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FBRXXX10.1177/0894486516680930Family Business ReviewHolt et al.

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Family Business Review

Family Firm(s) Outcomes Model:

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© The Author(s) 2016
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DOI: 10.1177/0894486516680930

Outcomes Across the Family and Firm journals.sagepub.com/home/fbr

Daniel T. Holt1, Allison W. Pearson1, Jon C. Carr2, and Tim Barnett1

Abstract
Family firms are distinguished theoretically from nonfamily firms due to their pursuit of unique, family-related
aspirations and goals. The pursuit of these aspirations and goals leads many family firms to define success or failure
in terms of a broader set of outcomes than nonfamily firms. Despite this, family firm research has generally taken a
constricted view of family firm outcomes by concentrating on narrowly defined financial performance as measured
by accounting and/or market-based indicators. We contend that this somewhat myopic focus has slowed the field’s
development to some degree, by constraining our ability to test its fundamental tenets. To address this, we draw
on several disciplines to systematically order family firm outcomes within a family firm(s) outcomes model that
encompasses both financial and nonfinancial dimensions. While financial performance is important in research and
practice, herein we refer to both financial and nonfinancial outcomes and explain how these outcomes map on the
family unit and the family firm. Furthermore, we suggest measures that can be used and explain how the model can
be applied when researchers select financial and nonfinancial outcomes important to family members as the family
firm’s success or failure is gauged.

Keywords
family firm performance, measurement, noneconomic wealth, family wealth, socioemotional wealth

A considerable number of studies in the family firm lit-
erature focus on the relationship between family
involvement and firm’s success or failure, with little
consensus emerging (e.g., Amit & Villalonga, 2014;
Chrisman, Chua, & Bergiel, 2009; Chrisman, Chua, &
Sharma, 2005; Dyer, 2006). Anderson and Reeb (2003),
for example, found that among firms in the S&P 500,
“Family firms are significantly better performers than
nonfamily firms” (p. 1324). Conversely, Hillier and
McColgan (2009) concluded that family involvement
actually hinders firm success. In an effort to resolve the
often “puzzling” (Dyer, 2006, p. 253) inconsistencies
that have been reported, two meta-analyses examined
the association between family involvement and firm
financial outcomes. While both reported negligible cor-
relations, one concluded that family involvement may
have little if any impact on a firm’s success or failure
(O’Boyle, Pollack, & Rutherford, 2012) while the other
argued that key mediators must be examined if the
relationship is to be fully understood (Carney, Van
Essen, Gedajlovic, & Heugens, 2015).1
Amit and Villalonga (2014) suggest, however, that
the often conflicting findings and conclusions may arise
from a mismatch between the unique aspirations and
goals that characterize many family firms and the out-
comes actually measured in most family business stud-
ies. Specifically, scholars advance the notions that
family firms differ because they pursue family-centered
nonfinancial outcomes and that the strategies employed
in the pursuit of these are both relevant and meaningful
to families and their firms (e.g., Berrone, Cruz, &
1
Mississippi State University, Mississippi State, MS, USA
2
North Carolina State University, Raleigh, NC, USA
Corresponding Author:
Daniel T. Holt, College of Business, Mississippi State University, P.O.
Box 9581, Mississippi State, MS 39762, USA.
Email: daniel.holt@msstate.edu
2 Family Business Review 
Gomez-Mejia, 2012; Berrone, Cruz, Gomez-Mejia, &
Larraza-Kintana, 2010; Colli, 2012; Gomez-Mejia,
Haynes, Nunez-Nickel, Jacobson, & Moyano-Fuentes,
2007; Zellweger & Dehlen, 2012). Despite the wide-
spread acknowledgment of the importance of nonfinan-
cial and family-related goals, empirical studies have
largely focused on financial performance, rather than a
broader array of outcomes (e.g., Amit & Villalonga,
2014; Chrisman, Kellermanns, Chan, & Liano, 2010).
As a result, research may not be fully capturing the
desired and wide-ranging outcomes derived from the
strategic priorities of family firms. In a manner some-
what analogous to Steven Kerr’s (1975) article, “On the
Folly of Rewarding A, While Hoping for B,” family
firm research could be characterized as theorizing that
critical family firm outcomes (FFOs) are one set of
things (“A”—firm financial and family-centered, nonfi-
nancial outcomes), while empirically testing only a sub-
set of these things (“B”—firm financial “performance”
outcomes).
This disconnect between the theory that has been
advanced and empirical measurement is the central con-
cern of our article, and we address it in several ways.
First, we draw on family firm literature and other rele-
vant disciplines to develop an FFO model, which syn-
thesizes and theoretically structures key outcomes in
family firms along two dimensions—the systems
involved (i.e., the family and the firm) and the outcomes
pursued (i.e., financial and nonfinancial). Second, we
offer guidance on how key outcomes may be assessed
by identifying specific measures from the family firm
literature, the family science literature, and the broader
psychological and sociological literature. Finally, we
highlight several research opportunities, detailing how
the specific dimensions of performance identified in the
FFO model can inform future research.
By synthesizing and defining key outcomes and iden-
tifying how these outcomes can be measured, we make
several important contributions. First, we build on the
work of Evert, Martin, McLeod, and Payne (2016), who
reviewed 319 empirical manuscripts, concluding that
the lack of attention given to the conceptualization and
operationalization of constructs as a key challenge fac-
ing family business scholars. Of these constructs, the
outcomes that family businesses are striving toward
have been the most discussed, as several have unequivo-
cally argued that the theoretical development in the field
will be inhibited unless the outcomes are specified such
that the discipline’s theories can be developed and the
core tenets can be tested in greater depth (Miller & Le
Breton-Miller, 2014; Pearson & Lumpkin, 2011; Yu,
Lumpkin, Sorenson, & Brigham, 2012).2
Second, we address the “stretching” of the nonfinan-
cial outcomes umbrella where too many classes of things
have been lumped together such that there is no precise
understanding of these outcomes or their attributes.
Theoretically, we posit that nonfinancial outcomes have
become so general that researchers can empirically cou-
ple these aspects of the family firm with multiple out-
comes and competing theories about their role in family
firm decision making, without violating any of the
assumptions. This limits the field’s ability to meaning-
fully study what determines family firms’ scale and
scope, how the pursuit of particular outcomes may
enhance or limit the family’s ability to fulfill their objec-
tives, and what outcomes are the sources of heterogene-
ity among family firms (Chua, Chrisman, Steier, & Rau,
2012). In essence, with a more detailed specification and
operationalization of outcomes, meaningful tests can be
developed and conducted such that we avoid the folly of
theorizing FFOs as both financial and nonfinancial out-
comes (“A”), while empirically measuring only finan-
cial “performance” outcomes (“B”). As important, this
will give us the means to directly test how family firms
go about fulfilling the primary purpose of optimizing
outcomes such that financial as well as family-centric
nonfinancial goals are met.
Heterogeneity Among Family Firms
Researchers suggest that a homogenous classification of
family firms may lead to misleading theoretical conclu-
sions regarding the extent to which family involvement
influences firm outcomes. Family firms, instead, differ
among one another as they make strategic trade-offs as
they simultaneously pursue financial and nonfinancial
outcomes—a challenge, we argue, that is faced by non-
family firms as well. Family firms differ, however, in the
range of outcomes that may be meaningful. Chrisman,
Chua, and Zahra (2003) model the family firm decision-
making process, suggesting that differences likely begin
with the family’s goals and aspirations. Goals and aspi-
rations may differ across family and nonfamily firms but
may also explain differences among family firms. Chua
et al. (2012) note, “Variations in the behavior and perfor-
mance across family firms may be as large if not larger
than the variations between family and nonfamily forms
of organizations.” They further conclude, “The mix of
Holt et al. 3
economic and noneconomic goals is a cause of [this]
heterogeneity” (pp. 1103-1104).
To illustrate this point, we consider three differing
family firm orientations, each with potentially differing
goals. While several differing “types” of family firms
have been described (Birley, 2001; Dyer, 2006; Micelotta
& Raynard, 2011; Sharma, 2004) and substantiated
empirically (Basco & Rodriguez, 2009), we draw on
research that has suggested that family firms typically
fall within three categories, namely, business-first enter-
prises, family-first enterprises, and balanced enterprises
(e.g., Micelotta & Raynard, 2011; Ward, 1987). With
each of these types of family firms, the range of out-
comes that are considered meaningful would be expected
to vary as the family aspirations and goals vary with
each of these orientations. When the family’s goals are
centered on financial dimensions, this leads to a choice
to be structured and operated in a way that closely mim-
ics nonfamily firms. As the family develops idiosyn-
cratic family-centered goals and aspirations, additional
outcomes, whether they be family- or firm-specific,
should be considered and measured (e.g., Basco &
Rodriguez, 2009). Table 1 summarizes these types of
family firms, the key stakeholders involved with each,
and potentially relevant financial and nonfinancial
outcomes.
In business-first family enterprises, there is a distinc-
tion between the family and the business. Although the
importance of the founding or controlling family is
acknowledged, the familial component of the business is
downplayed, whereas the traditional organizational out-
comes of a commercial enterprise are highly valued.
Many have argued that family issues are not considered
when making decisions in these types of firms (e.g.,
Birley, 2001; Dyer, 2006; Micelotta & Raynard, 2011).
For these firms, this choice is made under the assump-
tion that a focus on family issues may ultimately bring
harm to the firm; therefore, the benefits that could be
garnered would be short-term, as benefits available from
the business would decrease if it were to decline.
Accordingly, the outcomes pursued by these firms
would largely mimic those pursued by nonfamily firms.
With family-first enterprises, there is an intimate
connection between the firm and the family—so much
so that the family drives the identity of the firm and fam-
ily needs become the top priority in business planning
and decision making (e.g., Birley, 2001; Dyer, 2006).
With the familial component of the business and the
family’s values representing the core essence of the
enterprise, goals tend to be more family-centered and
may run counter to the interests of nonfamily stakehold-
ers. Birley (2001) describes these as “family in” firms
where nepotism is the norm. Thus, goals likely include
having family members dominate management and
board membership regardless of qualifications and using
business resources to grow family wealth or reputation
without regard to other stakeholders. Taking this into
account, financial outcomes would be a necessary, but
insufficient, means of assessing the family-first firms’
overall goals.
Put differently, firm financial outcomes are necessary
if the business is to survive and meet any of the nonfi-
nancial goals the family may have. But, measuring only
firm financial outcomes would lead to a less than com-
plete operationalization of outcomes in family-first
enterprises, as these outcomes do not necessarily con-
sider the family-centric goals. For instance, researchers
have used sales per employee as a measure of family
firm success (e.g., Rutherford, Kuratko, & Holt, 2008).
While sales per employee measures a firm’s productiv-
ity and efficiency (as it was used by Rutherford et al.,
2008), it would not necessarily reflect a meaningful out-
come for the family-first firm as the family accrues no
direct benefit, regardless of magnitude. With this in
mind, this particular financial outcome, used alone,
would be incomplete unless other, family-centered out-
comes were considered. Nepotism, for instance, is often
characterized as detrimental to FFO but may represent
one of these key nonfinancial outcomes, as it represents
a means of fulfilling family obligations and engendering
the necessary commitment to ensure control across gen-
erations (Jaskiewicz, Uhlenbruck, Balkin, & Reay,
2013).
With the balanced family enterprise, the family and
the business are both prominent (e.g., Birley, 2001;
Dyer, 2006). Moreover, the positive attributes of fami-
lies and familial relationships (like loyalty, trust, and
caring) are often transposed to the companies’ relation-
ships with customers (Dyer, 2006; Micelotta & Raynard,
2011). These positive family attributes are presented as
a basis of experience that helps the firm perfect the char-
acteristics of traditional organizations (Micelotta &
Raynard, 2011). Although family preferences cannot be
dismissed and hold considerable influence, benefits
accrued through the firm are distributed not only to the
family but to other stakeholders as well. Unlike the fam-
ily-first enterprises, priorities in these firms go beyond
the family, including investments to enhance reputation
4 Family Business Review 

