v9i2 – Junior Management Science

Comparison of the Preferential Treatment of Retained Earnings with the Option Model for Family Partnerships

Anna Vitten, Bochum University of Applied Sciences (Master thesis)
Junior Management Science 9(2), 2024, 1414-1444

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The different taxation concepts of partnerships and corporations in Germany lead to systematic disparities and sometimes significant differences in tax burdens, particularly in the case of profit retention. However, legislators are increasingly pursuing the goal of harmonization through tax concessions and options for partnerships. In addition to the preferential treatment of retained earnings in accordance with Section 34a EStG, from 2022 a partnership can be taxed in accordance with the provisions for corporations by means of the new Section 1a KStG. This paper examines the benefits of both options for the primary target group – i.e. „family partnerships“. In doing so, the special tax requirements and needs arising from the typical characteristics of family partnerships are defined. It becomes clear that the legislator’s aim of achieving taxation that is neutral in terms of legal form cannot be achieved in its current form.

Keywords: § 1a KStG; § 34a EStG; family business; option model; preferential treatment.

DOI: https://doi.org/10.5282/jums/v9i2pp1414-1444

Impact of CSR on Firm Performance: The Moderating Role of Family Ownership in Individualistic & Collectivistic Countries

Abhishek Omprakash Singh, Technical University of Munich (Master thesis)
Junior Management Science 9(2), 2024, 1445-1463

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The objective of this study is to have a cross-country examination of the moderating role of family ownership on the corporate social responsibility (CSR) – financial performance (FP) relationship, also understanding how the moderating effect is influenced by cultural dimensions of collectivism and individualism. The study thereby incorporates views from both the Stakeholder theory and the Institutional theory. The study employs the one-way fixed effects regression analysis. Firm-year observations for the period of 2013 to 2022 of 439 firms across 35 countries are included. The magnitude of the interaction term is then inspected across the deemed collectivistic and individualistic cultures. The study finds that the degree of family ownership positively moderates the CSR-FP relationship and this moderation effect is stronger for collectivistic countries. The study is a novel approach to taking the CSR-FP subject with the family ownership moderating effect in a cross-country setting and it uniquely measures family ownership, not as the usual binary or subjective construct. The results of the study yield an interesting insight on the appropriate ownership structure for family members, and the status of legitimacy and trust family businesses can leverage with CSR to improve FP.

Keywords: collectivism; corporate social responsibility (CSR); family ownership; financial performance (FP); individualism.

DOI: https://doi.org/10.5282/jums/v9i2pp1445-1463

Unforeseen Succession – Identity Change Amongst Lateral Entrants in Family Firms

Pia Doris Morrow, EBS Business School (Bachelor thesis)
Junior Management Science 9(2), 2024, 1464-1484

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Due to the increasing globalization of today’s world, descendants of family firms are often drawn to the unlimited opportunities outside their premises and no longer see their future workplace or the core of their identity within the family organization. However, this can lead to a rude awakening if so-called unforeseen events, which can range from death or illness of a family member to intra-family conflicts, changes in the business model and even financial problems, arise. This thesis examines the effects of such unexpected successions on the identity of lateral entrants in family firms and presents a roadmap with practical and theoretical action implications for unplanned successors during the pre-, initial, and post-succession phase. The analysis of qualitative data from interviews with lateral entrants and experts revealed overlaps in identity constructs and experiences. Before the occurrence of an unforeseen event, lateral entrants already displayed entrepreneurial traits and a willingness to take risks but lacked connection to the family firm and interest in succession. During the initial succession phase, they prioritized rationality, efficient teams, and immediate action over emotional processing. After an average of three years, lateral entrants became confident family entrepreneurs. Furthermore, unforeseen successors showed great interest in arranging their own succession at an early stage in order to pass on what they had learned and counteract crisis situations preventively. In general, the interviewed candidates demonstrated a continuous process of developing their own successor identity, which did not develop disruptively but rather steadily and was characterized by specific milestones shown in the successor roadmap of this thesis.

Keywords: crisis management; family firm succession; Gioia methodology; social identity theory; unforeseen succession.

