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The Ties That Unbind: Socialization and Business-Owning Family Reference Point Shift

The Ties That Unbind: Socialization and Business-Owning Family Reference Point Shift by Robert S. Nason, Ambra Mazzelli and Michael Carney

Existing theory describes how family firms utilize a unique socio-emotional reference point to frame strategic decision-making, but does not fully consider family level strategy or changes in reference points. We theorize that as business-owning families are socialized with actors who provide new information, it alters their collective knowledge structures and thus impacts the nature of reference points used in strategic decision making. Specifically, we link the socialization of next-generation family members to the temporal focus of reference points (i.e., backward- or forward-looking) and socialization into the capitalist class to the spatial focus of reference points (i.e., internally- or externally-oriented). Further, we theorize that the use of non-family professional advisors accelerates reference point shift. Our theory reveals the decisive role of social capital in reference point change and sheds light on how business-owning families may break free from old strategic frames. In doing so, our framework provides a route to explore the socio-cognitive processes underlying reference points’ development and use, as well as sense-making and interpretation more generally.

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