european journal of management

E.J.M. Volume 14, Number 2, 2014 ISSN: 1555-4015 Special Issue "Human Resources, Human Capital And Psychological Capital In Business And Organizations"

EJM, Volume 14, Number 2, 2014

ISSN: 1555-4015

EUROPEAN JOURNAL OF MANAGEMENT ™

Managing Editors: Dr. Marius Dan Gavriletea Babes Bolyai University, Romania

Dr. Cheick Wagué, Dean South Stockholm University, Sweden

Special Number for Thematic:

"Human Resources, Human Capital And Psychological Capital In Business And Organizations"

A Publication of the

International Academy of Business and Economics®

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European Journal of Management Volume 14, Number 2, 2014 ISSN: 1555-4015 Managing Editors: Dr. Marius D. Gavriletea, Babes Bolyai University, Cluj-Napoca, Romania Dr. Cheick Wagué, Dean, South Stockholm University, Stockholm, Sweden Editorial Board: Dr. David Ward, European School of Economics, Milan, Italy Dr. Moshe Zviran, Tel Aviv University, Tel Aviv, Israel Dr. Cheick Wagué, Dean, South Stockholm University, Stockholm, Sweden Dr. Phapruke Ussahawanitchakit, Dean, Mahasarakham University, Thailand Dr. Sid Howard Credle, Dean, Hampton University, Hampton, Virginia, USA Dr. Zinovy Radovilsky, California State University-East Bay, Hayward, CA, USA Dr. William P. Cordeiro, California State University Channel Islands, CA, USA Dr. Ricarda B. Bouncken, University of Greifswald, Greifswald, Germany Dr. Bhavesh Patel, Ahmedabad University, Ahmedabad, Gujarat, INDIA Dr. Vishnuprasad Nagadevara, Indian Institute of Management, Bangalor, India Dr. Tahi J. Gnepa, California State University-Stanislaus, Turlock, CA, USA Dr. Scott K. Metlen, University of Idaho, Moscow, Idaho, USA Dr. Fred N. Silverman, Pace University, White Plains, New York, USA Dr. Benoy Joseph, Cleveland State University, Cleveland, Ohio, USA Dr. Ben-Jeng Wang, Tunghai University, Taichung, Taiwan, ROC Dr. Premilla D'Cruz, Indian Institute of Management, Ahmedabad, INDIA Dr. Alain Nurbel, University of La Reunion, CERESUR, France Dr. Anand Desai, Ohio State University, Columbus, OH, USA Dr. Xiaolin Xing, National University of Singapore, Singapore Dr. Chun Hung Roberts Law, Hong Kong Polytechnic University, Hong Kong, China Dr. Fang-Fang Tang, Chinese University of Hong Kong, Hong Kong, China Dr. Jangho Lee, Sogang University, Seoul, Korea Dr. Marius D. Gavriletea, Babes Bolyai University, Cluj-Napoca, Romania Dr. Aharon Tziner, Dean, Netnaya University College, Netnaya, Israel Dr. C.B. Claiborne, Texas Souther University, Houson, Texas, USA Dr. Byron J. Hollowell, Pensylvania State University, Pensylvania, USA Dr. Michael Benham, European Business School, Germany Dr. John S. Croucher, Macquarie University, Sydney, Australia Dr. Palaniappan Thiagarajan, Jackson State University, Jackson, USA Dr. Kevin K. F. Wong, Hong Kong Polytechnic University, Hong Kong, China Dr. Ernesto Noronha, Indian Institute of Management, Ahmedabad, INDIA Dr. Dale H. Shao, Marshall University, Huntington West Virginia, USA Dr. Lokman Mia, Griffith University, Brisbane, Queensland, Australia Dr. Marek Cwiklicki, Cracow University of Economics, Krakow, Poland Dr. Fabiano Guasti Lima, Ribeirao Preto University Of São Paulo, Brazil Dr. Sutana Boonlua, Mahasarakham Business School, Mahasarakham University Thailand Dr. Ironildes Bueno Da Silva, Catholic University Of Brasilia, Brasilia, Brazil Professor Christine Duller, Johannes Kepler University Linz, Austria Dr. Wilson Almeida, Catholic University Of Brasilia, Brasilia, Brazil Dr. George Heilman, Winston-Salem State University, Winston-Salem, North Carolina, USA Dr. Þórhallur Guðlaugsson, University of Iceland, Iceland Dr. Balasundram Maniam, Sam Houston State University, Texas The EJM is a peer-reviewed and publicly available journal listed in the Cabell’s Directories 2003-14 Editions. In addition, the EJM is also listed in the Ulrich’s International Periodicals Directory since 2003. The EJM is available online from the EBSCO Publishing and Cengage/ Gale Group Publishing. The EJM is a Registered Trademark of the IABE. All rights reserved. ©2014 IABE. Printed and Published in Russia.

