Family Business System Research Articles

Creating and sustaining mutualistic well-being: Toward a theory of family and business symbiosis

This paper addresses a question that is fundamental to the domain of family business research yet still inadequately addressed by the field’s predominant theories: Why are some family business systems able to create and sustain the simultaneous health of both the business and the family over generations, whereas many others experience an erosion in the well-being of one sphere relative to the other? Invoking analogical theorizing, we demonstrate the fruitfulness of applying key concepts from biological research on symbiotic relationships between organisms of different species. More specifically, we suggest that the area’s distinction between mutualism, commensalism, and parasitism provides a useful vocabulary for conceptualizing the heterogeneity evident amongst family business systems. By delineating factors that are likely to influence the nature and strength of a family business system’s symbiotic relationship, we hope that our conceptual framework helps guide future research on why, when, and how the interdependence between family and business can range—and sometimes shift—along a continuum from strong mutualism to strong parasitism.

Examining a centenary family business in the pasta industry: the case of Barilla, 1877–1971

PurposeThis study aims to explore the evolution of corporate governance through a 100-year-old Italian Barilla pasta family business from its founding to 1971. The study builds on prior research which has applied the three-circle model of family business systems in a historic context.Design/methodology/approachUsing legal records, five phases in the history of Barilla are noted. Annual reports and other sources have allowed for some more insights into business events and developments. Then, drawing on the three-circle model of family business, the corporate governance regime is mapped to the model and the family actors.FindingsThe findings here support extant literature in that the systems in the three-circle model are found to overlap more in a historic setting. Challenges with the three-circle model are also noted, specifically, when corporate governance is considered across a century of an organisation’s history.Originality/valueThis study supports prior use of three-circle model of a family business in an historic context, providing further evidence the model is not static over time. Contrary to the original three-circle model, this study suggests that family actors can potentially occupy more than one location in the model if the non-human actor of corporate governance and its effect on human actors is also considered.

Configurational patterns of human resource practices in the family-business systems: a multiple case study in China

Configurational patterns of human resource practices in the family-business systems: a multiple case study in China

Next‐generation entrepreneurial identity in family business systems: The influence of role‐changing events on the understanding of legacy, individual identity, and transgenerational entrepreneurship of next‐generation family business principals

AbstractThe paper addresses how the understanding of family business legacy, individual identity, and transgenerational entrepreneurship of next‐generation principals is affected by role changing events in family business systems. The paper uses the insights of a focus group of 38 next‐generation family business principals of ultrahigh‐net‐worth business families from 14 countries. It corroborates that parents and role models are influencing factors on the understanding and perception of family identity, values, and transgenerational entrepreneurship. Identity inflection points during moments of expected and unexpected role changes, such as family business succession, can either positively or negatively impact the appreciation of a next‐generation principal regarding legacy, identity, and transgenerational entrepreneurship. Based on the results of the qualitative interviews and peer group discussions, the findings indicate how identity inflection points affect the preservation of the next‐generation family business principal's identity and family identity during a moments of role changes in family businesses and are a bottleneck for transgenerational entrepreneurship.

Family business system dynamics in the aftermath of in-law entry: A reflection on emotions and strategic change

In the family business system, the family and business subsystems overlap, thereby reciprocally and dynamically influencing each other. When a son- or daughter-in-law enters the family, the equilibrium of the family business system alters in terms of conflicts and emotions. In this study, we embrace family systems theory to conceptually devise how child-in-law entry in the family spurs strategic change in the business subsystem. Building on this speculation, we introduce a multi-level framework of the emotional and relational mechanisms that unfold at the family-business interface. Our study offers insights to family business research, family systems theory, and strategic management, as well as outlining promising directions for future research.

