Harnessing the power of generations through participative strategy: a study on Malaysia Small Family Firms

Abstract

Small family firms (SFFs) in Malaysia, exemplars of economic development, skillfully balance family legacy preservation with entrepreneurial spirit to navigate generational challenges. In a context marked by paternalism, conservatism, and collectivism, these firms exhibit diverse array of familial dynamics and firm performance (FP) outcome. This study, employing hierarchical regression analysis and interactive plot diagrams on a sample of 112 Malaysian SFFs, thoroughly investigated the impact of entrepreneurial orientation (EO) and participative strategy (PS) on FP, with a special focus on the moderating role of generational involvement (GI). The findings reveal that GI positively affects both EO and FP, particularly when PS is integrated, effectively mitigating conflicts and paternalistic tendencies in multi-generational settings. The study underscores the importance of PS in leveraging intergenerational knowledge (i.e. familiness), converting innovative opportunities (i.e. EO) into significant performance enhancements. This insight is invaluable for SFFs in similar cultural contexts, advocating for the strategic use of PS and GI to optimize entrepreneurial success. The research contributes significantly to understanding the intricate interplay between EO, PS, and GI in SFFs, particularly in culturally distinct environments like Malaysia.