Table 1.  Family Firm Examples: Meaningful Outcomes Linked to Theoretical Research and Practice.

Family firm examples

  Business-first family enterprises Family-first family enterprises Balanced family enterprises

Description Family firms with a stark distinction Family firms with an intimate Family firms where the family and
between the family and the connection between the firm the business are both prominent;
business although the importance and the family—so much so moreover, the positive
of the founding or controlling that the family needs become attributes of families and familial
family may be acknowledged; the first priority in business relationships (i.e., loyalty, trust,
described as having a “professional planning and decision making; caring) are transposed to the
culture,” the familial component of the familial component of the companies’ relationships with
the business may be downplayed, business and the family’s values customers and the community;
whereas the traditional represent the core essence of these are presented as a basis of
organizational outcomes of a the enterprise experience that helps the firm
commercial enterprise are most perfect the characteristics of
valued traditional organizations
Theoretical Agency theory, institutional theory, Agency theory, behavioral Stewardship theory, stakeholder
perspectives stakeholder theory agency model, family altruism, theory, behavioral agency model,
resource-based view, social social exchange
capital theory, socioemotional
wealth
Key stakeholders All business stakeholders Immediate family Family (over time) and all business
stakeholders
Relevant Firm outcomes Firm outcomes Firm outcomes
outcomes   Financial: Firm financial outcomes   Financial: Firm financial   Financial: Firm financial
(growth, profitability, business outcomes (emphasizing outcomes (growth, profitability,
net worth) profitability), total business net worth), stock
shareholder returns market performance
  Internal: Process efficiency,   Internal: Process efficiency   Internal: Process efficiency,
employee well-being employee well-being, meaning,
emotional significance
  External: Firm reputation,   External: Firm reputation, image
corporate social responsibility and prestige, corporate social
responsibility
  Family outcomes Family outcomes
    Financial: Family net worth,   Internal: Family well-being,
family control, family family happiness, family
portfolio value cohesion
    Internal: Family well-being,   External: Community
family happiness, family embeddedness, family image
cohesion, satisfaction with
fulfilling familial obligations,
emotional significance, decision
autonomy
    External: Family image  

Note: The descriptions of the firms, theoretical perspectives, and key stakeholders were developed based on descriptions from Birley (2001),
Micelotta and Raynard (2011), Miller and Le Breton-Miller (2014), and Ward (1987).

