scholarly journals Peculiarities Of Financial Management In Family Firms

2012 ◽  
Vol 11 (3) ◽  
pp. 315 ◽  
Author(s):  
Martin R. W. Hiebl
Keyword(s):  
Financial Management ◽  
Family Firms ◽  
Management Practices ◽  
Strategic Decision ◽  
Stewardship Theory ◽  
Business Research ◽  
Short Term ◽  
Traditional Role ◽  
Resource Based View

The majority of firms in market-oriented countries are family-owned. Despite their significant economic importance for these countries, research focusing on family firms is a rather young field within business research, having intensified starting only in the late 1980s. Research regarding the peculiarities of financial management in family firms is especially scarce. Hence, this paper seeks to synthesize existing research and to theoretically analyze the finance and accounting practices and resources of, as well as the role of financial managers in family firms. Using agency theory, stewardship theory, and the resource-based view of the firm, this paper suggests that finance and accounting practices should be adapted to the controlling familys needs. The paper further suggests that family firms are likely to use fewer short-term-oriented financial-management practices than non-family firms. Moreover, compared to non-family firms, financial managers should play a more traditional role in family firms, focusing on core financial management tasks and on advising the controlling family, while not themselves holding strategic decision-making power. The paper concludes with concrete avenues for further research.

scholarly journals LEGITIMACY SIGNALS AND FAMILY IPO PERFORMANCES

2013 ◽  
Vol 14 (1) ◽  
pp. 156-181 ◽  
Author(s):  
Hung-bin Ding ◽  
Kuntara Pukthuanthong
Keyword(s):  
Family Firms ◽  
Management Practices ◽  
Stock Exchange ◽  
Legitimacy Theory ◽  
Business Research ◽  
Taiwan Stock Exchange ◽  
The Family ◽  
The Relationship ◽  
Technology Industries

The objective of this research is to examine the relationship between signals including governance and management practices and the performance of family firms IPOs. Using IPO data of 129 family firms and 129 comparable non-family firms from the Taiwan Stock Exchange, our findings highlighted the role of non-family insiders, or non-family affiliated directors in the IPOs of family firms. Our comparison between family and non-family IPOs shows hiring prestigious underwriters significantly improves the performance of family firm IPOs. Finally, we found the industries of IPO firms moderate the relationship between corporate governance characteristics and IPO performances, as non-family firms in technology industries are perceived to be more legitimate than their family counterparts. This paper makes three contributions to existing research. Firstly, we contribute to the legitimacy theory by suggesting an interaction effect between internal (organizational) and external (environmental) factors. Secondly, our analysis highlighted the roles of affiliated directors and industry in the performances of public family firms. Thirdly, this study contributes to the family business research by underscoring the differences between family and non-family firms in the IPO context.

Financial Management of Tires Retail and Restaurant Business in Greater Jakarta

2019 ◽  
Vol 2 (4) ◽  
pp. 267-275
Author(s):  
Sung Suk Kim ◽  
Jacob Donald Tan ◽  
Rita Juliana ◽  
John Tampil Purba
Keyword(s):  
Financial Management ◽  
Management Practices ◽  
Working Capital ◽  
Structured Interviews ◽  
Short Term ◽  
Direct Observations ◽  
Medium Enterprises ◽  
Cash Reserves ◽  
Retained Earnings ◽  
Computerized System

This study aims to explore the financial management practices ofsmall-and-medium-enterprises (SMEs) in the Greater Jakarta (Jabodetabek). We investigate into 3 SME cases by conducting the semi-structured interviews with the owner-managers and using direct observations to know the practices of financial management of SMEs. Through the research, we have found six propositions related to the practice of short-term financial management. They apply bootstraps to ensure availability of working capital. They set aside cash reserves from retained earnings and minimize loans from financial institutions. They have the computerized system to track receivables facilitating working capital needs. They keep theirinventory control efficient to manage working capital. They screen customers using transactional records and reputations to minimize the risk of bad debts.

