A Comparative Analysis of Formalization Pathways in Family Entrepreneurship: Interactions Between Socio-emotional and Institutional Logics

Document Type : Original Article

Authors

1 tehran university

2 New Business Department, Faculty of Entrepreneurship, College of Management, University of Tehran, Tehran

3 Faculty of Entrepreneurship, University of Tehran

Abstract

The formalization of structures and managerial systems is one of the fundamental challenges facing family firms along their growth and development trajectory. Despite its importance, the existing literature has largely focused on the presence or absence of formal procedures, paying limited attention to the processual and comparative analysis of formalization pathways. his study aims to explain how different formalization pathways emerge in family businesses. To achieve this objective, it adopts a comparative case study approach and employs the Gioia methodology for data analysis, comparing two family businesses. The theoretical framework is grounded in the socio‑emotional wealth perspective and institutional theory, drawing on agency and stewardship theories to explain differences in governance logics, and on the resource‑based view to analyze how relational resources are transformed into organizational capabilities. The findings indicate that formalization in family firms does not follow a linear or homogeneous path. Rather, it is shaped by the interaction between the family’s socio‑emotional logic and external institutional pressures, leading to two distinct trajectories: a trust‑based evolutionary path and a control‑oriented designed path. In the first trajectory, formalization emerges gradually in alignment with stewardship logic, whereas in the second trajectory, agency concerns and external legitimacy pressures drive the more rapid and structured implementation of formal mechanisms. The results further show that formalization can convert family social capital into sustainable organizational capabilities, provided that it remains aligned with the family’s identity logics. By redefining formalization as a socio‑institutional process, this study contributes theoretically to the family business and human resource management literature and offers important managerial implications for designing formal systems in family‑based contexts.

Keywords

Main Subjects

Education and Management of Entrepreneurship

Articles in Press, Accepted Manuscript
Available Online from 17 August 2026

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History

  • Receive Date: 16 May 2026
  • Revise Date: 05 August 2026
  • Accept Date: 17 August 2026

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