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European Journal of Management

Volume 14, Number 2, 2014 ISSN: 1555-4015

A Welcome Note from the Managing Editors: It is our pleasure to present you the Volume 14, Number 2, 2014 of European Journal of Management (EJM) - Special Issue "Human Resources, Human Capital And Psychological Capital In Business And Organizations". The EJM is a publically available and peer-reviewed journal listed in Cabell’s Directories 2003-2014. The EJM is also listed in Ulrich’s International Periodicals Directories since 2004. The journal has the ISSN (ISSN: 1555-4015) issued by the US Library of Congress. EJM is a Trademark of the International Academy of Business and Economics (www.iabe.eu). The EJM is a publication of the International Academy of Business and Economics. It is our objective to publish in the EJM high quality research and papers work from all subject areas of management and business administration with a particular emphasis on issues related International business. The EJM issues are growing in importance from an issue to another and this fact is proven by the great number of the papers submitted by experienced researchers from many different countries in the World. We would like to assure you that we will do our best in the future, in order to offer you a high quality journal. In this issue of 2014, we publish research papers of good quality for your reading. Each paper has successfully undergone a double blind peer-review process. You may enjoy scope of research papers ranging from international finance, international economics, business strategy, management of technology, entrepreneurship, organizational structure to quality management. We hope that you will enjoy reading this issue of the EJM and look forward to the next issue. Your published research papers represent our inspiration and together we will be more professional. Please write us to share your ideas for making EJM even more relevant to your area research and teaching! We look forward to hearing your comments and suggestions about this issue of the journal, and welcome your contributions for future issues of EJM. All these comments will be seriously taken into account and we would not let you down! Our website, www.iabe.eu, is completely redesigned for online paper submission, checking status of your paper, and more. We invite you to visit our website and create your member account. Finally, we would like to express our sincere gratitude to numerous paper reviewers and editorial board for their contributions in making this issue. Warm Regards, Dr. Marius Gavriletea Dr. Cheick Wagué Managing Editors

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TABLE OF CONTENTS

European Journal of Management Volume 14, Number 2, 2014 ISSN: 1555-4015

STAKEHOLDER SALIENCE, GOAL SYSTEM, AND FAMILY BUSINESS: A CORRELATION STUDY Silvia Payer-Langthaler, Johannes Kepler University, Linz, AUSTRIA Christine Duller, Johannes Kepler University, Linz, AUSTRIA RETIREMENT PLANNING AND RESOURCES

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Joanne Kaa Earl, School of Psychology, University of New South Wales, Australia Helen Archibald, School of Psychology, University of New South Wales, Australia A TEST OF MEDIATING EFFECT OF ORGANIZATIONAL COMMITMENT IN THE RELATIONSHIP BETWEEN JOB SATISAFACTION NURSES TURNOVER INTENT

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Harif Amali Rivai, Department of Management, Faculty of Economics, Andalas University, Indonesia

COSTING ALLOCATION AND DIFFERENT IMPLICATIONS IN A SMALL CLOTHING MANUFACTURING COMPANY – A CASE STUDY

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Margit Malmmose, Aarhus University Rainer Lueg, Aarhus University MANAGING ORGANIZATIONAL INNOVATION THROUGH HUMAN RESOURCES, HUMAN CAPITAL AND PSYCHOLOGICAL CAPITAL

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Riccardo Sartori, University of Verona, Verona, Italy Andrea Scalco, University of Verona, Italy WORK VALUES AND AGING WORKFORCE. A PERSPECTIVE ON VALUE ORIENTATIONS AND MOTIVATIONS FOR POST-RETIREMENT ACTIVITIES.

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Piermatteo Ardolino, University of Verona, Italy Stefano Noventa, University of Verona, Italy Serena Cubico, University of Verona, Italy Patrizia Buziol, University of Verona, Italy Giuseppe Favretto, University of Verona, Italy Moreno Fiorentini, University of Verona, Italy Alberto Crescentini, SUPSI University of Applied Sciences and Arts of Southern Switzerland UNIVERSITIES AS SOURCES OF BUSINESS: ENTREPRENEURSHIP AND DOCTORAL STUDIES

