Differences between family and non-family SMEs: A comparative study of Australia and Belgium

2008 ◽  
Vol 14 (1) ◽  
pp. 40-58 ◽  
Author(s):  
Max Smith

AbstractThis study attempts to further the development of family business theory by providing a more detailed understanding of the differences between family and non-family firms' profitability, growth, exporting and networking behaviour. Utilising data from 2190 Australian SMEs, the study compares the Australian experience of differences between family and non-family firms with those found among Belgium firms. The Australian results are consistent with the growth and some of the networking behaviour found among Belgium firms, but not with their profitability and exporting behaviour. The study's findings support the contentions that the differences between family and non-family firms may be less than many earlier studies have indicated and that industry differences and cross-national differences in corporate governance environments may lead to variances in these differences. It also demonstrates that the underlying theoretical rationale for a number of predicted differences between family and non-family firms appears flawed. These findings indicate that new empirical studies that control for context are urgently needed to ensure the scholarly literature on family businesses is not being built on false assumptions. They also indicate that studies designed to explain differences in the family/non-family business relationship between industries and nations may lead to advances in family business theory.

2008 ◽  
Vol 14 (1) ◽  
pp. 40-58 ◽  
Author(s):  
Max Smith

AbstractThis study attempts to further the development of family business theory by providing a more detailed understanding of the differences between family and non-family firms' profitability, growth, exporting and networking behaviour. Utilising data from 2190 Australian SMEs, the study compares the Australian experience of differences between family and non-family firms with those found among Belgium firms. The Australian results are consistent with the growth and some of the networking behaviour found among Belgium firms, but not with their profitability and exporting behaviour. The study's findings support the contentions that the differences between family and non-family firms may be less than many earlier studies have indicated and that industry differences and cross-national differences in corporate governance environments may lead to variances in these differences. It also demonstrates that the underlying theoretical rationale for a number of predicted differences between family and non-family firms appears flawed. These findings indicate that new empirical studies that control for context are urgently needed to ensure the scholarly literature on family businesses is not being built on false assumptions. They also indicate that studies designed to explain differences in the family/non-family business relationship between industries and nations may lead to advances in family business theory.


2012 ◽  
Vol 13 (1) ◽  
Author(s):  
Paloma Fernández Pérez ◽  
Eleanor Hamilton

This  study  contributes  to  developing  our understanding of gender and family business. It draws on studies from the business history and management literatures and provides an interdisciplinary synthesis. It illuminates the role of women and their participation in the entrepreneurial practices of the family and the business. Leadership is introduced as a concept to examine the roles of women and men in family firms, arguing that concepts used  by  historians or economists like ownership and management have served to make women ‘invisible’, at least in western developed economies in which owners and managers have been historically due to legal rules  of  the  game  men,  and  minoritarily women. Finally, it explores gender relations and  the  notion  that  leadership  in  family business  may  take  complex  forms  crafte within constantly changing relationships.


2019 ◽  
Vol 10 (2) ◽  
pp. 116-127
Author(s):  
Ondřej Machek ◽  
Jiří Hnilica

Purpose The purpose of this paper is to examine how the satisfaction with economic and non-economic goals achievement is related to the overall satisfaction with the business of the CEO-owner, and whether family involvement moderates this relationship. Design/methodology/approach Based on a survey among 323 CEO-owners of family and non-family businesses operating in the Czech Republic, the authors employ the OLS hierarchical regression analysis and test the moderating effects of family involvement on the relationship between the satisfaction with different goals attainment and the overall satisfaction with the business. Findings The main finding is that family and non-family CEO-owner’s satisfaction does not differ significantly when economic goals (profit maximisation, sales growth, increase in market share or firm value) and firm-oriented non-economic goals (satisfaction of employees, corporate reputation) are being achieved; both classes of goals increase the overall satisfaction with the firm and the family involvement does not strengthen this relationship. However, when it comes to external non-economic goals related to the society or environment, there is a significant and positive moderating effect of family involvement. Originality/value The study contributes to the family business literature. First, to date, most of the studies focused on family business goals have been qualitative, thus not allowing for generalisation of findings. Second, there is a lack of evidence on the ways in which family firms integrate their financial and non-financial goals. Third, the authors contribute to the literature on the determinants of personal satisfaction with the business for CEOs, which has been the focus on a relatively scarce number of studies.