Caught in the spider's web: an investigation of dysfunctional behavioural patterns in a family firm

PurposeDrawing on the theory of goal systems applied to family business this case study focuses on the interdependence between non-economic goals and family goals, in order to identify if and how achieving non-economic goals generates dysfunctional behavioural patterns for family members in the long term.Design/methodology/approachThis study used an inductive, 20-year longitudinal case-study based methodology.FindingsThis case study shows how the business family faces ethical/affective dimensions, struggling every day for a balance and often undermining the legitimisation and differentiation of its children. Findings show that the achievement of non-economic goals can occur to the detriment of family goals, such as by generating a dysfunctional system, specifically in business family adaptability.Research limitations/implicationsThe principal limitation is that this single case study evidently does not allow for complete generalization of the findings.Practical implicationsThis case study makes a contribution to alerting the family business system to the long-term risk they face in trying to simultaneously maintain both harmony/cohesion and ethics/responsibility. Practitioners and consultants are therefore called on to help family firm owners with adopting a strategic vision by considering possible long-term counterfinal (i.e. mutually incompatible) goals.Social implicationsSMEs are the most widespread type of firm in the world, and consequently dysfunctional behavioural patterns within business families represent a prominent socio-economical problem for policy makers and institutions.Originality/valueThis study shows that, in the long term, that which is perceived to be a desirable goal can transpire to be a dysfunctional pattern. In doing so, this research introduces a new point of view to the literature on goal systems in family business.

Exploring women's initiatives for family business resilience during the COVID-19 pandemic

PurposeFamily businesses have contributed significantly to economic growth in various countries, including Indonesia. The coronavirus disease 2019 (COVID-19) pandemic reduced the world economy and caused economic shocks in various business sectors. Women successors face significant challenges in overcoming family business problems during the COVID-19 pandemic, especially in terms of resilience, which is seen as the organization's prominent ability for sustainability in a turbulent environment. Thus, this study aims to explore women's initiatives and propose a framework for family business resilience during the COVID-19 pandemic in Indonesia.Design/methodology/approachThis study uses a qualitative method with a case study approach to explore women's initiatives in family business resilience during the COVID-19 period. Data were collected through in-depth interviews with five women's successors of family businesses in Indonesia. Triangulation was used to test data validity. Meanwhile, data analysis uses the Miles–Huberman technique: data reduction, data display and conclusion drawing/verification.FindingsThis study found that women have the initiative to deal with the COVID-19 pandemic to develop and implement resilience in the family business. This study proposes a framework for factors that enhance family business resilience, including strategic decision-making (adaptive capacity, strategy renewal and appropriation capacity), strategic factors (successor motivation, successor competence and family support) and successor incremental program. Women have a long-term orientation toward the sustainability of their family businesses and can overcome various conflicts. The stereotypical view of women's leadership in family businesses has experienced a shift in which capability and competence are the main factors in recognizing women's leadership.Originality/valueThis study contributes to understanding women's roles in the resilience of family businesses under extreme stress during the pandemic. This study proposes a framework for family business resilience. In addition, this study adds new insights into the specific context of managing family business systems during the COVID-19 pandemic based on the resource-based view (RBV) and strategic management approach.

The impact of divorce on the family business system in SMEs -- patterns of coping strategies, commitment and ownership regulations

In this paper, we outline how the divorce of the main owner-manager of a family-owned SME impacts the family business system. Divorce not only represents a pronounced family failure, but it can also be a highly stressful condition for the family members involved. To date, the impact of divorce on family businesses remains understudied, despite rates of divorce as high as 50% in some countries. Drawing on almost a decade of experience with engaged scholarship at the interface between divorce and family businesses, we selected four typical case studies to illustrate different coping strategies and show how divorce can change the strategic outlook of the family business system in SMEs by altering the commitment of the owner family to maintain the business in the family as well as ensuring the business continuation per se. Moreover, we exemplify how legal ownership regulations can shape family businesses' strategic scope after divorce by impacting the financial situation. We integrate these findings into a model of family business system adaptation.

The impact of divorce on the family business system in SMEs - patterns of coping strategies, commitment and ownership regulations

The impact of divorce on the family business system in SMEs - patterns of coping strategies, commitment and ownership regulations

The business family 3.0: Dynastic business families as families, organizations and networks—Outline of a theory extension

AbstractThis paper's point of departure is that business families are permanently confronted with a dual function: They engage in typical family relations yet also have formal decision‐making processes for business and family strategy. However, large business families—which may consist of several hundred shareholders who own one or more family businesses—are confronted with an additional challenge. Alongside being simultaneously a family and an organization, they also have to establish and maintain notions of membership and modes of communication between distantly related shareholders. This we have called family network or family 3.0. The challenges involved in initiating, shaping and maintaining such networks require new strategic reconsideration in the family itself and an extension of the existing theoretical observations regarding family businesses, thereby establishing the basis for a better understanding of large‐scale business families. For this, we try to combine family business research, organization studies and systems theory.

