The impact of socioemotional wealth on the relationships between entrepreneurial orientation and debt financing of family businesses : empirical evidence from Nigeria

Family businesses play an important role in economic development and income growth. However, increasing business competition has placed family businesses in a volatile position due to their limited resources. Undoubtedly, the family business's success in responding to the challenge of the business environment depends on their strategy for engaging in entrepreneurial behaviours and the availability of debt financing to family businesses. Understanding the factors that influence debt financing, therefore, becomes important. In exploring the factors that influence debt financing, prior studies investigate the effects of entrepreneurial orientation and socioemotional wealth (SEW) in isolation from each other. Moreover, literature on the effect of SEW on debt financing shows mixed conclusions. The current study, by considering SEW as the kernel, firstly examines the influence of entrepreneurial orientation on debt financing. Secondly, it examines the impact of SEW on the relationships between entrepreneurial orientation and debt financing. To avoid bias from utilising one particular research method, this study purposely employed an explanatory sequential triangulation strategy. This was intended for model testing and an in-depth understanding of the research issues in the Nigerian context. Primary data were collected from Nigeria via a quantitative survey and qualitative interviews. Adopting a purposive sampling and snowball sampling method, a total of 500 self-administered questionnaires were sent out in August 2019 to family businesses to collect primary data. Out of the number sent, 405 useful responses were gathered for the quantitative study generating a response rate of 81%. For the qualitative study, 10 interviews were conducted with family businesses. A hierarchical regression analysis was applied in assessing the impact of SEW on the relationship between entrepreneurial orientation and the debt financing of family businesses. Research results suggest that, firstly, entrepreneurial orientation influences the debt financing of family businesses. More importantly, SEW has a significant moderating impact on the relationship between entrepreneurial orientation and debt financing. The study contributes to the literature in three major areas. Firstly, against the backdrop of mixed conclusions in prior research about the effect of SEW on debt financing this study finds that the effect of SEW could be examined along with the dimensions of entrepreneurial orientation. Specifically, it establishes that SEW moderates the effects of the EO dimensions on debt financing of family businesses i.e., the antecedents of debt financing. This helps clarify the role of SEW. Secondly, unlike prior studies and models that examine the influence of entrepreneurial orientation and SEW in isolation from each other, this study develops and validates a model to examine how these factors jointly shape debt financing. Specifically, the model shows that entrepreneurial orientation influences debt financing but also SEW would intensify the influence of entrepreneurial orientation on company debt financing. Lastly, even though family businesses are the dominant form of organisation in the world and are the prime source of wealth creation and employment for both developed and emerging economies, it has received insufficient research attention in Nigeria. This study has, therefore, added to the scanty research available about family businesses and their contribution to poverty alleviation, employment generations, and sustainable economic growth in Nigeria. On the whole, the study makes a theoretical and methodological contribution to the study of debt financing of family businesses.