Family Firms Professionalization: Institutional Theory and Resource-Based View Perspectives

Hanqing Fang, Esra Memili, James J. Chrisman, Dianne H.B. Welsh


Our article examines the assumption that family firms are an inferior organizational form as compared to non-family firms by analyzing family firms’ professionalization in developed and developing economies. We use institutional theory and resource-based view frameworks to analyze how environmental factors may affect the antecedents and consequences of family firms’ professionalization. We put forth three propositions concerning family firms’ professionalization and the relationship to competitive advantages in developing and developed economies.

In developed economies, due to the pressure of social conformity, a family firm is more likely to professionalize, but professionalization is not likely to be the driver of competitive advantages because non-family firms are more likely to professionalize and it would not be rare and valuable. In developing economies, employment of professional managers and adoption of professional norms become costly, but valuable. Therefore, we expect that family firms’ professionalization is more likely to become the source of competitive advantages in an institutional context of developing economies rather than developed economies. We put forth four suggestions based on our propositions for future research. Implications for practice and those advising family firms, particularly small family firms, in developed and developing economies are discussed.

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