The entry of a second generation at SK Enterprises: challenges and future prospects

Theoretical basis The case discussion begins with an understanding of Davis’s three-circle model. It then leads toward the key resources and challenges, by system and development stage as given by Gersick et al. (1997). After understanding the family business system, the case delves into making the students understand the circumplex model of the marital and family system. This matrix talks about the flexibility in the business structure along with cohesion in the family unit. The case then gets into the discussion about succession and the new generation joining the family business and the conflicts that may arise due to the same. It might be imperative to bring out the different forms of conflict that may arise in the family and business system. Researchers have identified three forms of conflict – task, process and relationship (Mckee, Madden, Kellermans and Eddleston, 2014). As passing the baton would take place next for this business in the case, the current generation needs to look at the future growth strategy for the business. Here, the discussion refers to the exploitation and exploration matrix given by Bergfeld and Weber (2011). Research methodology This is a primary data case. The data has been collected from SK Enterprises. Interviews were conducted to arrive at the issues and challenges discussed in the case. Case overview/synopsis This case talks about the dilemma of a first-generation entrepreneur. Jatinder Agarwal was the owner of SK Enterprises, a light-engineering firm manufacturing bright bars, engine parts and ceiling fan shafts. He had set up the business in 1984. His brother, Ramesh was helping him in the business. The business had prospered and grown from a single product manufacturing workshop in 1984 to two factories manufacturing multiple light engineering products. In 2015, the business was doing well and both Jatinder and Ramesh were excited to involve their respective sons, Pranav and Sanidh in the business after completion of their education. The case is about the challenges faced by Jatinder and Ramesh with the entry of a new generation. Jatinder and Ramesh were working in the family business with an implied structure where the business was a sole proprietorship in the name of Jatinder but the decisions were taken by both the brothers collectively. With the entry of the new generation, Jatinder had to decide how to re-organize the business and avoid conflicts in the family. He also had to take a decision regarding the future course of strategy, which would help the business grow further. Complexity academic level This case is about the dilemmas faced by a first-generation entrepreneur. The case can be taught in an “entrepreneurship” course, in a post-graduate MBA program. This case can also be taught in a family business program as part of the course on “Understanding Family Business – Managing Paradoxes” or “Building Lasting Family Business – Synergy in Vision, Values and Strategy.” This case can also be taught as part of a “business strategy” or “human resource management” in MBA or executive MBA program in the first year.

Values, Spirituality and Religion: Family Business and the Roots of Sustainable Ethical Behavior

The inclusion of morally binding values such as religious—or in a broader sense, spiritual—values fundamentally alter organizational decision-making and ethical behavior. Family firms, being a particularly value-driven type of organization, provide ample room for religious beliefs to affect family, business, and individual decisions. The influence that the owning family is able to exert on value formation and preservation in the family business makes religious family firms an incubator for value-driven and faith-led decision-making and behavior. They represent a particularly rich and relevant context to re-assess the relationship between ethical beliefs, decision-making processes and behaviors in business organizations at the interface between family and professional logics. This Special Issue is dedicated to deepening our understanding of the role religious values and spirituality play in the formation of organizational ethical practices in faith-led family firms and resulting organizational and family-related outcomes. In this editorial, we introduce the 10 papers included in this Special Issue, which investigate the relationship between religion or spirituality and family firm ethical behavior in various geographical, cultural and religious contexts, using a multitude of qualitative and quantitative methodologies. By focusing on the effects of religious or spiritual orientations on both the business and the family, as well as on the values, norms and goals present in the family business system, further research can gain a more nuanced understanding of the relationship between religious and spiritual believes, and sustainable ethical behavior in family firms.

Empresa familiar y la teoría de sistemas luhmanniana

El objetivo es analizar algunos aspectos de la problemática de la empresa familiar tomando como referencia la teoría de sistemas de Niklas Luhmann. La investigación es eminentemente teórica. Para llevarla a cabo, se revisaron fuentes secundarias como, artículos y libros sobre la empresa familiar y la teoría de sistemas luhmanniana. Posteriormente, apoyados en los fundamentos de esta teoría, se proponen una serie de hipótesis de trabajo que coadyuven a tener un conocimiento más puntual sobre la problemática de la empresa familiar. Partiendo de la idea que una organización es un sistema social que se constituye a través de la comunicación de decisiones, se propone que la problemática de la empresa familiar esencialmente tiene sus orígenes en la confrontación cotidiana de códigos de comunicación radicalmente opuestos. Asimismo, se presume que estas unidades empresariales debido a su limitada complejidad: escases de recursos y capacidades; enfrentan graves problemas para adaptarse a su entorno. O debido a sus propias determinaciones y operaciones internas, no tienen ningún interés en perpetuar tal adaptación.