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.

scholarly journals Sustainability and Business Outcomes in the Context of SMEs: Comparing Family Firms vs. Non-Family Firms

2018 ◽  
Vol 10 (11) ◽  
pp. 4080 ◽  
Author(s):  
María López-Pérez ◽  
Iguácel Melero-Polo ◽  
Rosario Vázquez-Carrasco ◽  
Jesús Cambra-Fierro
Keyword(s):  
Business Models ◽  
Family Firms ◽  
Medium Size ◽  
Stewardship Theory ◽  
Business Practices ◽  
Socially Responsible ◽  
Business Outcomes ◽  
Proposed Model ◽  
Moderator Role

Society is demanding more sustainable and socially responsible business models. Therefore, the concept of sustainability has become a cornerstone to help understand the success of many firms in the current competitive context. However, the context of SMEs has received little attention thus far. In order to solve this gap this article analyses the links between sustainability practices and business outcomes—both financial and non-financial (i.e., image and reputation)—for small and medium-size enterprises (SMEs). In addition, the study strives to analyze the potential differences between family firms and non-family firms. To this end, a quantitative study is carried out using PLS techniques to analyze a sample of SME owners and managers with a view to testing the proposed model based on the Stewardship Theory and Socioemotional Wealth Theory. In this sense, our study is pioneering in that it aims to assess—from a quantitative viewpoint—the moderator role of family firms on a series of relevant sustainability-driven outcomes. The data suggest that, in SME contexts, sustainability influences the corporate reputation, brand image, and financial value of the company. Importantly, we find that the profile (family vs. non-family) of the firm moderates the links between sustainability and business outcomes. Hence, our findings have important implications for sustainability implementation in SME contexts. Finally, we provide a series of guidelines aimed at maximizing the effectiveness of sustainability-based business practices.

Friends or Foe?

2022 ◽  
pp. 1412-1435
Author(s):  
Rosalba Manna ◽  
Rocco Palumbo ◽  
Massimiliano Pellegrini
Keyword(s):  
Resource Management ◽  
Business Ethics ◽  
Human Resource Management ◽  
Human Resource ◽  
Family Firms ◽  
Management Practices ◽  
Ethical Challenges ◽  
Human Resource Management Practices ◽  
Push Forward

Scholars have argued that business ethics is a crucial ingredient for the successful recipe of human resource management. However, little is known about the factors that trigger an organizational commitment towards the promotion of an ethical approach in crafting human resource management practices. This is especially true for family firms, whose ethical slant in devising human resource management practices has been under-researched. This chapter intends to push forward our knowledge in the field of business ethics investigating the role of familiness in determining ethically-rooted human resource management practices among small and medium-sized enterprises. More specifically, the authors investigated how awareness of business ethics issues and formalization of human resource management policies and practices affect the SMEs commitment to ethics. Family firms were found to be aware of the ethical challenges that characterize human resource management; however, no evidence was retrieved about the role of familiness in triggering an ethical commitment in managing human resources.

The Role of Awareness in Designing Human Resources Management Practices in Family Firms

2022 ◽  
pp. 1017-1053
Author(s):  
Giulia Flamini ◽  
Luca Gnan
Keyword(s):  
Human Resources ◽  
Family Firms ◽  
Management Practices ◽  
Human Resources Management ◽  
External Environment ◽  
Organizational Factors ◽  
Two Dimensions ◽  
Hrm Practices ◽  
Implicit Coordination

The chapter aims to develop a theoretical configurational model of HRM practices for family firms based on the construct of awareness. The typology of ideal HRM practices configurations the authors developed grounds on are 1) two organizational factors (awareness of the internal and external environment and organizational awareness) and 2) two dimensions of organizational awareness (the need for explicit and implicit coordination mechanisms). The first dimension refers to the need for mechanisms explicitly adopted by a family firm to manage task or communication interdependencies. The second one relates to those requirements for mechanisms that are available to family firms from shared cognition, which enable them to explain and anticipate task statuses and individuals' collaborative behaviors, thus helping them in managing task interdependencies. The authors combined these results in four configurations of HRM practices (administrative, shared, professional, and integrated configurations) and developed seven propositions.

