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Showing papers in "Family Business Review in 1999"


Journal ArticleDOI
TL;DR: The Resource-Based View (RBV) of competitive advantage as discussed by the authors provides a theoretical framework from the field of strategic management for assessing the competitive advantages of family firms by isolating idiosyncratic resources that are complex, intangible, and dynamic within a particular firm.
Abstract: The Resource-Based View (RBV) of competitive advantage provides a theoretical framework from the field of strategic management for assessing the competitive advantages of family firms. The RBV isolates idiosyncratic resources that are complex, intangible, and dynamic within a particular firm. The bundle of resources that are distinctive to a firm as a result of family involvement are identified as the “familiness” of the firm. This approach provides a research and practice method for assessing the specific behavioral and social phenomena within a firm that provide an advantage. Using a familiness model for assessing competitive advantage overcomes many of the problems associated with the generic claim that family companies have an advantage over nonfamily companies. It also provides a unified systems perspective of family firm performance.

1,846 citations


Journal ArticleDOI
TL;DR: In this article, a research model that outlines the determinants of functional families and profitable businesses is proposed, with an emphasis on the key features of family and business, including the inclusion of the family in the same detail as the business.
Abstract: This paper proposes a research model that outlines the determinants of functional families and profitable businesses—requisites for family business sustainability. Two features distinguish the model from previous models: inclusion of the family in the same detail as the business and emphasis on the key features of family and business. Delineation of the interface between the family and the business permits the use of research methods that allow for variable degrees of overlap of family and business rather than assuming that family businesses constitute either a single system or two separate systems. The research model is also compatible with a variety of theoretical perspectives.

415 citations


Journal ArticleDOI
TL;DR: The authors examined the extent to which conflict across generations of family firms is due to the effects of two independent variables (generation and generational shadow) and found that the presence of a generational shadow was indicated by whether either or both of the parents continued to influence the company once the next generation assumed control.
Abstract: This paper examines the extent to which conflict across generations of family firms is due to the effects of two independent variables—generation and generational shadow. The presence of a generational shadow was indicated by whether either or both of the parents continued to influence the company once the next generation assumed control. Hypotheses predicted nonlinear trends in conflict and interactions between generation and generational shadow. Using data from a national telephone survey of over 1,000 family business owners, the results of an ANOVA test confirmed that the presence of generational shadow, in particular, that of the founder, increases organizational conflict.

326 citations


Journal ArticleDOI
TL;DR: In this paper, the authors report the analyses of a survey of 59 family businesses and identify conflict management profiles for achieving positive outcomes for both business and family, based on a comparison of means.
Abstract: This paper reports the analyses of a survey of 59 family businesses. Findings indicate that in comparison to nonfamily businesses, family businesses have a more complex set of issues to consider when managing conflict. Collaboration, accommodation, and compromise strategies produce relatively better outcomes for both family and business. A competitive strategy results in relatively negative outcomes for both business and family. High levels of collaboration contribute to positive outcomes for both family and business, and high levels of compromise and accommodation contribute to positive family outcomes. Based on a comparison of means, this paper identifies conflict management profiles for achieving positive outcomes for both business and family.

269 citations


Journal ArticleDOI
TL;DR: For example, the percentage of households that own at least one family business where its owner or manager resides in the residential familyqhousehold was 13.8% in the United States as mentioned in this paper.
Abstract: This paper presents U.S. prevalence figures and their relationship to various family business definitions offered in literature to date. The percentage of households that own at least one family business where its owner or manager resides in the residential familyqhousehold was 13.8%. Results yielded a 10.0% prevalence rate for households having a business that qualified for this 1997 National Family Business Survey. The level of prevalence was shown to be associated with gender, ownershipqmanagement, involvement of family members, and generation of owner. These findings are useful for refining family business definitions. This paper also offers implications for future research, teaching, and practice relative to family businesses.

236 citations


Journal ArticleDOI
TL;DR: This paper examined the differences between founder-controlled firms and firms controlled by descendants or relatives of the founder and found that descendant controlled firms are more profitable, while founder controlled firms grow faster and invest more in capital assets.
Abstract: This study examines the differences between founder-controlled firms and firms controlled by descendants or relatives of the founder. In general, we observe that founder-controlled firms grow faster and invest more in capital assets and research and development. However, descendant-controlled firms are more profitable. The results are consistent with a life-cycle view of the family firm in which the early years are characterized by rapid growth. The experience of the early years provides a basis for later, when the firm is more professionally run and can exploit its established position in the market.

