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Abstract
Drawing on the upper echelons theory, this study investigates how entrepreneurial orientation is impacted by the family member CEO's demographic characteristics (age, gender, educational level, tenure, and generation) and how entrepreneurial orientation (innovativeness, proactiveness, and risk-taking) influences the family firm's financial performance. The model was empirically tested with survey data of 1314 family firms CEO respondents from 33 countries worldwide using data from the "Successful Transgenerational Entrepreneurship Practices Project" (STEP Project) applying Partial Least Squares analysis.
Moreover, it was considered the moderating effect of national culture (uncertainty avoidance and gender egalitarianism). The findings highlight no significant relation from any of the family member CEO's demographic characteristics, age, educational level, tenure, generation, and gender with innovativeness. Educational level, tenure, and gender of the family member CEO were significant in relationship with proactiveness. Educational level and generation of the family member CEO were significant in relationship with risk-taking. The findings also indicate that innovativeness has no significant effect on financial performance, but proactiveness and risk-taking have a significant and positive relationship with financial performance.
Furthermore, gender egalitarianism moderates the relationship between proactiveness and financial performance so that when gender egalitarianism is high, the relationship between proactiveness and financial performance is stronger. In countries with high uncertainty avoidance levels, the relationship between risk-taking and financial performance is weaker. In family firms, the results suggest that what drives the family firm's financial performance are proactivity and risk-taking.
The results inform managers of family firms to consider the educational level of the CEO as a relevant demographic characteristic that has an effect on proactiveness and risk-taking. It also advises that innovativeness has no significant effect on financial performance so efforts should focus on proactiveness and risk-taking.