Family-owned Enterprises Research Articles

Challenges of Family-Owned Business in India: A Survey Based Analysis of Family Business Owners

The foundation of the Indian economy is family-owned companies, which contribute significantly to the GDP of the nation. These companies do, however, confront several difficulties that can prevent them from expanding and remaining viable. The most important difficulty is succession planning. Families in India generally run their enterprises from generation to generation. Finding the ideal successor, however, can be challenging because it calls for juggling family relationships and commercial savvy. Professionalism is an additional difficulty. Changing from a conventional, hierarchical management structure to a more professional, merit-based strategy is a challenge for many family-owned firms in India.As a result, there can be inefficiencies, a lack of creativity, and challenges in attracting and keeping talent. Another issue faced by family-owned enterprises in India is access to funding. Most of these enterprises rely on internal capital or bank loans, which might be scarce and limit expansion possibilities. Overall, family-owned firms in India have difficulties that call for meticulous preparation, strategic thought, and a readiness to adjust to shifting market conditions over the long term to remain competitive and viable.

Difficulties in Building Relationships with External Stakeholders: A Family-Firm Perspective

Currently, there is a growing number of businesses which organize their operations in the form of projects. One of the key success factors in the area of project management is building successful relationships with project stakeholders. Using stakeholder theory perspective and looking through the lens of family involvement, the study addresses two research questions: 1. how do family firms perceive the difficulty in building relationships with external stakeholders compared to other project management difficulties; 2. does organizing work in the form of projects redefine the significance of family involvement in the difficulties of building relationships with external stakeholders. To answer these questions, 154 Polish family-owned enterprises, considered as representatives of Eastern European emerging economies, were surveyed. The results indicate that family involvement strongly influences the difficulties in building relationships with external stakeholders, but only in those companies which at the time of the survey were not managing projects. In the firms employing project management practices, only the factor related to increasing the number of employees had a facilitating effect on the studied phenomenon. On the contrary, in the case of family firms not managing projects, the growth in the number of employees increased the difficulty in building relationships with external stakeholders. The findings add to the research on the role of family involvement in building relationships with a firm’s external stakeholders.

In the uncertain world of Qontrac International: navigating through family, growth and succession management challenges

Learning outcomes Upon completion of this case study analysis, the course audience is expected to achieve four learning outcomes. In particular, students should be able to conduct a comprehensive organizational diagnosis to uncover the peculiarities of managing a family business; analyze the specific challenges faced by family-owned enterprises in the context of emerging markets; evaluate the succession management practices in family organizations and design a profile of a successful successor; assess the effectiveness of managerial decision-making and provide recommendations for securing the sustainability of a family firm. Case overview/synopsis This case study unveils the tumultuous story of Vishwanath Shetty, an ambitious entrepreneur who transformed his small venture into a profitable family business with operations in Middle East, Asia and Africa. Since the early establishment of Qontrac International in 1989, he relied on the ownership and management participation of several members of his and his wife’s families. Over the years, Vishwanath was successful in pursuing a strategy of continuous growth and geographic diversification by taking advantage of the business opportunities in several regions and opening up branches in Oman, the United Arab Emirates (UAE), Ghana and India. Yet, almost three decades after its launch, the company was confronted with a number of family, growth and succession management challenges that endangered its survival in the long run. The Shetty family experienced a serious rift due to financial reasons, the performance of the two branches managed by siblings declined, and the old firm structure and management style did not fit well with the newly enlarged and geographically dispersed Qontrac International. To deal with these organizational issues, Vishwanath was faced with an additional dilemma of securing the support of a suitable intra-family candidate who could join the family business and become his successor. By describing the strategic events and family dynamics that shaped the evolution of Qontrac International over time, the case provides an opportunity to assess the effectiveness of managerial decision-making in the context of family firms and provide viable recommendations for ensuring firm survival and longevity. Complexity academic level Upper-level undergraduate audience Graduate audience (in Master of Global Entrepreneurial Management program). 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 Strategy.

