis of a group of 48 firms that agreed to participate after the

[(Fig._1)TD$IG] Proportion of Family managers

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Importance of kinship Leading Generation

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Trust intention

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Propensity to cooperate

+ Involvement in the succession process

Resource exploration/exploitation

+

_

Fig. 1. Conceptual model of the hypothesized relations. Dashed line indicates the moderating effect of family generation on the relationship between succession and resource exploration/exploitation strategies.

D. Pittino, F. Visintin / Journal of Family Business Strategy 2 (2011) 57–68 Table 1 Main features of the sample.

Number Average age % Suppliers final products Number of employees Turnover (thousands of euros) % Cooperation % Low technology % Medium-low technology % Medium-high technology

Family SMEs

Non family SMEs

Total

190 29 56 55 11,722 47.8 38 41 21

82 19 51 61 19,682 60.2 34 36 30

272 26 55 57 14,178 51.7 37 40 23

second and third round of contacts. No significant differences were found between this group and a matched sample of the firms that agreed to participate in the first round. The final sample was made up of 272 firms, with an average number of 57 employees, ranging from 10 to 248, and with an average turnover of 14.2 million euros, ranging from 200,000 euros to 300 million euros. The average age of the firms was 26 years. Of the firms in the sample, 69.5% were classified as family firms, according to the definition by Westhead and Cowling (1999): a family controls the company through the majority of voting shares, the family is represented in the entrepreneurial and management team, and the entrepreneur perceives the business to be a family firm and plans to transmit business ownership and management to the subsequent generations. The interviewed firms operate in an area characterized by the presence of industrial districts (especially in the furniture and machine-tool sectors); thus, the sample may be said to capture the importance of the contextual dimension in enhancing the cooperation propensity through relational embeddedness effects. The basic sample details are reported in Table 1. 4.2. Variables The following measures were used in the operationalization of the concepts of interest. 4.2.1. Cooperation propensity In our dependent measure, because our interest is to model a ‘‘propensity,’’ we employed a dichotomous variable that assumes value 1 if the enterprise has started one or more cooperation agreements at the time of the research or up to three years before, 0 otherwise. Dichotomous measures of the cooperation propensity have been already used in previous studies on SMEs (e.g., Dickson & Weaver, 1997). 4.2.2. Family firm Family firm is a dichotomous variable assuming value 1 if the firm can be defined as a family business according to the criteria specified above, 0 otherwise. The dichotomous specification of family firm status is usually employed when comparing strategic behavior (including cooperation strategies) between family and non-family firms (e.g., Memili et al., 2011; Zahra et al., 2004). 4.2.3. Generation in charge Generation in charge is a variable that assumes discrete values corresponding to the family generation leading the firm and has been extensively used and validated in the development of the FPEC scale of family influence (Astrachan et al., 2002; Klein et al., 2005). 4.2.4. Succession process For the succession process, we employed a dichotomous variable assuming value 1 if the firm was involved in the

