2.1 – Family firms’ goals and socio-emotional wealth

7Family businesses are paradoxical because the unique features that make this organizational type performing, at the same time, engender most of its weaknesses. In these firms, the owning family plays an important role in ensuring the start-up and performance of the firm, which differs from other types of businesses mainly by emotional bonds. This type of bond would have a key influence if the firm’s performance deteriorates. While a typical shareholder would exit a business that goes through a bad spell for a long time, a family shareholder would accept to endure some difficult years because he/she is attached to his family business. However, the cohesion and unity resulting from family members’ commitment to the firm are threatened by the concerns of control and ownership succession, the sometimes-harmful interference of family members and intrafamily destructive conflicts.

8Because of the owning family’s involvement in the firm, the goals pursued by the family firm are far from being limited to the goal of firm’s value maximizing pursued by managerial enterprises (Sharma et al. 1997). While these goals could be financial and non-financial (Tagiuri and Davis, 1996), they also could be family-oriented or business-oriented. In addition, they may change over time and also according to the interaction between the family and the business needs (Davis and Tagiuri, 1989). For the entrepreneurial family, the firm is not merely a financial investment, which aims at ensuring financial profits. But, the long-term commitment to the firm and business continuity are major goals the owning family explicitly pursues (Danco, 1975). Essentially, a relationship that goes beyond the professional aspect and that is inherently affective and emotional is established between the firm and the family sub-systems. In addition, while the firm guarantees the family financial security, provides its members with job opportunities and, above all, allows them to fulfil their professional needs and satisfy their entrepreneurial passion, in counterpart, the owning family supports the firm by various means and is always willing to make important sacrifices to ensure its growth and survival. What is more, this bond between the family and the firm is not ephemeral but is passed on from the founder to successors thereby creating a long-lasting family commitment to the firm. As this commitment is not simply an emotion expressed towards the firm, it is translated in practice by the behaviours and principles of firm’s governance and management.

9The family business literature has shown that these firms have their own characteristics that are at the foundation of their performance and failures. In their seminal paper, Habbershon and Williams (1999) call “familiness” the unique set of resources that a particular firm possesses through the interactions between the family, its members and the firm. A family business has socially complex characteristics and resources as diverse as the mainly informal and deeply rooted decision-making processes, the peculiar relations between parents and descendants or the special relationships a firm establishes with its stakeholders. Family businesses are also known for developing a culture embodying human values (Bornheim, 1999) and also a reputation and specific assets which are the fruits of path-dependent phenomena and the unique history of the firm (Habbershon and Williams, 1999).

10More recently, Gomez-Mejia et al. (2007) empirically demonstrate that family firms can opt for financially risky strategies, while previous literature had particularly emphasized their prudence (Carney, 2005) and risk aversion (Donckels and Fröhlich, 1991, Le Breton-Miller and Miller, 2006). These risky strategic choices are not aimed at maximizing profits but are justified by the desire of the owning family to maintain its independence in order to preserve the set of non-financial benefits the firm provides to family members. These benefits encompass the social and emotional returns that the owning family derives from its involvement in the business, among which: the satisfaction of affective needs, belonging and esteem, the pleasure of exerting influence, the perpetuation of family values, the fulfilment of obligations inherent in blood relationships, the opportunity to behave altruistically towards family members, or the satisfaction of the need to identify with the family firm (Gomez-Mejia et al. 2007; Berrone et al., 2012). The main thesis of Gomez-Mejia et al. (2007, 2011) is that the preservation of this Socio-Emotional Wealth (SEW) is key to understanding the behaviour of family firms. For Berrone et al. (2012), Socio-Emotional Wealth is considered a meta-goal for family firms as the preservation of SEW becomes an end in itself for owning families.

