Family Business Context Research Articles

Management control and leadership styles in family business

Purpose This study aims to provide insight into the meaning and perceptions of leadership and its subsequent management control system (MCS) practices in family business in less developed countries. More specifically, the study attempts to understand the cultural context of family business and its importance in developing its leadership and MCS, the production and reproduction processes of the culture into the MCS and the resulting MCS. Design/methodology/approach We shared the view that organizational reality is negotiated and constructed by collective participants’ consciousness. The study used interpretive case study. Interviews, observation and documentary analysis were used to collect the data. Findings Leadership and MCS of family business is embedded in its societal culture. A leader–owner is not a creator but a mere manager of organizational culture because he/she is also a product of the societal culture. The owner and his/her inner circle (family and non-family members) may collectively play crucial roles in producing and reproducing the legitimate MCS based on the extended family concept. In this sense, cultural control based on shared family norms is the most dominant one and simplifies process and result controls. However, business pragmatism may go hand-in-hand with the culture in giving room for MCS transformations. Research limitations/implications The family business under study is still run by the family’s first generation, has no subsidiaries and is embedded in Javanese paternalistic culture. Although rich in details, the sample size of the study is a limitation. Practical implications This study encourages the owners of a family business to consider the use of strong cultural control along with bureaucratic controls to create a sustainable organisation. Originality/value This study offers insight to help understand and explain how leadership and MCS practices in family business are embedded in broader societal culture in less developed countries.

Gender, ethnicity and identity work in the family business

We study how family business members form and manage their individual identities in a family business context, attending both to individual and societal circumstances. We depart from the understand ...

Entrepreneurial orientation in family firms – management and intercultural development

Abstract This paper has taken an insight to the systemic models of family business from the open systems perspective. I focus on family business system models and on the subsystems content of family system and ownership system in family business context. The paper claim that the open system perspective on intercultural family businesses has both theoretical and empirical implications on family business research. Family businesses have many reasons, including family conflicts over money, nepotism leading to wrong management, and infighting over the succession of power from one generation to the other. Regulating the family’s roles as shareholders, board members, and managers is very important because it can help avoid these pitfalls. This paper will discuss the importance of the openness of the company through five the attributes of enduring family businesses: ownership, family, business and portfolio governance, wealth management, foundation. Dimension of attributes success have taken family business like five jewelers.

Family business explained by field theory

Purpose– The purpose of this paper is to present a model concerning family business participation. The model can both be used to explain why somebody chooses to become a family business member and how family entrepreneurs act inside their firms. In this paper the author will present a holistic, socio-cultural and constructivist model concerning entrepreneurship behaviour.Design/methodology/approach– The model is based on field theory or the perceptions of human behaviour presented by Kurt Lewin. However, the model is expanded to include modern system theories and family business aspects. The author sees family business participation as an emerging behaviour in a complex social system. The central concept or construct, to help the author understand this emerging behaviour, is the psychological life space of the individual. It is not only family that affects the life space. This life space is affected by the current life situation, the past activities as well as the potential aspirations or “dreams” about the future.Findings– A holistic, socio-cultural and constructivistic model is developed. It starts from the notion of a “psychological life space” construct, suggested by Kurt Lewin. The author has developed the concepts further, thereby expanding the area concerning entrepreneurship and modern theories of human behaviour by adding environment and culture to the model. The temporal dimension can be divided into three parts: i.e. the past (experience), the present (real-time) and the future (aspirations). All actions and changes happen in the present, although they are affected by the past and the aspirations for the future. These three parts will continually affect the individual's decision making. In other words the life space is never static, but constantly changing over time Thus, an individual's choice to enter, expand or exit a family business can be explained by the complex relationship between realistic and unrealistic views of the past, present and the future.Research limitations/implications– It is only a model. However, it can cast new light on the understanding of how family businesses work and could transfer knowledge to the next generation of the family business.Practical implications– A better understanding of the development of the complex behavioural patterns and factors behind entrepreneurial family formation is given. This enables the author to design methods to explore and analyse individual life spaces. If the author would have such methods, the author might be able to see how and why individuals’ behaviour becomes family entrepreneurially oriented, thereby giving use effective ways and new instruments to support growth and stability in our society.Originality/value– The field theory, or as it has also been named, topological psychology, has been more or less forgotten for a long time, or overshadowed by other theories of human behaviour. However, according to Martin Gold (1999), Lewin has in recent years again become one of the most frequently quoted social researchers. The paper contributes in this process by applying it to a family business context.

