Family ownership, performance below aspiration levels and signaling strategies in emerging markets

Advertising and CSR constitute the two key signaling strategies for family firms in emerging markets to attract new stakeholders and investors and to retain existing ones. However, the preference of family owners for these strategies may shift based on firm performance. We combine Signaling Theory with the Behavioral Theory of the Firm to examine how family ownership influences these strategies and whether these preferences shift when firms perform below aspiration levels. On a sample of Indian firms over the 2006–2019 period, we find that family ownership is positively related to signaling through both advertising and CSR investments. However, when the performance of the firm falls below aspiration levels, family owners invest more in CSR and less in advertising. These findings contribute to literature on family firm signaling and the shifting preferences of family owners during performance fluctuations, in emerging markets.