An exploration of cooperative stakeholder engagement and risk-taking behavior in privately held family firms

Abstract

This study explores the impact of cooperative engagement with nonfamily employees, consumers, and communities on risk-taking behavior of privately held, long-lived family firms. We posit that cooperative relations can build and reinforce connectedness among the family and nonfamily stakeholders which, in turn, can lead to increased risk-taking. More specifically, the increased stability from widespread cooperative nonfamily engagement will positively moderate risk-taking behavior by amplifying the influence of family involvement in privately held family firms. Using a unique survey of long-lived, privately held family firms, we find support for our hypotheses: cooperative engagement interacts with the essence of family involvement to amplify risk-taking. This study contributes to the stakeholder engagement and family firm literatures and offers managerial and policy implications by underscoring the benefits of cooperative engagement as it enhances risk-taking of family firms, a precursor of growth.