Leader driven organizational adaptation

Purpose– Earlier research has identified adaptive leadership strategies and organizational culture as two key factors that influence a firm's adaptive capabilities. However, little is known about how leadership and organizational culture affect each other. Nor do the authors know how the combined effects of adaptive leadership and culture facilitates organizational adaptation over time. The purpose of this paper is to address this gap by using a co-evolutionary perspective to enhance the understanding of this phenomenon.Design/methodology/approach– Data were collected through informant interviews, observations and archival material.Findings– Study findings reveal that leaders can enhance organizational adaptability by creating an appropriate context to guide the co-evolutionary interactions between their leadership strategies, organizational culture and employees towards the ongoing achievement of firm goals.Originality/value– The study enhances the understanding of how leaders facilitate organizational adaptability, especially in a family business context.

STAKEHOLDER SALIENCE, GOAL SYSTEM, AND FAMILY BUSINESS: A CORRELATION STUDY

ABSTRACT This article is a response to the numerous calls for the application of stakeholder theory for the analysis of family businesses and among the first papers that deal with the concept of stakeholder salience in the family business context empirically. This study extends the literature by hypothesizing that stakeholder salience differs due to a company’s ownership structure (family business versus nonfamily business) and the degree of the owner family’s influence. Furthermore, the authors analyze the interplay between stakeholder salience and a company’s goal system, expecting that a company’s goal system reflects the claims of the highly salient constituents and that this correlation is influenced by a company’s ownership structure and the degree of the owner family’s influence. The results from a survey of large and medium-sized companies in Austria only partially confirm the hypotheses. Our findings suggest a need for continued emphasis on the empirical research on this topic. Keywords stakeholder theory, salience, family business, goal system

Zayed Al Hussaini Group: the road ahead for the family business in the UAE

Subject area Corporate strategy and family business management. Study level/applicability The case is designed for usage in senior-level undergraduate courses of strategic management and managing family businesses. Case overview This case study relates the story of the launch and development of Zayed Al Hussaini Group, a family business in the United Arab Emirates (UAE). The business had been established a year after the unionization of the different Emirates by the founder, Zayed Al Hussaini, in partnership with his brother. Following a series of strategic moves, such as acquisitions and divestures, and adverse family-related events, the Group was led solely by the founder himself. Over the years, Zayed Al Hussaini Group has grown to become a successful family business in various industries of its operation, but following the death of the founder's son, the company activities have been struck with chaos. Zayed's nephew, Ahmed, who had left the family business to continue his studies and work at McKinsey & Company in London, has been called back home after eight years to take the lead of the entire Group. However, he is faced with several challenges, such as dealing with the family gap he has developed over time and balancing family and business priorities. Will Ahmed be able to make the right decisions in the role and responsibilities that have been bestowed upon him? Expected learning outcomes To analyse the process of launching a family business and making strategic decisions for managing its development over time. To assess the potential difficulties and challenges which are associated with managing a family-run organization. To evaluate the effectiveness of decisions with regards to the company's growth and succession management planning. To apply relevant theoretical concepts to the analysis of complex situations in the specific context of family businesses. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Family ownership logic: Framing the core characteristics of family businesses

AbstractIn this article we show how specific family business logic shapes managerial practices. Based on empirical material from 20 case studies of family ownership governance, our study identifies seven core characteristics of family ownership logic. These include active, visible and persistent ownership with few owners, relatively stable strategic development encompassing multiple ownership goals, autonomy towards capital markets, and a strong identification and emotional bonding with the business. By considering the family business context, we find managerial practices that are prevalent in the majority of businesses around the world and that have implications for ownership research. It is concluded that by taking the logic of ownership into consideration when studying family businesses, researchers in this field can contribute to the growing literature on sociocultural and behavioural factors in corporate governance relations.