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Serena Cubico, University of Verona, Italy Giuseppe Favretto, University of Verona, Italy Maddalena Formicuzzi, University of Verona, Italy Anastasia Ferrari, University of Verona, Italy Jocilene Gadioli de Oliveira, Coordenação de Aperfeiçoamento de Pessoal de Nível Superior, Brazil Ajay K. Jain, Management Development Institute Gurgaon, India Romina R. Fucà, University of Macerata, Italy THREAT OF LOSING THE JOB AND DEVIANT BEHAVIOURS AS CONSEQUENCE: COMPARING SOCIAL EXCHANGE PERSPECTIVE AND JUSTICE CONTROL MODEL AS THEORETICAL EXPLANATIONS Beatrice Piccoli, University of Verona, Verona, Italy Massimo Bellotto, University of Verona, Verona, Italy

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THE ROLE OF MANAGEMENT ACCOUNTANTS IN THE USE OF ERP SYSTEMS IN LARGE COMPANIES

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Bernhard Gärtner, Johannes Kepler University, Linz, AUSTRIA Andrea Krichbaum, Johannes Kepler University, Linz, AUSTRIA EMOTIONAL INTELLIGENCE AND LIFE SATISFACTION: AN EMPIRICAL STUDY ON ITALIAN NURSES

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Annamaria Di Fabio, Department of Education and Psychology, University of Florence, Italy Letizia Palazzeschi, Department of Education and Psychology, University of Florence, Italy ASSESSING THE IMPACT OF THE ONLINE LEARNING PORTAL ON STUDENT PERFORMANCE IN A BUSINESS/MARKETING COURSE

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Con Korkofingas, Macquarie University, Sydney Australia Joseph Macri, Macquarie University, Sydney Australia SUPPORTING CRITICAL THINKING THROUGH ANCHORED ASYNCHRONOUS ONLINE DISCUSSIONS

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Nimer Alrushiedat, California State University, Fullerton, California, USA UNDERSTANDING UNIQUE CONSUMER BEHAVIOR: INSIGHTS FROM SOCIAL PSYCHOLOGY

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Anja Franck, TU Dresden, Germany Stefan Wünschmann, TU Dresden, Germany CREATIVE SELF-EFFICACY, HARDINESS AND RESISTANCE TO CHANGE

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Gaetano Andrea Mancini, University of Florence, Italy HUMAN CAPITAL DISCLOSURE: A DETERMINANT OF FIRM GROWTH AND FINANCIAL PERFORMANCE. EMPIRICAL EVIDENCE FROM EUROPEAN LISTED COMPANIES Silvio Bianchi Martini, University of Pisa Antonio Corvino, University of Foggia Federica Doni, University of Milano-Bicocca Alessandra Rigolini, University of Pisa

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STAKEHOLDER SALIENCE, GOAL SYSTEM, AND FAMILY BUSINESS: A CORRELATION STUDY Silvia Payer-Langthaler, Johannes Kepler University, Linz, AUSTRIA Christine Duller, Johannes Kepler University, Linz, AUSTRIA ABSTRACT This article is a response to the numerous calls for the application of stakeholder theory for the analysis of family businesses and among the first papers that deal with the concept of stakeholder salience in the family business context empirically. This study extends the literature by hypothesizing that stakeholder salience differs due to a company’s ownership structure (family business versus nonfamily business) and the degree of the owner family’s influence. Furthermore, the authors analyze the interplay between stakeholder salience and a company’s goal system, expecting that a company’s goal system reflects the claims of the highly salient constituents and that this correlation is influenced by a company’s ownership structure and the degree of the owner family’s influence. The results from a survey of large and medium-sized companies in Austria only partially confirm the hypotheses. Our findings suggest a need for continued emphasis on the empirical research on this topic. Keywords: stakeholder theory, salience, family business, goal system