with stakeholders, forming sustaining relationships with directors with family member involvement decided
partners, and investing in the community (Miller & Le based on competence rather than heredity. Accordingly,
Breton-Miller, 2014). Moreover, one might expect a bal- a complete measure of these firm’s outcomes includes
ance between family and nonfamily executives and myriad financial and nonfinancial measures.
Holt et al. 5
Family Firm(s) Outcomes Model
Given this heterogeneity, we propose a holistic approach
to viewing outcomes that attempts to account for the
complexities among family firms that have been theo-
rized. To comprehensively model these outcomes, we
draw on a framework by Venkatraman and Ramanujam
(1986), strategic management scholars who suggest that
firm outcomes can be determined by assessing a set of
appropriate financial, operational, and external out-
comes.3 The first, most basic set, financial outcomes,
“encompasses three specific areas of firm outcomes: (a)
financial outcomes (profits, return on assets [ROA],
return on investment, etc.); (b) product market outcomes
(sales, market share, etc.); and (c) shareholder return
(total shareholder return, economic value added, etc.)”
(Richard, Devinney, Yip, & Johnson, 2009, p. 722). The
second, operational outcomes, taps internal functional
dimensions such as product quality and managerial effi-
ciency. The third and final set, external outcomes, repre-
sents external dimensions of importance to shareholders,
managers, and customers but extends beyond financial
outcomes and the internal operations of the firm.
Using only these financial, operational, and external
outcomes, however, does not sufficiently capture the dis-
tinct but overlapping family and business systems that
are unique to family firms (e.g., Sharma, 2004). That is,
the domain of FFO can be viewed more accurately as one
that includes (a) firm outcomes and (b) family outcomes,
including outcomes that arise due to the family systems
interaction with the business system (e.g., Sharma,
2004). Firm outcomes represent meaningful outcomes
for the firm that, while they may be affected by the fam-
ily system, would also play a role in firms with no family
involvement. Family outcomes represent meaningful
outcomes for the family that may be affected by the busi-
ness system but that would also be relevant in families
with no business involvement (e.g., family cohesion,
family income). With these definitions in mind, we delib-
erately acknowledge and incorporate the interactions and
feedback processes that are important within the family
business system. For instance, employee well-being (i.e.,
employee job satisfaction) would be a firm outcome in
the FFO model. This classification is based on the idea
that both family and nonfamily firms have some interest
in employee well-being (although this interest, as we
know, varies significantly across both family and nonfa-
mily firms). We, however, acknowledge that employee
job satisfaction may vary based on the extent to which
family involvement influences job satisfaction positively
or negatively, introducing interesting research opportuni-
ties regarding the mechanisms that may lead to these dif-
ferences. In addition, the outcomes take several different
forms, as suggested by Venkatraman and Ramanujam
(1986), such that financial and nonfinancial outcomes
are considered (with nonfinancial outcomes falling into
two broad categories, internal and external).
We also posit that understanding any particular FFO
is contingent on understanding that firm’s goals
(Chrisman, Chua, Pearson, & Barnett, 2012). Hofer and
Schendel (1978) consider goals to be the ultimate, long-
run, ends that an organization or individual pursues.
Essentially, goals represent what an individual or orga-
nization aspires to accomplish. Indeed, empirical find-
ings suggest that there are wide variations in the
behaviors of family firms (e.g., Chrisman & Patel,
2012). Moreover, these variations arise from the unique
and potentially varied set of family goals that these firms
pursue as the controlling family exercises its discretion
to behave idiosyncratically. Integrating these thoughts,
we depict the range of FFO in our model, the family
firm(s) outcomes model,4 in Figure 1.
While understanding the range of outcomes relevant
to family firms is essential, it is also critically important
for researchers to accurately measure these outcomes. In
fact, Evert et al. (2016) note that family business schol-
ars find reliable and valid measurement one of the field’s
greatest challenges. As we have noted, several calls have
challenged researchers to develop appropriate measure-
ment scales so that the phenomena observed in family
firms can be better understood (Litz, Pearson, &
Litchfield, 2012; Miller & Le Breton-Miller, 2014;
Pearson, Holt, & Carr, 2014; Pearson & Lumpkin, 2011;
Yu et al., 2012). In short, for the field to advance, proper
measurement is essential, with Miller and Le Breton-
Miller (2014) specifically asking for “more direct, mul-
tifaceted, and finer grained measures” (p. 718) of FFO
and aspirations.
Toward this end, we provide example measures, with
demonstrated validity and reliability that are available to
assess the outcomes in the FFO model. While it is not
our purpose to comprehensively review the psychomet-
ric properties of these measures (see Pearson, et al.,
2014, for a detailed discussion of family business mea-
sures), information regarding validity and reliability is
critical if researchers are to make informed decisions as
to whether a scale should be adopted for their research
6
Outcomes
Financial Outcomes that reflect the
fulfillment of financial goals
Non- Non-financial outcomes that
financial reflect the fulfillment of goals that
internal are associated and linked to those
within the boundaries of the
family or firm
Non- Non-financial outcomes that
financial reflect the fulfillment of goals that
external are associated and linked to
thoughts and perceptions of those
beyond the boundaries of the
family or firm.
Figure 1.  Family firm(s) outcomes model.
Note. Shaded areas represent outcomes that are exclusively related to the family’s involvement in firm(s). While certain outcomes may be relevant in nonfamily firms (e.g.,
shareholder returns), these outcomes may trigger different strategic choices in firms with family involvement. The unshaded areas represent outcomes found in both family and
nonfamily firms and are common in organizational research.
Family Firm Systems
Firm(s) Outcomes Family Outcomes
Block Ia: Firm-specific financial outcomes Block IIa: Family-specific financial outcomes
Financial outcomes associated with key firm outcomes that include financial Financial outcomes important to the family regardless of involvement with
outcomes and product market outcomes. the firm’s ownership or operations.
Examples include: Examples include:
Profitability Family Control
Growth Family income and portfolio value
Liquidity Family market returns
Firm patient and survivability capital determined by family
Family wealth
Family credit
Family assets (e.g., real estate, stock in firms other than the family firm)
Philanthropic value (i.e., tax deductions)
Block Ib: Firm-specific non-financial internal outcomes Block IIb: Family-specific non-financial internal outcomes
Non-financial outcomes associated with effective and efficient internal Non-financial outcomes associated with effective and efficient family
operations, falling within the boundaries of the firm. processes.
Examples include: Examples include:
Obective measures such as product quality & process efficiency General family well-being
Subjective measures such as job satisfaction, organizational commitment, Emotional well-being
& stewardship climate Family happiness
Family cohesion (emotional & cognitive)
Psychological meaning & identity
Autonomy
Belonging
Transgenerational sustainability intentions
Satisfaction with fulfillment of familial obligations.
Block Ic: Firm-specific non-financial external outcomes Block IIc: Family-specific non-financial external outcomes
Non-financial outcomes associated with the perceptions of those beyond the Non-financial outcomes associated with the perceptions of those beyond the
boundaries of the firm(s) regardless of family’s involvement with firm(s). boundaries of the family regardless of the family’s involvement with firm(s).
Examples include: Examples include:
Customer loyalty Community embeddedness
Customer satisfaction Family image & prestige
Firm reputation Family legacy
Firm image
Social responsibility
Several firm-centric goals & few family-centric goals Few firm-centric goals & several family-centric goals
Holt et al. 7
purposes. Furthermore, we do not prescribe what out-
comes measures a researcher should choose. Instead we
classify and propose a wide range of measures from
which the researcher could select with regard to the
research questions and theory under study.
Firm Outcomes (Figure 1, Blocks Ia-Ic)
Firm outcomes represent meaningful outcomes that may
be affected by family involvement but play a role in
firms with no family ownership or management as well.
Firm-specific financial outcomes (Figure 1, Block Ia)
typically encompass financial outcomes (e.g., profits,
ROA, and return on investment) and market outcomes
(e.g., sales and market share). Firm nonfinancial inter-
nal outcomes, defined as those associated with the effec-
tive and efficient internal operations of the firm, include
control-oriented and operations-oriented indicators of
product quality and operational efficiencies (Figure 1,
Block Ib). In addition, these include key affective out-
comes like job satisfaction and organizational commit-
ment. These nonfinancial internal outcomes have a rich
legacy in the operations management and organizational
behavior literature, with comprehensive reviews
addressing them (e.g., Chenhall & Langfield-Smith,
2007; Fields, 2002). Finally, firm nonfinancial external
outcomes (Figure 1, Block Ic) reflect fulfillment of
goals, such as customer loyalty, customer satisfaction,
firm reputation, firm image, and social responsibility
(e.g.,Venkatraman & Ramanujam, 1986; Walsh &
Beatty, 2007), that extend beyond the internal boundar-
ies of the firm.
In terms of financial outcomes (Figure 1, Block Ia),
Table 2 offers a summary of accounting, market, and
mixed measures that have been used by family business
scholars (Holt, Pearson, Carr, & Barnett, 2012) along
with the benefits and limitations of these measures.
These outcomes are usually assessed with one of two
approaches. First, researchers often use multiple, single-
item outcome measures with each measure being treated
as an independent outcome (i.e., several regression
models each with different outcome measures are com-
pared and tested, Rutherford et al., 2008). Second, out-
comes are sometimes aggregated into a “collective”
measure. This approach has been commonly used with
subjective surveys of financial outcomes, which are
completed by key informants (typically an owner-man-
ager, CEO, or senior manager) who rate several finan-
cial outcomes relative to competitors, using multipoint
response options ranging from not at all satisfactory to
completely satisfactory (e.g., Craig & Dibrell, 2006).
Typically, the outcomes include (1) sales, (2) market
share, (3) employees, (4) profitability, (5) return on
equity, (6) ROA, and (7) profit margin on sales. As
research moves forward, we would, however, suggest
that multi-item indicators be considered, even when
measured with objective data (Boyd, Gove, & Hitt,
2005).5 Hamann, Schiemann, Bellora, and Guenther
(2013) provided an example of how financial outcomes
can be operationalized with multi-item measures, pre-
senting evidence of construct validity and reliability.
Specifically, they identified multi-item measures for
three independent constructs, namely, profitability
(using a three-item measure that includes return per
employee, return on sales, and ROA; α = .90), growth
(using a three-item measure that includes employment
growth, assets growth, sales growth; α = .76), and liquid-
ity (using a three-item measure that includes cash flow
return per employee, cash flow return on sales, and cash
flow ROA; α = .86).
Several measures of firm nonfinancial internal and
external outcomes (Figure 1, Blocks Ib-Ic) can be rec-
ommended. Richard et al. (2009), for instance, offered
the balanced scorecard as a means of measuring nonfi-
nancial internal business processes, innovation, and
learning. Spector’s (1997) Job Satisfaction Survey is an
exemplary measure of this key employee attitude, while
Mowday, Steers, and Porter’s (1979) measure of organi-
zational commitment has been well validated and
adapted for use in family firms (Klein, Astrachan, &
Smyrnios, 2005). Family business scholars have also
made a significant contribution to the measurement of
these outcomes with the development of a valid and reli-
able stewardship climate scale (Neubaum, Thomas,
Dibrell, & Craig, 2016). With regard to external factors,
Walsh and Beatty (2007) developed an instrument that
measures five key dimensions of reputation, namely,
customer orientation, perceptions of the firm as a good
employer, reliability of the firm, product and service
quality, and social and environmental responsibility.
While Walsh and Beatty (2007) offer a subjective mea-
sure of social responsibility, Dyer and Whetten (2006)
used the Kinder, Lydenberg, and Domini and Company
index of corporate social responsibility—an objective
measure. This index assesses social responsibility based
on perceptions of social initiatives directed toward the
environment, diversity, employee relations, human
rights, product features, and corporate governance.
 Table 2.  Financial Outcomes in Family Business Literature (Block Ia of the Financial Family Outcomes model in Figure 1).a

8
Financial measures used in family business
Measure researchb Benefits Limitations Methodological and research considerations

