Project R-14809

The Love-Hate Relationship between Family Firms and Entrepreneurial Finance (Research)

Family firms are unique because there is a family dimension in these firms. As a consequence, not only economic but also noneconomic goals shape their decision-making. These noneconomic goal refer to the preservation of the family's socio-emotional wealth. This is the affect-related value the family invested in the firm. The decision-making based on these two types of goals is also visible in the financing decisions. While prior studies already identified the trade-offs family firms make between the more classic financing forms, there is no knowledge on the trade-offs between these traditional financing forms and the entrepreneurial financing forms such as crowdfunding, venture capital, and initial coin offerings. This is highly relevant to study because while there are risks associated with entrepreneurial finance, such as the dilution of ownership or the high cost of angel financing, the benefits can outweigh the costs for family businesses looking to grow and thrive in today's business environment. Therefore, understanding how family firms make the trade-offs mentioned above and why they will (not) go for an entrepreneurial financing form based on both the family's financial and nonfinancial considerations is ground-breaking.

16 September 2024 - 15 September 2028