Family Business Literature Overview: Towards Achieving Family Business Growth

Abstract

Businesses which are predominantly owned and managed by a family are commonly referred to as family businesses. This study’s objectives are to examine the definition and characteristics of family businesses, evaluation of the uniqueness and theoretical framework of family businesses literature and the nature of family business growth. Family businesses are unique from non-family businesses, in how they grow, financial strength, wealth safeguarding and their risk appetite. The most rational perspective is what might be used to emphasize the uniqueness of family businesses and how it connects to stakeholder management’s standpoint. Family businesses have become a significant and vital segment of a country’s economy through their contribution to job creation, poverty alleviation and sustainable development. Family-owned businesses in industrialised economies, on average, outpace other types of businesses, with family-owned businesses involving 80–90% of all businesses in North America and provide jobs for between 50 and 75 percent of the world’s labour force. Evidence from sub –Saharan Africa suggests that more than 90% of businesses which are not owned by the governments are family businesses. Growing a family business is not a one-sided process because it can depend on current business and family concerns. A successful organization and the creation of additional employment possibilities for its members from one generation to the next are both possible outcomes of family company growth. However, some family businesses purposefully avoid expanding out of concern for losing control of the enterprise. The literature review has shown that family businesses grow more slowly than non-family businesses on average due to lack of incorporating new entrants leading to lack of new ideas which is detrimental to a company growth. Other factors for the slower growth of family businesses in comparison to non-family businesses include their traditional strategies, insufficient financial strength, safeguarding of their wealth and risk appetite with a tendency toward risk aversion. According to the studies done in Sweden family businesses, the results from the literature review have also shown that family businesses grow much more slowly than non-family businesses do in both urban and rural areas.