Accounting Asset turnover ratio; business net worth; cash
measures flow from operations; debt ratios; earnings
before interest and taxes; earnings before
interest, taxes, depreciation, and amortization;
sales per employee; employment growth;
family net worth; interest coverage ratio; net
operating profits; net worth; profit margin;
return on assets; return on capital employed;
return on equity; return on invested capital;
return on investment; return on sales;
sales; sales growth; variance in accounting;
profitability; subjective assessments of
performancec
1.  Readily available for private and
public family firms
2.  Directly relates to family firm
profitability
3.  Empirically linked to financial rates
of return
1.  Takes a historical perspective, emphasizing past 1.  Consider the study’s focal stakeholders,
decisions and behaviors understanding accounting measures are
2.  Less valid for turbulent environments and most relevant to family managers not
emerging economies necessarily family owners
3.  Varies based on differing mandates and 2.  Account for differences in accounting
interpretations of policies (e.g., choices on policies when possible
depreciation schedules and inventory valuation), 3.  When collecting data from primary data
making comparisons difficult sources,
4.  Susceptible to human error, bias, and deception (a) Purposefully select key informants
based on position and knowledge
(b) Mitigate the risk of bias by collecting
data from multiple informants

Financial Abnormal returns, earnings per share, 1.  Takes a forward-looking
market ownership, price-to earnings ratio, shareholder perspective, representing
measures returns, stock price, total shareholder returns discounted present value of future 2.  Varies considerably based on market volatility,
cash flows
2.  Incorporates the value of
intangible assets, making it
particularly relevant when taking a
resource based view
1.  Not readily available for privately held family 1.   Consider the study’s focal stakeholders,
firms
momentum, and herd mentalities (i.e., markets
are not completely efficient)
3.  Evaluates the firm as a whole, limiting its use
when evaluating business units
understanding market measures are most
relevant to family and nonfamily owners not
necessarily family managers
2.  Consider measures that capture the extent
to which rents generated flow directly to
owners (e.g., total shareholder returns)
3.  Consider industry-relative measures when
analyzing multi-industry samples
4.  Consider the extent to which financial
market measures are valued in study’s
cultural context

Mixed Debt-to-equity ratio, dividend payout ratio, 1.  Incorporates both risk (often 1.  Takes a historical perspective on asset value, 1.   When collecting data from primary data
accounting market-to-book value, Tobin’s q, subjective overlooked in accounting limiting its ability to account for intangible sources, scrutinize the measure to avoid
and assessments of performance measures) and operational assets accounting and financial measures that are
financial effectiveness (often overlooked in 2.  Varies based on decisions and behaviors that unrelated empirically
market market measures) may be inconsistent with the logic of sound 2.  Consider the availability of data as some
measures 2.  Empirically linked to financial rates performance (i.e., measures can improve due outcomes require significant data (e.g.,
of return to underinvestment or discipline in managing Tobin’s q)
costs)

Neither Survival has been identified as a unique financial 1.  Data are available through 1.  Categorical classifications treat all exits (as well 1.  Consider the reason for exit, differentiating
accounting outcome. It has been operationalized in historical records and secondary as survivals) as equivalent events (i.e., mergers, positive exits for the family from those that
and various ways to include hazard rates (which sources acquisitions, and bankruptcies likely differ) negatively influence the family managers
financial allow tests of survival against base rates of 2.  Limited variation… and owners
market survival) and dichotomous variables that (a) Creates problems with range restriction
measures identify firms that have survived over a (b) Makes it difficult to differentiate between firms
specified period

a
The strategic management literature was consulted to compile the benefits, limitations, and research considerations of the financial outcomes. Consult the following for more detailed discussions: Combs,
Crook, and Shook (2005), Murphy, Trailer, and Hill (1996), and Richard, Devinney, Yip, and Johnson (2009). bThe financial outcomes emerged from a systematic review of 464 manuscripts that reported
empirical findings with performance as a dependent variable (Holt, Pearson, Carr, & Barnett, 2012). The manuscripts were identified through broad searches of databases and manual searches of key
journals (e.g., Entrepreneurship: Theory and Practice, Family Business Review). cSubjective assessments of performance have been made by asking a key informant, “How would you rate your firm’s current
performance as compared to your competitors (past 3 years)?” With items evaluating accounting dimensions of performance such as: growth in sales, return on assets, return on equity, and employment
growth. Researchers often use similar measures without justifying how these indicators relate with one another or family firms (e.g., Craig & Dibrell, 2006).
Holt et al. 9
Family Outcomes
Returning to the FFO model and moving beyond firm
outcomes and measures, we also explore family out-
comes and measures. Our view of the family outcomes
is consistent with the extant view of socioemotional
wealth and has been derived from the specific out-
comes that have been introduced and discussed as part
of this broad construct (e.g., Gómez-Mejía et al., 2007).
Family-specific outcomes represent meaningful out-
comes for the family that may be affected by the busi-
ness system, but they also play a role in families with
no business involvement (Figure 1, Blocks IIa-IIc).
These outcomes are important to family business
scholars because of the causal, overlapping, synergis-
tic, or substitutional relationships that they may have
with each other (Zellweger & Nason, 2008). Causal
relationships occur when one outcome causes another.
Family cohesion is a family-specific outcome that may
enable or cause the realization of other outcomes.
Theoretically, cohesiveness would be expected to
reduce agency costs between owners and managers,
sparing the firm costs that come with control mecha-
nisms, thereby increasing firm and family wealth.
Thus, just as profits might drive other meaningful out-
comes like corporate philanthropy, cohesiveness could
drive meaningful outcomes while simultaneously
being a meaningful outcome itself. Moreover, family
outcomes could be far more important to the family
than firm outcomes when the family’s aspirations or
goals are more family-centered, as opposed to firm-
centered (i.e., a family first enterprise). Table 3 offers
several reliable and valid measures that are available to
assess these outcomes.
Family Financial Outcomes (Figure 1, Block IIa).  With a few
notable exceptions (e.g., Danes, Stafford, Haynes, &
Amarapurkar, 2009), the financial outcomes specific to
the family (e.g., income and other financial assets like
real estate) have largely been overlooked (O’Boyle
et al., 2012), although family business researchers often
allude to family wealth. Danes et al. (2009) defined fam-
ily wealth as the monetary and physical assets owned by
family members, individually or collectively. Financial
assets are cash or those assets that can readily be con-
verted into cash; they include pooled money of the
nuclear and extended families as well as funds from
financial institutions. Moreover, the desire for the accu-
mulation of these assets would vary as some family
firms might be lifestyle firms that aspire to a specific
level of wealth and no more.
Surprisingly few measures of family wealth are avail-
able. The most common measure appears to be the
Family Affluence Scale (FAS), a four-item measure of
family wealth developed by the World Health
Organization (Boyce, Torsheim, Currie, & Zambon,
2006). Items on the FAS address (a) family ownership of
a car, van, or truck; (b) a dedicated bedroom for each
child; (c) family computer ownership; and (d) the fre-
quency of family travel for holidays. This instrument,
however, has several biases that likely limit its general-
izability across cultures. Bedroom sharing, for instance,
may better represent culture and family size, as well as
age and gender of the children, rather than family wealth
(Boyce et al., 2006). While the content from the FAS
may serve as a basis to develop a more generalizable
measure, an alternative is Danes et al.’s (2009) straight-
forward calculation of family net worth (see Table 3).
Several other measures are available to gauge family
financial outcomes. As researchers select these mea-
sures, we recommend that they consider the research
context such that financial outcomes appropriately take
the family and firm into account. One such outcome is
total shareholder returns, which represent the changing
value of wealth that is derived from ownership shares
(either increasing or decreasing) plus whatever divi-
dends have been paid or reinvested. Although not com-
monly used by family business or strategic management
scholars (cf. Hamann et al., 2013), total shareholder
returns are common indicators of corporate outcomes
that are reported in corporate governance documents
(Dalton & Aguinis, 2013).
Family Nonfinancial Internal Outcomes (Figure 1, Block
IIb). Family-specific, nonfinancial, internal outcomes
represent meaningful nonfinancial outcomes for the
family that reflect the degree to which the family values
and identifies with these nonfinancial outcomes. We dif-
ferentiate these outcomes from family processes like
behaviors and interactive practices that characterize
family relationships (e.g., Olson, 2000). These processes
include factors such as conflict management, differenti-
ation, communication, problem solving, and control
norms, which are common in many of the family science
instruments (e.g., Smilkstein, Ashworth, & Montano,
1982). While there is no question that these functions
and processes would be related to and affect family out-
comes, our focus is on the outcomes themselves.
10 Family Business Review 

Table 3.  Family Outcome Measures (Blocks IIa-IIc of the Financial Family Outcomes model in Figure 1).
Measure Example item Source

Financial family outcomes (Block IIa, Figure 1)