Accounting for family and business overlaps

PurposeThis paper aims to draw on a family business perspective to explore the historic accounting records of an Italian liquorice juice business. The applicability of the three-circle model of family business systems to such an historic context is examined.Design/methodology/approachUsing archival records, the Cassa accounting book of the business is studied. Its transactions are examined to distinguish family and business items over the period from 1875 to 1920.FindingsThrough an analysis of the accounting records, the family, ownership and business systems are shown to overlap more than typically expected in a contemporary setting.Originality/valueContemporary literature suggests the three-circle model of a family business is relatively static, but it has not been applied to an historic context. This study suggests that the model can be applied in historic studies, but it is not static over time with its elements needing refinement.

Entrepreneurial exploration and exploitation processes of family businesses in the food sector

PurposeThe purpose of this paper is to contribute to the entrepreneurship theory in family firms as it focuses on the relevance of an ambidextrous entrepreneurial strategy (Helfat and Peteraf, 2009), thanks to an effective combination between exploitation and exploration activities. The study refers to the food sector, characterized by established food traditions and changing consumption patterns.Design/methodology/approachAfter reviewing the topics, the authors referred to Goel and Jones (2016) for its representativeness for the research. The authors conducted an explanatory case study in which the authors identified the framework’s three sub-systems impacting the above family business systems. The case study is relevant because Eataly, a family-owned and -managed firm, is gaining recognition while applying a strong entrepreneurial strategy and it is unique in the world for the strength of its commercial strategy and dimensions.FindingsEntrepreneurship strategies can be explained by combined organizational antecedent conditions, represented by three sub-systems: family, business and ownership. The sub-systems’ features and their interrelations play a relevant role in influencing entrepreneurial exploration and exploitation processes.Research limitations/implicationsThe study contributes to the actual entrepreneurship theory in family firms because it indicates the relevance of an ambidextrous entrepreneurial strategy, thanks to a combination of exploitation and exploration activities. In addition, it analyses the so-called antecedent conditions in organizations to achieve this favorable combination. Limitations involve the case study method and interview technique, both of which could be expanded.Practical implicationsSeveral practical implications follow for different stakeholder categories (food sector companies, investors and private/public entities) concerning the management of antecedent conditions, the consequences of entrepreneurial investment policy, and tourism and territorial development.Originality/valueThis research is novel because it combines an ambidextrous entrepreneurship approach (Goel and Jones, 2016) with the family firm’s sub-systems (Tagiuri and Davis, 1982), observing how these sub-systems are relevant to defining and managing effective entrepreneurship strategy in a family food firm. The value added is particularly relevant in the food sector, which is characterized by low research and development. In addition, it requires innovative approaches to stimulate customers’ perception of market demand, to satisfy their needs and to sustain family firms in a highly competitive environment.

Contrasting ideologies between generations in Sree Subramania Ayurvedic Nursing Home – a 400 year old family owned organization