11The importance given to SEW goals might vary thereby giving different weights to the various SEW goals depending on the owning family’s objective characteristics (size, composition, etc.) but also on its history, heritage, values and culture. For example, while some families might place a greater value on the sense of dynasty and transgenerational vision, others might emphasize the protection of the family image as their main priority (Berrone et al., 2012). For Le Breton-Miller and Miller (2013), differences in the stages of evolution of family firms and the nature of family involvement can influence the socio-emotional goals priorities of owners and managers. For example, as noted by Berrone et al. (2012), if SEW evolves as the firm passes through generations, it is likely that the weights of the different dimensions of SEW also vary as the firm is passed onto the next generation (Astrachan and Jaskiewicz, 2008). In particular, control and influence, sense of dynasty, and emotional attachment could have a stronger weight in first generations, given these companies’ founder-centric orientation (Berrone et al., 2012). Besides, family owners need to have enough discretion within the organization to impose their goals of SEW preservation (Berrone et al., 2012). As such, power variables such as management and governance factors may have a key impact on the development of SEW. In this vein, Pongelli et al. (2016) argued that family firms assign different weights to SEW priorities according to differences in ownership structure, with significant implications for international strategic decisions. Moreover, Berrone et al. (2010) argue that SEW will be more salient when the CEO belongs to the family and when the CEO is also the chairman of the board. In a similar manner, Gómez-Mejía et al. (2011) proposed that the presence of other owners, such as institutional investors, with different problems or strategic frames, would diminish the emphasis on SEW preservation. Additionally, the image of a family business may be an important resource that is related to its familiness (Zellweger et al., 2010) and thus it is worth considering how particular families influence the perceptions of external stakeholders (Weismeier-Sammer et al., 2013).

12While the concept of SEW has been regularly studied since its introduction in family business literature, many voices have criticized it and others have adopted a complementary look or engaged in an effort to refine its conceptualization. For example, Miller and Le Breton-Miller (2014) suggested a distinction between “restricted” and “extended” SEW priorities. In essence, the former refer to priorities that are highly family centric and often run counter to the interests of nonfamily stakeholders and the firm, at least in the long run (Le Breton-Miller and Miller, 2014). There may however be positive outcomes from some very different types of family SEW priorities which the authors called “extended” (Le Breton-Miller and Miller, 2014). Although based on family preferences, these encompass benefits that go beyond the family. Kellermanns et al. (2012) extend the socioemotional wealth (SEW) perspective by arguing that SEW can be negatively associated with proactive stakeholder engagement (PSE). The authors further suggest that the SEW dimensions can be associated with positive or negative valence. Lastly, they propose that negatively valenced SEW dimensions lead to family-centric behaviour, which negatively affects PSE.

13In line with the call by Berrone et al. (2012) for further research examining which factors play a role in determining the weight placed on the different dimensions of the SEW, we argue in this paper that the importance of SEW goals pursuance and the weight giving to each dimension highly depend on the owner-manager’s characteristics. We believe that owner-manager’s characteristics affect the dual nature of family firms and the ambiguous and bivalent nature of socioemotional wealth. Further, we argue that that the family business owner-manager plays a key role in family business recovery and resilience.

2.2 – Owner-manager’s role in family business’s fall and revival

14Extant research in relation to the entrepreneurial process has tended to concentrate upon the entrepreneur as hero and other positive aspects of the process (Smith & McElvee, 2010). Similarly, Haynes, Hitt, and Campbell (2015) stress that the preponderance of research on entrepreneurial leaders focuses on the ‘bright’ side, or leaders’ positive characteristics and how those benefit entrepreneurial organizations. Therefore, much of the entrepreneurship research illustrates the taken-forgranted nature of the ‘bright’ side of entrepreneurial leader ship and its positive outcomes (Haynes, Hitt, and Campbell, 2015). Yet, there is a need to know how the dark side of entrepreneurs might influence the operations and performance of their organizations. Some extant work shed light on these influences. For example, Kets deVries (1985) shows how the traits that initially made leaders successful can become sources of destructive internal needs that endanger their ventures over time. Similarly, Beaver and Jennings (2005) show how the lack of flexibility and an ‘almost egotistical attitude’ (p. 9) displayed by some small business leaders combined with the abuse of power can lead to venture failure. Kuratko (2007) highlighted the role of entrepreneurial ego which includes an overriding desire for success and unrealistic optimism (Kuratko and Hodgetts, 2007). Haynes, Hitt, and Campbell (2015) theorize about how entrepreneurial leaders’ greed and hubris, through diverse mechanisms, affect different types of human and social capital so vital to entrepreneurial success, and thus indirectly lead to suboptimal performance.

