Existing theory describes how family firms utilize a unique socioemotional reference point to frame strategic decision making, but scholars have not fully considered family-level strategy or changes in reference points. We theorize that as business-owning families are socialized with actors who provide new information, their collective knowledge structures are altered and, thus, the nature of reference points used in strategic decision making is impacted. Specifically, we link the socialization of next-generation family members to the temporal focus of reference points (i.e., backward or forward looking) and socialization into the capitalist class to the spatial focus of reference points (i.e., internally or externally oriented). Further, we theorize that the use of nonfamily professional advisors accelerates reference point shift. Our theory reveals the decisive role of social capital in reference point change and sheds light on how business-owning families may break free from old strategic frames. In doing so our framework provides a route to explore the sociocognitive processes underlying reference points’ development and use, as well as sensemaking and interpretation more generally.
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