Oecotrophologie · Facility Management (OEF)
Emotionally intelligent top management and high family firm performance: Evidence from Germany
(2021)
Executives in family firms are often confronted with emotionally loaded issues, in part due to the need to include the interests of the owning family. Given this context, we hypothesize how high family-firm performance is affected by the emotional intelligence (EI) of a family-based CEO and top-management team (TMT), in addition to the CEO's transformational leadership (TFL) and TMT's behavioral integration. Survey measures were taken from a random sample of 72 CEOs of German family firms and 245 members of their TMTs. We found that TMT behavioral integration mediates between CEO TFL and objective firm performance while CEO EI is significantly related to both CEO TFL and TMT EI. Implications are discussed for future research thereby suggesting an extension to upper-echelon theory.
Purpose. Experience suggests that a loss of trust may occur on both sides of the merger and acquisition (M&A) equation – acquirer and acquiree – though the latter is more generally considered the most affected. The purpose of this paper is to explore how a loss of trust during the M&A process in family firms can be avoided. An acquisition potentially triggers a loss of trust in the workplace and, as a result, a loss of productivity thereby causing the merged business to totter. Moreover, trust in a firm’s owner tends to be a key driver in merging family firms.
Design/methodology/approach. The authors investigated an expanding German family firm that recently acquired other family firms. They conducted in-depth interviews on all hierarchical levels in both the acquiring and the acquired firm. These cases are taken from a wider study of acquiring family firms completed in 2019.
Findings. Value congruence, integrity and openness are found to enhance trust during M&As, in particular, if the new owner of a merged enterprise is also a family entrepreneur. Under certain circumstances, the trust of employees in the acquired firm’s previous owner can be transferred to the new owner.
Originality/value. This study explores how specific circumstances of family firms impacts organizational trust in M&A processes. The developed framework helps family firms to use characteristics of their specific nature as an asset to maintain their employees’ organizational trust before, during and even after M&As.