63

succession process at the time of the research, 0 otherwise. A family firm was considered as involved in the succession process if it was undergoing one of the two last stages in the model of succession process proposed by Le Breton-Miller et al. (2004), namely, that the selection process of the successor is taking place, or the incumbent is changing his role, whereas the successor is assuming a leading position (‘‘incumbent phase out/successor phase in’’). 4.2.5. Proportion of family members in the top management team Based on Astrachan et al. (2002), we employed this measure to assess the degree of family influence in strategic decisions. The measure has been validated within the F-PEC scale and is the proportion of members of the top management team that belongs to the family that controls the enterprise. Given our definition of family SMEs, we must bear in mind, however, that non-family members in the TMT are also a direct expression of the controlling family. 4.2.6. Control variables We also employed a set of control variables accounting for structural and industry-level dimensions that, according to previous findings, have an impact on the SMEs cooperation propensity (e.g., Dickson & Weaver, 1997; Dickson, Weaver, & Hoy, 2006; Van Gils & Zwart, 2009). In particular, we controlled for: (1) the firm’s size, measured through the number of employees, as an indicator of resource endowment and attractiveness as a cooperation partner; and (2) industry technological intensity as a proxy of environmental uncertainty. (This proxy was adopted, for example, by Bayona, Garcia-Marco, & Huerta, 2001 and Steensma, Marino, Weaver, & Dickson, 2000) We followed the OECD definition of a sector’s technological intensity in low technology, low to medium technology, and medium to high technology (OECD, 2009); the position of the firm in its industry value chain (whether the firm is a supplier for other firm’s production processes or sells final products), as a proxy for both environmental uncertainty and bargaining power (Powell, Koput, Smith-Doerr, & Owen-Smith, 1999); the firm’s age, as a proxy of experience, reputation and attractiveness as a partner (Van Gils & Zwart, 2009); and topmanagement-team size, to control for possible conflicts and goal divergence arising from large family management groups (Lambrecht & Lievens, 2008). Correlations among the variables are shown in Table 2. 4.3. Data analysis technique Because of the dichotomous form of the dependent variable, hypotheses were tested through multivariate binary logistic regression models. Dependent and independent measures met the assumptions that are needed to justify the use of binary logistic regression for estimation purposes (Hair, Black, Babin, & Anderson, 2010). In particular, (1) the observation of the partial regression plots confirms the linearity of the relationship between the regression equation and the logit form of the dependent variable; (2) the pairwise application of Levene tests excludes problems of heteroscedasticity; (3) observation of the variance inflation factor (VIF) in the models includes main effects for all the variables values around 1, indicating that no significant problem of multicollinearity should exist. An exception is the variable firm’s age, which presents a critical value of the VIF (>10) and has been omitted from the second set of regressions. To test Hypothesis 1, we estimated two models with cooperation propensity as a dependent variable and control variables and a family firm dummy as explanatory dimensions (Table 3).

D. Pittino, F. Visintin / Journal of Family Business Strategy 2 (2011) 57–68

64 Table 2 Correlations among variables. 1 1 2 3 4 5 6 7 8 9 10

Family firm Industry Value chain Generation Firm’s age Succession process Employees Coop propensity TMT size Proportion of FM

1

2

3

.16 1

***

.06 .20*** 1

4

5

– .06 .06 1

6 ***

.20 .26*** .11 .54*** 1

7

– .02 .25*** .15 .02 1

8 .04 .01 .04 .01 .12 .01

1

9 **

.14 .10 .13** .06 .09 .17 .11 1

10 ***

.19 .07 .09 .07 .09 .13 .03 .04 1

– .18*** .05 .08 .16** .24*** .11 .08 .01 1

*** ** *

Correlation is significant at the .01 level. Correlation is significant at the .05 level. Correlation is significant at the .1 level.

Hypotheses 2, 3, 4 and 5 were tested on the subsample of family firms (N = 190) through five logistic models using the proportion of family members, the succession phase, the generation involved, and the interaction term between generation and succession as the control variables (Table 4). To avoid multicorrelation problems, in this second set of regressions, the firm’s age has not been included, being strongly correlated with the generation involved.

Table 3 Binary logistic estimation of the dependent variable cooperation propensity in the whole sample (N = 272). Model 1: controls; Model 2: controls and family business.

Industry Value chain No. of employees TMT size Firm’s age Family firm Constant Pseudo R2 Model x2 Model x2 significance 2log likelihood Overall predictive accuracy (%) N

Model 1

Model 2

.13 .68** .00 .01 .01

.15 .63** .01 .02 .00 .91*** .50 .11 19.14 .00 270 66

.56 .06 8.8 .12 238 59 272

*** ** *

Coefficient is significant at the .01 level. Coefficient is significant at the .05 level. Coefficient is significant at the .1 level.

5. Results The regression model estimating the influence of being a family firm on the cooperation propensity (Hypothesis 1) is significant at the .01 level and has a pseudo R2 of .11 (Table 3, Model 2). The coefficient of the family firm dummy is negative and significant at .01 level (Table 3). This result therefore provides support for Hypothesis 1, indicating that family firms show on average a lower propensity to start inter-organizational collaborations compared to non-family collaborations. Among the control variables, the position in the value chain is the only significant dimension and indicates that firms supplying final products are more likely to establish cooperation agreements. When we limited our attention to family firms (Table 4), Hypothesis 2 was not supported; the coefficient of the variable measuring the proportion of family members is not significant in all the specifications of the model. The effect of the generation is positive and the effect of the succession process is negative, both in the estimations that include the main effects separately and jointly (Model 2, Model 3 and Model 4). Models 3 and 4 are also overall significant at the .1 level and the .05 level, respectively, and their pseudo R2 values are around .10 and .09, respectively. These findings support Hypotheses 3 and 4. Model 5 introduces the interaction effect among succession and generation; both main effects and interaction term are significant at the .01 level. The regression is also significant at the .01 level, with a pseudo R2 of .16. This model provides statistically significant support for Hypothesis 5. According to the value of the coefficients,

Table 4 Binary logistic estimations of dependent variable cooperation propensity among family firms (N = 190).