15In this research, we establish a relationship between this stream of entrepreneurial literature and the socio-emotional wealth within family businesses. Our thesis is that the owner-manager’s characteristics, i.e. his imperfections or sins and also his emotions, partly explain the effort to pursue socio-emotional goals and the desire to grow and protect this wealth, which is linked to firm performance and continuity. In so doing, we provide an empirical observation of the propositions of Haynes, Hitt, and Campbell (2015). Indeed, these authors have suggested that in family firms, the excessive pursuit of SEW by a greedy leader results in underutilization of available human and social capital necessary for financial success (Haynes, Hitt, and Campbell, 2015). In addition, the excessive pursuit of SEW by a hubristic leader results in overestimation of available human and social capital necessary for financial success (Haynes, Hitt, and Campbell, 2015). In effect, while greed is generally conceptualized as the pursuit of extreme material or financial wealth, the authors posited that in family firms, the leader’s greedy behaviour manifests in a way that is unique to that setting, through the pursuit of extraordinary socioemotional wealth. Similarly, we believe that the two sins highlighted by these authors have an effective influence on the pursuit of socio-emotional goals in family firms. In this paper, while taken these two factors into account, we aim at making contributions to the research on the dual nature of family firms and work on the ambiguous and bivalent nature of socioemotional wealth.

16Another key aspect of concern is related to the consequences of owner-manager’s flaws in terms of cognitive emotions. For example, Smith and McElwee (2010) state that the entrepreneurial sin of hubris is often the triggering mechanism for the fall from grace as a perquisite for full-blown emotional meltdown and is ultimately accompanied by shame. In this research, we will highlight the emotions of shame and guilt, which are two of the emotions that are recognized as especially relevant to ethical decision-making and compensatory behaviour (Eisenberg, 2000; Tangney, 1991; Tangney et al. 2007; Ghorbani et al. 2013). Importantly, Ghorbani et al. (2013) investigate the effect of moral emotions on compensatory decision making and compares these effects across different levels of perceived psychological distance. For example, when an individual does something that harms (or benefits) another party, the agent experiences emotions such as guilt (or fulfilment) (Ghorbani et al., 2013). This emotion subsequently encourages the agent to avoid (or re-engage in) such behaviour, at least, in the near future and under similar situational factors (Ghorbani et al., 2013).

17According to Leary (2007) and Tangney et al. (2007), ashamed people perceive that blame is focused on themselves, but guilty people perceive it to be focused on their behaviour. Ashamed individuals are more likely to blame others or get angry at them for creating shame-eliciting situations, and are not likely to undertake any measure to change the wrongdoing (Leith and Baumeister, 1998; Tangney 1995). Guilt, in contrast, being based on the ability to take other people’s perspectives, a cognitive ability that did not result from shame, is more likely to activate senses and behaviours that can benefit others (Leith and Baumeister, 1998). Guilty individuals would try to correct the transgression, and either accept retribution from the victim or give out compensation. Therefore, guilty people are expected to take some measures to compensate their victims. Ashamed transgressors, on the other hand, would be more likely to feel like they want to hide from everyone and as a result, would be less likely than transgressors who consider themselves guilty to compensate their victims (Leith and Baumeister, 1998: Tangney 1995)

18In accordance with this logic, the present paper studies the role of greed and hubris, two distinctive entrepreneurial characteristics and aims to make contributions to research on the dual nature of family firms and work on the ambiguous and bivalent nature of socioemotional wealth. Precisely, we will focus on the consequences of greed and hubris, first in terms of firm’s performance decline, and then in terms of shame and guilt experienced by the owner-manager. More specifically, we aim at observing how the owner-manager’s sins and emotions influence the pursuit of socio-emotional goals and how these goals might cause the firm’s fall but also allows it to recover after a strong crisis.

3.1 – Methodology and data collection

19Because family firms are social complex phenomena, collecting owner-manager’s perceptions and analysing her/his speech is crucial. The research that we present in this paper focuses on a unique case carried out in a participant observation setting (David, 2000). For Siggelkow (2007), a unique case study that reveals an exceptional phenomenon is valuable, thus a large observation sample is not necessary. In addition, nonrepresentativeness might not be of concern, as “the organization that one has chosen to study may very well not be selected randomly” (p. 20). In our research, we choose a particular organization precisely because “it is very special in the sense of allowing us to gain certain insights that other organizations would not be able to provide” (Siggelkow, 2007, p.20). The chosen organization is very particular, because it experienced a severe crisis, which contrary to all expectations did not imply the firm’s closure in the end (which might be the case of the majority of family SMEs experiencing crises). In addition, the immediate access to one of the researchers to the management team was a unique opportunity to observe from inside what was happening in the firm in such a context. This is all the more interesting that generally when family firms endure crises they are reluctant to communicate about these issues or to cooperate with researchers.

20The unique case study offers the advantage of allowing an in-depth analysis of the studied organization and taking into account the unique context in which its history unfolds (Yin, 1989). This method is relevant to our research, which aims at attaining a deep understanding of the impact of owner-manager’s characteristics on socio-emotional goals in family firms and in fine on firm’s survival. As stated by De Massis and Kotlar (2014), when the approach is applied in a robust way, it becomes a valuable method for family business scholars to describe complex phenomena, develop new theory or refine and extend existing theories.

