5 Discussion and conclusion
Prior studies on financing behavior in family firms rooted in the SEW theoretical perspective are scarce. The fact that SEW has hardly been studied in relation to leverage is somewhat surprising, since debt financing is one of the most important sources of external financing for family firms in most countries (Romano et al. 2001). Our study shows that SEW is a relevant and fruitful lens through which to explain debt decisions in family firms. It also provides an interesting framework to better understand the demand-side of financing, which should be clearly differentiated from studies that provide insights on the supply (or lack) of different sources of financing available on the market (see, for example, Chua et al. 2011; Molly et al. 2012 and Michiels and Molly 2017).
Our results indicate that family firms indeed consider both family-centered goals and family control through board representation when making decisions on the firm’s debt rate. However, the fact that no significant direct effect of family-centered goals on firm debt rates was found suggests that family-centered goals do not directly influence decisions regarding debt use. We found this effect only through higher family board representation. Therefore, in line with De Massis et al. (2014), family representation on the board could be seen as an Bability driver^ of SEW firm behavior, since greater power and control on the board grants family owners the discretion to impose their family-centered goals when making decisions. Our findings offer empirical support to the ability and willingness framework adopted to predict the particularistic behavior of family firms (De Massis et al. 2014; Chrisman et al. 2015), stating that both willingness (family-centered goals) and ability (family board representation) are needed to determine the family firm’s distinctive behavior. In this regard, family-centered goals can be seen as a necessary but insufficient aspect of SEW influencing family firm financing behavior, requiring the ability to act in line with SEW through the family’s control on the BOD.