1. INTRODUCTION A recent literature review conducted by Laplume et al. (2008) reveals that stakeholder theory is increasingly at the forefront of the corporate agenda. In this context, it can be confirmed that research through the lens of stakeholder theory focuses disproportionately on large publicly traded corporations (Phillips et al., 2003). In doing so, some authors complain that, thereby, small businesses and family businesses (FBs) are largely neglected (Sharma, 2003; Laplume et al., 2008). In general, stakeholder theory (Freeman, 1984) is based on the belief that the ultimate purpose of a company is to serve the interests of all of its constituents, not only that of its shareholders. One of the broad themes within stakeholder related research is the definition of stakeholders (Laplume et al., 2008). In this context, the concept of stakeholder salience has gained attention. According to Mitchell et al. (1997), stakeholder salience is dependent on specific (combinations of) stakeholder attributes: power, legitimacy, and urgency. Although widely cited, there has been limited research using the Mitchell et al. (1997) framework as a tool for empirical analysis. Most studies take the power, legitimacy, and urgency attributes as given and describe stakeholders in terms of these attributes (Parent and Deephouse, 2007). The broad study of Agle et al. (1999) and the multi-method, comparative case study of Parent and Deephouse (2007) are among the few examples that empirically confirm the theoretical model of stakeholder salience proposed by Mitchell et al. (1997). Both studies focus on large organizations and confirm a positive relationship between the number of stakeholder attributes and perceived stakeholder salience. In addition, Mitchell et al. (2011) recently applied the concept of stakeholder salience vis-àvis the FB context in a conceptual manner, but until now there is no empirical study that empirically tested their assumptions concerning stakeholder salience in family firms. The aim of the following paper is twofold: firstly, the paper is a response to the numerous calls for the application of stakeholder theory for the analysis of FBs (Sharma, 2004; Chrisman et al., 2005; Chrisman et al., 2012; Cennamo et al., 2012). Secondly, taking into account the empirical findings of a quantitative survey of large- and medium-sized companies in Austria, the following paper is among the first that empirically deals with the concept of stakeholder salience in the FB context. In doing so, the author’s focus is primarily on the factors that might have an impact on stakeholder salience and on the interplay between stakeholder salience and a company’s specific goal system. Supposing a certain correlation between stakeholder salience and a company’s goal system (Freeman, 1984; Donaldson and Preston, 1995; Cennamo et al., 2012), the authors empirically answer the following research questions:

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Research question 1:

Are there differences in stakeholder salience due to a company’s ownership structure (FB versus NFB) and the degree of family influence?

Research question 2:

Does the company’s goal system reflect the claims of the highly salient constituents and does this correlation depend on a company’s ownership structure and the degree of family influence?

The article is organized as follows. First, we mention reasons that substantiate the application of stakeholder theory in a FB context. Additionally, in section two we review the stakeholder salience literature to highlight some of the key elements that underline the unique salience issues that are said to occur in FBs. In this context, we assume that stakeholder salience is mainly influenced by the structure of ownership and the degree of family influence. In FBs, it is difficult to answer the question whether shareholders are family- or nonfamily-stakeholders. Hence, we additionally focus on a company’s goal system to shed further light on the influence of stakeholder salience on a company’s goals. Sections 3 and 4 are dedicated to the methodological principals as well as the statistical results. Finally, our article concludes with a brief discussion of the main results and mentions some limitations that should be acknowledged. In general, the following article is motivated by our belief that the application of the stakeholder salience concept to the FB context will assist scholars as well as practitioners within this domain to further explore the processes of prioritization of stakeholders in this unique and important context; and that a profound analysis of a company’s goal system will shed further light on the stakeholder salience concept. In the case of FBs it is obvious to note that the family itself constitutes – among others – one important stakeholder group (Zellweger and Nason, 2008; Zellweger et al., 2011) and thus, it is a matter of course, that the owner family gains a higher salience in FBs than in nonfamily businesses (NFBs). Therefore, it is important to note that this study focuses primarily on nonfamily stakeholders (Hauswald and Hack, 2013), such as (nonfamily)-shareholders, employees, customers, suppliers, banks, and the general public (Freeman, 1984; Clarkson, 1995). 2. THEORETICAL BACKGROUND AND DEVELOPMENT OF HYPOTHESES One of the most influential theses of stakeholder theory is that organizations should be managed in the interest of all their constituents, not only in that of shareholders, so that the claims of relevant stakeholders are integrated into an organization’s strategic plans, goal systems, and decision-making processes (Freeman, 1984; Donaldson and Preston, 1995; Jones, 1995; Kaler, 2003). Furthermore, stakeholder theorists argue that all persons or groups with legitimate interests participating in an enterprise do so to obtain benefits and that there is no prima facie priority of one set of interests and benefits over another (Donaldson and Preston, 1995). In this context, the identification and prioritization of stakeholders play a central role in stakeholder management (Parent and Deephouse, 2007). In order to answer the questions “Which stakeholders should managers pay attention to?” and “Which stakeholders do managers really care about?” (Laplume et al., 2008), the concept of stakeholder salience (defined to be the degree to which managers give priority to competing stakeholder claims) (Mitchell et al., 1997: 854) has gained momentum. In this context, Mitchell et al. (1997) use three important social science concepts to characterize stakeholders: power (the ability of stakeholders to impose their will on a given relationship through coercive, utilitarian, or normative means (Etzioni, 1964), legitimacy (claims are appropriate, proper, and desirable in the context of the social system (Suchman, 1995), and urgency (the degree to which a constituent believes its claims are time sensitive or critical, or generally spoken, the degree to which stakeholder claims call for immediate attention (Mitchell et al., 1997). Based on these assumptions, Mitchell et al. (1997) developed a typology of eight stakeholder salience-types based on whether or not a stakeholder has one, two, or three of the above mentioned attributes of power, legitimacy, and/or urgency. The core relationship in Mitchell et al.’s (1997) theory was that the more attributes a stakeholder has, the greater its salience will be (Parent and Deephouse, 2007). One attribute for itself does not guarantee high salience in a stakeholder-manager relationship. For instance, power only gains authority through legitimacy, and it gains exercise through urgency (Mitchell et al., 1997). On the other hand, legitimacy gains rights through power and voice through urgency. Finally, urgency by itself is not sufficient to guarantee high salience in the stakeholder-manager relationship but in combination 8