Resistance to change in the financial management of small family-owned firms: a grounded theory of family firms in Laos

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hanvedes Daovisan ◽  
Thanapauge Chamaratana
Keyword(s):  
Grounded Theory ◽  
Financial Management ◽  
Family Firms ◽  
Management Practices ◽  
Resistance To Change ◽  
Sampling Procedure ◽  
Content Type ◽  
Management Processes ◽  
Open Coding ◽  
Axial Coding

Purpose The purpose of this study is to apply a grounded theory (GT) approach to develop a theory of resistance to change in the financial management of Laotian family firms. Design/methodology/approach The research adopts a GT approach, using a theoretical sampling procedure. Interviews were conducted with 36 Laotian family firms between April 2017 and May 2019. The in-depth interview transcriptions were analyed using open coding, axial coding and selective coding. Findings The interviewees identified that strategic planning, budgeting and management processes are factors influencing resistance to change. Research results show that accounting portfolios, investment decisions and return on assets are aspects of financial management that are particularly prone to change. The authors, therefore, suggest that Laotian family firms’ reduction in confidence and loss aversion may activate resistance to the adoption of more efficient financial management practices. Originality/value To the best of the authors’ knowledge, this is the first research to attempt to use grounded data to emerge a theory of resistance to change in financial management in Laos.

scholarly journals “Substantial Mutuality”: The Road to Trust between NGOs’ stakeholders

2020 ◽  
Vol 5 (1) ◽  
pp. 37-54
Author(s):  
Charlotte Bour
Keyword(s):  
Management Practices ◽  
Interpersonal Relations ◽  
Current System ◽  
Short Term ◽  
Trust Development ◽  
The Road ◽  
Multi Level ◽  
The Creation ◽  
Development Agendas

Multi-level governance materialises in the chain of influence between donors, Non-Governmental Organisations (NGOs), local partners and beneficiaries. This stepped relationship is often characterised by a degree of mutual mistrust and by divergent interests. It exists in a realm between formal highly bureaucratised and standardised development systems coupled with ineffective management practices, short-term agendas and lack of interpersonal relations, which undermine the creation of mutuality between the former and mostly informal stakeholders at the receiving end. This enquiry on “leadership as process” examines the role of NGOs in creating “substantial” mutuality in this chain of relationships. The data collected showed that there is a gap between upstream (donors and NGOs) objectives and the context in which they operate. The study concludes that by establishing mutuality and ownership NGOs can bridge the gap and limitations of the current system. Keyword: multi-level governance; non-governmental organisations; leadership-as-process; trust; development agendas

scholarly journals Financial Management Practices Among Micro Enterprises and their Implications for Loan Repayment: A Case of Solidarity Group Lending of DCB Commercial Bank in Dar es Salaam

2020 ◽  
Vol 12 (12) ◽  
pp. 122
Author(s):  
Daudi Kitomo ◽  
Robson Likwachala ◽  
Cornelio Swai
Keyword(s):  
Commercial Bank ◽  
Financial Management ◽  
Management Practices ◽  
Cluster Sampling ◽  
Cash Holding ◽  
Short Term ◽  
Group Lending ◽  
Loan Repayment ◽  
Common Practices ◽  
Micro Enterprises

The aim of this study was to determine the implications of financial management practices among micro enterprises for loan repayment. The study was confined to Solidarity Group Lending (SGL) customers of DCB Commercial Bank Plc (DCB). Specific objectives included: to identify common practices of managing finances among SGL customers; to determine the extent to which the commonly identified financial management practices influence loan repayment; and to find out challenges facing SGL customers during loan repayment in DCB. A case study research design and cluster sampling were used while data were collected using questionnaires from 80 respondents. Data were analyzed using multiple regressions, and simple descriptive statistics of frequencies, percentages, mean, and range. Results indicate that the common practices of managing finances among the respondents were cash holding 73.8% (n= 59) and short term investments 38.8% (n=31). Regression results revealed that about 70% of variations in ease of loan repayment is influenced by cash holding and short term investment techniques at p=0.000 level of significance (i.e. R = 0.841, R2 = 0.707 and p < 0.05). Key challenges of loan repayment among the respondents were: losses from business (82.6%), payment delays from debtors (67.5%), and difficulty in managing group members to attend their respective loan centers (72.6%). The study recommends that SGL customers need to be educated and sensitized on various financial management techniques and their implications so that they select appropriate techniques in managing profitability and liquidity in their businesses to enhance smooth loan repayment.

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

2018 ◽  
Vol 10 (12) ◽  
pp. 4557
Author(s):  
Joanna Sadkowska
Keyword(s):  
Project Management ◽  
Family Involvement ◽  
Success Factors ◽  
Family Firms ◽  
Management Practices ◽  
Eastern European ◽  
Building Relationships ◽  
Key Success Factors ◽  
External Stakeholders

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.

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