Corporate social responsibility practices developed by Mexican family and non-family businesses

PurposeThe purpose of this paper is to identify the CSR practices developed by Mexican family and non-family MSMEs. The study also aims to compare the CSR practices carried out by family and non-family businesses in a country with an emergent economy.Design/methodology/approachThe paper opted for an exploratory study using a sample of 384 businesses was selected in the southern state of Quintana Roo, Mexico, distributed in 245 family and 139 non-family businesses and a questionnaire was applied directly to the managers/owners.FindingsThe results show that family MSMEs develop CSR practices to a higher extent than non-family ones, mainly on environment and societal dimensions. In addition, CSR practices in family-owned enterprises develop to a higher extent when the manager/owner has more years of experience in the business, has a higher university education and the size of the business is larger.Research limitations/implicationsThe study was developed exclusively with a MSMEs sample with a scope only on the southern part of Quintana Roo, Mexico; the shortage of business databases and the stratification of businesses based exclusively on the number of employees. This work presents information that contributes to the state of the art, broadening the existing literature related to CSR in businesses of a country with an emergent economy and an environment where the tourism and commercial sectors predominate.Practical implicationsThis paper provides information to government institutions for the establishment of public policies targeted for an increase of CSR activities by businesses in the area. Manager and/or owners can understand the importance of implementing CSR activities within the business as a competitive strategy. It is also important for universities, professors/researchers and for all interested parties.Originality/valueThis paper provides theoretical and empirical evidence about CSR practices carried out among family and non-family MSMEs in an emergent economy.

Scott Family Enterprises: Building the Path to Effective Governance

As founders of First Interstate BancSystem, which held $8.6 billion in assets and had recently become a public company, and Padlock Ranch, which had over 11,000 head of cattle, the Scott family had to think carefully about business and family governance. Now entering its fifth generation, the family had over 80 shareholders across the US. In early 2016, the nine-member Scott Family Council (FC) and other family and business leaders considered the effectiveness of the Family Governance Leadership Development Initiative launched two years earlier. The initiative's aim was to ensure a pipeline of capable family leaders for the business boards, two foundation boards, and FC. Seven family members had self-nominated for governance roles in mid-2015. As part of the development initiative, each was undergoing a leadership development process that included rigorous assessment and creation of a comprehensive development plan. As the nominees made their way through the process and other family members considered nominating themselves for future development, questions remained around several interrelated areas, including how to foster family engagement with governance roles while guarding against damaging competition among members; how to manage possible conflicts of interest around dual employee and governance roles; and how to extend the development process to governance for the foundations and FC. The FC considered how best to answer these and other questions, and whether the answers indicated the need to modify the fledgling initiative. This case illustrates the challenges multigenerational family-owned enterprises face in developing governance leaders within the family. It serves as a good example of governance for a large group of cousins within a multienterprise portfolio. Students can learn and apply insights from this valuable illustration of family values, vision, and mission statement.

Innovation Adoption in Mexican Small Family Firms

Innovation is a topic that has been widely analyzed and discussed in the literature of business and management sciences and there a far and wide consensus among scholars, researchers and professionals that innovation activities should be considered not only as a business strategy but also as a daily activity in enterprises, especially in small and medium-sized ones. However, a high percentage of theoretical and empirical published investigations have focused in the innovation activities of big enterprises while only a small percentage has analyzed this construct in small and medium-sized enterprises. Only a few of them have focused in small, family-owned enterprises even when this type of business is the most representative of the economy and society in country around the world. Therefore, the main goal of this empirical research is the analysis of adopting innovation activities in small, family-owned businesses in an emerging country, as it is the case of Mexico. The results obtained show that there is a clear adoption of innovation in products, processes and management systems from small family businesses.

Engagement of family members, corporate governance and social responsibility in family-owned enterprises

PurposeWith the increasing awareness and recognition of the importance of corporate governance (CG), its practices and mechanisms along with their effect on performance and general organization’s behavior have become of interest for many scholars. The purpose of this paper is to examine the relationship between CG, with a focus on the board of directors (BOD) and the audit committee, and the level of corporate social responsibility (CSR) practices toward health, refugees, community, and environment.Design/methodology/approachData were collected through a questionnaire distributed to 203 employees working at family-owned enterprises (FOE) in Lebanon. SmartPLS 3.0, statistical software for structural equation modeling, was used to analyze data.FindingsThe results indicate that the audit committee component of CG has a significant positive impact on CSR dimension practices toward health, refugees, and community and environment. Furthermore, family members’ engagement in the board of directors and decision making plays a moderating role on the relationship between the audit committee and CSR practices toward health, community, and environment, as well as the relationship between the BOD and CSR toward community and environment.Originality/valueThe role of family members’ engagement in the effectiveness of CG and CSR practices FOE is studied.