2018 ◽  
Vol 8 (1) ◽  
pp. 2-21 ◽  
Author(s):  
Claudia Binz Astrachan ◽  
Isabel C. Botero

Purpose Evidence suggests that some stakeholders perceive family firms as more trustworthy, responsible, and customer-oriented than public companies. To capitalize on these positive perceptions, owning families can use references about their family nature in their organizational branding and marketing efforts. However, not all family firms actively communicate their family business brand. With this in mind, the purpose of this paper is to investigate why family firms decide to promote their “family business brand” in their communication efforts toward different stakeholders. Design/methodology/approach Data for this study were collected using an in-depth interview approach from 11 Swiss and German family business owners. Interviews were transcribed and coded to identify different themes that help explain the different motives and constraints that drive their decisions to promote the “family business brand.” Findings The analyses indicate that promoting family associations in branding efforts is driven by both identity-related (i.e. pride, identification) and outcome-related (e.g. reputational advantages) motives. However, there are several constraints that may negatively affect the promotion of the family business brand in corporate communication efforts. Originality/value This paper is one of the first to explore why family businesses decide to communicate their “family business brand.” Building on the findings, the authors present a conceptual framework identifying the antecedents and possible consequences of promoting a family firm brand. This framework can help researchers and practitioners better understand how the family business nature of the brand can influence decisions about the company’s branding and marketing practices.


2017 ◽  
Vol 27 (2) ◽  
pp. 231-247 ◽  
Author(s):  
Vitor Braga ◽  
Aldina Correia ◽  
Alexandra Braga ◽  
Sofia Lemos

Purpose The success of the family firms cannot be detached from the current paradigm where, within the present economic conditions, economic agents struggle to exploit the existing opportunities and need to take into account the risks associated to the international arena and the innovation processes. The internationalisation and innovation processes may trigger resistance within family business due to their relatively higher difficulty to take risks and to invest in industries outside the scope of their original core business. Innovation and internationalisation processes become relevant strategies for the family firms’ continuity and success. In line with such fact, the aim of this paper is to contribute with insights regarding the processes of innovation and internationalisation within family businesses. In particular, this paper aims to assess the propensity of such firms to apply such strategies, to identify the particular business behaviour and to assess the extent to which the particulars of family firms may constraint or lead to the implementation of innovation policies, and thus its internationalisation. Design/methodology/approach The data were collected through questionnaires within family business aiming to understand the scope and characteristics of internationalisation and innovation processes within these firms. The 154 replies from such data collection were analysed using different multivariate statistic procedures, although this paper is based on factorial and correlation analysis. Findings The analysis of the results shows that there is an association between the processes of innovation and internationalisation within family business. In addition, the results also suggest a typology of firms regarding their innovation and internationalisation strategies and motivations. Research limitations/implications The results of this paper are, to some extent, limited because they did not allow comparing the findings with data from non-family business. However, the authors’ aim was not to distinguish family firms, but rather to characterise them. Practical implications This paper expects to contribute with lessons for the management of family business and to raise awareness of the constraints faced by family business. It is important to highlight that family business performance may be affected by a lower propensity to risk-taking attitudes, by the lack of non-family management and to the necessity of separating the family and the business in the business dimensions that the family limits the business growth. Originality/value Although there is a significant amount of the literature devoted to explore family business, innovation and internationalisation studies, very few draw on the relationship between internationalisation and innovation processes within family business. This paper explores such a relationship within a particular business context – the family dynamics that strongly affect management and business development.


2017 ◽  
Vol 7 (3) ◽  
pp. 1-28 ◽  
Author(s):  
Zubaida Muhumed ◽  
Virginia Bodolica ◽  
Martin Spraggon

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 [email protected] to request teaching notes. Subject code CSS 11: Strategy.