with at least one of the other two attributes; urgency will change the relationship and cause it to increase in salience to the firm’s managers (Mitchell et al., 1997: 870). According to this model, entities with no power, legitimacy, or urgency will be perceived as having no salience by the firm’s managers and therefore are so called non-stakeholders (Mitchell et al., 1997). Given that FBs are undoubtedly one of the most important forms of business in both national and international contexts (Aastrachan and Shanker, 2003; Villalonga and Amit, 2006), and further given the undisputed assessment within family firm literature that FBs face unique stakeholder constellations (Sharma, 2004; Chrisman et al., 2005; Zellweger and Nason, 2008), it is rather surprising that stakeholder challenges faced by such organizations are – apart from a few recent exceptions (Stavrou et al., 2007; Zellweger and Nason, 2008; Mitchell et al., 2011; Cennamo et al., 2012) – being nearly overlooked (Laplume et al., 2008). The FB literature gives several reasons that substantiate the relevance of applying stakeholder theory to the family firm context. Firstly, in contrast to nonfamily enterprises, FBs have an additional stakeholder group, namely the family. According to Zellweger and Nason (2008), it can be stated that ownership families clearly affect, and are affected by, the achievement of a corporation’s purpose (Freeman, 1984) and therefore can be labeled as a unique stakeholder category (Zellweger and Nason, 2008; Zellweger et al., 2011). Secondly, the family form of organization not only involves the interplay of a number of stakeholders but first and foremost faces a diverse set of economic and noneconomic goals (Chrisman et al., 2005), with socio-emotional goals in the forefront (Gomez-Mejia et al., 2007; Berrone et al., 2012). While the family firm literature clearly acknowledges the importance of nonfinancial objectives, it has been relatively silent about how these firms manage their stakeholder network (Cennamo et al., 2012: 1155). Hence, incorporating stakeholder theory into future research is advisable to fill an existing theoretical gap (Chrisman et al., 2005). Finally, it is argued in the literature that, in contrast to nonfamily enterprises, FBs face unique stakeholder constellations and have a particular inclination to satisfy multiple stakeholders (Zellweger and Nason, 2008). Based on social identity theory, Dyer and Whetten (2006) suggest that family entrepreneurs often view their firms as an extension of the self and their families, which makes them more likely to be socially responsible and, hence, satisfy societal stakeholders (Tagiuri and Davis, 1992; Zellweger and Nason, 2008). Tagiuri and Davis (1996) additionally report that FBs display strong community relations and are deeper embedded in the societal context of their firms. With regard to long-lasting goal orientation, it is postulated in the literature that FBs have a greater incentive to produce individual benefits for stakeholders compared with NFBs (Zellweger and Nason, 2008). Additionally, it has been shown that the goal systems of FBs are not solely oriented towards profit, but also towards stakeholder interests, especially those of customers and employees (Spence and Rutherford, 2001; Zellweger and Nason, 2008; Hack, 2009). With regard to the employees it is said that FBs’ employees are more intrinsically motivated (Arregle et al., 2007), that the interaction between family members and employees is based on faith, trust, and confidence (Tagiuri and Davis, 1992; Habbershon and Williams, 1999), that FBs avoid staff reduction even in times of economic crisis (Lee, 2006), and that FBs are characterized by a very flexible working culture (Arregle et al., 2007). In summary it can be said, therefore, that FBs face lower staff fluctuation and higher employee and customer satisfaction (Miller et al., 2008; Hack, 2009). Moreover, it is said in the literature that family members in the firm often have strong relationships with their clients, suppliers, bankers and other external stakeholders (Lyman, 1991; Yeung, 2000) and that family members’ interactions with the mentioned stakeholder groups are numerous and intense and therefore contribute to the development of organizational social capital (Arregle et al., 2007). Whether family firms are more likely than others to engage actively with their stakeholders and why they would do so has received relatively little attention (Cennamo et al., 2012). Cennamo et al argue that who controls the firm and the extent to which the controlling party values achieving social goals explain why some firms are more sensitive than others to stakeholder issues and the ensuing pressure. The authors suggest that FBs engage proactively in stakeholder management activities because by doing so, they enhance and protect their socioemotional endowments (Cennamo et al., 2012). Following institutional theory (Powell and DiMaggio, 1991), Mitchell et al. (2011) argue that where principal institutions intersect (i.e. family and market logic) a unique set of challenges emerge in connection with the question of which stakeholder groups matter most or the principle of who or what 9