Succession and corporate performance: the appropriate successor in family firms

Among the founders of family firms, succession is the greatest challenge to long-term success. According to The Family Firm Institute (n.d.), only about 30% of family businesses survive into the second generation, 12% are still viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond. In contrast to Western countries, the sustainable development of family-owned enterprises within Chinese society must rely on the operation of enterprises. Succession, being inevitable, can reduce the value of a company. This study sought to identify the appropriate succession plan to maintain business value and family’s wealth. The main purpose of this study is to discuss the relationship between a family’s succession, the successor, and firm performance. The sample is comprised of listed firms in Taiwan with necessary data from the Taiwan Economic Journal Database (TEJ). The period extends from 1996 till 2016. Securities, financial firms, and other elements of incomplete information are excluded from the sample. The research sample including 1,286 firms and 13,849 firm-year data, 2,918 of which indicate succession issues. This study employed regression model and investigated the relationships between family succession, the successor, and corporate performance. The main findings indicate that succession negatively influences corporate performance. However, an internal successor is better than an external one, and children successors are better than other relatives.

The satisfaction of non-family employees with High Involvement HR practices: evidence from family SMEs

ABSTRACTMost family businesses employ more non-family employees than family employees, making them a crucial resource for family small-to-medium enterprises (SMEs). Thus, family SMEs must pay particular attention to developmental needs of such employees. However, there is limited empirical knowledge concerning how Family SMEs can manage and develop their non-family employees. Drawing on organizational justice theory, this study set out to investigate how and why non-family employees are satisfied with the High Involvement HR practices (HIHRPs) adopted by family SMEs. Empirical evidence was drawn from the experiences of 16 non-family employees from six SME family-owned enterprises. Findings suggest that a balance between formal and informal HIHRPs is need among family SMEs for non-family employees to be satisfied with them. Moreover, satisfaction with both formal and informal HIHRPs can encourage non-family employees’ engagement with the enterprise and the development of their skills and capabilities. Findings also suggest that the satisfaction with HIHRPs varies with respect to the organizational positioning of non-family employees. Our findings make a valuable and timely contribution to the human resource development and SME literatures in general.

A Survey of Internal Governance in Family Business

Family businesses play an important role in the global economic environment. In China, more than 90% of them use family management or family organization. This shows that family-owned companies are playing a decisive role in China’s economy. However, with regard to the current development situation, the development status of family-owned enterprises is not optimistic, and the average life expectancy is only 5 years. Facts have proved that internal governance is the key point for the steady development of family-owned enterprises. Internal governance supervision, as an important component of the five elements of internal control, is related to whether the internal management of a family-owned company can be implemented steadily and effectively. Therefore, a sound internal governance supervision system is the key point for whether the family business can survive in the modern economic competitive environment. This review points out the disadvantages of the family business and points out the new direction for the follow-up family business research that applies to the internal governance supervision model of the family business.

The international entry mode of family-owned enterprises: a socio-emotional wealth perspective

This paper aims to provide a preliminary step in the attempt to consolidate international business and family business research outcomes. The idea is that the two literature streams keep developing separately calling for the development of a consolidation process. Through the adoption of the socio-emotional wealth (SEW) perspective, the paper proposes a conceptual re-interpretation of the results achieved by the main international business theories underlining the key and most influential factors potentially affecting the international entry mode process of family-owned enterprises. It is suggested that family firms tend to perceive a higher risk than non-family firms because of their intrinsic characteristics and connected principles behind decision processes. Specifically, family-owned firms pursue the protection of the SEW and hence, their choices should always be in line with such principle. As a consequence, their ideal entry mode should always guarantee the full protection of the SEW, a specificity that only Greenfield investments can pledge.