  Family net worth
  Family control
  Family portfolio value
  Stock market performance
  Total shareholder return
Nonfinancial internal outcomes (Block IIb, Figure 1)
  Family happiness
  Emotional well-being (i.e.,
loving family)
  Family harmony
  Family cohesion
  Emotional cohesion
  Cognitive cohesion
 Meaning
  Emotional significance
  Emotional meaning
  Emotional commitment
  Decision autonomy
 Belonging
 Transgenerational
sustainability intentions
  Satisfaction with fulfillment No measure available (proxies might include number of family
of familial obligations
Nonfinancial external outcomes (Block IIc, Figure 1)
 Community
embeddedness
  Family firm image and
prestige
  Family firm legacy
Family assets minus liabilities (1 item) Danes, Stafford, Haynes, and
Amarapurkar (2009)
Percentage ownership (3 items; α = .91) Klein, Astrachan, and Smyrnios
(2005)
Number of firms currently controlled by the family (1 item) Zellweger, Nason, Nordqvist, and
Brush (2011)
Total return for the family and its members (3 items, α = .94) Hamann, Schiemann, Bellora, and
Guenther (2013)
Computed for the family stakeholders Dalton and Aguinis (2013)
Is the family happier than other families? (number of items not Pless and Satterwhite (1973)
specified, α = .83)
We do not show love for each other (5 items, α = .83). Epstein, Bishop, and Baldwin (1983)
My family seems to get along with each other better than most Beehr, Drexler, and Faulker (1997)
families do (4 items, α = .87).
Our family spends time together (5 items, α = .89). Smyrnios et al. (2003); Olson (1986,
2000)
In this family, we usually feel happy with each other (9 items, α = .89). Bjornberg and Nicholson (2007)
In this family, we have similar views on things (9 items, α = .89). Bjornberg and Nicholson (2007)
If we lost [blank], we would feel like we had lost a bit of ourselves (9 Ball and Tasaki (1992)
items, α = .93).
Our [blank] reminds us of important things we have done or places Ball and Tasaki (1992)
we have been (3 items, α = .76).
We feel as if we belong to the family business (8 items, α =.85). Bjornberg and Nicholson (2012)
We are proud to tell others that we are part of [blank] (9 items, Mowday, Steers, and Porter (1979)
α = .90).
It is basically our family’s responsibility to decide how we get things Hornsby, Kuratko, Holt, and Wales
done in the family firm (7 items, α = .84). (2013)
We feel a sense of belonging to the family firm (3 items, α = .95). Bollen and Hoyle (1990)
Family members involved in the business are deeply committed to Sharma, Chrisman, and Chua (2003)
the company continuing as a family business (5 items, α = .73).
—
members employed by the firm)
Leaving this community would be hard (8 items, α = .77). Mitchell, Holtom, Lee, Sablynski, and
Erez (2001)
People in our community think highly of our family firm (8 items, Mael and Ashforth (1992)
α = .77).
No measure available (proxies might include perceptions of —
community members regarding the family firm’s history of
community involvement)

Note. In some cases, items were modified to put them in a family firm context with terms like “I” being replaced with collective terms. Citations from the family
sciences literature are marked with an asterisk “*.”