204 citations


Journal ArticleDOI
TL;DR: This article used data from a national survey of 673 business-owning households to assess factors associated with intermingling business and family finances, and found that the use of family resources in the business is more likely in sole proprietorships, when the business owes money to financial institutions, and when the owner is older, more experienced, and without children in the household.
Abstract: This study uses data from a national survey of 673 business-owning households to assess factors associated with intermingling business and family finances. Logit analysis indicates that the use of family resources in the business is more likely in sole proprietorships; when the business owes money to financial institutions; and when the business owner is older, more experienced, and without children in the household. Family use of business resources is more likely if the business is incorporated, is located in a rural area or small town, and borrows money.

184 citations


Journal ArticleDOI
TL;DR: This article found that if a family business does not get involved in foreign markets in the first and second generations, it is unlikely to do so in later generations, and that the majority of family businesses that do source from overseas markets do so mostly for cost and quality benefits.
Abstract: This study determines the extent of internationalization (i.e., global business attitudes and activities) of family businesses. A survey of 187 family businesses from northwest Ohio finds that family businesses do not regularly monitor the international marketplace or integrate global developments into domestic decisions. Although a small pool of businesses currently has ties with family businesses in foreign countries, many more would like to develop such ties. The study finds that if a family business does not get involved in foreign markets in the first and second generations, it is unlikely to do so in later generations. The majority of family businesses does not develop sources in foreign countries. The family businesses that do source from overseas markets do so mostly for cost and quality benefits. Approximately half of family businesses sold their products in foreign markets primarily via exporting and joint ventures.

180 citations


Journal ArticleDOI
TL;DR: Gersick, Davis, Hampton, and Lansberg as mentioned in this paper used the three-circle model of family business to understand the dynamics at work in any family company at a particular point in time.
Abstract: The Three-Circle Model and Transitions For the past decade and a half, the three-circle model has been the primary conceptual model of family business. This model views family enterprise as a complex system comprised of three overlapping subsystems: ownership, business, and family. The three-circle model is an excellent tool for understanding the dynamics at work in any family company at a particular point in time. In our more recent work, we found it useful to transform this three-circle concept into a developmental model in which each of the three subsystems moves through a sequence of stages over time (Gersick, Davis, Hampton, & Lansberg, 1997). For example, in our developmental theory, family business ownership moves from a Controlling Owner (CO) stage to Sibling Partnership (SP), and then to Cousin Consortium (CC), or the company itself changes from a Start-Up and passes through other stages to Maturity. Many of our colleagues have offered similar elaborations. In fact, the most recent World Conference of the Family Business Network was organized around three stages in the development of family business ownership. There is no doubt that specifying the stages of family, ownership, and business development enhances our understanding of any family business. Although we continue to learn more about the special nature of each stage, we are now particularly interested in the periods of change between stages: the transitions. Every stage theory must describe some mechanism that takes a system from one stage to the next. The transition periods are the most critical and challenging moments in the development of family enterprises. Transitions are often periods of uncertainty when the decision makers feel most anxious and vulnerable. Such feelings are understandable, given that transition periods are when an organization makes fundamental choices that will profoundly shape its future. By calling attention to the transitions, we do not mean to imply that periods of stability within each stage should be taken for granted. The transitions are opportunities for reassessment of the course the business is following and for fundamental change; the periods in the middle of a stage, when the firm is committed to a particular ownership structure or organizational design, present the major opportunity for focus and growth. Both change (transition) and growth (stability) are essential for success and continuity, although they require different kinds of work. The tasks of transition periods are exploratory and strategic; the tasks during periods of stability are operational and tactical in nature. Put another way, during transitions we may consider all options and decide which mountain to climb—often while the army cools its heels in the valley and waits. Then, during the stable Stages and Transitions: Managing Change in the Family Business

174 citations


Journal ArticleDOI
TL;DR: The authors used data from the 1993 National Survey of Small Business Finances to determine the extent to which small family-owned firms use various types of credit products using logistic regression, and identified variables that predict the likelihood of using credit.
Abstract: Securing adequate capital is an ongoing challenge for many small family-owned businesses. This article uses data from the 1993 National Survey of Small Business Finances to determine the extent to which small family-owned firms use various types of credit products. Using logistic regression, it also identifies variables that predict the likelihood of using credit. Findings reveal that size, age, and profitability of the firm were the most important predictors. Results also indicate that there were virtually no differences between family-owned and nonfamily-owned businesses in the usage of various credit products.

