Differences in management styles, levels of profitability, and performance across generations, and the development of the Family Business Success Model

2019 ◽  
Vol 32 (1) ◽  
pp. 32-50 ◽  
Author(s):  
Josiane Fahed Sreih ◽  
Robert N. Lussier ◽  
Matthew C. Sonfield
Keyword(s):  
Family Business ◽  
Financial Management ◽  
Emerging Market ◽  
Business Owners ◽  
Family Businesses ◽  
Business Success ◽  
Content Type ◽  
Success Model ◽  
The Family ◽  
Probability Of Success

Purpose The purpose of this paper is to, first, investigate the differences between generations in family businesses and, second, develop and verify the Family Business Success Model ability to improve the probability of business success measured by perceived profits, growth and meeting the owners’ expectations. Design/methodology/approach Data were collected through questionnaires and personal interviews. Overall, 98 usable questionnaires were collected for statistical analysis with a response rate of 82 percent. Findings One-way ANOVA hypotheses testing of the variables found four significant differences between generations. Regression analysis found the Family Business Success Model to be significant. Family business owners can improve the probability of success by utilizing a team-management decision-making approach, effectively handling conflict effectively, formulating specific succession plans, developing strategic plans, using sophisticated financial management methods, dealing effectively with the founder’s influence and if they seek to grow, they should consider going public. Practical implications This study provides family business owners, managers, educators and public policy makers with the means to help family businesses survive and grow effectively throughout generations by using the Family Business Success Model. In addition, this study can help consultants and advisors of family businesses to understand the differences between the first, second and third generation family businesses from a holistic perspective and help them implement the family business model. Originality/value This study contributes to the literature as one of the few studies in the Lebanese emerging market that examines how the first, second and third generations of family businesses differ. More importantly, it develops a Family Business Success Model that improves the probability of success.

“We are a family firm”

2018 ◽  
Vol 8 (1) ◽  
pp. 2-21 ◽  
Author(s):  
Claudia Binz Astrachan ◽  
Isabel C. Botero
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Family Firm ◽  
Business Owners ◽  
Public Companies ◽  
Content Type ◽  
Brand Building ◽  
Depth Interview ◽  
The Family ◽  
Family Associations

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.

The innovation and internationalisation processes of family businesses

2017 ◽  
Vol 27 (2) ◽  
pp. 231-247 ◽  
Author(s):  
Vitor Braga ◽  
Aldina Correia ◽  
Alexandra Braga ◽  
Sofia Lemos
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Family Businesses ◽  
Family Management ◽  
Multivariate Statistic ◽  
Content Type ◽  
Business Innovation ◽  
The Family ◽  
Internationalisation Strategies ◽  
Innovation Processes

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.

Family succession, professionalization and internationalization: a study of Brazilian family businesses

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Augusto Dalmoro Costa ◽  
Aurora Carneiro Zen ◽  
Everson dos Santos Spindler
Keyword(s):  
Family Business ◽  
Family Members ◽  
Secondary Data ◽  
Family Businesses ◽  
Three Dimensions ◽  
Content Type ◽  
The Family ◽  
Two Generations ◽  
Internationalization Strategies ◽  
The Relationship

PurposeThe purpose of this paper is to investigate the relationship between family succession, professionalization and internationalization in family businesses within the Brazilian context.Design/methodology/approachThe paper presents a multiple-case study method with three Brazilian family businesses that have at least two generations of the owning family involved in the business and an international presence of at least three years. In-depth interviews and secondary data were undertaken with family and non-family members of each case.FindingsThe authors' results show that a family business can boost its internationalization by introducing both succession planning and professionalization on international activities. As family members tend to be more risk-averse and focused on keeping the family business within the family, professionalization is a way of improving the firm's ability to expand internationally. This process tends to lead to lower performance by the firm for the first few months or the first year after the investment, but afterward, international performance tends to grow exponentially.Originality/valueOnly a few studies have been concerned on the relationship of these three dimensions. Thus, the research takes into account that professionalization and succession lead family businesses to improve their internationalization strategies.

