scholarly journals The black box: Unraveling family business succession

2007 ◽  
Vol 10 (2) ◽  
pp. 9-14 ◽  
Author(s):  
Noel D. Campbell ◽  
Kirk H. Heriot ◽  
Dianne H. B. Welsh
Keyword(s):  
Competitive Advantage ◽  
Family Business ◽  
Family Firms ◽  
Second Generation ◽  
Family Firm ◽  
Black Box ◽  
Future Research ◽  
The Family ◽  
Business Succession ◽  
Family Business Succession

Using the family business succession, resourcebased view of firms, familiness, and organizational clan literatures, this article develops a model based on the ability of the family business to use familiness, a specific bundle of attributes deriving from a family’s culture, as a competitive advantage for the family firm. In particular, this resource-based framework of family business shows how familiness can distinguish between family firms that succeed beyond the second generation and those that do not. Implications for future research are discussed.

FAMILY BUSINESS SUCCESSION: EVOLUTIONARY ECONOMICS APPROACH

2008 ◽  
Vol 16 (03) ◽  
pp. 279-298 ◽  
Author(s):  
JUHA KANSIKAS ◽  
TUOMAS KUHMONEN
Keyword(s):  
Family Business ◽  
Evolutionary Economics ◽  
Family Relations ◽  
Family Firm ◽  
Evolutionary Forces ◽  
2Nd Generation ◽  
The Family ◽  
Business Succession ◽  
Family Business Succession ◽  
Selection Of

This study analyses family business continuity from founder generation to the 2nd generation in terms of succession in the context of evolutionary economics. Two literature bases; family business succession and evolutionary thinking in organisational and economic change, are reviewed and combined to provide insights to understand the nature of family business succession. Operation of the key evolutionary forces — variation, selection, retention and struggle — in family business succession are illustrated. Regarding variation, there is a concern for understanding the importance of having enough diversity within the family firm, since this diversity of routines and competences comprises the pool of variation from which to select when the environment changes. With regards to selection, there is a concern for understanding the risk of selection bias easily rooted in the family firm culture: are some variations favoured in the selection of operating, investment and search routines because of family relations, emotions and values, including decisions on who will succeed and who will own the firm in the future. Elaboration and investigation of these concepts may help to identify special characteristics of the "family firm species" that are either beneficial or risky for the survival in the evolutionary struggle.

scholarly journals THE DIFFERENCE PATTERN OF SUCCESSION BETWEEN SECOND GENERATION AND THRID GENERATION FAMILY BUSINESS IN INDONESIA (A REVIEW OF THE MEDIUM-SIZE FAMILY BUSINESS)

2019 ◽  
Vol 3 (2) ◽  
pp. 133-154
Author(s):  
Christina Whidya Utami
Keyword(s):  
Family Business ◽  
Second Generation ◽  
Family System ◽  
Medium Size ◽  
Third Generation ◽  
The Third ◽  
The Family ◽  
Generation Family ◽  
Business Succession ◽  
Family Business Succession

The purpose of this study is to find out whether there are differences on pattern of succession between the second and the third generation of family business in Indonesia. Research Design/ Methodology/ Approach: A cross sectional and comparative research design were used in this study, while the data survey was conducted to 41 respondents from the second-generation group and 48 respondents from the third-generation family business; the businesses has run for 5 to 50 years and were categorized as medium size family business. The study used multiple regression test via SPSS to test the hypothesis. Findings: In family business led by the second-generation successor, only personality system affects the family business succession. On the other hand, in family business led by the third-generation, personality, ownership, family, and management system variables affect the success of the family business; meanwhile, family system does not find to affect the family business succession. Research Limitation/ Implication: This study investigates pattern of succession in family business including personality system, ownership system, family system and management system. This study can suggest a solution in the regeneration process of a family business in order to maintain the continuity of the business. limitation: There are some biases found on family’s perspective of the assessment, and the study only focus on medium-size family business. Practical Implications: A right amount of focus on pattern of succession will help the second and the third generation of the family to manifest in business succession. Exploring the second and the third-generation perspectives in regard to succession pattern is the key to maintain the continuity of the family business. Originality/ value: This study offers a pattern of succession from various perspectives, including personal, ownership, family, and management, as well as the relationship to the long-term success of the family business.