172 citations


Journal ArticleDOI
TL;DR: The authors empirically examined the relationship between ownership structure (family business status) and strategy and found that some differences exist in how family businesses compete in the marketplace and that the current understanding of the strategy construct has limited our ability to measure the actual differences in strategies.
Abstract: The limited research that examines the relationship between ownership structure (family business status) and strategy has provided conflicting results. In this paper we empirically examined that relationship and found that some differences exist in how family businesses compete in the marketplace. The current understanding of the strategy construct, however, has limited our ability to measure the actual differences in strategies.

Journal ArticleDOI
TL;DR: In this article, the authors report survey results of 252 Italian family firms based on the MassMutual framework and analyze the structure and behavior of Italian small and medium-size family firms and compare them with those in the United States.
Abstract: This research note reports survey results of 252 Italian family firms based on the MassMutual framework. The objectives of the survey were to analyze the structure and behavior of Italian small and medium-size family firms and compare them with those in the United States. The note focuses on these comparisons with regard to family involvement, ownership and governance structures, top management teams, decision-making processes, strategic goals, and succession perspectives. The paper goes on to explore the implications of survey results for family firms, researchers, and practitioners.

Journal ArticleDOI
TL;DR: The degree to which the family dominates as a form of business organization depends in part on whether a business's operations favor the implicit informal personal relationships of families or the explicit, formal, impersonal contractual relationships, characteristic of market-oriented organizations as mentioned in this paper.
Abstract: The degree to which the family dominates as a form of business organization depends in part on whether a business’s operations favor the implicit informal personal relationships of families or the explicit, formal, impersonal contractual relationships, characteristic of market-oriented organizations. In some situations family identity, trust, personal ties, and the monitoring functions that family relationships provide promote greater incentives for success than explicit, formal contracts. In other cases, formal relationships can provide a more effective means of linking workers within the firm, even when the workers are family members.

Journal ArticleDOI
TL;DR: This paper investigated predictors of business tensions and family and business goal achievement within family businesses. And they found that family health assessment (APGAR) was the highest predictor of business tension for both household and business managers, and family health was the largest contributor to family goal achievement.
Abstract: The purpose of this study is to investigate predictors of business tensions and family and business goal achievement within family businesses. Household managers identified higher business tensions and higher goal achievement levels than did business managers. A family health assessment (APGAR) was the highest predictor of business tensions for both household and business managers. Total business tensions was the most significant predictor of business goal achievement for both business and household managers, and family health (APGAR) was the largest contributor to family goal achievement for both managers.

Journal ArticleDOI
TL;DR: In this paper, the authors present preliminary findings from three longitudinal case studies forming part of ongoing doctoral research into the activities and dynamics of business-owning families as they address the tasks and issues required during their succession processes.
Abstract: This paper presents preliminary findings from three longitudinal case studies forming part of ongoing doctoral research into the activities and dynamics of business-owning families as they address the tasks and issues required during their succession processes. Specifically, the paper qualitatively explores the nature, characteristics, and effects of family relationship dynamics in three family business systems undertaking the transfer of controlling ownership to the next generation (from father to son). A model is presented to describe the sources of anxiety “imperatives” and their management during transition processes. Conclusions are drawn about the characteristics of emotional dynamics in business-owning families and how these can, over time, hinder or help families manage these tasks.

Journal ArticleDOI
TL;DR: In this article, a theory of leadership succession in a family firm is developed using cognitive categorization as a foundation, and a general leadership succession model that includes the process by which both the parent leader and the child leader evaluate each other and themselves through the cognitive categorisation process, and develop testable propositions from the parent and child leader classifications.
Abstract: Using cognitive categorization as a foundation, this paper develops a theory of leadership succession in the family firm. We specify a general leadership succession model that includes the process by which both the parentqleader and childqsuccessor evaluate each other and themselves through the cognitive categorization process, and we develop testable propositions from the parentqleader and childqsuccessor classifications. This paper posits that these classifications influence the succession process as the parentqleader prepares the childqsuccessor for leadership, and that the childqsuccessor determines both the desirability of assuming leadership and his or her readiness to accept succession.