DOI: https://doi.org/10.5282/jums/v9i2pp1464-1484

Analysing the Sustainability of Procurement in Family Businesses – A Study of Measurable Investments and Practices Based on ESG Principles

Philipp Schmidt, WHU – Otto Beisheim School of Management (Bachelor thesis)
Junior Management Science 9(2), 2024, 1485-1510

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Sustainability has gained considerable prominence in recent decades as the inevitability of change becomes increasingly apparent. Family businesses constitute a significant and influential part of the global economy. Therefore, they are pivotal in addressing the world’s sustainability challenges. Despite extensive research on sustainability in corporations and public firms, there remains a dearth of comparable data concerning sustainability in privately owned family businesses. Through qualitative interviews and cross-case analyses, this thesis investigates the procurement practices within family businesses, deriving comparative insights guided by Environmental, Social, and Governance (ESG) criteria. The findings evaluate family businesses based on the ESG framework, visualising the development and integration of sustainable practices into the procurement processes. The research highlights the indirect impact of sustainability on developing competencies that can confer a competitive advantage. Additionally, it sheds light on the potential financial benefits reported by family businesses that have implemented sustainability measures. Overall, the findings contribute to the existing academic research on sustainability in businesses and family business studies.

Keywords: ESG; family business; performance-based assessment; procurement; qualitative interviews; sustainability.

DOI: https://doi.org/10.5282/jums/v9i2pp1485-1510

Leveraging Credit Ratings Through Impression Management: An Exploratory Study of German Small and Medium-Sized Family Firms

Ludwig Marrenbach, EBS Business School (Master thesis)
Junior Management Science 9(2), 2024, 1511-1539

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In an era marked by multi-crisis environments, the significance of corporate finance and credit ratings amplifies, especially for German small- and medium-sized family firms, often constrained in accessing capital markets. This thesis investigates how family firms employ impression management strategies within qualitative credit ratings to enhance their creditworthiness. Through exploratory qualitative research involving 17 interviews with German family firms and banks, primarily financing the Mittelstand, three key dimensions of impression management emerge: family-specific, business-specific, and relationshipspecific tactics. Family-specific factors, including values and generational succession, significantly influence qualitative credit rating scores. Moreover, the interplay between firms and banks, orchestrated by the owning family, shapes effective impression management strategies. This research underscores the role of family involvement in shaping qualitative credit ratings, emphasizing the interrelations among family, business, and banking dynamics. The discussion highlights the relevance and adaptability of these impression management dimensions, contributing to a deeper understanding of qualitative credit rating processes within the context of family firms.

Keywords: credit rating; family firm; impression management; leveraging credit ratings; qualitative rating factors.

DOI: https://doi.org/10.5282/jums/v9i2pp1511-1539

Multiple Case Study Analysis on the Consequences of Mandatory Sustainability Reporting in Private German Family Firms

Ralf Ebner, Technical University of Munich (Master thesis)
Junior Management Science 9(2), 2024, 1540-1566

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This study explores the consequences of the Corporate Social Responsibility Reporting Directive (CSRD) on family firms. The European Commission (EC) extends under the CSRD the number of reporting companies from approximately 12,000 to 50,000, with the greatest increase in Germany. For 2025, around 13,000 German private family firms must disclose a sustainability report for the first time. Preparing a sustainability report that meets the requirements of the CSRD involves its own consequences. Based on a multiple case study of ten private German family firms, I develop a framework that illustrates implementation challenges and provides guidance to unlock business opportunities. Building on family business research, I contribute to the literature by differentiating family firms based on their sustainability strategy and maturity of sustainability reporting. This allows us to derive three archetypes facing varying implementation challenges. The analysis reveals direct and indirect opportunities along a firm’s value chain. After introducing a reporting process, all archetypes can benefit from direct opportunities, whereas a proactive sustainability strategy needs to unlock indirect opportunities.

Keywords: corporate sustainability; corporate sustainability reporting directive; family firms; mandatory sustainability reporting; socioemotional wealth.

DOI: https://doi.org/10.5282/jums/v9i2pp1540-1566

Growing Up Between Family and Business: Transmission of Values in the Socialization Process of Children in Business Families

Valerie Raiss, Witten/Herdecke University (Bachelor thesis)
Junior Management Science 9(2), 2024, 1567-1590

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Values serve as a compass that guide our attitude and behaviour. The values that we are taught as children shape our identity and early career development. In business families, the descendants‘ socialization process is additionally influenced by the presence of the family business. This thesis discusses how the combination of the emotion-driven family logic and the businessdriven company logic affect the transmission of values to the children. The line of argument is based on a qualitative literature analysis and a qualitative evaluation of nine narrative interviews. It can be concluded that particularly the corporate assets and the omnipresent expectation of company succession have a dominant influence on the values that are transmitted to descendants in business families. The dual responsibility for family and business lead to the following core values: freedom to shape one’s life, family cohesion and modesty. In business families, the values passed on to the children therefore form the framework for their attitude towards the family business and thus determine the transgenerational preservation of the company.

Keywords: business family; family business; socialization; succession; values.

DOI: https://doi.org/10.5282/jums/v9i2pp1567-1590