Paternalistic leadership in family firms: Types and implications for intergenerational succession

This article demonstrates how the various paternalistic leadership styles practiced by predecessors influence the attitudes, subjective norms and perceived behavioural control of successors in family firms and the extent to which these factors influence a successor's perceptions of the quality of the succession process. Stemming from the theory of planned behaviour, our conceptual model integrates previous findings into a comprehensive, two-sided analysis, capturing factors associated with the outgoing and incoming generation. We use the central construct of paternalism to formalise more accurate scenarios of a successor's intentions and behaviours related to the transfer of leadership. This study serves as a foundation for future empirical studies investigating the effects of paternalism in the family business context.

The entrepreneurial orientation–performance relationship in private family firms: the moderating role of socioemotional wealth

Drawing on socioemotional wealth (SEW) literature, this paper revisits the established entrepreneurial orientation (EO)–performance relationship in a family business context. The main idea in entrepreneurship literature is that EO leads to increased firm performance. We question this logic in a family business context because family related non-financial goals, like SEW, may prevent the firm to reap the fruits of their entrepreneurial efforts. Specifically, we argue that SEW engenders inefficiencies that place constraints on the realization of the benefits of entrepreneurship. Therefore, we propose that a high level of SEW preservation hinders the transmission of the family firm’s EO into positive performance effects. To test this hypothesis, an empirical study was developed using a sample of 232 Belgian private family firms. Robust linear regression analysis reveals that the positive effect of EO on financial performance decreases as the level of SEW preservation increases.

SME family business innovation: exploring new combinations

Purpose – Continued research around innovation within small- and medium-sized enterprises (SME) family businesses is needed to better understand the influence of specific resources and capabilities that might promote and/or constrain entrepreneurial activities. The purpose of this paper is to develop an organising framework investigating SME family business innovation drawing on a Schumpeterian understanding of innovation as the introduction of new combinations. Design/methodology/approach – Four guiding principles are developed and applied to an illustrative case study of an entrepreneurial family business that highlights the usefulness of complexity thinking for understanding innovation. Findings – NZ Sock provides a rich illustrative case study to highlight how principles of complexity thinking along with Schumpeterian notions of innovation can usefully inform the authors’ understanding of entrepreneurial SME family businesses. The proposed guiding principles offered are borne out in application to the illustrative case example. Research limitations/implications – The findings suggest that complexity thinking and a Schumpeterian lens can usefully inform and extend the authors’ understanding of innovation within entrepreneurial SME family businesses. Further research would benefit from exploring the guiding principles proposed in other entrepreneurial SME family businesses to further substantiate this field of inquiry. Practical implications – Principles of complexity thinking may provide additional understanding and insight for SME family business members needing to innovate and adapt to ever-changing operating environments. Originality/value – Innovation is critical to the long-term survival and success of such firms; yet, to date little theoretical contribution and research has been offered in the field of innovation within the context of SME family businesses. Complex adaptive systems provide a lens from which to understand such businesses and that that a complexity framework helpfully allows attention to be given to such phenomena as emergence, adaptability and combinations through which innovation outcomes and processes may be understood. This paper offers four guiding principles that can be further tested and refined.