really counts (Freeman, 1994). The authors apply the power, legitimacy, and urgency attributes of stakeholder salience vis-à-vis the FBs context and they show that stakeholder salience (Mitchell et al., 1997) will be different and more complex in FBs than in organizations where institutions are based on a single dominant logic (i.e. market logic) (Friedland and Alford, 1991; Thornton et al., 2012). In the same context, Mitchell et al. (2011) argue that when institutions intersect, such organizations are likely to experience greater stakeholder conflicts, greater ethical conflicts, and greater cognitive complexity than other organizational forms. According to Mitchell et al. (2011) there are distinct and idiosyncratic aspects associated with the FB context (e.g. non-economic goals, socioemotional wealth, family history, intentions for transgenerational sustainability, altruistic tendencies) that make stakeholder salience issues more complex and increase the potential for conflict. According to the above lines of reasoning we suppose that stakeholder salience differs significantly between FBs and NFBs. Hypothesis 1:

Employees, customers, suppliers, banks and the general public gain a higher salience in FBs than in NFBs.

According to Chrisman et al. (2012), the growing awareness of FBs being heterogeneous is a call to focus more on the distinct consequences of family involvement. Therefore, in addition to the structure of ownership, the impact of the family and their affect on stakeholder salience seem to be interesting. In our study, the impact of the family is defined and measured according to the Substantial Family Influence (SFI) concept of Klein (2000). The SFI is an example of a continuous measure of family involvement or essence that is better suited to capturing varying levels of family involvement than dichotomous classifications to separate family and non-family firms (Astrachan et al., 2002; Chrisman et al., 2005; Chrisman et al., 2012). The SFI measures a family’s influence via a combination of the extent and quality of its ownership, governance, and management involvement (Klein et al., 2005). Melin and Nordqvist (2007) report that FBs are heterogeneous in the manner in which they view and respond to the claims and pressures of family and non-family stakeholders. In this context, the question arises whether a different degree of family involvement has a consequence on the salience of the considered stakeholder groups. A decreasing (increasing) SFI simultaneously implies an enlargement (reduction) of non-family ownership, and/or non-family managers and/or non-family board members. As family member’s attributes of power, legitimacy, and urgency differ in important ways from general business stakeholder salience (Mitchell et al., 2011), we suppose that stakeholder salience is influenced, among others, by the degree of family involvement. Hence, given the above observations, we introduce the following proposition: Hypothesis 2:

Stakeholder salience differs due to a family’s influence: The higher the SFI, the higher the salience of employees, customers, suppliers, banks, and the general public.

In the words of stakeholder theory, organizational success depends on satisfying multiple stakeholder interests (Donaldson and Preston, 1995). According to Miles (1980), the ability of the organization to satisfy the expectations of its strategic constituents can be called synonymic as organizational effectiveness. As an organization is comprised of many different constituencies, each of these constituencies may be interested in different aspects of (financial and nonfinancial) performance outcomes (Simons et al., 2000; Zellweger and Nason, 2008). Furthermore, outcomes are assumed to reflect the fulfillment of an organization’s goals (Venkatraman and Ramanujam, 1986) and it is evident that the goal system of a company has to correspond to the different performance outcomes and stakeholder demands in order to sustain a company’s success (Simons et al., 2000; Otley, 2005; Merchant and van der Stede, 2007) and an organization’s effectiveness (Miles, 1980). Referring to Freeman’s (1984) original definition, stakeholders can affect (and are affected by) the achievement of a firm’s objectives. Bridging the concept of stakeholder salience with Freeman’s definition of stakeholders, it can be followed that a company’s highly salient stakeholder groups do not only affect the achievement of a firm’s objectives but they even determine a company’s processes of goal setting and decision making. As a consequence, it can be stated that the claims of the highly salient stakeholders determine the contents of a company’s goal system.

