Survival Of Family Firms Research Articles

Crossroads of family business research and firm demography—A critical assessment of family business survival rates

Do family firms rise and decline in three generations? Not only since Thomas Mann's “The Buddenbrooks” has the survival rate of family firms intrigued family business scholars, practitioners and consultants. In this article, we trace the family firm survival rate to its roots and discuss its empirical basis and univocal reading. We then ask how the mortality of family businesses could be measured, and which contextual factors need to be taken into account. To this end we explore the literature on firm demography, a field which is particularly concerned with age and mortality, and identify crossroads with family business studies. We conclude by suggesting a re-conceptualization of survival rates within a larger firm demographic research framework.

Must Love Kill the Family Firm?

Family firms depend on a succession of capable heirs to stay afloat. If talent and IQ are inherited, this problem is mitigated. If, however, progeny talent and IQ display mean reversion (or worse), family firms are eventually doomed. This is the essence of the critique of family firms in Burkart, Panunzi and Shleifer (2003). Since family firms persist, solutions to this succession problem must exist. We submit that marriage can transfuse outside talent and reinvigorate family firms. This implies that changes to the institution of marriage - notably, a decline in arranged marriages in favor of marriages for love - bode ill for the survival of family firms. Consistent with this, the predominance of family firms correlates strongly across countries with plausible proxies for arranged marriage norms. Interestingly, family firm dominance interacted with arranged marriage norms also correlates with lower GDP per capita, suggesting that cultural inertia may also impede convergence to more efficient economic organization.

From a family‐owned to a family‐controlled business

PurposeThe purpose of this paper is to provide a meaningful, integrated, and re‐interpreted framework of Chandler's ideas regarding corporation's growth, offering an understandable conceptualization of how these insights are applicable to explain family firm's transitional stages – even when, in 1977, Chandler was not aware of it.Design/methodology/approachGrounding ideas on Chandler's insights regarding corporate firm's growth, and drawing on Gersick et al. family ownership evolutionary model, this paper develops an integrated framework of family‐controlled corporation's growth which allows family business researchers to reconcile with Chandler's perspectives, recognizing that his ideas contributed a lot to the family business literature.FindingsChandler's ideas regarding family firm's management are based on a narrow definition (and perspective) of family firm ownership. When allowing not only family‐owned firms, but also family‐controlled ones in his capitalism classification, his developmental stages make perfect sense when applied to family enterprises.Originality/valueThis paper intends to reinterpret Chandler's views on family firms, stating that the processes described for corporations are also applicable for family enterprises – when their definition becomes broader (including not only family‐owned, but also family‐controlled firms). The latter, bridges the gap between Chandler's envisioned historical evolution of corporations, and the development, professionalization and survival of family firms.

The Survival of Family Firms: The Importance of Control and Family Ties

The aim of this article is to analyze the survival patterns of a group of family firms which have already spent at least 25 years in the market. To this end, we use the Kaplan–Meier product limit estimator supplemented with qualitative information gathered by direct observation and discussions with entrepreneurs. The main findings are that small family firms which have reached their 30th year in the market face a very high risk of sudden exit, increasing with firm age. Further control carried out by means of interviews with entrepreneurs identifies problems connected with succession as one of the main causes of the decision to close down.

Challenges Facing Family Companies in the Gulf Region

Introduction In the 21st century, family businesses in all areas of the world face significant challenges and plentiful opportunities. The growth and survival of family firms depends on their ability to address these challenges, capitalize on their strengths, and take advantage of the opportunities facing them. Nowhere is this dictum truer than in the Gulf Region, where family companies are likely to experience dramatic changes to their environment in the next decade. The family with its extended kinship network is probably the central element of the Gulf Region socioeconomic system. The family household unit in the Gulf, the extended family, and the family’s close allies are the chief nurturers and arbiters of individuals’ values, attitudes, and beliefs. A person’s primary social and economic support comes from his or her nuclear and extended families. Social and business life revolves around the family. There is a strong cultural preference that business opportunities should be pursued, if possible, first within the family, and then with other ally families. More than in any other area of the world, in the Gulf, business is viewed as a way to enhance a family’s social standing rather than as an impersonal, wealth-generating, market-driven activity. Of course, many factors interrelate with the family element to create the distinctive features of the Gulf socioeconomic system. The patriarchal system of government; comfort with traditional, seniority-based leadership; social and economic protectionism; the importance of the oil industry; welfare-state economics; fast-paced ecoI N V I T E D C O M M E N T A R Y

Fortune and Failure: The Survival of Family Firms in Eighteenth-Century India

For those indigenous family firms locating their businesses in the new colonial settlement of Bombay there was no assurance of future prosperity. Although the potential for successful trading ventures was such that many families acquired fortunes during the eighteenth century, nevertheless the conditions of trade could be uncertain as well as opportune. Their strategies for survival incorporated the traditional interaction of familial and cultural networks to ensure continuity of the firm and to consolidate business assets. Additionally, family firms adapted to European systems, using the civil courts to claim inheritance rights, prevent the division of family estates (essential in maintaining status within the trading community), guard against insolvency and reclaim debts. In this way, indigenous family firms demonstrated an ability to adapt and survive in a changing, but often hazardous, commercial environment.