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

2017 ◽  
Vol 7 (3) ◽  
pp. 1-28 ◽  
Author(s):  
Zubaida Muhumed ◽  
Virginia Bodolica ◽  
Martin Spraggon
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Management Practices ◽  
Emerging Market ◽  
Strategic Decision ◽  
Eastern Region ◽  
Ripple Effect ◽  
Strategic Choices ◽  
Content Type ◽  
The Family

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.

Strong governance: a result of evolutionary and revolutionary processes

2014 ◽  
Vol 4 (2) ◽  
pp. 99-109 ◽  
Author(s):  
Lorna Collins ◽  
Ken McCracken ◽  
Barbara Murray ◽  
Martin Stepek
Keyword(s):  
Family Business ◽  
Best Practice ◽  
Family Dynamics ◽  
Family Businesses ◽  
Formal Structure ◽  
Governance Mechanisms ◽  
Content Type ◽  
The Family ◽  
The Uk ◽  
The Impact

Purpose – This paper is the first in a regular series of articles in JFBM that will share “a conversation with” thought leaders who are active in the family business space. The world of family business is, like many other arenas, constantly evolving and as the authors learn more about how and why families “do business” the approaches and tools for working with them also evolve. The purpose of this paper is to stimulate further new research in areas that practically affect family businesses and to “open the door” to practical insights that will excite researchers and provide impetus for new and exciting study. The specific purpose of this paper is to explore “what is strong governance.” There has been much interest in governance lately yet there is a tendency to treat governance in a formulaic way such that, at the moment, the notion that every family business must have a family council or a formal structure in order to be considered “effective” and “successful” predominates. The authors’ panel challenges and discusses this notion drawing on the experience and knowledge as family business advisors, consultants and owners. Design/methodology/approach – The impetus for this particular conversation is a result of a brainstorming conversation that Lorna Collins and Barbara Murray held in February 2014 where they focussed on “how JFBM can encourage and stimulate researchers to engage in aspects of research that makes a difference to the family business in a practical way.” This paper reports a conversation between Barbara Murray (Barbara), Ken McCracken (Ken) and Martin Stepek (Martin), three leading lights in the UK family business advising space, all of whom have been involved in running or advising family businesses for more than three decades, held in August 2015. The conversation was held via telephone and lasted just over 60 minutes. Lorna Collins acted as moderator. Findings – Strong governance is not just about instituting a “family council” or embedding formal governance mechanisms in a family business. Evolutionary adaption by family members usually prevails such that any mechanism is changed and adapted over time to suit and fit the needs of the family business. Many successful family businesses do not have recognized “formal” governance mechanisms but, it is contended, they are still highly successful and effective. Future areas of research in governance are also suggested. Originality/value – This paper contributes to the family business discourse because the debate it reports challenges the basic assumptions upon which much consulting and advisory practice is conducted. It also challenges the notion of “best practice” and what is “new best practice” and how is it that any “best practice” is determined to be “best.” Furthermore, the panel provides insights in to the “impact of family dynamics on governance” and “the impact of family dynamics on advisors.” The paper content is original in that it provides an authentic and timely narrative between active family business practitioners who are also scholars and owners.

Does family involvement matter post IPO? Adding value through advertising in family firms

2018 ◽  
Vol 8 (3) ◽  
pp. 218-234 ◽  
Author(s):  
Atanas Nik Nikolov ◽  
Yuan Wen
Keyword(s):  
Firm Performance ◽  
Family Involvement ◽  
Family Business ◽  
Family Firms ◽  
Family Firm ◽  
Family Businesses ◽  
Publicly Traded ◽  
Content Type ◽  
The Public ◽  
The Family

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.