Industry Value chain No. of employees TMT size Proportion of family members Generation Succession Succession  generation Constant Pseudo R2 Model x2 Model x2 significance 2log likelihood Overall predictive accuracy (%) N *** ** *

Coefficient is significant at the .01 level. Coefficient is significant at the .05 level. Coefficient is significant at the .1 level.

Model 1

Model 2

Model 3

Model 4

Model 5

.03 .85** .01 .01 .62

.05 .76** .01 .01 .54 .27*

.01 .80*** .00 .05 .62

.066 .78*** .00 .06 .52 .21** .25***

.06 .81** .01 .07 .42 .43*** .92** .18*** 3.00** .18 20.31 .009 193 72 190

.29** .98 .07 8.72 .12 267 63 190

1.00* .09 9.87 .105 204 65 190

1.41 .10 10.07 .09 202 64 190

1.47** .09 11.87 .05 201 69 190

D. Pittino, F. Visintin / Journal of Family Business Strategy 2 (2011) 57–68

in particular, the model suggests that the marginal effect of the succession is negative but, given the positive sign of the interaction term succession  generation, its magnitude decreases as the number of the leading generation increases. Overall, the pseudo R2 of our models range from .07 to .18 and are consistent with previous research applying logistic regression to the estimation and modeling of strategic behavior in family firms; reported values of explained variance range from .09 to .20 (e.g., Westhead, 2003; Westhead & Howorth, 2006). 6. Discussion The results allow us to assess the influence of family firms’ features on the cooperation propensity, using as theoretical underpinnings the transaction governance and resource-based perspectives.

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partners who can contribute to business growth and/or acquire the firm in the future. It is interesting to interpret the attitude toward cooperation also through the resource-based view. Our results suggest that family firms are less likely to engage in cooperation agreements aimed both at resource exploration and resource exploitation. We may thus argue that family firms invest their resources in exploration-oriented cooperation only if the goal of the cooperation is consistent with their long-term orientation and their pathdependent learning processes (Sirmon & Hitt, 2003). These conditions are more likely to occur in partnerships with members of the same community. Similarly, exploitation-oriented cooperation is more difficult for family firms because of the difficulty they may have in specifying the value for their highly tacit and embedded resources. Exploitation agreements about these kinds of resources can therefore be realized only within socially embedded networks.

6.1. Family firms versus non-family firms 6.2. Antecedents of cooperation propensity within family firms Hypothesis 1 postulated a difference between family and nonfamily firms in the attitude toward inter-organizational cooperation; the hypothesis relies mainly on trust as a determinant of choice among alternative mechanisms of transaction governance. The logistic regression analysis supports the idea that family firms exhibit a lower propensity to start cooperation agreements, thus confirming the theoretical predictions formulated in previous works (e.g., Roessl, 2005). We attribute this outcome to the family influence on the enterprise decisions, resulting in a higher emphasis on kinship and community dimensions in the governance of transactions. The reliance on these factors could either completely rule out the chance to cooperate with non-family actors or reduce sharply the number of possible partners to those who share values and beliefs with the business family, as also suggested by Lester and Cannella (2006), who observe that family firms are likely to establish interlocking directorates with family firms with whom they share common values. The result is also in line with recent empirical findings showing how family firms use less subcontracting agreements compared to non-family firms; among family firms, kinship ties are an important determinant in the decision of subcontracting (Memili et al., 2011). From another point of view, a high level of family in-group trust may lower the perception of trustworthiness of other parties, producing an increase in transaction costs of external cooperation. Compared to non-family firms, family firms may also enjoy a relative advantage in the use of hierarchy as a governance mechanism compared to external alternatives because the costs of incentive and the control of internal employees are mitigated by the employee stewardship attitude toward the family firm, which creates a favorable transaction atmosphere and reduces the potential of opportunism (Miller, Le Breton-Miller, & Scholnick, 2008; Miller, Lee, Chang, & Le Breton-Miller, 2009; Royer et al., 2008). The difference between small family and non-family firms in cooperation propensity could also be interpreted in terms of different goals of entrepreneurial activity. As pointed out by Miller et al. (2008), within smaller family firms, family members experience feelings of belonging, affection and intimacy as sources of non-economic utility; personal non-economic goals are closely intertwined with a strong sense of kinship obligation and stewardship, and commitment to the family coincides with the commitment to the firm. Things tend to be different for entrepreneurs/founders with no family ties in the business: they are often serial entrepreneurs, moving from venture to venture, or alternatively entrepreneurs who pursue growth through quick expansion. This attitude toward the business may weaken the personal tie between the entrepreneur and the firm and increases the propensity of the entrepreneur to find potential external