21The participant observation carried out by one of the two authors was possible as he was an employee (professor) in the firm. The participant observation lasted 18 months between January 2011 and July 2012. The co-author’s status allowed him having the manager’s trust, participating in formal and informal meetings relating to the receivership procedure (as this will be explained later) and further aspects of firm’s life. This technique has an advantage that in the same time entails some difficulties as the amount of information to be analysed could be huge. Consequently, the co-author had to make sure to keep a research notebook in which he recorded our field notes. In addition, considering that this technique could not be self-sufficient, and in accordance with the principles of this methodology (Guba and Lincoln, 1985), a thorough document analysis (internal and external documents) was first carried out in order to understand the firm’s history and trajectory. Thanks to the author’s status within the firm, access to minutes of meetings related to management communications with staff and also to documents exchanged between the owner-manager, the administrator and the accounting firm was possible.

22Finally, formal non-directive interviews allowed to obtain and understand the owner-manager’s discourse. The non-directive interview is characterized by its openness and flexibility useful to understanding “the motives, mental representations, subjective logic, references, and values underlying the motivations explicitly invoked by an individual” (Gavard-Perret et al., 2012). A total of seven interviews with the owner-manager were carried out (a first of 2 hours 30 minutes’ duration and 6 interviews of 40 to 45 minutes carried out bimonthly during the judicial procedure). During these interviews, the owner-manager was invited to tell the story of the firm, to chronologically reconstruct its history as well as his personal motives and feelings. The goal of the semi-structured interview was to harvest the discursive data reflecting the conscious or unconscious mind of the owner-manager questioned during the receivership period. Interviews were recorded in order to avoid taking notes and to make the collected data exhaustive and therefore more reliable.

3.2 – Firm context and history

23Firm X was created in 1997 by two professors who wanted to “emancipate themselves from the constraints of authority and give an entrepreneurial and personal impetus to their careers”. Elie and Paula decided to set up a training centre offering post-baccalaureate technical trainings. Elie with his wife Valeria (holding 45% of the capital) associate with Paula and her future husband [1] Chris (holding 45% of the capital). A fifth partner, Pearson, joined them (holding 10% of the capital). Firm X is a family firm considering that founders belong to two families and that they are involved in day-today management and also in firm’s governance. Finally, the firm was completely financed by associates’ personal funds. Apart from a minor bank loan, which was solicited at the beginning of the activity (to pay for rents and other installation costs), no recourse to other external financing was sought during firm establishment.

24The firm is a training centre offering technological university courses. The first academic year started in September 1997. Learners are students in professionalization contracts that is to say they are firms’ employees whose university education is funded by public organizations called CACOs [2] (Collective Authorized Collector Organizations). The firm charges its services (teaching hours provided) to the CACOs that pay for them.

25The firm’s offer developed as shown in table 1.

Figure 1

Firm’s shareholding structure

Firm’s shareholding structure

26From inception, there was a strong demand for the proposed curriculums, that have a positive reputation among clients/students. In particular, the training centre’s offer was well adapted to the expectations of customers in the firm’s immediate environment. Indeed, a strategic location was chosen by the entrepreneurs and the centre was established at the heart of a growing urban centre in the Val d’Oise French department (very close to a tube station, bus stations, shopping centres and restaurants and a dense business tissue surrounding the centre). This gave the firm an important visibility, easy relations with employers and a strong appeal for students. Gradually, the centre has developed a strong reputation particularly because of the familiarity of faculty members with students, as the sense of interpersonal and human relations was a key driving value. In addition, the fact that students were closely followed by professors was a highly appreciated competitive advantage. Consequently, the recruitment of apprentices was an easy task, which was also facilitated by the support of public authorities, as well as by the notoriety of the trainings offered. The initial goal of firm’s founders was to guarantee quality recruitment of apprentices and small student groups.

27During the early years, firm’s overheads were effectively controlled. Particularly, salary overheads were reduced to a minimum, since three of the associates were also professors and chose not to receive salaries whereas only the manager was compensated (at the minimum legal wage). Moreover, the size of the premises was proportionate with the number of students, which allows for controlling the rental expense. In addition, Valeria handled preparatory accounting tasks so that to minimize the accountant firm’s bill.

28Finally, it is worth noting that the owner-manager and his associates received various natural advantages, the amount of which was kept under control. Some of the associates considered these advantages as fair benefits compensating the lack of official remunerations.