Family business successors' motivation and innovation capabilities: the case of Kosovo

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asdren Toska ◽  
Veland Ramadani ◽  
Léo-Paul Dana ◽  
Gadaf Rexhepi ◽  
Jusuf Zeqiri
Keyword(s):  
Family Business ◽  
Qualitative Methodology ◽  
Second Generation ◽  
Scientific Evidence ◽  
Structured Interview ◽  
Study Data ◽  
Family Businesses ◽  
Content Type ◽  
The Family ◽  
Emerging Country

PurposeThis study aims to investigate the second-generation successors’ motives to join family businesses and their ability to generate innovation within them.Design/methodology/approachA qualitative methodology is used in this study. Data were collected through structured interview with the second-generation representatives, where the data obtained helped us to come to the results and answer the research questions of the study. A total of 15 interviews were conducted.FindingsThe findings of this study show that the second generation is motivated to continue the family business, cases show that successors since childhood have been oriented towards building an entrepreneurial mindset and also after entering the family business have generated innovation.Originality/valueThe study will bring theoretical implications to the family business literature, providing scientific evidence for the second generation of family businesses, from an emerging country such as Kosovo. As Kosovo is an emerging country, the study will contribute to the literature, suggesting other studies by emerging countries in this way to see the similarities and differences.

scholarly journals Investigating value-laden leadership styles among family business owners

2016 ◽  
Vol 47 (4) ◽  
pp. 35-46 ◽  
Author(s):  
E. Venter ◽  
S. M. Farrington
Keyword(s):  
Leadership Styles ◽  
Leadership Style ◽  
Family Business ◽  
Business Performance ◽  
Business Owners ◽  
Primary Objective ◽  
Family Businesses ◽  
Participative Leadership ◽  
Significant Relationships ◽  
The Family

Given the need for a different approach to leadership, as well as the need for further investigation on leadership among family businesses, this study investigates several value-laden leadership styles among family businesses. More specifically the primary objective is to establish the levels of Servant, Ethical, Authentic, and Participative leadership displayed by family business owners and the influence thereof on the Perceived business performance of the family business. A survey was undertaken and 266 usable questionnaires were returned from 133 family business owners and 133 from family business employees. The data analysis involved calculating descriptive statistics and undertaking t-tests. Multiple regression analysis (MRA) was done to test the hypothesised relationships. Although the MRA analysis revealed no statistically significant relationships between the leadership styles investigated and Perceived business performance, the vast majority of respondents agreed that the styles investigated were displayed by the family business owners. For both sample groups Ethical leadership returned the highest mean score, followed by Servant and Participative leadership. The importance of these value-laden leadership styles to family businesses is thus highlighted, contradicting the literature that family businesses owners are often autocratic in their leadership style. In addition, increased clarity on the effectiveness of these value-laden leadership styles within the context of family business is provided.

Direct and indirect effect of entrepreneurial orientation, family involvement and gender on family business performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Erny Rachmawati ◽  
Suliyanto ◽  
Agus Suroso
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Entrepreneurial Orientation ◽  
Business Performance ◽  
Family Businesses ◽  
Future Research ◽  
Content Type ◽  
The Family ◽  
The Relationship