Family business succession: impact on supplier relations and customer management

2018 ◽  
Vol 26 (6) ◽  
pp. 1-4 ◽  
Author(s):  
Carol J. Gaumer ◽  
Kathie J. Shaffer
Keyword(s):  
Family Business ◽  
Brand Equity ◽  
Second Generation ◽  
Business Owners ◽  
Customer Relationships ◽  
Content Type ◽  
The Family ◽  
Employee Relationships ◽  
Business Succession ◽  
Family Business Succession

Purpose The purpose of this study is to examine what happens to human relationships when a family business is handed off to the next generation. The second generation, to succeed, must work to nurture and sustain current customer, supplier, and employee relationships so as not to damage existing goodwill. As power is transferred from the founder of the family business to the next generation, organizational issues and the leadership style of the successor take center stage. Design/methodology/approach This is strictly a conceptual paper designed for the practitioner. There is no empirical study therein, only theoretical frameworks to guide practitioners and family business owners. It is meant to be informational with many useful “tips” for family business succession. Findings Relationships with valuable human resources, such as current customers, suppliers, and employees must receive the attention they deserve to avoid negatively impacting organizational brand equity. Failure to nurture supplier relationships can increase costs and access. Neglected customer relationships may cause the loss of key members of these groups, contributing significantly to second-generation business failures. Damaged employee relationships cause expensive turnover, loss in customers, and negative word of mouth. Research suggests that only 30 per cent of businesses survive into the second generation and even less (about 13 per cent) into the third generation (U.S. Census Bureau, 2015). Research limitations/implications The next step would be to test the propositions using both qualitative and quantitative research, beginning with interviews of second-generation family business owners. The interviews would test the successor-generations’ attitudes and behaviors toward established customers, suppliers, and employees. Attitudes would be measured on a Likert scale to explore the perceived importance of current customers, employees, and suppliers to the new owner. Issues of commitment, responsibility, loyalty, friendship, respect, and caring would also be measured to evaluate how relationship-friendly the new owner is. Levels of retention of key stakeholders would then be correlated with the firm’s financial success or failure to see if there is any statistically significant relationship. Practical implications Establishing and maintaining strong trust relationships will socially bond customers, employees, and suppliers to the organization. Introduction of a second generation changes the dynamics of these relationships, so care is critical, as customers, suppliers, and employees become anxious with change. Relationship management is about nurturing customer relationships, honoring supplier arrangements, and developing employees. Consistent care toward trusted human resources creates brand equity (or monetary value). Naturally, family businesses start small and understand the value of each relationship, but as the business passes from the founder to the second generation, these loyal, trusted relationships may be tested. It is up to the successor to assure customers, suppliers, and employees that they are a valued part of the operation. Inability to do this will likely lead to an erosion of the business’ loyal base and may precipitate in failure of the firm for the successor. Social implications The social implications revolve around acceptable human interaction and proper treatment of individuals who are critical to the small family business’ success. As a family business passes from the founder to the second generation, loyal, trusted relationships may be tested. It is up to the successor to assure customers, suppliers, and employees that they are a valued part of the operation. Inability to do this will likely lead to an erosion of the business’ loyal base and may precipitate in failure of the firm for the successor. Originality/value It is original in that it is practitioner-oriented and full of useful tips for the family business owner. None of the information contained therein is novel. It is a consensus or compilation of useful information packaged for a practitioner.

Daughters taking over the family business

2016 ◽  
Vol 8 (1) ◽  
pp. 28-47 ◽  
Author(s):  
Silvia Gherardi ◽  
Manuela Perrotta
Keyword(s):  
Gender Inequality ◽  
Family Business ◽  
Family Firms ◽  
Small Enterprises ◽  
Content Type ◽  
Gender Regime ◽  
The Family ◽  
Orders Of Worth ◽  
Business Succession ◽  
Family Business Succession

Purpose – This paper aims to explore gender and legitimacy in family business succession. Design/methodology/approach – Within the theoretical framework of French pragmatic sociology, the authors conceptualise the family business as the locus where two regimes of engagement are present, generating the co-presence of two orders of worth, namely the domestic and the industrial. Taking a processual approach to entrepreneuring, and using case studies of small enterprises in Italy, this paper explores the case of daughters taking over the family firms. Findings – The paper shows how the daughters’ perceived gender inequality in the succession process is justified and how the justification work and the production of legitimacy are accomplished, shifting from one order of worth to the other. Originality/value – The value of the contribution consists in pointing to how gender inequality is reproduced and justified inside the family business. The dual regime of engagement is what justifies the reproduction of a specific gender regime within the family business. Moreover, the paper adds a “gender” perspective to French pragmatist sociology.

