family-enterprise management

Family-Enterprise Management

Is family influence an asset or a liability?

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Basco Rodrigo PhD

Witten/Herdecke University

Witten Institute for Family Business

Family-Enterprise ManagementIs family influence an asset or a liability?

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Family business field

Relativity, 1953M. C. Escher

http://en.wikipedia.org/wiki/Relativity_%28M._C._Escher%29

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Academic Journals

Family Business InstitutesResearch Centers Family Business Chairs

Conferences

How has family business knowledge been created?

How has family business knowledge evolved ?

Researchers

Practitioners

Family Owners

Family Managers

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Procedure – Literature review

» Journals: ETP, JBV, and FBR

» 2000-2009

» 235 articles

» Organization of papers:

- Descriptive characteristics: topic, theory, future research, academic limitations, recommendations and general conclusions.

- Internal and external elements/knowledge

» Classification:

- Borrowing and replicating

- Borrowing and extending

- Inverse contribution

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Future research lines – theoretical/methodological

» Literature review for topics such as governance, management, firm performance. To analyze to what extent these three steps (bringing knowledge from the main stream, adding and developing new knowledge, and bringing back knowledge) can be recognized in different topics.

» Trap on the ontological view of Family Business Field. This is a limitation for developing a real theory of family firm which incorporates the family as well as the firm perspective.

» Methods: general statistical methods and specific methods to incorporate the family dimensions into the general research.

Family-Enterprise Management. Is family influence an asset or a liability?

Family-Business Relationship

• CEO Alfred Ritter of Ritter Sport: ‘We do not think in years, but rather generations’

• CEO Dr Karsten Ottenberg of Gieseck & Devrient: ‘We do not think in producing good figures in the next quarter. We are more concerned with sustainability over generations’

• CEO Angel Añaños of AJEGORUP: ‘Family participates actively in relevant business decisions and if there isn’t unanimity within the family there are two alternatives: either to convince those who don’t agree or let themselves be convinced by those of a different opinion’.


• How to measure the family influence on firm behavior?

• Does family influence on firm affect firm performance?

• Does the fit between family-business interaction and strategic position economically matter?

FirmFamily


Family-Enterprise Management. Is family influence an asset or a liability?

It is known that: family business behave differently

How to measure the family-business relationship?

Where can family-business relationship be captured?

Decision-making


Methodology

» Scale development (questionnaire)

» Sample design and data collection (representative sample)

- Spain

- +700 small and medium family firms

- Firm size: 50 to 500 employees

- Family business definition: 50% capital in family members / at least 2 family members TMT.

» Data analysis

- Descriptive analysis

- Factorial analysis (underline structure of the data)

- Discriminant analysis

- Confirmatory factorial analysis (construct validity: reliability, convergent validity, discriminant

validity, nomological validity)


Business orientation

Family orientation

Family-oriented decisions Business-oriented decisions

How is an organization governed and managed?

Family involvement

SUCCESSIONSTRATEGIC PROCESSBOARD OF DIRECTORS

HUMAN RESOURCES


• Family participation is a necessary condition …… but not sufficient to understand how family firms work.

• It is not the family participation itself what makes family firm

different, but the way the family affects decision-making.



» How to integrate this result into the system theory?

» Heterogeneity of family firms: how do family firms combine family-oriented and business-oriented positions? What is the effect on firm performance?


Family-Enterprise Management Is family influence an asset or a liability?

Heterogeneity of family firms


System theory Configurative approach

» Regularity, rules and patterns

» Holistic view

» Goal Orientation

» Equifinality – Multifinality

» Circular causality

» Homoestasis and heterostasis

Configurative approach

» ‘Multidimensional constellation of conceptually distinct characteristics that commonly

occurs together’


Business-oriented decisions

Fam

ily-o

rien

ted

dec

isio

ns Family-enterprise first

firmsFamily-first firms

Business-first firmsMarginal type of firms

Are family firms a homogeneous group?


Family-oriented decisions Business-oriented decisions

Family-first firms Family-enterprise first firms Business-first firms

Business performanceFamily Performance

EquifinalityEquifinality

How does the family-business relationship affect family firm performance?

Methodology


- Performance (subjective measure based on degree of goal achievement)


» Data analysis


- Cluster analysis (underline structure of the sample – group)

- Discriminant analysis

- Ideal profile of firm – Euclidean distance

- Configurative approach procedure (heterogeneity – equifinality - performance)



• Heterogeneity based on behavioural elements

• Family firms can achieve successful business results by using a combination of family and business orientations in their decision-

making


» How to integrate this result into the strategic literature?

» Heterogeneity of family firms: how do family firms integrate family-orientation / business orientation with strategic position (strategic behavior)?


Strategic position of family firms


How do family firms fit together their family and business oriented decision-making and strategic behaviour in order to produce superior performance?

Methodology


- Strategic behavior (how does the firm compete – Porter’s scale: cost-leadership and differentiation

leadership)


» Data analysis


- Configurative approach procedure (heterogeneity – performance) – Factorial analysis

– Cluster analysis

– Euclidian distance

– Regression and correlation


• Decision-making and strategic behaviours are not independently important, but they are important when they complement each

other

• Consistency in the direction of decision-making and strategic behaviour helps firms achieve a higher level of performance


Future steps Family-Enterprise Management

• Practical aspects: Family-Enterprise Management » Report - Family-Enterprise Management (practical perspective about family-enterprise

management)

» Book – Theoretical model about Family-Enterprise Management and case studies.

» Blog to spread these ideas

» Teaching seminar/course

• Research aspects: Family-enterprise management » Extending this research to other contexts

» Case studies:• Improve the scale• Introduce the connection between individual level and firm level• Context (cultural context) as relevant aspect to understand

Future stepsResearch – Working papers

• Special Issue: Family Business and Regional development (Basco, R.; Block, J.; Stough, R.; Welter, F.; Wennberg, K.)

• The role of the family firms in the regional development (Basco, R.)

• Opportunity-oriented and family-oriented founder owner-managers. Do they behave differently? (Basco, R.)

• Determinants of family and non-family member nomination in the succession of privately-owned family firm (Basco, R. & Calabró, A.)

• Family-enterprise decision-making, a behavioral economic perspective (Bartolami, F. & Basco, R)

• An exploratory study of family firm objectives (Basco, R.; Pieper, T. )

• Board of directors and firm performance in private family firms: a test of the demographic versus behavioral approach (Basco, R.; Voordeckers, W.)

• The role of board of directors during financial crisis in family firms (Fynn-Willem Lohe, Calabro A. & Basco, R.)

• Board composition in family firms: Its effect on firm performance (Vecchiarini, M: Calabro, A: & Basco, R.).

• Who should sit here and who should sit there? Effects of family-oriented objectives on board composition (Basco, R. & Calabro, A.)

• Search breadth and innovation in family firms: evidence from a natural-resource based cluster in Chile (Basco, R.; De Massis, A. Kotlar, J.)

family-enterprise management

Education

family business knowledge

family influence

family business fieldhow

familybusiness interaction

familybusiness relationshipit

family dimensions

family members tmt

real theory of family