The international entry mode of family-owned enterprises: a socio-emotional wealth perspective

The international entry mode of family-owned enterprises: a socio-emotional wealth perspective

The Archaeology of the Wood Pottery: Confounding the “Industrial” Transformation of Southern Stoneware Production after Edgefield

The post–Civil War decades of the 19th and early 20th centuries are the period most commonly associated with the origins of industrialization in the southeastern United States. Recently, however, researchers working in Edgefield, South Carolina, have presented compelling archaeological evidence for the industrial production of stoneware, much of it made by enslaved laborers, as early as 1810. These findings require reconsideration of the widely shared historical narrative that portrays 19th-century stoneware potteries in Edgefield and across the region as small-scale family-owned craft enterprises, where industrialization did not occur until a decade or more after the Civil War as a response to competition from cheap Northern stoneware and metal and glass containers. Inspired by the new insights, this study traces stoneware production in the Edgefield area forward into the 20th century by examining the case of the Wood Pottery site in North Augusta, South Carolina. Based on archaeological and historical evidence, three significant changes to stoneware production methods are traced: (1) changes in firing technology; (2) a switch from alkaline glaze to Albany slip; and (3) morphological changes in the vessel assemblages marking the use of jigger arms and molds. Instead of a “vertical” historical trajectory that moves from a craft to an industrialized enterprise, we envision these changes as part of a “horizontal” shift in an already-industrialized enterprise, reflecting a reorganization of labor and technology aimed at coping with competition from alternative storage-vessel forms and the loss of an enslaved workforce.

Inside an African family business estate: the founder’s legacy and the successor’s dilemma

Subject area Family business. Study level/applicability Specialized undergraduate courses, Elective MBA courses. Case overview This case study uncovers the remarkable story of the relentless growth and sporadic weakening of Nurul Ain (NA) Limited, a family business conglomerate with major operations in the Eastern region of Africa. The case provides an opportunity to follow the different stages of development of this family-owned organization through a sequence of strategic events and family dynamics that led to its recurrent success, decline and rejuvenation. Despite the numerous successes of NA Limited since its establishment in the early 1990s, the ambiguous relationship between family, ownership and management systems has caused a ripple effect of strategic, structural and governance challenges that threaten the sustainability of the family business. Nowadays, the founder faces the pressing challenge of ensuring his legacy remains intact and is passed over to his chosen successor, who, in turn, is confronted with the dilemma of joining the family business or pursing an independent career outside NA Limited. Shedding light on the complexity of today’s family-run organizations, the case allows examining the effectiveness of strategic decision-making in an emerging market context by applying a variety of family business principles, theories and frameworks. Expected learning outcomes Discuss the sources of competitive advantage and the typical challenges that family firms face in the context of emerging markets. Perform a comprehensive corporate diagnosis and examine the specificities of strategic management process in family businesses. Assess the succession management practices in family-run organizations and design a profile of successful successor. Discuss the effectiveness of various corporate governance mechanisms in the context of family-owned enterprises. Evaluate the strategic choices of the top management team and offer recommendations for securing the family business longevity. 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 11: Strategy.

Supply management and family business: A review and call for research

Family-owned enterprises dominate global business, generating 70–90% of the world's gross domestic product. Existing management research has validated that family businesses often behave differently than non-family businesses, primarily by focusing on idiosyncratic non-economic goals that are not typically assessed in traditional business research. Extant supply management literature has yet to investigate the influences of family business, thus overlooking a potential significant source of variation in our research as well as limiting our managerial relevance. The objective of this paper is to introduce supply management scholars to family business, including its prominence and unique characteristics. Applying socioemotional wealth as a theoretical lens, we develop a research agenda from existing supply management and family business literature by offering propositions for future research where family business influences may permeate contemporary supply management topics including strategic supply management, sourcing strategy, supplier relationships, sustainability, risk, and e-procurement. In doing so, we provide an initial foundation for supply management scholars to both incorporate family business effects into research and launch new research streams. This is one of the first papers to our knowledge that introduces the field of family business to supply management scholars.