An evaluation of the family science and assessment
literatures indicates that there are several key affective
family outcomes (e.g., Grotevant & Carlson, 1989).
Most broadly, overall family health represents the fami-
ly’s general well-being and comprises subjective evalu-
ations of physical, material, social, and emotional
factors. More specifically, family emotional well-being
and family happiness have also been identified as impor-
tant family outcomes (Epstein, Bishop, & Baldwin,
1983; Pless & Satterwhite, 1973), representing subjec-
tive assessments of the family’s love, intimacy, and
global pleasantness.
Holt et al. 11
Cohesion is an important and frequently discussed
family outcome (e.g., Grotevant & Carlson, 1989) that
has been introduced to the family firm literature
(Bjornberg & Nicholson, 2007). Cohesion is the degree
to which family members view themselves as emotion-
ally close or distant from each other (e.g., Smyrnios
et al., 2003). It varies along a continuum from tightly
woven to disengaged. Tightly woven families have
blurred boundaries and high levels of emotional respon-
siveness (i.e., high levels of intimacy). In contrast, dis-
engaged families tend to have rigid family boundaries, a
lack of emotional responsiveness, and little communica-
tion among family members. Family conflict is associ-
ated with less cohesiveness and emotional bonding.
Bjornberg and Nicholson (2007) differentiate between
emotional and cognitive cohesion, presenting a measure
with both validity and reliability evidence. Emotional
cohesion reflects affective attachment while cognitive
cohesion refers to shared views. The distinction between
affect and cognition may be particularly important as
multigenerational family firms may share views but
have weaker emotional attachments.
As noted, the family business literature has focused
on nonfinancial outcomes that arise as the family and
firm are intertwined (e.g., Gomez-Mejia et al., 2007);
however, this literature does not provide a theoretical
rational for the dimensions that are included. To further
specify constructs linked to these outcomes and provide
a theoretical grounding, we turn to the emerging litera-
ture on psychological ownership, which provides a
sound theoretical framework for relevant nonfinancial
internal outcomes. Pierce, Kostova, and Dirks (2003)
define psychological ownership as a “state where an
individual feels as though the target of ownership or a
piece of that target is ‘theirs’” (p. 86). These feelings of
ownership develop toward material objects such as a
business, as well as immaterial objects, such as ideas,
with those objects that are grounded psychologically
becoming a part of the individual’s “extended self.”
Linking these concepts with the family business litera-
ture, psychological ownership produces feelings of (a)
psychological meaning, (b) autonomy, and (c) belong-
ingness (cf. Pierce, Kostova, & Dirks, 2001).
The first outcome of psychological ownership is
identity and meaning. Mere ownership tends to be emo-
tionally gratifying because possessions become sym-
bolic extensions of the self, taking on a unique affective
significance (Kahneman, Knetsch, & Thaler, 1990;
Zellweger & Dehlen, 2012). Essentially, individuals
develop a sense of satisfaction and identity through their
interactions with their possessions coupled with a reflec-
tion on their intrinsic meaning. Of course, this meaning
is not derived from all possessions—relatively trivial
items do not engender psychological identification.
However, significant possessions, like a business, can
foster an important sense of worth and meaning (Pierce
et al., 2001; Schulze, Lubatkin, & Dino, 2003; Zellweger,
Kellermanns, Chrisman, & Chua, 2012). Moreover,
those possessions, like a business, that require a signifi-
cant investment become more intertwined with who and
what the individual or the family is, thereby becoming a
significant part of one’s or the family’s identity.
The second outcome of psychological ownership is
decision autonomy. Because discretion in decision mak-
ing has been identified as a central theme in the concept
of autonomy, we, like Berrone et al. (2012), define
autonomy as the extent to which the family feel or per-
ceive that they can make operational and strategic deci-
sions unilaterally. With this in mind, the concept of
autonomy is closely linked to the concepts of authority
that one expects to come with ownership. However,
objective ownership (i.e., the proxy that has been used to
measure control; Berrone et al., 2012) does not neces-
sarily equate to perceptions of autonomy as these per-
ceptions may vary regardless of objective ownership.
Indeed, Westhead and Cowling (1998) show how diverse
perceptions of autonomy might be, reporting that 21%
of British firms did not perceive themselves to be a fam-
ily business even though they were a family-controlled
firm. Interestingly, nearly 77% of the firms having less
than 50% of the ownership concentrated with a single
family still perceived themselves as a family firm.
The third outcome of psychological ownership is
belonging. The need to belong refers to the extent to
which an individual feels that quality, long-lasting rela-
tionships among family and nonfamily members are
formed through the family firm. Baumeister and Leary
(1995) argue that the need to belong is a fundamental
one that, when fulfilled, produces positive effects under
a variety of conditions. To fulfill this need, people strive
to be included in meaningful social relationships.
Although families vary, many have suggested that they
are a uniquely postured environment to provide belong-
ingness, social structure, and a sense of caring and
empathy (Sirmon & Hitt, 2003). Furthermore, tangible
support can be provided through the wealth-creating
capabilities and career opportunities the family firm
may afford.
12 Family Business Review 
Finally, fulfillment of familial obligations is a key
outcome. Familial obligations refer to the extent to
which the family can provide wealth-generating capa-
bilities for the family and create career opportunities for
family members. Theories of philanthropic giving argue
that the caring associated with giving does not reflect
selflessness or the absence of self; rather, caring fulfills
the needs of the caregiver as well as the needs of the
recipient, providing the caregiver with a level of emo-
tional satisfaction (Schervish & Havens, 2003). This sat-
isfaction is particularly strong when the benefactor
recognizes that the needs of others are similar to indi-
vidual or collective family needs. Hence, as the family
becomes more closely intertwined with the firm, the
owners of family businesses, driven by caring, may gain
satisfaction as they select family members for key man-
agement roles or make choices regarding family mem-
ber compensation (Carney, 2005).
In Table 3, we present direct measures of these family
nonfinancial internal outcomes. Measures of meaning
and identity, for instance, have been developed and
tested by Ball and Tasaki (1992). While developed with
consumers in mind, these can be adapted to represent the
extent to which a family would feel the firm is a key part
of defining the family’s meaning and worth. Similarly,
Bollen and Hoyle (1990) developed and tested a direct
measure of belonging that can be adapted to assess feel-
ings toward the family, the business, or both. Perhaps
more important, these measures have considerable evi-
dence with regard to validity and reliability (Ball
&Tasaki, 1992; Bollen & Hoyle, 1990). Specifically, we
considered the extent to which the literature had reported
(a) content validity evidence (i.e., evidence of system-
atic scale development), (b) construct validity evidence
(i.e., evidence of convergent and discriminant validity),
(c) predictive validity evidence (i.e., evidence of theo-
retical relationships between the focal measure and out-
comes), and (d) reliability evidence (i.e., evidence of
test–retest reliability and internal consistency), omitting
instruments for which validity or reliability evidence is
not available.6
Before including a scale in Table 3, we considered
two additional criteria. First, the instrument had to be
related to a family outcome (i.e., it did not measure a
family process). Thus, scales such as Smilkstein et al.’s
(1982) five-item measure of family functioning, which
has been used in family business research (e.g., Danes,
Zuiker, Kean, & Arbuthnot, 1999), was not included.
Second, the instrument had to be general in nature and
not developed for a specific context such as the assess-
ment of family happiness when the family had a termi-
nally ill child. Table 3 summarizes measures that are
related to the key dimensions of general family well-
being, emotional well-being, and family cohesion as
well as an example item and available reliability
evidence.
Family Nonfinancial External Outcomes (Figure 1, Block
IIc).  Family nonfinancial external outcomes are associ-
ated with perceptions of those beyond the boundaries of
the family, regardless of the degree of family involve-
ment with the firm(s). These outcomes include family
image, family legacy, and community embeddedness, as
summarized in the recent review piece on philanthropy
by Feliu and Botero (2016). For example, perceived
family image and family prestige, defined as the degree
to which members feel that community members hold
the family in positive regard in absolute and compara-
tive terms, differ from firm image in that the frame of
reference shifts to the family. To simplify our discus-
sion, we explain these distinctions as we discuss image
and legacy of the family and the firm.
Family firms have been characterized as altruistic
with collectivistic orientations that encourage deliber-
ate, thoughtful actions that consider the effects these
actions have on the firm, family, and community, pre-
sumably to develop or preserve the family or firm’s
image and legacy (Eddleston & Kellermanns, 2007).
Image reflects the family members’ belief about outsid-
ers’ perceptions of the family, the firm, or both (Gioia &
Thomas 1996). Unlike image, legacy refers to the endur-
ing meaning that has been attached to the family or firm
and extends beyond the time horizon that comes as one
particular generation leads the family, manages the fam-
ily firm, or owns the family firm (e.g., Fox, Tost, &
Wade-Benzoni, 2010; Hammond, Pearson, & Holt,
2016).
Consistent with this thinking, we suggest that the
family’s image refers to the extent to which the family
feels that it is visible in the local community and that the
community has a positive view of the family, regardless
of the family’s involvement in a family firm. In contrast,
the firm’s image is linked to the community’s perception
of the firm. Undoubtedly, the family’s image and the
firm’s image are linked when the family is involved with
a firm. Moreover, both should be linked to reputation.
And, finally, these links would be stronger as the family
and firm are more completely intertwined. Rubenstein
Holt et al. 13
(1990), for instance, reported that 20% of the senior
managers in firms that shared the family’s name indi-
cated that respect for the family name was one of the
firm’s top three priorities as compared to 9% of the
senior managers in family firms that were not named for
the family.
Like image, legacy can be related to the family, the
firm, or both (Hammond et al., 2016). A legacy is devel-
oped when the family, the firm, or both makes substan-
tial contributions that last beyond the family or a
particular generation’s direct leadership of the family,
extending the family’s enduring meaning into the future.
Legacy has a deep psychological meaning that epito-
mizes socioemotional wealth as it has been conceptual-
ized by Gomez-Mejia and his colleagues (Gomez-Mejia,
Cruz, Berrone, & de Castro, 2011; Gomez-Mejia et al.,
2007; Gomez-Mejia, Makri, & Larraza Kintana, 2010).
To illustrate, Wade-Benzoni, Sondak, and Galinsky
(2010) suggest that legacies are viewed as a way to defy
death, with people viewing their legacy as a way to con-
nect with future generations after they, themselves, are
no longer a part of the social environment. This serves as
strong impetus to acting on the behalf of future genera-
tions, demonstrating concern for and commitment to the
well-being of those future generations.
As presented in Table 3, image and prestige can be
assessed with an eight-item scale developed by Mael
and Ashforth (1992). While initially developed for a
study of universities, the measure has been adapted for
for-profit firms and seems well suited for the family, as
it includes items like “People in my community think
highly of [blank].” Our review of the literature, how-
ever, failed to identify a measure of legacy, and this
appears to be a notable gap in the literature. In the
absence of direct measures, we encourage researchers to
use proxies that reflect legacy-building activities that
include the allocation of resources and capabilities to
create a lasting impact on one’s community or other
groups that are meaningful.
Offering another alternative, we suggest that prestige
and legacy might be measured by adapting a scale devel-
oped by Mitchell, Holtom, Lee, Sablynski, and Erez
(2001), which was designed to gauge embeddedness
(i.e., the extent to which the family feels it fits and is
linked to the community; see Table 3). In addition, the
measure captures the sacrifices that are felt if these links
are severed. Mitchell et al.’s (2001) measure of embed-
dedness includes items like “We love the place where
we live.” In turn, the image and legacy measures parallel
those that are measured for the family; however, the
frame of reference changes to assess perceptions regard-
ing the firm rather than the family (Mael & Ashforth,
1992).
Family Goals
To fully understand how the behaviors and outcomes in
family firms vary, the conceptualization of outcomes
must be coupled with an understanding of the family
owners’ and managers’ willingness to pursue family-
centered, nonfinancial goals and engage in idiosyncratic
behavior to achieve those goals (i.e., the continuum
along the base of the FFO model in Figure 1). In other
words, the strategic decisions and operations of the firm
are only influenced by nonfinancial utilities (i.e., socio-
emotional wealth) when and if they are included among
the aspirations of the dominant family coalition (Debicki,
Kellermanns, Chrisman, Pearson, & Spencer, 2016).
Unfortunately, research has generally lacked mea-
sures of the family firm’s aspirations, which are a crucial
explanatory variable. Often, the family’s goals and aspi-
rations have been inferred based on governance vari-
ables like family involvement in ownership and
management or generic measures of risk aversion (e.g.,
Chrisman & Patel, 2012). When attempts have been
made to measure aspirations directly, financial goals of
the family firm have been emphasized over nonfinancial
or socioemotional goals (e.g., Basco & Rodriguez,
2009). To assist researchers, Debicki et al. (2016) offers
an instrument that assesses more emotional aspirations.
Specifically, the instrument assesses the importance of
(a) family image, (b) family sustainability, and (c) fulfil-
ment of family obligations. While Debicki et al.’s (2016)
measure is in its infancy, it may provide the missing
measure of family aspirations that can effectively dif-
ferentiate family firms from one another and guide the
selection of appropriate outcome measures based on
goals and aspirations.
Future Research Opportunities
The classification scheme offered in the FFO model and
the identification of measures to operationalize those
outcomes is useful in several ways (see Table 4).
Foremost, it aids in the development of a research
agenda for family business scholars. As noted in the
introduction, meta-analyses by O’Boyle et al. (2012)
and Carney et al. (2015) suggest that family
14 Family Business Review 

Table 4.  Research Opportunities Presented by the Family Firm Outcomes Model.
Areas of Relevant theoretical
opportunity Research questions frameworks Methods Key citations and references

Accumulation 1. How do family firms transform Psychological ownership Multilevel modeling McKenny, Payne, Zachary,
of nonfinancial nonfinancial and financial outcomes theory Within and-between and Short (2014), Pierce,
wealth into stocks of firm and family Social capital theory group analysis Kostova, and Dirks (2001)
nonfinancial wealth (Blocks Ia-Ic; Prospect theory
Blocks IIb-IIc, Figure 1)? Behavioral agency model
2. How and when does the accumulation
of family nonfinancial wealth
(Blocks IIb-IIc, Figure 1) lead to the
accumulation (or deterioration) of
firm wealth (Blocks Ia-Ic, Figure 1)?
Multilevel aspects 1. What significant events fracture or Sense-making theory Multilevel modeling Holt, Madison, and
of the family coalesce the family around particular Social exchange theory Dispersion modeling Kellermanns (2016),
firm outcomes outcomes? Affective events theory Within-and-between McKenny et al. (2014),
2. How does the dispersion of differing Stewardship theory group analysis Neubaum, Thomas, Dibrell,
family subgroups’ perceptions of and Craig, (2016), Weick
family nonfinancial outcomes (Block (1995)
IIb; Block IIc, Figure 1) influence firm
outcomes (Blocks Ia-Ic, Figure 1)?
3. What processes and mechanisms
facilitate the younger generations’
contributions to family and firm
nonfinancial wealth stocks (Blocks Ib-
Ic; Blocks IIb-IIc, Figure 1)?
Temporal 1. How does nonfinancial wealth change Affective events theory, Repeated measures Ployhart and Vandenberg
considerations over time, exploring the duration, prospect theory designs (2010)
rate of change, and patterns of change
(Blocks IIb-IIc, Figure 1)?
2. When firm and family nonfinancial Behavioral agency model
wealth is expended (Blocks Ib-Ic;
Blocks IIb-IIc, Figure 1), What are the
rates and patterns of replenishment?
How do these interact with other firm
outcomes?
3. What are the subjective views family
firm’s have of time? What implications
do these views have on the pursuit of
firm outcomes?

