Long-term orientation: Implications for the entrepreneurial orientation and performance of family businesses

TLDR

Long‑term orientation (LTO) is a common trait of family firms, yet its impact on outcomes remains equivocal, especially regarding how it shapes entrepreneurial behavior. The study proposes that LTO is positively linked to innovativeness, proactiveness, and autonomy, but negatively linked to risk taking and competitive aggressiveness, and explores how entrepreneurial orientation affects family firm performance. Using the entrepreneurial orientation framework, the authors formulate hypotheses connecting family firms’ long‑ and short‑term horizons to five EO dimensions and assess their performance consequences.

Abstract

Long-term orientation (LTO), defined as the tendency to prioritize the long-range implications and impact of decisions and actions that come to fruition after an extended time period, is a common characteristic of many family businesses. Prior research is equivocal regarding whether an LTO contributes to or detracts from family firm outcomes. Of particular interest is the extent to which family business can be entrepreneurial given an LTO. Drawing on the concept of entrepreneurial orientation (EO), propositions that relate long- and short-term management time horizons of family firms to five dimensions of EO (innovativeness, proactiveness, risk taking, competitive aggressiveness and autonomy) are developed. Specifically, we propose that an LTO will be positively associated with innovativeness, proactiveness, and autonomy but negatively associated with risk taking and competitive aggressiveness. We also address the long- and short-term implications of EO on the performance of family firms, and identify issues to consider in future research into the EO–LTO relationship.