Journal ArticleDOI
TL;DR: In this paper, the authors examine to what extent lessons can be drawn from the experiences of family businesses in the Western world toward the re-emerging entrepreneurship in east central Europe and conclude that often, as it does in the West, the family forms the basis for the creation of new business initiatives in this region.
Abstract: We examine to what extent lessons can be drawn from the experiences of family businesses in the Western world toward the re-emerging entrepreneurship in east central Europe. We conclude that often, as it does in the West, the family forms the basis for the creation of new business initiatives in this region. It is evident that research concerning family businesses in the West can lead to particularly relevant insights. The three characteristics that almost always affect every family business constitute the cornerstone for the future success.

Journal ArticleDOI
TL;DR: In this paper, the authors review the relevant literature regarding the cost of capital and apply it to the family firm, and suggest that a firm's cost is a market-based function of the characteristics of the investment, not the investor.
Abstract: It has been suggested that the cost of capital for a family firm depends on, among other things, a “family effect,” which deals with the family's relation to its business. Financial theory regarding the cost of capital states that the cost of capital is a market-based function of the characteristics of the investment, not the investor. This theory suggests that a firm's cost of capital does not depend on a family effect. However, not all financial economists' assumptions regarding the cost of capital hold for the family firm. This paper reviews the relevant literature regarding the cost of capital and applies it to the family firm. Knowing the correct cost of capital will enable family owner-managers to make better investment and financing decisions, evaluate performance, and structure rewards for performance.

Journal ArticleDOI
TL;DR: In this article, the authors reflectively analyzes 76 family business senior executives' perceptions of their personal experiences of being mentored and provide family businesses with a practical tool for the selection of appropriate mentoring methodologies.
Abstract: This paper reflectively analyzes 76 family business senior executives' perceptions of their personal experiences of being mentored. Although mentoring in family firms is a common recommendation, there is little empirical research supporting its use or efficacy. The findings from this research reveal that those who were mentored believe it is a vital tool for success. The data indicate a strong belief that the selection of the mentoring technique—formal or informal, performed by a family or nonfamily member—should depend on the parties involved and the situation. The analysis provides family businesses with a practical tool for the selection of appropriate mentoring methodologies. The paper also presents recommendations for future research.

Journal ArticleDOI
TL;DR: In a recent presentation at the University of St. Thomas Center for Family Enterprise Family Business Forum, John Davis, a family business consultant, researcher, and educator, commented that their clients already know everything that consultants like himself teach as mentioned in this paper.
Abstract: In a recent presentation at the University of St. Thomas Center for Family Enterprise Family Business Forum, John Davis, a family-business consultant, researcher, and educator, commented that their clients already know everything that consultants like himself teach. But to be successful, clients need to confront or deal with the obstacles inherent in family-business succession planning. Of course, my first question was: What are those issues? As I looked back over my practice, I began to identify some common obstacles. But before I name these obstacles for discussion, I will describe the context in which I work with my clients. In my work with family-business clients, the basic goal is to help the B.O.S.S. be successful. I begin my work with clients by helping them realize that they have to help the B.O.S.S. be successful so that they can successfully navigate the obstacles and deal with their issues. At the initial client meeting, when I introduce this concept (which comes from Collaborative Team Skills, written by Miller and Miller, 1994), all heads turn toward the father. I announce to the father that he has just been demoted, and that the real boss around here is the four constituencies that make up the acronym. The B stands for the Business and what the busiTen Most Prevalent Obstacles to Family-Business Succession Planning

Journal ArticleDOI
TL;DR: In this article, the authors divided households in which at least one member is involved in managing a family business into two groups: those in which one individual performs two roles, family manager and business manager, and those that two different individuals perform the two roles.
Abstract: This study divided households in which at least one member is involved in managing a family business into two groups: those in which one individual performs two roles, family manager and business manager, and those in which two different individuals perform the two roles. The study compares adjustment strategies that the two groups use to manage the overlap of business and family demands within and across the two family types. Findings suggest that the individual performing dual roles is more likely than two separate managers to make adjustments by bringing the household responsibilities to the business and the business responsibilities home.