29In fine, from the first accounting year, the family business was able to gain earnings, a part which was distributed as dividends to associates.

30On the organizational level, during firm establishing, Elie and Paula proposed to Chris, the partner and future husband of Paula, to be in charge of firm’s management because they could not perform this function, being civil servants. At the beginning, the team size was small and its composition is described in table 2.

31In the beginning of the 2000s, the training centre experienced a very severe crisis caused by a set of external and internal factors. In 2000, two significant developments had occurred. Firstly, the national frameworks (programs, hours, oral tests, etc.) of the offered curriculums had been reformed by authorities and the centre was accordingly obliged to rearrange its internal functioning (notably, teaching hours and timetables) thereby implying a heavier workload for the professors. Second, a legal reform of professionalization contracts led to increasing administrative complexity (and therefore, to longer internal processing times), longer client receivables collection periods (as the CACOs had to deal with cases on longer periods and pay hours later) and a drop in turnover (because of the reduction in the number of teaching hours paid by the CACOs and also lower hourly rates).

32At the same time, the firm’s expenses were steadily increasing. The development of firm’s trainings offers naturally involved the recruitment of additional professors and the move to larger premises (the rent was engulfing 25% of firm’s turnover). But, the premises were underemployed and some classes had a very small students staff.

33In addition, devious professional practices and management decisions have increased the difficulties: First, the payment of natural advantages (personal luxury cars, personal telephone bills, etc.) to the manager and the associates was continuing against all logic, thereby leading to serious excesses and a significant increase in firm’s overheads. In addition, despite the difficulties that were beginning to be felt, the associates continued to get dividends. Finally, the firm’s management was poorly performed. Chris, the owner-manager acted as an amateur, as he told us during the interviews, as his management practice was neither rational nor formalized nor planned. During the interviews, he admitted having procrastination as a major default.

34Moreover, the personal and family life of Chris and Paula had an adverse influence on the firm. In the midst of the business crisis (2001), the couple got married and had their first child. Since then, the two associates were less and less available to manage the business as they did in the past. Consequently, their less significant involvement had affected the quality of student recruitment and coaching but also the quality of relations with students. As a result, the centre started struggling to recruit students, which ultimately led to a decline in firm’s turnover. Later (in 2005), personal conflicts began to emerge and the couple separates. Although the affective distance between the two associates did not involve acute conflicts in the workplace, it significantly influenced the firm’s operations because of the increasing lack of communication and consultation between them. In short, the divorce acted as an aggravating factor of the organizational crisis the business was enduring.

35This severe crisis led to deleterious consequences: notably, payment delays and significant cash flow difficulties began to be felt. Consequently, the owner-manager started negotiating payment deadlines with his creditors and succeeded to obtain a cash facility from his bank. However, the bank gradually became reluctant to support him without the personal guarantees he could bring to the firm (mainly a mortgage on his principal residence). The firm was gradually accumulating debts. Finally, the ‘Elie and Valeria’ couple left the firm in 2001 by selling their participation for a symbolic euro.

36However, despite the growing difficulties, the owner-manager adopted headlong rush strategy during years, by pushing deadlines and negotiating payment terms rather than trying to find effective solutions to problems. Consequently, the crisis heavily affected his work as he emotionally disengaged from the firm and invested himself less in his tasks: he simply gives his teaching hours, resolves problems of authority with students but no longer accomplishes a leadership role.

37Ten years after the crisis started, the firm was in a deplorable situation. Finally, in January 2011, Chris decided to act, as he was no longer able to honour his financial obligations to the main public creditors (urssaf [3], tax administration) and employees. In consultation with his accountant, he decided to benefit from a receivership procedure and went under the protection of the commercial court, which appointed an administrator.

38From the date of entry into receivership, the amount of firm’s accumulated debts (230 000) was frozen. However, new debts had to be paid without delay and the firm was not allowed to have an overdraft.

4.1 – The fall

40The research reveals the occurrence of a destructive process, explained by greed and hubris, which was based on the combination of two harmful mechanisms. Indeed, the lack of professionalization and the unrestricted pursuit of family-centric SEW allowed for the consumption of firm’s assets and financial resources. The confusion of the personal and professional patrimonies (family and firm financial wealth) implied that the firm was considered a vehicle that primarily served the financial and employment goals of family members. For a long time, there has been excessive consumption of firm’s assets and revenues that nearly provoked firm bankruptcy.