Subject area The subject areas are family-owned business, entrepreneurship and strategic management. Study level/applicability The target audiences for the case study are BBA and MBA students and management trainees who are interested in learning about family-owned business and the problems faced by them when generations change. This case can be used to teach concepts in family-owned business and strategic management courses in the context of emerging markets. The case also introduces the problems faced by a traditionally operating organization which has to change to survive in the market. The case can be used to teach senior management teams participating in executive education programs on how problems arise in family-owned business. To successfully work with this case study, students need to have the basic theoretical understanding of family-owned business. Case overview Sree Subramania Ayurvedic Nursing home (SSANH), one of the most reputed Ayurvedic treatment centers in Kozhikode, Kerala in India, was converted into its present form in 1974 from Thekkayil Vaidyasala by Thekkayil Rajaratnam Vydiar. The latest addition to this family run nursing home is Dr Sananad Ratnam, who in continuity of his family tradition studied Ayurveda. Dr Sanand wanted to rethink the positioning of the 400-year-old family business system with an objective to increase the number of people served by SSANH. He is armed with ambitious plans to expand SSANH and increase the volume of patients served. Dr Sanand’s father, the second partner of SSANH, was not quite supportive of this idea. His father felt that the increase in scale without compromise in quality was impossible in Ayurveda. Dr Sanand felt handicapped with problems such as lack of marketing strategies, lack of standard managerial procedures, lack of innovation in processes and, more importantly, conflicting ideologies between father and son in the family-owned business. To address these problems, Dr Sanand has recently hired the services of a consulting firm. This case highlights how SSANH, in spite of being in an advantageous position, is unable to exploit its full potential. Further explaining the different ways in which different generations perceive business, this case invites the attention to the dilemma: Should the business proceed with its expansion plan? If it decides to expand, how it should convince the previous generation of the family that the expansion plan accommodates their concerns. Expected learning outcomes After completion of this case, students would be able to: gain a perspective on the problems faced by a family-owned business which has successfully survived for decades; understand how a family-owned business functions differently from other business models; evaluate different ways in which the organization can look to solve the dilemma by considering the different stakeholders in question; and apply the result of the literature on family-owned businesses to understand the dynamics of business of this specific setting, i.e. one that has a rich heritage, is in an emerging economy and is a family-owned business. 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. Subject code CSS 3: Entrepreneurship.

A family CEO running the family business: which competencies really matter?

This study aims to increase our understanding of the competencies that are and should be used by family CEOs to achieve success for both the family and business. This quantitative study is based on a survey among family CEOs in Belgian family firms. The results show that the use by the family CEO of family business system competencies significantly increases the financial performance of the company as well as the performance of the family. Notwithstanding this result, it is striking that many family CEOs give little priority to using these family business system competencies compared with other competencies in managing the family business.

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.

Examining the Impact of Inherited Succession Identity on Family Firm Performance

The vast majority of research on family firm performance following intergenerational succession draws on either agency or stewardship theory, resulting in conflicting findings and conclusions. In this study, we depart from the mainstream by focusing on how inherited successor identity and its combined influence with successors’ broader socioeconomic context exert impact on intergenerational post‐succession performance. Drawing on social embeddedness perspective, we hypothesize that a non‐first‐son‐based succession identity disproportionately better positions successors to take advantage of the informational exchange relationships and entrepreneurial opportunities, particularly when succession identity interacts with independent outside board members, as well as large blocks of outside shareholders, while simultaneously avoiding the pressures and constraints associated with “family tradition” aspects of the family business system. Data collected from a sample of Korean family firms showed support for this moderation hypothesis. These results suggest the need for more theoretically grounded research on the inherited identity of successors to help draw a more realistic and balanced picture of social dynamics in family firm performance.

The Role of Perfromance Measurement Systems within Family Businesses: a Proposed Balanced Scorecard Model

There was found to be a significant gap between theory on family business and performance measurement systems (PMSs): the theory underlines the importance of PMSs for family businesses, but little research on how implement these systems is available. In this study we propose the adoption of PMSs tools, specifically Balanced Scorecard (BSC), for family businesses; the design of the model depends on the typical issues of family businesses, more specifically social capital and trust, based on effective governance. Social capital represents a distinctive characteristic of family business. Considering that system trust constitutes the basis of social capital, we outline the role PMSs can play in sustaining system trust; PMSs are crucial to the alignment between the management and strategic vision of the organization.The BSC proposed represents a PMSstool that makes governance effective, because it creates the basis for alignment between management and strategic vision of the organization (both from family and business point of view), consistently with family members expectations. The study is organized in different sections. Firstly, we analyse the characteristic of family businesses that must be considered to design BSC: literature review includes the sources of sustainable competitive advantage, focusing the attention on the interaction between family and business, underlining the central role of social capital; then the concept of trust is investigated as it provides the basis of social capital. Secondly, we discuss how PMSs can be adopted to make governance effective. Then we consider the opportunity to adopt BSC as PMSs tool. On the basis of literature review, some propositions are presented to link family business, social capital, trust, PMSs and BSC. Finally, we propose a BSC model for family businesses: we also discuss the reasons why we have chosen BSC framework and the conditions under we have designed the model. Implications are drawn as conclusions; the paper ends with some limitations of the study and opportunities for further researches.