2018 ◽  
Vol 10 (1) ◽  
pp. 43-61
Author(s):  
Martin Jurek

Abstract Objective: This paper reviews the major family business research papers that address factors related to relationship and work-to-family conflicts. Methodology: The procedure this paper applies follows recommendations for literature reviews by Fink (2010) consisting of: (1) selecting a research question (2) selecting bibliographic or article databases, (3) choosing search terms, (4) applying practical screening criteria, (5) applying methodical screening criteria, (6) doing the review and (7) synthesizing the results. Findings: The article summarizes that, although family business research is progressing in terms of theory building, it continues to lack a systematic adoption of longitudinal, cross-national and multi-theoretical approaches. To date, research on conflict in family firms remains underdeveloped in the CEE. Value Added: Outlining the state of the art of theoretical and empirical studies by applying a resource-based view. Recommendations: Application of control variables, such as size of the business, business life cycles, generational status, type of industry and various cultural settings. Furthermore, the role of communication, sibling rivalry and perceived justice of family members could be investigated more thoroughly.


2020 ◽  
Vol 10 (1) ◽  
Author(s):  
Katiuska Cabrera Suarez ◽  
Elena Rivo-López ◽  
Santiago Lago-Peñas ◽  
Santiago Lago-Peñas

Nowadays, family businesses, the predominant form of business worldwide, face an increasingly changing environment boosted by megatrends such as globalization, digitalization, artificial intelligence, climate change and sustainability. Along with this, are factors that play at a firm level such as stricter rules concerning transparency and compliance or the increasing importance of Corporate Social Responsibil- ity (CSR). Therefore, new strategies and organizational changes are necessary to allow for greater adaptation to the new context. This special issue provides insights on these questions from a variety of perspectives.                                           The work of Hernández-Linares and López-Fernán- dez expands the current thinking on this process of adaptation by exploring the combined effects of three strategic orientations (entrepreneurial, learning, and market orientations) on the family firm ́s performance. The authors provide interesting contributions in terms of highlighting the importance of strategic orientations for value creation in enterprise organizations. They also provide empirical evidence that the family char- acter of the firm determines the relationship between strategic orientations and business performance, and offer some results on the effect of market orientation on firm performance in family firms versus non-family firms.                                                                                                 Those differences in strategies are further ana- lysed within the setting of the business dimension in which financial and economic decisions are made. The contribution by Terrón-Ibáñez, Gómez-Miranda and Rodríguez-Ariza, discusses the influence of that di- mension in their performance, comparing family and non-family firms. This interesting analysis of financial performance provides useful results. The study showsthat, unlike non-family firms, there is an inverted U- shaped relationship between the size of family SMEs and the value of certain economic–financial indicators, such as the return on assets, operating margin and employee productivity. This means that although the increase in the dimension of the family organizations is positively related to its performance, there are lim- its from which the value of certain economic–financial indicators can be negatively affected.                                                                                                                                                           The next paper contributes to the discussion of the family business’s role in the private health sector. Reyes-Santías, Rivo-López and Villanueva-Villar, set out to identify the historical evolution of the family business in this sector, attempting to determine the variation and its contribution to the private health sector during the 1995-2010 period. The findings of this discussion provide family firms with an almost 60% survival level in this sector. Along with this, the au- thors provide some guidelines for future research con- cerning this higher degree of survival, why family firms are leading the concentration process taking place in the sector, as well as their strategies for super-spe- cialization in the services offered especially by family businesses in healthcare.         The effect of family ownership and the character- istics of the board of directors on the implementation level of Enterprise Risk Management is an important topic. The article by Otero-González, Rodríguez-Gil, Durán-Santomil and Tamayo-Herrera certainly adds to the discussion. In particular, their research shows that family businesses are less interested in implementing ERM, except when shareholders have greater control of the company and when professional investors are present in the company. Besides, the importance of a board of directors’ characteristics of in terms of risk taking is confirmed by observing that larger boards en- courage risk managers to be hired.                                                                                                                                                           The paper by Lorenzo-Gómez looks at the barriers to change that are specific to the characteristics of family business, considering both the barriers that af- fect the perception of the need to undertake changes and the availability of resources to face those chang- es, and the barriers to implementing these changes within already consolidated organizations, where new routines are created to replace the existing ones. Thefindings suggest that the factors affecting these barri- ers include the generation at the head of the family business; the influence of interest groups, particularly in terms of the duality between the company and the family; and the participation level of professionals from outside the family.                                                                                         The final contribution by Aragon-Amonarriz and Iturrioz-Landart offers an interesting discussion on how family-responsible ownership practices enhance social responsibility in small and medium family firms. Their results reveal the positive relationships between the elements of family-responsible ownership in terms of succession management, financial resource allocation, professionalism and social responsibility, and ultimate- ly with the socially responsible behaviour of family SMEs.                                                                                                                 The challenges surrounding family business owners and the nuances around strategic and organizational decision making are together an area ripe for future research. The editors look forward to seeing future de- velopments on these topics that pay special attention to the influence of family characteristics and dynamics on the strategic and organizational change of family firms, and that draw on both quantitative and quali- tative research methodologies for the wider develop- ment of the field. Acknowledgements. The papers published in this issue were presented at the “II Workshop of Family Business: Strategic and Organizational Change” at Ourense, Galicia, Spain, June, 13-14, 2019. The conference was organized by GEN group research (http:// infogen.webs.uvigo.es/) and the Chair of Family Business of the University of Vigo, and was sponsored by the AGEF (Galician Family Business Association), Inditex Group, IEF (Spanish Family Firm Institute), and with ECOBAS group as collaborator. Thanks for their invaluable support. We are also very thankful of all other participants at the conference.   Katiuska Cabrera Suárez,  University of Las Palmas Elena Rivo-López, co-director of the Chair of Family Business, University of Vigo Santiago Lago-Peñas, co-director of the Chair of Family Business, University of Vigo    