involvement has little if any relationship with a firm’s
success. Put differently, the findings have indicated that
family firms perform at least as well as, or no worse
than, nonfamily firms. This suggests that the nonfinan-
cial outcomes that family firms pursue may provide
some compensating capabilities that allow them to
overcome any firm- or family-specific deficiencies. By
using the FFO as a guide, researchers might begin to
empirically tease out which specific outcomes may
“cause” firm-specific outcomes across differing sam-
ples of family firms and offer a better understanding of
the underlying mechanisms that help family firms per-
form at the levels of nonfamily firms.
As this is done, we encourage researchers to give
special consideration to questions regarding family spe-
cific outcomes like family harmony that may be affected
by the firm but play a role for families with no involve-
ment in a firm (see Figure 1, Blocks IIa-IIc). Family har-
mony (a family-specific outcome) may affect the
perceptions of well-being (i.e., job satisfaction) among
nonfamily employees, which subsequently influences
firm financial success (Davis, 1983). Moreover, indi-
vidual family members may have very different percep-
tions of harmony, leading to many intriguing questions
that revolve around the variability in the family mem-
bers’ perceptions of key nonfinancial outcomes and how
Holt et al. 15
this variability influences the firm (Holt, Madison, &
Kellermanns, 2016). While these dynamic influences
between the family and the business have been sug-
gested (Sharma, 2004), few have been tested directly
(e.g., Holt et al., 2016).
Several intriguing opportunities also emerge as one
begins to view nonfinancial outcomes as stocks of
wealth that can be accumulated. That is, just as the pur-
suit and attainment of financial outcomes lead to finan-
cial wealth (i.e., profits may lead to shareholder wealth),
the pursuit and attainment of nonfinancial outcomes
could lead to a stock of nonfinancial wealth (Chua,
Chrisman, & De Massis, 2015; Shepherd, 2016). When
considering this perspective, we have little understand-
ing of how these nonfinancial outcomes are accumu-
lated to create this wealth. Indeed, most tests of
nonfinancial outcomes take the presence of this wealth
as a given, assuming it positively influences the family
regardless of its specific form. As a result, these models
offer few insights about how nonfinancial wealth devel-
ops, the mechanisms through which it accumulates, and
the consequences of its use as it interacts with other firm
outcomes.
With a clear conceptualization and operationalization
of nonfinancial outcomes, we might begin to understand
how nonfinancial wealth is accumulated and how its
accumulation may vary as differing outcomes are pur-
sued. Decision autonomy, for instance, might come as
the firm is founded where family legacy would accumu-
late only as the firm reaches some threshold of legiti-
macy whether that be financial or nonfinancial (i.e.,
Figure 1, Block Ia or Ic; Hammond et al., 2016). In other
cases, nonfinancial wealth might accumulate through a
series of complex relationships among specific nonfi-
nancial and financial outcomes (Zellweger & Nason,
2008). Family image and prestige might be expected to
follow such a pattern, emerging over time as customers
and the community at large recognize the contributions
made by the family. In some instances, these contribu-
tions may be facilitated through philanthropic donations
made by the firm (Feliu & Botero, 2016), and these may
influence the family either positively or negatively. That
is, philanthropic donations would positively influence
the family only if the image, prestige, and tax advan-
tages generated offset the financial returns that are
foregone.
As we delve more deeply into understanding of how
family nonfinancial wealth is accumulated, family business
scholars have the opportunity to explore the multilevel
nature of several phenomena while integrating several
novel theoretical perspectives into our work (see Table 4).
The FFO model, along with others, posits that family leg-
acy is an important nonfinancial outcome family firms pur-
sue (i.e., from 1995 to 2015, 109 manuscripts make
reference to it; Hammond et al., 2016). The concept of
legacy, however, has been conceptualized as an individual-
level construct where an individual transmits what he or
she stands for, receiving some level of intrinsic satisfaction
(Hunter & Rowles, 2005). Yet family business scholars
posit that legacy has properties at a higher level—the fam-
ily—and a family legacy emerges through social interac-
tions and exchanges among individual family members
(Hammond et al., 2016). This suggests that sense-making
theory (Weick, 1995), which describes how emergent prop-
erties of a group evolve, can be invoked to help us under-
stand how outcomes like family legacy, family harmony,
and family cohesion originate within a small group of fam-
ily members to accumulate as family-level outcomes that
are imprinted such that shared expectations and under-
standings are developed and, most important, valued.
Moreover, we can also begin to understand the causal or
synergistic relationships among the differing forms of
wealth, helping us further isolate the capabilities that allow
family firms to overcome any deficiencies they may have
as they compete (Carney et al., 2015; O’Boyle et al., 2012).
Collectively, the accumulation of wealth, whether it
be nonfinancial or financial, leads to interesting avenues
of research in another emerging area—time (e.g.,
Ployhart & Vandenberg, 2010). While time has been
acknowledged in family firm research (arguing that fam-
ily firm leaders have a long-term orientation relative to
their nonfamily counterparts; Gentry, Dibrell, & Kim,
2016), time is generally viewed as a medium under
which positive or negative changes occur, without con-
sidering specific time-related constructs. Put differently,
a researcher might hypothesize that the strategic persis-
tence of a family firm influences financial outcomes over
time where a longitudinal examination would a better
choice to analyze such a relationship than cross-sectional
examination. Time-related constructs like duration, rate,
and pattern, however, become important as the accumu-
lation of firm and family nonfinancial outcomes are con-
sidered (see Figure 1, Blocks Ib-Ic, Blocks IIb-IIc;
Mitchell & James, 2001). Duration would refer to the
length of time that a specific form of nonfinancial wealth
lasts in a steady state, and rate refers to the speed at which
the particular form of wealth would be expected to
change. Pattern, in turn, would represent the trajectory or
16 Family Business Review 
shape of any change that takes place over time where
these might be described as stable, linear, exponential, or
sinusoidal patterns. Unlike the linear patterns that are
often studied and assumed, it would be reasonable to
expect nonfinancial outcomes, whether they be classified
as firm or family, to ebb more dramatically over time,
leading to more dynamic durations, with potentially
instantaneous change rates and complex patterns. Making
this more interesting, the conceptualization of time itself
may be unrelated to the objectively measured passage of
time, instead, being a concept that is subjectively con-
structed by the family.
These specific research areas are particularly inter-
esting because they present family business scholars
with an opportunity to not only help us understand fam-
ily firms but also inform other areas of management.
Shepherd (2016), for instance, has indicated that an
understanding of how nonfinancial outcomes are cre-
ated, maintained, and leveraged by the family firm not
only would offer insights into the family business litera-
ture but also has the potential to inform the entrepre-
neurship literature. By examining temporal issues,
family business scholars can inform many other areas in
management as very little is known about the subjective
passage of time, its role in organizations, and how it
influences the current decisions. Family firm scholars
are uniquely postured to offer insights into these theo-
retically and practically important issues because of the
unique goals of family firms that revolve around the
optimization of financial as well as family-centric nonfi-
nancial outcomes.
Practical Implications for
Researchers
Beyond the broad research topics we have detailed, the
FFO model offers practical implications for researchers
involved in testing theory that explains family firm deci-
sion making and behavior. We recognize that it will not
always be feasible to collect nonfinancial outcomes,
especially when secondary data sources are used.
Studies, however, should be designed such that the dif-
ferences in financial and nonfinancial outcomes and the
interrelationships among these outcomes are taken into
account. Several financial outcome measures, for
instance, may be relevant to the family and the firm
depending on whether the firm is family owned and
managed or just family owned (see Table 2). When a
family has ownership but no managerial involvement,
several financial outcomes may not directly overlap
with the family. For example, ROA appears to be the
most commonly measured FFO (Holt et al., 2012;
O’Boyle et al., 2012). This outcome, however, may or
may not overlap with family financial outcomes, as it
does not necessarily provide direct benefits to the fam-
ily, regardless of magnitude. That is, a firm with a high
ROA may or may not have a higher share price and may
or may not pay dividends (Dalton & Aguinis, 2013).
Accordingly, higher ROA might not provide a direct
financial benefit to the family, and such an outcome,
although important for the firm, may not completely
represent the family’s financial outcomes.
A related implication is that outcomes, whether they
be firm- or family-related or financial or nonfinancial in
nature, address distinct constructs. Thus, researchers
(and reviewers) should not expect results from different
tests of the same hypothesis to converge if differing out-
comes from the FFO model are examined. Expanding