Spiritual identity, stakeholder attributes, and family business workplace spirituality stakeholder salience

In this paper, we argue that the spiritual identity of members of a family business can positively or negatively impact the salience of stakeholders to the complex coalition of decision-makers that comprises managers in that business. Utilizing stakeholder salience theory and role theory, we examine the complex theoretical relationships among spiritual identity, stakeholder attributes, and family business stakeholder salience. This examination reveals the multidimensionality of workplace spirituality and the need for finer-grained distinctions in stakeholder attributes, to better represent the complexities inherent in a family business context. This article develops four propositions, through which we offer the following contributions to the literature on family business workplace spirituality: (1) new analysis frameworks for future use, (2) prototypical descriptions of stakeholder types and representative vignettes for making finer-grained distinctions, (3) multidimensional implications for exploring the somewhat unexpected or under-considered topics in the workplace spirituality literature, and (4) proposals for family-business-specific effects for workplace spirituality on outcomes that arise from inherent family ties in businesses.

The role and impact of accounting in family business

Why has accounting, one of the eldest disciplines in business, only recently started to consider family business, the prevalent form of economic organization in the world, as a relevant research context? What is the role of accounting in family business? Which accounting issues are relevant in family business? How are different accounting practices implemented in family business? And how do these practices affect various family business outcomes and dynamics? This article aims to answer these and other questions by focusing on three key family business characteristics: 1. involvement of the family in ownership, governance and management, 2. socioemotional wealth, and 3. succession. Given the distinctive features, aims and foci of financial and managerial accounting, the article points out that distinctive research questions, methodologies, and theoretical frameworks are needed to study financial and managerial accounting in a family business context. We suggest several topics in both financial and managerial accounting relevant to family business that can be explored by future research. In particular, we propose that managerial accounting represents an area in family business that requires increasing attention from accounting scholars.

Resource Acquisition in Family Firms: The Role of Family-Influenced Human and Social Capital

Does family-influenced human capital (FIHC) facilitate or hamper resource acquisition Previous literature is scant and offers a negative portrayal of the family business context in this respect. We question this negative view of the phenomenon by arguing that FIHC may be beneficial to resource acquisition when family members are characterized by high bridging social capital. More specifically, we argue that family-influenced bridging social capital positively moderates the relationship between FIHC and resource acquisition, as bridging social capital reduces the disadvantages of FIHC allowing for the advantages to come to the fore. Our hypothesis is tested and confirmed on a data set of 241 family firms based in the Republic of Ireland.

Social identity theory and the family business: A contribution to understanding family business dynamics

The combination of the family unit and the business entity has been a major focus within family business research. While some research suggests that their combination is beneficial; other research indicates that it is detrimental – one of the main reasons being intra-family conflict. Due to its potential to account for inter- and intragroup conflict, social identity theory will be used to offer a lens from which to understand family business, at both the individual and organisational level. Using a single in-depth case study, the various dimensions of social identity theory will be applied to the family business context. The findings indicate that social identity can go some way in helping us better understand the dynamics of longstanding family businesses. Three dimensions that contribute to the development of a common identity among family members are proposed.

English

  Family businesses (FBs) are the most prevalent form of business throughout the world, and are highly pertinent in developing economies. The issue of succession in FBs has received some attention by researchers. Given that 15% of family businesses survives into the third generation, it remains an area of concern. In South Africa 80% of businesses in the formal sector are family owned. This article discusses the current level of knowledge in succession and commitment theories within a family business context. The different theoretical approaches to commitment include the behavioural, attitudinal and motivational theories. This article suggests that the motivational commitment approach must be used to predict successor commitment in the family business. A model is suggested to verify family succession commitment relationships and a measuring instrument has been developed based on the model to verify successor commitment.   Key words: Family business, succession, commitment, motivational approach, measuring instrument, behavioural, attitudinal.

Culture and values in family business—A review and suggestions for future research

This article provides a review of key literature in the field of culture, values and family business by addressing three key questions. First, what is culture in a family business context and how can it be defined and conceptualized? Second, what can culture do for the family business? And third, which factors or attributes shape culture in family business? The article presents several suggestions for future research and previews the four articles included in the special issue on culture and values in family businesses.

Family Firms and Entrepreneurship: Contradiction or Synonym?

