The Social Embeddedness of Socioemotional Wealth: A Review and Future Research Agenda

ABSTRACT Research Questions/Issues Scholarly interest in family firm governance and its strategic decision‐making has increased since the invention of socioemotional wealth (SEW). However, the widespread use of the SEW concept raises concerns on its reification and tautology. To address these concerns, we propose analyzing the social embeddedness of family firms to shed light on SEW‐driven governance practices and decision‐making. Research Findings Our two‐step method reviewed 85 papers utilizing social network perspectives, institutional theory, and SEW concepts. Our analysis demonstrates that integrating social embeddedness into SEW can help clarify the origins of SEW and its impact on decision‐making and governance and practices within family firms. Nonetheless, our analysis also highlights research gaps that future studies should address. Theoretical Implications By integrating the social embeddedness perspective with SEW, we offer a novel framework that systematically illustrates the social rationales underpinning diverse SEW‐driven behaviors and the evolution of governance practices in family firms. This framework, drawing from social network and institutional theory, elucidates the formation of SEW as driven by multidimensional social motivations, thus reconciling mixed findings from previous SEW research. Furthermore, our review provides a comprehensive research agenda for future studies in family business and corporate governance, encouraging exploration of multiple institutional logics, social networks, and their confounding effects on the SEW of family businesses. Practical Implications Our findings guide financial investors and nonfinancial stakeholders to better comprehend family firms' economic and noneconomic concerns, their distinct strategic behaviors from other firms, and their hybrid governance practices. Our discussion suggests practitioners incorporating social context of controlling families into decision.