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In order to operationalize the concept of saliency, Agle et al. (1999) designed a survey to examine distinct relationships among the stakeholder attributes of power, legitimacy, urgency, and salience. The survey included several items for each of the stakeholder attributes, such as (Agle et al., 1999): This stakeholder group had power, (S) when the specific group had access to, influence on, or the ability to impact our firm, (-) or the power to enforce its claims. • This stakeholder group exhibited urgency in its relationship with our firm (-) when it actively sought the attention of our management team or (-) communicated its claims to our firm. • The claims of a particular stakeholder group were viewed by our management team as legitimate (-) when the claims of this group were legitimate in the eyes of our management team. All three examples give reason to conclude that stakeholder salience has an impact on the configuration of a company’s goal system. Accordingly, we expected that: •

Hypothesis 3:

A company’s goal system reflects the claims of the highly salient constituents.

Consistent with the reasoning above, Zellweger and Nason (2008) propose that stakeholder salience has an impact on the relationship between stakeholder satisfaction and organizational effectiveness. Stated more formally, they claim that the more salient (hence the more influential or strategic) a stakeholder group, the higher its impact on organizational effectiveness. In a similar manner, Chrisman et al. (2012) additionally assume that the salience of a stakeholder has an impact on a stakeholder’s ability to influence organizational effectiveness or in influencing the goal system. Thereby, the authors suppose in their recent study on small firms that the degree of family involvement affects the adoption of family-centered non-economic goals. Furthermore, the authors empirically confirm that the salience of a stakeholder in influencing the goals, decisions, and actions of a firm largely depends upon that stakeholder’s legitimacy, power, and urgency (Chrisman et al., 2012). Consequently, as stakeholder theory provides insights into which stakeholders are likely to influence a company’s selection of goals, we argue in the following paper that the set of goals adopted by a company will be influenced – among other things – by the degree of family involvement (SFI) (Chrisman et al., 2012). Hence, given the above observations, it was reasonable to expect the following hypothesis: Hypothesis 4:

The correlation between stakeholder salience and a company’s goal system is affected by its ownership structure and the degree of family influence: the higher the SFI, the higher the alignment between stakeholder salience and the company’s goal system.

3. METHODOLOGY: SAMPLING PROCEDURES, MEASURES, AND STATISTICAL TESTS Empirical evidence presented in this paper is derived from a survey of large and medium-sized companies in Austria. The required data were gathered by using a standardized online questionnaire between June and July 2012. An invitation to participate in our survey was sent out by e-mail to the CFOs of all 5.827 Austrian companies with at least 50 employees (European Commission, 2003). Contact details were derived from the compass database. The quality of data was verified by various controls. First, we conducted 10 pretests with corporate executives in different sized companies and change requests based on these pretests were integrated into the survey during a final discussion. Second, we assigned individual token keys to every e-mail invitation to prevent multiple answers from identical participants. Finally, representativeness was tested by comparing the first third of the data set with the last third with respect to size in order to control for non-response bias. There was no indication of nonresponse bias, as no significant differences were detected between early and late respondents (Fowler, 2009). We received a total of 488 answers, representing a response rate of 8,4 %. In total, 192 questionnaires had to be eliminated as a consequence of incomplete answers. The complexity of the 11