Among the factors that may influence the cooperation propensity within family firms (Hypotheses 2–5), no significant relationship has been detected between the proportion of family members in the TMT and the cooperation propensity (Hypothesis 2). Moreover, the sign of the coefficient (although not significant) seems to suggest that the proportion of non-family members is negatively related to the propensity to cooperate, and this may indicate that family firms prefer the cooptation of external actors instead of the establishment of cooperation agreements. This result may be attributed to the fact that in family SMEs, the sense of belonging, the shared beliefs and the stewardship attitude are also high among non-family managers. The effects of the generation in charge on the cooperation propensity are positive and significant, both in the regressions with the main effects (Table 4, Models 2, 3 and 4) and in the estimation that considers the interaction effect with succession (Model 5). These results support Hypotheses 3, 4 and 5 and are consistent with the arguments that view the family influence and the related emotional and kinship effects as being stronger in first-generation firms (Astrachan et al., 2002; Miller et al., 2008). As generations proceed, and other things being equal, the family influence diminishes, and the impact on the cooperation attitudes also weakens. Moreover, from a resource-based point of view, firstgeneration firms may be characterized by a higher degree of tacitness in entrepreneurial knowledge and organizational assets, and thus exploitation-oriented cooperation is more difficult. The influence of succession is also significant and can be explained using the resource-based rationale: dealing with the succession can lower the amount of slack resources that an organization should invest in exploration-oriented partnerships. The marginal effect of succession is indeed negative in Models 3, 4 and 5. The interaction effect in Model 5 is also significant and indicates that as generations proceed, the impact of the succession process in lowering the cooperation propensity is less pronounced; this confirms that the organizational complexity and the uncertainty of the succession process are at their maximum level in the shift from the first to the second generation (e.g., CabreraSua´rez, De Saa´-Pe´rez, & Garcia-Almeida, 2001; Davis & Harveston, 1999) and generally confirms that the magnitude of the family influence on strategic decisions depends on the family business life cycle (Cruz & Norqvist, 2007). 7. Conclusions This paper contributes to the literature on family business, providing theoretical and empirical insights on the topic of inter-