4.2 – The revival

48Our observations highlight the role of guilt as a driving force for the strategic renewal of the family firm. Indeed, the owner-manager was forced to make actions to save his business because he felt guilty of having destroyed the business and squandered the financial wealth he enjoyed during the boom period. He confessed that he was not used to control firm’s expenses (some of which were sumptuary) and that he took from the firm, that he considered a cash cow, the money that allowed him to lead a flamboyant lifestyle. He states:

49

I acted as an ostrich…I put my head in the sand telling myself that it’s just going to be a small storm…and once it’s gone, I’ll be able to lift my head and everything will go well”. He also told us: “Psychologically, it was a hard period, as I was the sole manager, therefore, the one and only accountable of the economic and legal situation of my firm. I had more and more difficulties to sleep, I got very anxious…And, my personal situation was changing, as I was separating from Paula…There were 2 children in the game.

50The regret of his actions and the feeling of guilt resulted in a desire to be redeemed by agreeing to submit to the requirements of the receivership procedure and accepting to share his power with the judiciary administrator.

51While an exit through liquidation was for a while considered, this option was ruled out because the owner-manager wished to “fight to keep his business alive”. Indeed, despite his relative emotional disengagement and low personal investment in work, he remained attached to the firm he considers “his baby”. He declares to us:

52

When you are told that 70% of receiverships in the Val d’Oise department conclude with a liquidation that is to say by a complete disappearance of the firm and that only 30% of firms come out, I panicked for the first 10 or 15 days…Then I started to tell myself that my firm will be part of the 30 % who are successful.

53Importantly, the owner-manager explains his willingness to save the firm by the set of non-financial benefits he gets from the firm. And his desire to protect these socio-emotional benefits motivated his willingness to fight in order to save and sustain the firm. Concerning the motivations that drove him to act, he states:

54

First of all, I realized that I loved my firm. Even if the students do get on my nerves, I like them anyway. I like the human aspect in my work. That’s what suits me best…I’m like that. I’ve realized that I liked the relationships I had with professors, I know that I was enjoying great freedom: I have the luxury of being with my children every Wednesday, I have the luxury of being able to spend a week with my two sons every school holiday.. If there is an unexpected family event, I have the luxury to be away and able to catch my course hours later. I was enjoying real freedom, that of a firm manager. I became aware of this luxury and this made me want to fight too. I said to myself that I did not want to lose all these things.
Ok, now I may not earn as much as a few years ago… Ok, I drive an “awful” Renault Clio while a few years ago I drove an all options SAAB car. Ok, I used to get plenty of benefits, my phone was supported, my insurance too. When I think about all this today, I feel that the balance is rather negative…But, quickly, I realize that good things are worth more than negative ones. That’s it, it really made me want to fight, not to let the ship sink.

55Importantly, money does not seem to be the driving force behind the desire to save the firm. Indeed, with respect to money, the owner-manager declares:

56

Money is not a motivating factor for me, it’s a requisite we all need to live. But it’s not what makes me advance in life: It’s not my goal to have Hugo Boss suits, to ride in a 1 00000 € car. Now, it’s obvious that if I want to grow my business, I will need money.

57In short, the “redemption” process was founded on his emotional attachment to the firm, on his need to enjoy freedom and to be master of his own destiny (as expressed by his attachment to the exercise of control) and also on a sense of duty towards the employees and students he did not want to let down. An illustration of the friendly and near-affective relationships made with students is that students told the owner-manager that they did not want to leave the centre, when they were offered the option to reorient themselves to a competing training centre so that they would be able to finish their curriculums.

5.1 – Discussion

80Our research shows that the pursuit of SEW goals might have positive and negative outcomes and consequences on firm’s survival (SEW has bright and dark sides). While a SEW maximizing behaviour could entail detrimental outcomes on firm’s survival, a SEW satisficing (preserving) behaviour conjugated to professionalized management could lead to performance and survival on the long run. In addition, while some entrepreneurial sins, such as greed and hubris, acted as exacerbating factors of SEW goals pursuance, the cognitive emotions of shame and guilt drove the owner-manager to moderate the pursuance of these goals.