Family Business Succession in Portugal: An Examination of Case Studies in the Furniture Industry

2001 ◽  
Vol 14 (3) ◽  
pp. 231-244 ◽  
Author(s):  
Carole Howorth ◽  
Zahra Assaraf Ali
Keyword(s):  
Work Experience ◽  
Family Firms ◽  
Family Firm ◽  
Highly Educated ◽  
Cultural Effects ◽  
The Family ◽  
Low Levels ◽  
Anglo American ◽  
Business Succession ◽  
Family Business Succession

This paper explores the transferability of theoretical constructs developed in an Anglo-American culture to Portugal. Cultural effects on succession are examined within three Portuguese family firms, which were selected for their ability to generate theory. Much of the extant literature appears to be valid in this context. Notable exceptions include difficulties in applying stages models of the succession process with more than one predecessor and successors at varying stages. Harmonious rather than contentious relationships were commonplace. Daughters were more highly educated than sons and less likely to enter the family firm. Sons joined the family firm with little or no outside work experience and low levels of education. These facts are highlighted as concerns regarding the ability of Portuguese family firms to compete in the new economy. A conceptual framework is presented as a basis for further research.

scholarly journals The Transition of Family Business Leadership:

2018 ◽  
Vol 2 (3) ◽  
pp. 101-104
Author(s):  
Dahliana Kamener ◽  
Norasekin Ab. Rashid ◽  
Daniati Puttri
Keyword(s):  
Family Business ◽  
Succession Planning ◽  
First Generation ◽  
Second Generation ◽  
Family Businesses ◽  
Business Leadership ◽  
The Family ◽  
Family Leadership ◽  
Business Succession ◽  
Family Business Succession

The issue of succession is very important because the successful succession leads to the sustainability of a family businesses (Sharma & Dave, 2013). Generally, the family businesses are difficult to flourish and even many have bankrupt. Some family businesses are bound on the first generation  and some have collapsed in the second generation.  Literature shows that just 30 percent of family businesses can be passed along to the second generation, and 70 percent fail after first generation step down because there are no preparation for succession and inability  of the next generation to control and run the company (Aronoff, (2004).  The study purposed to examine six hypotheses and the result showed the succession planning, non-family leadership, and decision making authority unsignificantly affect on the succession of the family business. Nevertheless, founder's influence, successor and strategic planning variable affect significantly to the success of family business succession at Padang city, West Sumatera.  

“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.

scholarly journals Strategic and Organizational Change

2020 ◽  
Vol 10 (1) ◽  
Author(s):  
Katiuska Cabrera Suarez ◽  
Elena Rivo-López ◽  
Santiago Lago-Peñas ◽  
Santiago Lago-Peñas
Keyword(s):  
Organizational Change ◽  
Family Business ◽  
Family Firms ◽  
Health Sector ◽  
Family Businesses ◽  
Future Research ◽  
Strategic Orientations ◽  
The Family ◽  
Private Health Sector ◽  
Responsible Ownership

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    

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.

Knowledge transfer in family business successions

2015 ◽  
Vol 5 (1) ◽  
pp. 17-37 ◽  
Author(s):  
Britta Boyd ◽  
Susanne Royer ◽  
Rong Pei ◽  
Xiaolei Zhang
Keyword(s):  
Knowledge Transfer ◽  
Competitive Advantage ◽  
Family Business ◽  
Family Firms ◽  
Family Businesses ◽  
Theory And Practice ◽  
Future Research ◽  
Content Type ◽  
Business Environments ◽  
Theoretical Reasoning

Purpose – Knowledge often is the fundament for strategic competitive advantage. Thus, it is highly relevant to understand better how knowledge is transferred from one generation to the next in family businesses. The purpose of this paper is to link the competitive advantage realisation in family businesses to the success of transferring strategically valuable knowledge in different business environments to the next generation. Design/methodology/approach – Building on the contingency model of family business succession (Royer et al., 2008) knowledge transfer in family businesses from different cultures is investigated in this paper. From a resource-oriented and transaction cost inspired perspective two family businesses with a similar industry background from China and Europe are compared regarding knowledge transfer in the context of family firm succession taking into account the respective transaction atmosphere. Findings – Different successions for two long-lived family firms are illustrated in a systematic fashion: based on the theoretical elements suggested both cases are described to get insights into the usefulness of the theoretical reasoning developed. On the basis of these, the cases are compared with each other and conclusions for both cases are drawn. Implications for theory and practice as well as avenues for future research are sketched. Originality/value – The focus of the current study is to gain more insight into long-lived family businesses by comparing two cases over a period of more than 200 years with regard to strategically relevant resources as well as the underlying transaction atmospheres. Implications for family firms depending on the resource types and transaction atmosphere are discussed.

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