Entrepreneurial orientation and strategic initiatives in family business groups: The role of corporate centres and family influence

Strategic management practices and their influence on entrepreneurship in family businesses are receiving increasing attention from scholars. Yet, few studies have hitherto investigated such practices in the context of large family business groups with unique characteristics, i.e. the presence of a corporate centre that handles corporate strategy in a business group and the presence of family management that affects strategic decision-making processes concerning entrepreneurship and innovation, both at the corporate level and the business unit level. This paper aims to explore and analyse the influence of corporate parenting style of corporate centres in strategic planning, strategic control and financial control as well as family influence factors on business unit entrepreneurial orientation (EO) and business unit strategic initiatives, which in turn affect business unit performance. The study applies a structural equation model (SEM) to a sample of 106 respondents who are CEOs and senior management officers in business units managed by 16 corporate centres of family business groups in Indonesia. The results suggest that the presence of corporate centres and family influence affect business unit performance through influencing EO and strategic initiatives. The corporate parenting role played by corporate centres differentially influences EO and strategic initiatives in business units. Moreover, family influence has a positive impact on EO and business units’ strategic initiatives. At the business unit level, it is found that EO does not exhibit a direct relationship with performance, but its influence on performance is positive whenever EO has been implemented in the form of strategic initiatives.