81More precisely, we show that the entrepreneurial sins of greed and hubris partly drive the unrestricted pursuit of SEW goals in family firms. However, this effect might be direct or indirect through the deliberate lack of professionalization. First, greed leads the manager to maximize the power in his hands thereby leading to ineffective firm’s governance. Then, hubris manifested in a kind of managerial overconfidence thereby maximizing manager’s personal power, prioritizing emotions and feelings in decision-making and also unduly appointing relatives and friends to key positions. In addition, manager’s greed and hubris were determinant in the deliberate managerial choice of letting the organization be non-professionalized. Indeed, informality and intuitive decision-making (non-reliance on formalized managerial tools) might help the manager and his family to freely use the firm as a means to attain personal financial enrichment. Additionally, this lack of professionalization acted as a conducive context for the unrestricted pursuit of SEW goals thereby amplifying the effect of the two sins on this variable. In result, the conjunction of firm’s assets consumption, lack of professionalization and unrestricted pursuit of SEW goals led to a severe crisis which challenged firm’s survival.

82While the entrepreneurial crisis was denied for a certain period, the owner-manager began to gradually be aware of its seriousness and its consequences on firm’s survival. His emotions were determinant in the course of action he followed during this crisis. When he attained the ultimate state of disgrace, the overwhelming emotion he felt was shame. He was blaming his self for not being a good manager.

83For a while (in the beginning of 2011), this emotion would have implied a business liquidation what could have been synonymous of a flight from responsibilities. Yet, the goal preserving socio-emotional wealth had triggered a move from shame to guilt. Indeed, the owner-manager felt deeply guilty of the degraded situation that the firm has reached. He realized that he should have run his business better, applied rigorous methods and should not take large amounts of benefits in kind. Eventually, this emotion of guilt manifested in the implementation of a retrenchment strategy helped with a moderation of the pursuit of SEW goals. The actions and decisions made by the owner-manager or imposed to him allowed for a formalization of firm’s functioning, a rationalization of decision-making and a bounding of managerial power. Eventually, the retrenchment actions helped the firm to gradually recover from the business crisis. Our observations help explain the rationale provided by Casillas et al. (2018). The authors argue that when survival is not in jeopardy, family involvement will entail a lower level of retrenchment to avoid damage to family social ties and family reputation (Casillas et al., 2018). However, when the decline is strong enough to threaten a firm’s survival, family involvement will intensify the retrenchment strategy in order to safeguard SEW (Gómez-Mejía et al., 2007; Casillas et al., 2018).

84In addition, our findings show that firm’s professionalization was an indispensable response to the existential crisis experienced by the firm. The literature on the growth of family SMEs has long shown the need to formalize activities, to rationalize them and, more generally, to professionalize the firm in order to allow it to grow. However, while growth pushes organizations toward formal strategies, Pascarella and Frohnan (1990) identify some issues in the quandary surrounding transitions from entrepreneurial to professional management. According to the authors, the following clashes occur as firms grow: the founder’s autonomy versus reporting systems and controls; the tolerance for uncertainty versus reduction of uncertainty; independent and unstructured versus interdependent and coordinated; personal energy and efforts versus ability to work with and through others; ideas and individuality versus policies and procedures. Clearly, in our case, the necessary transition from the entrepreneurial phase to the managerial phase was late for the studied firm. In fact, the manager did not seem to have realized the need to professionalize the firm in response to the evolution of its business and the new challenges that it gradually encountered while growing. He even may have avoided this professionalization as it might clash with the autonomy and the lack of accountability he was enjoying before receivership. Our findings show that the setting up of the judiciary receivership promoted a kind of firm professionalization, which resulted in a rationalization of activities, tasks formalization and an improved corporate governance (decentralization of decisions and improved control of manager’s actions). It is worth noting, in fact, that the manager’s former wife, dismissed in 2011, remained involved in the firm as a shareholder. As a result, her involvement in ownership constitutes a sort of counter-power to that exercised by the owner-manager. However, the owner-manager seemed concerned about this situation and confesses that he would like to no longer see his ex-wife as a shareholder.

85Last but not least, our research corroborates previous descriptions about the peculiarities of decision-making in family firms. As described by Redding (1990), owner-managers may analyse their investment decisions on the back of an envelope or utilize heuristic methods or a mental calculus rather than a careful and exact accounting calculation. For Carney (2005), this approach to analysis facilitates rapid decision making and offers advantages in pursuing ephemeral opportunities where time is of the essence and in situations where it is “better to be always first than always right” (Williamson, 1997, p. 55). While these descriptions are consistent with the observations we made in our research, it was shown that a more formal and rational decision-making was rendered necessary during the receivership period in order to save the firm.

