High-performance work practices, socioemotional wealth preservation, and family firm labor productivity

Abstract

Despite growing research on the effect of high-performance work practices (HPWPs) on family firm performance, the implications of socioemotional wealth (SEW) preservation remain ambiguous. This stems from SEW preservation being used primarily as an explanatory construct and assessed indirectly rather than directly in empirical studies. To address this research gap, we draw upon organizational control and signaling theories to determine the "true" interaction between HPWPs and SEW preservation for labor productivity. Specifically, competing hypotheses are presented to determine if this interaction supports complementarity or substitutability. Using a sample of 124 Spanish family firms and a direct measurement of SEW preservation, our results provide support for substitutability, suggesting that family firms can realize higher labor productivity when HPWPs are fully implemented and commitment to SEW preservation is low, and vice versa. These findings have important implications for family firms, given HPWPs' inverse relationship with SEW preservation regarding labor productivity.