Journal ArticleDOI
TL;DR: Kim et al. as mentioned in this paper examined two elements of Korean immigrant businesses in Metro-Atlanta: characteristics (ethnic business, general family business, ownership and succession planning, strategic planning, and conflict and communication) and key success factors.
Abstract: Immigrant businesses in the United States are a vibrant and growing part of the economy, and their similarities and differences to other family businesses in the U.S. are worthy of investigation.This paper examines two elements of Korean immigrant businesses in Metro-Atlanta: characteristics (ethnic business, general family business, ownership and succession planning, strategic planning, and conflict and communication) and key success factors. There were 93 respondents in this exploratory study. This paper discusses the results and implications of the study.

Journal ArticleDOI
TL;DR: In this article, a family's success is measured by the caliber of talent it manages to attract and retain through marriage, and this fundamental fact has received little attention in the family business field.
Abstract: An index of a family's success is the caliber of talent it manages to attract and retain through marriage. This fundamental fact in sociology, anthropology, and history has received little attention in the family business field. Parents in Western societies have two windows of opportunity to enhance long-term family success through marriage: first, before their children reach puberty, and later, after they choose spouses for themselves.

Journal ArticleDOI
TL;DR: This paper examined whether employment in a family-owned business offers parents of young children more flexibility in balancing work and child care responsibilities than employment in non-family owned businesses, and found that employment in such a business offers more flexibility for young children.
Abstract: This research examines whether employment in a family-owned business offers parents of young children more flexibility in balancing work and child care responsibilities than employment in nonfamily...

Journal ArticleDOI
TL;DR: Curtis L. Carlson is one of America's entrepreneurial icons, having launched the Carlson Companies with an innovative idea, trading stamps, or, as the in- dustry is known today, loyalty marketing as discussed by the authors.
Abstract: Curtis L. Carlson is one of America's entrepreneurial icons, having launched the Carlson Companies with an innovative idea—trading stamps, or, as the in- dustry is known today, loyalty marketing. His suc- cessful Gold Bond Stamp Company became the foun- dation for a group of service companies operating in more than 140 countries and employing more than 180,000 people. The Carlson Companies posted 1997 revenues of $20 billion from their family of compa- nies, including the Regent and Radisson Hotels, TGI Fridays, Seven Seas Cruises, and the Carlson Wagonlit Travel Agencies.Mr. Carlson is strongly committed to maintain- ing the Carlson Companies as a family enterprise, owned and led by the Carlson family. He credits his father, Charles Carlson, with sharing an immigrant legacy of hard work and entrepreneurial drive that has energized four generations of Carlsons. During the last few years, Mr. Carlson has been criticized for his unwillingness to step aside and pass the leadership responsibility to the next ...

Journal ArticleDOI
TL;DR: Goleman's most recent book, Working with Emotional Intelligence (WEI) as discussed by the authors, has been used to train family business consultants and people who work in family firms.
Abstract: Daniel Goleman has written two runaway bestsellers. He’s the toast of the talk show book circuit and the current guru on how we handle ourselves in relationships. He was a science writer for the New York Times for 12 years and is now the CEO of Emotional Intelligence Services in Sudbury, Massachusetts. What does his most recent book, Working with Emotional Intelligence, have to offer family business consultants and people who work in family firms? In Working with Emotional Intelligence Coleman has expanded a chapter from his first book, Emotional Intelligence: Why it Can Matter More than IQ (1995), and created a workbook for applying concepts of emotional intelligence to the workplace. Although he does not specifically talk about emotional intelligence in family business, it is clear that his observations can be relevant for the intense relationship systems of families who work together. The book is divided into five parts. In Part 1, Goleman explains the difference between the threshold skills that get a person in the door when applying for a job, the basic cognitive intelligence (IQ) and expertise expected of an applicant, and the emotional intelligence that makes for a star performer (p. 15) in the workplace. He believes that excellence in any job requires more than just threshold skills, and that emotional intelligence is crucial to outstanding workplace achievement. Part 2 describes in detail the 12 specific individual emotional capabilities that Goleman believes are essential to star performance, and Part 3 outlines 13 key relationship skills that make the difference in how people get along with each other at work. In Part 4, Goleman describes his approach to training for emotional intelligence, and in Part 5, he discusses what it means for an organization to be emotionally intelligent. For the purposes of this book, Goleman’s composite individual definition of emotional intelligence is “. . . the capacity for recognizing our own feelings and those of others, for motivating Working with Emotional Intelligence, by Daniel Goleman. New York: Bantam Books, 1998. 383 pp., $25.95 hardcover.