survey probably contributed to the low response rate. Thus, the remaining 296 answers built the basis of the results presented below. Because stakeholder salience occurs in the minds of managers (Mitchell et al., 1997), managers play a key role in the theory (Mitchell et al., 2011). Consequently, our study addressed primarily CFOs. In prior studies concerning the measurement of stakeholder salience, multiple item surveys were used to operationalize the construct of power, legitimacy, and urgency (Agle et al., 1999) that made it possible to create an ordinal-scaled stakeholder salience variable (from low to high): latent, expectant, and definitive stakeholders (Mitchell et al., 1997 and 2011). In the following study, the focus is primarily on highly salient (“definitive”) stakeholders. Thus, we consider a stakeholder as “definitive” (stakeholders exhibiting simultaneously power, legitimacy, and urgency and thus are perceived by managers with the highest salience) (Mitchell et al., 1997) when a company’s management incorporates the claims of a specific stakeholder group during the definition of its performance goals. To answer the question in the survey, the CFOs were given a list with the following stakeholders: shareholders, employees, customers, suppliers, (family) owners, general public (community), banks, and others. Obviously, we thus follow Freeman’s broad definition of a stakeholder (Freeman, 1984), for it leaves the notion of stake and the field of possible stakeholders unambiguously open to include virtually anyone (Mitchell et al., 1997). In order to control for Hypothesis 1 and to answer the question whether FBs show differences concerning their stakeholder salience, it was necessary to explicitly mention family owners as a distinct stakeholder group (Zellweger and Nason, 2008). As noted earlier in the article, we identified FBs according to the concept of SFI (Klein, 2000), which considers strong family influence measured by a family’s (1) share of the capital, (2) seats on the management board, and (3) seats on the advisory board. Given that the family holds at least some share in the firm and therefore is not equal to zero, a firm is considered to be a FB if the SFI measure is equal to or exceeds one. However, with respect to the delineation and definition of the term FB, there is no general consensus in the academic literature (Chrisman et al., 2005; Ibrahim et al., 2008) and definitions based on selfperception are becoming quite common and frequently used in empirical research. According to these definitions, the classification of firms into FBs and NFBs depends in part, or even entirely, on the judgment of the person being interviewed (Westhead and Cowling, 1998; Gudmundson et al., 1999; Gallo et al., 2004). Thus, in addition to the SFI, we asked the participating CFOs whether the companies they belong to are FBs or not. One method of identifying organizational goals is simply to ask those persons in charge of an organization what they believe to be its primary goals (Etzioni, 1961; Tagiuri and Davis, 1992; Lee and Rogoff, 1996; Westhead, 2003; Chrisman et al., 2012). It is widely acknowledged in the business literature that goal systems are composed of financial as well as nonfinancial goals (Kaplan and Norton, 1996; Simons et al., 2000; Ferreira and Otley, 2009). Numerous scholars have suggested that FBs, compared with NFBs, face particularities in their goal systems, stemming from the dominance of the controlling families that give a high priority to nonfinancial goals (Zellweger et al., 2011; Chrisman et al., 2012) and to their socioemotional wealth (Gomez-Mejia et al., 2007; Berrone et al., 2012). In order to test the relationship between the stakeholder salience (Mitchell et al., 1997) and a company’s goal system, a comprehensive question concerning the rating of the importance of distinct financial and nonfinancial goals was based on a five-point Likert scale in order to get dispersed and nuanced answers. A rating of one was given to goals with extremely high importance, whereas five marked the lowest importance of the respective goal. The applied goal catalogue consisted of 17 distinct goals with each stakeholder group being reflected (shareholder-, employee-, customer-, supplier-, and family-oriented goals, etc.). In addition, the survey participants were asked to provide an additional ranking (one to three) of the goals with the highest importance. In order to test our Hypotheses we applied one-sided Fisher’s exact tests (significance level 5%). 12


4. RESULTS AND IMPLICATIONS In Hypotheses 1 and 2 were controlled for the influence of a company’s ownership structure and the degree of family influence on stakeholder salience. As already stated, the following study focuses primarily on nonfamily stakeholders as it is not surprising that the owner-family gains a significantly higher salience in FBs than in NFBs. FB vs. NFB FB counts 75 39 39 49 8 12 7

n = 97 % 77,3 40,2 40,2 50,5 8,2 12,4 7,2

NFB counts 150 5 71 108 14 25 43

n = 180 % 83,3 2,8 39,4 60,0 7,8 13,9 23,9

Family influence (SFI) within FB Fisher p-value 0,144 0,000 0,501 0,082 0,530 0,438 0,000

shareholders owner-family employees customers suppliers bank general public

SFI < 2 counts 40 14 17 22 3 4 3

n = 45 % 89,9 31,1 37,8 48,9 6,7 8,9 6,7

SFI ≥ 2 counts 29 23 16 20 40 50 2

n = 42 % 69,0 54,8 38,1 47,6 9,5 11,9 4,8

Fisher p-value 0,021 0,022 0,575 0,538 0,461 0,456 0,533

TABLE 1: IMPACT OF OWNERSHIP STRUCTURE AND FAMILY INVOLVEMENT ON STAKEHOLDER SALIENCE As shown above, stakeholder salience differs significantly between FBs and NFBs with respect to one stakeholder group, namely the general public. Different from our expectations, the result indicates that the general public (society, community) gains a significantly higher salience in NFBs than in FBs. Summing up, neither of the expected stakeholder groups gains a higher salience in FBs than in NFBs and Hypothesis 1, therefore, has to be rejected. The second part of Table 1 presents the results of the analysis used to test Hypothesis 2, suggesting that stakeholder salience differs due to a family’s influence measured by the SFI within FBs. Our results do not justify our assumption that stakeholder salience is influenced by the degree of family involvement with respect to employees, customers, suppliers, banks and the general public. Therefore, the general pattern of results leads us to reject Hypothesis 2. Furthermore, our statistical results indicate that a company’s (nonfamily) shareholders gain a significantly higher salience in FBs with a low family influence (SFI