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organizational cooperation in small- to medium-sized family businesses. In particular, we compared family and non-family firms, analyzing whether some specific features of family business, namely the relevance of kinship and community dimensions in the dynamics of trust formation and the peculiar resource configuration, have an impact on the propensity to establish interorganizational cooperation agreements. We then focused on family firms, assessing to what extent different degrees of family influence impact the cooperation propensity. To develop our arguments, we employed theories on transaction governance mechanisms and the resource-based perspective. 7.1. Contributions to research and theory The results contribute to fill the gap in the empirical literature on family business cooperation, showing that family firms are less likely to establish cooperation agreements as compared to nonfamily firms. Among family firms, the cooperation propensity is influenced both by the generation in charge and by the succession process. Our results may have relevant theoretical implications for the field of family business because they contribute to a deeper understanding of the effects of ‘‘familiness’’ on a firm’s behavior (Habbershon & Williams, 1999; Sharma, Chrisman and Chua, 1997). In particular, our results support the emerging stream of literature that aims at identifying the family firms as peculiar organizational solutions for the governance of transactions and for the economic use of assets and resources (e.g., Carney, 2005; Gedajlovic & Carney, 2009). From this perspective, our findings confirm the idea that dimensions stemming from kinship, such as loyalty, altruism, and expectations of reciprocity, are key variables to evaluate antecedents and outcomes of strategies in family firms, and this is consistent, for example, with the position held by Steier (2003), who highlights the ‘‘familial altruistic’’ dimension in the strategic decisions of investment adopted by families in business, with the observation by Gomez-Mejia, Hynes, Nunez-Nickel, and MoyanoFuentes (2007), according to whom the preservation of ‘‘socioemotional wealth’’ is often the main goal pursued by family business owners, or with the arguments developed by Lester and Cannella (2006) and Miller et al. (2009), who highlight the higher propensity of family firms to rely on cohesive local communities to gain resources for their survival and success. Moreover, our findings suggest that the family firm’s resource configuration, characterized by tacitness and embeddedness, may have an impact on cooperation choices, determining specific trajectories in terms of resource exploration or exploitation; this sheds additional light on the theories on the family firm’s resourcebased competitive advantage (Habbershon et al., 2003; Sirmon & Hitt, 2003; Sirmon et al., 2007). Additional implications concern the general theories on the determinants of organizational cooperation in SMEs. The significance of family-related variables highlights the importance of the emotional and cognitive dimensions in the strategic decisions about cooperation. This finding is important because the role of decision makers’ perceptions is often overlooked by the literature on alliance formation motives (Van Gils & Zwart, 2009). 7.2. Managerial implications Finally, our findings may suggest a set of managerial implications related to cooperation in small- and medium-sized family enterprises; we argued that the decision process inspired by family values reduces the number of candidates for possible cooperation in the pre-formation phase. As pointed out in the introduction, on the one hand, this may be a positive factor, as it ensures the

establishment and maintenance of business partnership based on social capital and relational embeddedness, with all the associated benefits, for example, of privileged access to resources, support, and the development of valuable knowledge. However, on the other hand, low levels of cooperation propensity may be detrimental to family SMEs, for example, to the extent of limiting the access to new knowledge and creating resistances to change. Therefore, the introduction of formal procedures that are driven by market/business rationality in the environmental screening and in the evaluation of cooperation alternatives may facilitate the establishment of inter-organizational agreements by family firms. Examples of these procedures can be found in the definition of ‘‘procedural rationality’’ in alliance-related decisions provided by Walter, Lechner and Kellermanns (2008). Another relevant issue involves the availability of slack resources as a condition to start a cooperation from a resourcebased perspective. The shortage of slack resources seems to be more pronounced during the critical phases of the family-business life cycle, such as the succession process. The development of the cooperation propensity therefore requires organizational solutions that allow the creation of slack resources both in terms of assets and managerial attention. From this perspective, possible solutions can be identified in the establishment of effective organizational routines that free the entrepreneurial attention from short-term issues (Cyert & March, 1963); the amount of managerial attention required to undertake a cooperation strategy may also be increased both through the decentralization of power and the strengthening of the professional management team (Gedajlovic, Lubatkin, & Schulze, 2004). 7.3. Limitations and directions for future research Our research has, of course, a number of limitations that could be addressed in future studies. In particular, we examined only cooperation propensity as a dependent variable without considering, for example, the number of cooperation agreements established and the different goals and scopes of agreements (e.g., technology transfer, outsourcing, R&D, production in cooperation, and marketing). Moreover, we did not take into account the identity of the partners involved in the cooperation, and in particular, we did not consider whether family firms are more inclined to establish cooperation agreements with other family firms. We also did not consider the existence of previous experiences of cooperation; our data are exclusively crosssectional and do not allow us to observe dynamic effects accounting for previous experiences, path dependencies, and learning processes. With respect to the explanatory variables, our binary operationalization of the succession is inadequate to capture the complexity of the entire process; moreover, we made only assumptions and conjectures about the cultural effects of the family control, without performing direct measurements. The relevance of cultural dimensions and the importance of the social embeddedness in the phenomenon under scrutiny also suggest the application of qualitative techniques in future studies. Future research should also examine the link between cooperation and performance in family and non-family firms in order to analyze whether and under which conditions the persistence of the community logic in family SMEs’ interorganizational relationships leads to better competitive and economic performances or, on the contrary, creates resistance and obstacles that limit the development or even threaten the survival of the firm. Finally, because the dimension of embeddedness is crucial to understanding the attitude of family firms toward cooperation, future studies should also aim at establishing cross-cultural comparisons in the assessment of cooperation propensity.

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