Abstract
The multigenerational survival rate for family-owned businesses is not good. Lack of a shared vision for the family enterprise and weak next-generation leadership are often cited as two of the leading reasons for the failure of family firms to successfully transition from one generation of family ownership to the next. The climate of the business-owning family has also been suggested as important to the performance of the family enterprise. Despite these commonly held tenets, there is a lack of rigorous quantitative research that explores the relationships among these three factors. To address this gap, a quantitative study of 100 next-generation family firm leaders and 350 family and non-family leaders and employees with whom they work was conducted. The results demonstrate that a shared vision for the family business has a strong effect on the leadership effectiveness of next-generation family leaders and a moderate effect on the degree to which they are positively engaged with their work. The findings also show that two dimensions of family climate significantly influence the likelihood that a shared vision for the family firm has been created. Open communication in the family is positively related to the presence of a shared vision for the business. Intergenerational authority, which refers to a senior generation that exercises unquestioned authority and sets the rules, is negatively related to the presence of a shared vision. Surprisingly, a third dimension of family climate, cognitive cohesion, which includes shared values in the family, had no relationship with the degree to which there was a shared vision for the family business. The implications for family business owners is that they would be wise to spend as much time on fostering a positive family climate characterized by open communication as they do on creating and executing a successful business strategy if their goal is to pass the business from one generation of family owners to the next.
Highlights
Businesses constitute between 80 and 98% of all businesses in the world’s free economies, generate 49% of the GDP in the U.S and more than 75% in most other countries
H2: Having a shared vision for the family business has a positive effect on the degree to which next-generation family leaders are engaged with their work in the family firm
This result demonstrates that having a shared vision for the family business contributes to the sense of fulfillment, energy, and enthusiasm experienced by the next-generation leaders in our study
Summary
Businesses constitute between 80 and 98% of all businesses in the world’s free economies, generate 49% of the GDP in the U.S and more than 75% in most other countries They employ 80% of the U.S workforce and more than 75% of the working population globally, and created 86% of all new jobs in the U.S over the past decade. Despite their importance, only 30% of family businesses survive from the first to the second generation of family ownership, only 12% survive from the second generation to the third, and only 4% survive from the third generation to the fourth (Poza, 2013). Research has shown that the climate of a business-owning family plays an important role in determining the culture and performance of family firms (Dyer, 1986; Björnberg and Nicholson, 2007) and the likelihood of successful transitions from one generation to the (Morris et al, 1997)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