operations and sales into an international setting should
accelerate growth, prestige, and image but might have
ambiguous effects on accounting returns, family wealth,
and cohesion. Thus, we would encourage researchers to
collect data across the classification scheme that is pre-
sented in the FFO model for the purpose of building a
unique body of knowledge around each type of outcome
measure. However, we would caution researchers not to
expect traditional methods of triangulation to converge
if the measures of outcomes represent differing con-
structs (i.e., firm financial outcomes vis-à-vis family
financial outcomes).
Conclusion
Despite the FFO model’s utility in synthesizing and
framing the portfolio of outcomes relevant to family and
firms, we would encourage researchers to continue to
refine the FFO model and build on the framework if we
are to fully understand “the nature of family firms dis-
tinctions” (Chrisman et al., 2005, p. 559). For example,
there are likely additional and more nuanced outcomes
at the interface between the family and the firm (both
financial and nonfinancial) that are garnered by the fam-
ily and its members because of its involvement in the
firm. Similarly, there are likely theoretically meaningful
outcomes that are important to the firm because of fam-
ily involvement in the business. Sirmon and Hitt (2003),
for instance, define patient capital as financial capital
that is invested without threat of liquidation for long
Holt et al. 17
periods, which distinguishes it from typical financial
capital based on the intended time of investment. They
explain that family and nonfamily firms likely strive to
develop such capital but nonfamily firms are less able to
do so because of the reward structures within markets.
Family firms, in contrast, are postured to generate such
capital for the firm as they have aspirations to perpetuate
the business for future generations. Accordingly, patient
capital would be a meaningful financial outcome for the
firm that arises as the family is involved.
As another example, the domain of nonfinancial out-
comes is very broad (i.e., internal and external) and
comprises a diverse set of elements including emotional
(e.g., happiness), social (e.g., belonging), cognitive
(e.g., cognitive cohesion), and normative (e.g., family
values) constructs. While we leveraged strong theory to
develop the domain of internal and external nonfinancial
outcomes (e.g., Berrone et al. 2012; Gomez-Mejia et al.,
2007; Pierce et al., 2003; Venkatraman & Ramanujam,
1986), we acknowledge there is a need for a more
detailed look at these dimensions and that a more devel-
oped understanding of these outcomes would be an
important refinement to the model, particularly at the
interface of the family and firm. The first review issue of
Family Business Review highlights theoretical areas in
family business research that demonstrate the nuanced
integration of family and firm goals with respect to
important FFO. For example, Madison, Holt,
Kellermanns, and Ranft’s (2016) integration of agency
and stewardship theories provides a specific example of
how firm and family goals may affect outcomes. The
FFO model can help researchers consider possible addi-
tional outcomes to represent either the family or the
firm, and future research can continue to refine outcome
measures at the interface of both. Opportunities for fur-
ther delineation of both family and firm outcomes
abound, and perhaps the most important opportunity is
to identify outcomes that reflect the interface of family
and firm.
In closing, Venkatraman and Ramanujam (1986),
while addressing the broader discipline of strategic man-
agement, succinctly stated, “The narrowest conception
of business performance centers on the use of simple
outcome based financial indicators” (p. 803). Among
family business scholars, this is a point that has been
recognized and accepted for some time (e.g., Berrone
et al., 2010; Gomez-Mejia et al., 2007), suggesting that
the overall success or failure of the family firms can be
completely understood only when the nonfinancial
outcomes that are relevant and meaningful to families
and their firms are understood. Yet, as we look at family
business scholarship, we, as family business scholars
ourselves, sense that our research can often be character-
ized as theorizing FFO as one thing, while empirically
measuring something else. Put differently, family busi-
ness scholars, almost unanimously, have theorized that
family firms differ from nonfamily firms in the range of
outcomes that are desired, pursuing a set of unique goals
and aspirations that are related to the family, the firm, or
the interface of the family and the firm. In an attempt to
view these outcomes comprehensively, we present the
FFO model, which synthesizes and structures the litera-
ture on family firms with the extant literature on firm
outcomes, family assessment, and psychological owner-
ship to identify the outcomes that are related to the fam-
ily and the firm. With an understanding of the entire
portfolio of outcomes, family firm scholars will be able
to more directly (a) evaluate the strategic choices that
are made by family firms, (b) assess where family firms
stand vis-à-vis nonfamily firms, and (c) understand how
family firms evolve over time.
Acknowledgments
We would like to express our appreciation to Grand Valley
State University for sponsoring this research. In addition, we
would like to thank Jess Chua for his insightful comments on
previous versions of this article.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with
respect to the research, authorship, and/or publication of this
article.
Funding
The author(s) disclosed receipt of the following financial sup-
port for the research, authorship, and/or publication of this
article: This research was supported with a scholarship of
$5,000 from the Family Owned Business Institute at Grand
Valley State University.
Notes
1. O’Boyle et al. (2012) aggregated the results from 78 stud-
ies with a total sample size of 80,421 firms, reporting a
correlation of r = .006 between family involvement and
firm financial performance. Carney et al. (2015) aggre-
gated 48 studies that included a sample of 461,032 firm-
years of performance, reporting a correlation of r = .00
(and a 95% confidence interval [−.02, .03]).
18 Family Business Review 
2. Yu et al. (2012) reviewed “dependent variables” as
defined in a research method sense (i.e., variables were
included in their analysis if these variables were depen-
dent variables in regression equations). Through this
lens, the spectrum of variables was broad, with depen-
dent variables such as professionalization, strategy con-
tent, and internationalization included. Furthermore, Yu
et al.’s (2012) discussion of performance and outcomes
was rather general, suggesting that performance in family
firms referred to the effectiveness of the family business
system and had two dimensions: “overall success” and
“financial outcomes.” We extend this discussion, some-
thing Yu et al. specifically called for, as they said, “more
attention [should be] focused on the family and its influ-
ence, especially on ‘noneconomic goals,’ ‘nonfinancial
performance,’ and ‘family outcomes’” (p. 48).
3. While there are several frameworks (e.g., Cameron &
Whetten, 1983; Chakravarthy, 1986), this conceptualiza-
tion aligns with the definitions of firm performance as
well as the theories of family business (e.g., behavioral
agency model). Furthermore, it is an accepted frame-
work with Google Scholar reporting that it has been cited
over 4,300 times. Based on this conceptualization, finan-
cial “performance” is a common outcome of firms, yet
firm outcomes encompass a number of other objectives,
including but not limited to financial performance. Hence
we adopt the broader term outcomes to include the wide
range of desired ends firms may seek.
4. The model assumes the firm has some family involve-
ment through ownership but may have differing levels of
involvement through management. The “(s)” is included
on the FFO model title because families may be involved
in the ownership or management of a portfolio of firms.
5. Boyd et al. (2005) replicated the analysis of Amihud and
Lev’s (1981) study that relied on single-item measures,
concluding that Amihud and Lev’s findings were largely
artifacts of measurement error.
6. Berrone et al.’s (2012) measure of socioemotional wealth
was excluded because construct validity, the factor structure,
and the reliability of the scales have not been tested. We
believe this measure has considerable promise but that it is
premature to include it in the FFO measurement model until
subsequent research reports its psychometric properties.
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Author Biographies
Daniel T. Holt is an associate professor of Management in the
College of Business at Mississippi State University. He received
his PhD in Management from Auburn University. Prior to join-
ing the faculty at Mississippi State University, he served in the
U.S. Air Force, serving as an engineer in Central America, Asia,
and Middle East. His research interests cover a wide spectrum
of management areas to include family business, entrepreneur-
ship, measurement methods, and organizational behavior issues.
Allison W. Pearson is a Giles Distinguished Professor of
Management and holds the Rouse Professorship in Management
at Mississippi State University. Her interests include behavioral
issues in family firms, including social capital, group functioning,
and goals.
Jon C. Carr is the Jenkins Distinguished Professor of
Entrepreneurship in the Poole College of Management at North
Carolina State University and an associate editor of Family
Business Review. His research is focused on entrepreneurship,
family business, and organizational behavior topics.
Tim Barnett is a professor of Management and the Bobby and
Barbara Martin Fellow at Mississippi State University. Prior to
joining the faculty at Mississippi State University, he spent 11
years on the faculty at Louisiana Tech University. For the past
several years, his research has focused primarily on behavioral
issues in family firms.