5.2 – Contributions to theory

86From a theoretical perspective, the present research offers several contributions. First, it shows that owner-manager’s characteristics need to be taken into account in explaining socio-emotional goals pursuit and SEW importance in family firms. Indeed, the owner-manager’s characteristics (sins and emotions) affect the priorities and weights of the different socio-emotional goals. Precisely, we suggest that:

• The owner-manager’s sins of greed and hubris motivate the firm to pursue (maximize) family-restricted socio-emotional goals (to the detriment of stakeholders’ interest) thereby leading to firm’s decline.
• The owner-manager’s negative emotions of shame and guilt motivate the firm to pursue (satisfy) family-restricted socio-emotional goals thereby leading to firm’s survival/ thriving.

87Therefore, the present paper contributes to research on the dual nature of family firms and work on the ambiguous and bivalent nature of socioemotional wealth. It contributes to explaining why some family firms can partake in harmful stakeholder behaviours despite having seemingly strong SEW (Kellermanns et al. 2012). Consistently with Kellermanns et al. (2012), our paper suggests that SEW can be either an affective endowment or burden for family firms and their constituents, as we show that it can be both a vector of development or destruction of the family firm. As argued by Kellermanns et al. (2012), if SEW is the main frame of reference for family firms and their owners, SEW may also serve as a driver of self-serving behaviour on the side of the family and explain why some family firms place family needs above those of the firm and its stakeholders.

88More generally, our research contributes to our knowledge about SEW in family firms by evidencing the impact of affect-related and socio-emotional goals on the resilience capacity of family firms. Our case study adds to our knowledge about the subjective value of the firm in the eyes of its owners. More than money, for its owner, the family firm represents the own identity, the past, the future and freedom. The owner-manager agrees to make significant sacrifices, and accepted what he could not accept in the past (before the crisis) to keep alive the business from which he derived the non-financial benefits that he valued enormously. If the shareholder was not a family, it is conceivable that the owner would have accepted the liquidation of the business when its performance has deteriorated. In short, we show that socio-emotional goals are related to the resilience capability of family firms.

89Additionally, our study contributes to the stream of research on family firms’ resilience, which is especially critical because many family business owners intend to pass the ownership and management of the firm to the next generation of family members (Steier, 2005). While the goals of continuity and survival are frequently studied in family firms’ literature, to the best of our knowledge, rare studies had investigated the influence of socio-emotional goals on the capacity of family firms to endure crises, to regenerate their businesses, in short to be resilient. In this vein, our case study clearly shows that preserving emotional and social benefits was a key factor behind firm’s recovery and survival. Moreover, we show that owner-manager’s cognitive emotions are fundamental in explaining the resilience of family firms, as they influence the inclination of the owner-manager towards the pursuance of the “bright” side of socio-emotional wealth.

90On the other hand, our research adds to the increasing body of work on the ‘dark’ side of entrepreneurial leadership, such as the leader’s desire for power, for material wealth, and for celebrity (Haynes et al., 2015). We substantiate the propositions of Haynes et al. (2015) concerning hubris and greed and the pursuance of SEW in family firms.

91Finally, our study contributes to the regrettably scanty research about organizational learning and in family firms’ literature. Indeed, our findings show how the crisis and receivership acted as triggers for an individual and organizational learning process. At the individual level, the owner-manager has been able to develop his knowledge and leadership skills during the period of receivership. His learning is mainly a double-loop learning as it questioned his thought paradigms and his beliefs concerning firm’s management. In addition, he admitted having developed a thorough comprehension and a full command of technical documents and administrative and accounting tasks and also a tendency to rationalize and formalize his managerial tasks (for example, by adopting a long-term vision through budgets). On the other hand, he seems to have more confidence in economic and financial reasoning, to the detriment of the informal and tacit logics. On the organizational level, the reorganization of employee roles and the formalization of activities were based on a general learning accomplished by the entire organization. At the instigation of the manager and the judiciary administrator, the employees had to review their thinking patterns, learnt new techniques and rationalized the execution of their tasks. Our observations corroborate previous descriptions of organizational learning in the family business literature. These firms would be weakly oriented towards organizational learning unless they are exposed to external influences through the appointment of outside employees, managers or directors. Indeed, their inherent introversion, which is particularly due to the desire to protect the firm and socio-emotional wealth, leads to conservatism and strategic rigidity resulting in a low propensity to learning. In our study, we observe that the implementation of organizational learning waited for a triggering event to occur and would probably not have happened otherwise. In addition, organizational learning has occurred predominantly through the processes of internalization (as explicit knowledge has been acquired by the owner-manager through the administrative and accounting tools provided by the administrator) and socialization (as the manager has developed, under the administrator’s supervision, a tacit know-how related to his managerial tasks).