(JSBE) Special Issue was motivated by increasing intellectual curiosity from within the entrepreneurship academic commu-nity to study entrepreneurial phenomenon in a family business context. Family enterprises dominate the commercial landscape in all economies, and interest in the unique challenges facing this business genre is growing. In many family firms, ownership and management are maintained across several generations, and a key challenge for long-term survival is to sustain the entrepreneurial spirit of the founding generation of entrepreneurs (Littunen and Hyrsky, 2000). All firms regularly need to renew their way of doing business in order to stay competitive, as they risk losing their entrepreneurial capacity when they mature (Kellermanns and Eddleston, 2006). However, family firms face many additional chal-lenges with regard to entrepreneurship (Zahra, Hayton and Salvato, 2004). Some scholars see family firms as conservative, introverted, inflexible and lacking en-trepreneurial spirit (i.e., a contradiction), while others argue the opposite and view family firms as a setting where entrepreneurship is enabled to flourish (i.e., a synonym). There is increasing evidence, including in the manuscripts in this edition, that families in business are robust sources of entrepreneurial activity (Naldi et al., 2007). It is apparent that family business and entrepreneurship are not contradictory; that family businesses

Family Business System Models – A Case Study and Some Implications of Open Systems Perspective

This paper seeks to build an insight to the systemic models of family business from the closed-open systems perspective. We focus on family business system models, on the characteristics of open systems, and on the subsystems content of family system and ownership system in the family business context. The contemporary research on family business system models suggests that an open-systems approach is particularly useful in combining various elements of a family business together. This paper presents a longitudinal case study of a family business portfolio specializing in flowers. We conclude with notions of open system perspective on family business system models; and we suggest that the open system perspective brings new insight into the concept of family business, and it has important methodological implications to family business research.

Finding kaizen approach in small Mexican family businesses: an exploratory study

PurposeIn recent years, small family businesses in Mexico have come under enormous pressure from their external environment: this has resulted in serious problems affecting the running of their businesses, leading ultimately to a drop off in sales, customers and market share. Some have attempted to respond to this environment by using the Japanese approach of kaizen (meaning continuous improvement). The purpose of this paper is to ask if the kaizen approach is implemented in a specific environment such as that of small family businesses in Mexico.Design/methodology/approachIn this study, qualitative research was conducted using case studies as the research strategy. Two small, family‐run Mexican businesses were selected and studied (a restaurant and hotel) and a retrospective focus was adopted; four methods were used to gather data: direct observation; participative observation; documentary analysis; and semi‐structured interviews.FindingsThe findings of the three case studies show that the kaizen approach can be applied to small family businesses in Mexico, but that the degree of implementation depends on the evolutionary stage of each family business. Consequently, for this first exploratory study, it was found that, in the start‐up stage, only the First Guiding Principle of kaizen was observed, along with some indications for the Fourth Guiding Principle. Whereas for the expansion stage, the consolidated presence of the Second, Fourth and Fifth Guiding Principle of kaizen was observed. Finally, it was possible to identify certain techniques and tools at every stage in addition to the Guiding Principle. In closing, the exploratory study made it possible to investigate the major enablers and inhibitors that a family business goes through.Research limitations/implicationsResearch was based in two case studies. However, rather than seeking empirical generalisation, the research tried to examine and explore how the kaizen approach is applied in a specific environment such as that of a sports organisation dedicated to football in Mexico.Practical implicationsThe paper aspires to be of interest as much to researchers as to professionals in the family business context, whether they have top management responsibilities or are middle managers, and also to all those employees whose work is related to this sector, with the aim of understanding the management of small family businesses in Mexico from the kaizen perspective.Originality/valueA review of academic and practitioner literature on the subject indicated that implementation of the kaizen approach in family businesses had scarcely begun to be explored. It is also significant that in Mexico and Latin America, examples of the implementation of this kind of approach are practically non‐existent in academic literature on family businesses.