Ownership structures and productivity in Indonesia and Malaysia

The relationship between ownership structures and company performance has been issue of interest among academics, investors and policy-makers. So far, there are still inconclusive findings that family and state ownership giving positive or negative impact on firm performance. This study employed technical efficiency and Malmquist productivity index to measure firm performance. Period of this study will be conduct from 1992 to 2007. Result of this study revealed that Technical efficiency study in Indonesia showed that state owned enterprises (SOEs) had better performance than family owned enterprises (FOEs) since SOEs' performance increased more stably during research period. Meanwhile Malaysia-based technical efficiency study demonstrated that FOEs samples had lower efficiency level than SOEs, which performed a little enhancement. In term of productivity, Indonesian FOEs had become more productive compare with SOEs during three sub-periods. On the other hand, Malaysian FOEs and SOEs had improved from time to time within the three sub-periods.

Family business identity and corporate governance attributes: Evidence on family-owned enterprises in the UAE

Over the past decades, the empirical evidence on the intersection of family businesses and corporate governance has flourished significantly in the context of developed economies. Yet, little is known to date about the effectiveness of various governance mechanisms in family-owned enterprises operating in emerging markets. Due to the evolving nature of corporate governance frameworks in these markets, family business practitioners need to enhance their knowledge about governance arrangements that may lead to superior performance outcomes. Our aim is to contribute to the literature and assist practitioners by exploring the relationship between family business identity and corporate governance attributes in family-run companies located in the UAE. Data related to organisational background, familial identification and governance devices were gathered from secondary sources for a sample of 195 UAE-based family firms. Based on quantitative data analyses, we uncover the prevailing characteristics of family businesses in the UAE and identify how the familial identification of its members is associated with structural attributes of board of directors and top management team (e.g., size, family relatedness, gender and cultural diversity). The concluding section discusses the contributions of our study and delineates priorities for future research in the field.

A Comparison of Corporate Governance Practices in State-owned Enterprises and Their Private Sector Peers in India

In India, Corporate governance norms were prepared with the assumption that firms were controlled by private players. However, in India, there are many firms that are majority-owned by the State or the government. Literature on corporate governance has highlighted the differences in the governance practices of government- and private-owned enterprises. But the parameters on the basis of which such differences emerge have not been studied. This article attempts to fill in the research gaps by analyzing the corporate governance practices of State-owned enterprises, known as public sector undertakings (PSUs), and family-owned enterprises in the Indian context by using the case study method. Five PSUs along with five family-owned private sector enterprises were selected for the study and their board practices were compared. The findings indicate significant differences in the board structure and the director’s compensation structure of PSUs and family-owned firms. These findings suggest that policy-makers need to consider the State ownership issue separately while making corporate governance norms.

The Underlying Process Through Which Knowledge Transfer and Learning are Influenced in Family Firms

Drawing on the similarity-attraction paradigm, the present study examined the mediating roles of absorptive capacity (cognitive capability component), liking (affective component), and relational identification (relational component) in accounting for the effects of perceived similarity on knowledge transfer and employee learning. Data used to test the proposed theoretical framework were collected over two separate time intervals and consisted of a sample of 216 supervisor-subordinate dyads from family-owned enterprises. The results demonstrated that perceived similarity positively influenced knowledge transfer and employee learning indirectly through its impact on affect and supervisor identification, respectively. Implications to theory, practice, and future research are discussed.

Agricultural transition and land-use change: considerations in the development of irrigated enterprises in the rangelands of northern Australia

The factors affecting the adoption of irrigation by landholders, using a case study of a government-managed irrigation water release in north-west Queensland, Australia, where current land use is dominated by extensive beef-cattle production, were investigated. The study was based on multiple data sources – interview data from family-owned agricultural enterprises, historical and contemporary documents and contemporary media analysis, workshop participation and field work. The study revealed multiple drivers and constraints, which affect the rate, timing and location of adoption of irrigation by family-owned grazing enterprises. The key finding was that there are individual, group and regional interests in irrigation development but that considerable social and individual learning is required for adoption of irrigation to occur. It was found that there is a prominent role for knowledge brokers — as individuals, irrigator groups, and trusted brokers of science information — in facilitating learning and change. An insight, relevant to governments that support irrigation developments is that interventions that aid and support learning can play a role in facilitating the land-use transition for individual grazing properties to irrigated agriculture.