2009 ◽  
Vol 17 (03) ◽  
pp. 257-295 ◽  
Author(s):  
DANIEL PITTINO ◽  
FRANCESCA VISINTIN

In this paper is we attempt to construct and validate a typology of innovation strategies among family SMEs applying the Miles and Snow's configurational model. We also try to extend the scope of the model testing the fit between entrepreneurial, managerial and governance characteristics and innovative posture of the firm. Research has been carried out on a representative sample of small and medium family firms of the Italian region Friuli Venezia Giulia. Results indicate that significant differences in the mentioned contextual variables exist among different strategic typologies of family firms, however some questions remain unanswered and more effort is needed to develop the configurational approach in the field of family business.


2018 ◽  
Vol 8 (3) ◽  
pp. 218-234 ◽  
Author(s):  
Atanas Nik Nikolov ◽  
Yuan Wen

PurposeThis paper brings together research on advertising, family business, and the resource-based view (RBV) of the firm to examine performance differences between publicly traded US family vs non-family firms. The purpose of this paper is to understand the heterogeneity of family vs non-family firm advertising after such firms become publicly traded.Design/methodology/approachThe authors draw on the RBV of the firm, as well as on extensive empirical literature in family business and advertising research to empirically examine the differences between family and non-family firms in terms of performance.FindingsUsing panel data from over 2,000 companies across ten years, this research demonstrates that family businesses have higher advertising intensity than competitors, and achieve higher performance returns on their advertising investments, relative to non-family competitors. The results suggest that the “familiness” of public family firms is an intangible resource that, when combined with their advertising investments, affords family businesses a relative advantage compared to non-family businesses.Research limitations/implicationsFamily involvement in publicly traded firms may contribute toward a richer resource endowment and result in creating synergistic effects between firm “familiness” and the public status of the firm. The paper contributes toward the RBV of the firm and the advertising literature. Limitations include the lack of qualitative data to ground the findings and potential moderating effects.Practical implicationsUnderstanding how family firms’ advertising spending influences their consequent performance provides new information to family firms’ owners and management, as well as investors. The authors suggest that the “familiness” of public family firms may provide a significant advantage over their non-family-owned competitors.Social implicationsThe implications for society include that the family firm as an organizational form does not need to be relegated to a second-class citizen status in the business world: indeed, combining family firms’ characteristics within a publicly traded platform may provide firm performance benefits which benefit the founding family and other stakeholders.Originality/valueThis study contributes by highlighting the important influence of family involvement on advertising investment in the public family firm, a topic which has received limited attention. Second, it also integrates public ownership in family firms with the family involvement–advertising–firm performance relationship. As such, it uncovers a new pathway through which the family effect is leveraged to increase firm performance. Third, this study also contributes to the advertising and resource building literatures by identifying advertising as an additional resource which magnifies the impact of the bundle of resources available to the public family firm. Fourth, the use of an extensive panel data set allows for a more complex empirical investigation of the inherently dynamic relationships in the data and thus provides a contribution to the empirical stream of research in family business.


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