PurposeThis study aims to determine the direct effect of entrepreneurial orientation on family business performance. This study also discusses the role of family involvement as a mediating variable and the role of gender as a moderating variable in the relationship between entrepreneurial orientation and family business performance.Design/methodology/approachA total of 328 hotels in Yogyakarta, Indonesia, were selected as samples by the convenience sampling method. Primary data is collected through structured questionnaires that are delivered by themselves to key people in the hotel such as owners, directors and key staff (HRD, financial, relationship). Hypotheses are tested by structural equation modeling procedures using AMOS 22.0. Sobel test is used to determine the indirect effect of the mediation variable.FindingsThe results showed that entrepreneurial orientation had no significant effect on family business performance. Family involvement acts as a full mediation in the relationship between entrepreneurial orientation and family business performance. Gender acts as a moderating variable that can strengthen the relationship between entrepreneurial orientation and family business performance. The results showed support for previous research.Research limitations/implicationsThe results of the study cannot conclude the national family business because it adopts convenience sampling and the sampling area is limited in Yogyakarta. Future research can use a larger sample. This study only researches hotels managed by family businesses, so it is not feasible to conclude for family businesses in general. Future research may choose to use several types of family businesses so that more varied results can be obtained. Future research could also compare hotels managed by family businesses with non-family businesses. The results also found that in addition to gender roles, respondent heterogeneity was an important component in the study of social identity. Therefore, research examining the influence of different cultures on the relationship between entrepreneurial orientation and family business performance should be an extraordinary topic for future study. Other results from this study also indicate that there is a role for religion in improving hotel performance. Future research is needed to further explore Islamic business modeling for family businesses.Practical implicationsThis finding has significant implications that can help family businesses in developing strategies that are suitable for business management. Entrepreneurial orientation occupies a strategic position in developing sustainable competitive advantage in the family business of the tourism sector especially the hotel business in Yogyakarta for the better. Besides, the results of the study also showed that entrepreneurial orientation had no significant effect on performance. This relationship becomes significant when combined with active family involvement. This finding also shows that entrepreneurial orientation has the potential to have a more beneficial effect because of the active involvement of the family in helping with business management, alleviating business-related problems, and having a significant influence when the family also acts as management.Social implicationsResearch findings indicate the role of gender in strengthening the relationship between entrepreneurial orientation and family business performance. This provides a good position for women in the social environment to show achievement. To place women on the side of gender equality and justice in the family business in Indonesia. By opening wider access for Indonesian women in the realm of business management, expanding women's participation in a family business, increasing the role of control for women, and increasing women's knowledge and skills to increase the benefits in managing family businesses so that they have sustainable resilience in the face of global competition.Originality/valueThe results of this study provide a new model in providing an overview of the direct and indirect roles (mediating and moderating) in the assessment of family business performance. This study uses three variables which are important in performance appraisal, namely entrepreneurial orientation (independent variable), family involvement (mediating variable) and gender (moderating variable). Where research that combines these four variables, directly and indirectly, has never been done before.

Cultural values and their implications to family business succession

2019 ◽  
Vol 10 (4) ◽  
pp. 281-292 ◽  
Author(s):  
Grisna Anggadwita ◽  
Werda Bagus Profityo ◽  
Dini Turipanam Alamanda ◽  
Anggraeni Permatasari
Keyword(s):  
Cultural Values ◽  
Family Business ◽  
Family Businesses ◽  
Chinese Family ◽  
Content Type ◽  
The Family ◽  
Succession Process ◽  
Business Succession ◽  
Family Business Succession ◽  
Practical Implications

Purpose The family business is one of the business entities that contribute to the economy of a country. Succession in the family business occupies a strategic position, especially in maintaining the company’s sustainability. The Chinese family business has unique characteristics in maintaining and growing its business with the cultural values that underlie how their business. The purpose of this paper is to discuss the cultural values of Chinese ethnic and their implications in the succession process in small family businesses in Bandung, Indonesia. Design/methodology/approach This research uses a qualitative method with the in-depth interview method as a data collection technique. The sampling technique uses purposive sampling, while to test the validity of research data using a triangulation technique. A total of four small Chinese-owned family businesses participated as informants in this study. The study will identify the stage of succession process in the Chinese family business. Findings There are several stages identified in the succession planning of small Chinese-owned family business in Bandung which include succession antecedents, succession activities and desired outcomes. The results showed that small Chinese-owned family business in Bandung has not applied the rules and procedures in the succession process. Most of the Chinese family business in this research still holds Confucianism culture; they prioritize boys as business successors, who have a greater responsibility rather than successor with other gender. Practical implications Several implications are discussed. One of them is the Chinese family business holding cultural values in the process of family business succession. Originality/value This research is expected to provide theoretical and practical implications for academics and family companies with similar cases.

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