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Journal Article•DOI•

Goal Setting in Family Firms: Goal Diversity, Social Interactions, and Collective Commitment to Family‐Centered Goals

Josip Kotlar1, Alfredo Vittorio De Massis2•
University of Bergamo1, Lancaster University2
01 Nov 2013-Entrepreneurship Theory and Practice (SAGE PublicationsSage CA: Los Angeles, CA)-Vol. 37, Iss: 6, pp 1263-1288
TL;DR: This paper found that goal diversity in family firms is expressed more strongly in the proximity of generational transitions, triggering social interaction processes through which organizational members contrast their goals, with familial social interactions being more effective than professional social interactions in managing goal diversity toward the formation of collective commitment to family-centered goals.
Abstract: Goal setting in family firms is very complex due to the interplay between family and business systems. However, this topic is largely overlooked in family business research. In this qualitative study of goals and goal formulation processes among 76 organizational members across 19 family firms, we identify goal diversity as a direct consequence of the overlap between the family, ownership, and business systems. We found that goal diversity is expressed more strongly in the proximity of generational transitions, triggering social interaction processes through which organizational members contrast their goals. Our findings suggest that different types of social interactions lead to different behaviors, with familial social interactions being more effective than professional social interactions in managing goal diversity toward the formation of collective commitment to family-centered goals.

Summary (3 min read)

Jump to: [Introduction] – [Sample and Context] – [Data] – [Behavioral Relevance of Goal Categories: The Emergence of Goal Diversity] – [Professional and Familial Social Interaction Processes] – [Collective Commitment to Family-Centered Goals] and [Towards a Process View of Goal Setting in Family Firms]

Introduction

  • Goal setting in family firms is very complex due to the interplay between family and business systems.
  • For family firms, these activities are likely to be more complex owing to the unique systemic interactions between the family and the business (Habbershon, William, & MacMillan, 2003).
  • Finally, the authors discuss the implications of their findings and draw conclusions.
  • New perspectives and innovative research approaches are required to perceive the complexity of goal setting implicit in family involvement in the business, and build a more fitting theory on the adoption of family-centered goals in family firms.

Sample and Context

  • Data were obtained from interviews, non-participant observations and archival documents gathered from small and medium family firms in Italy.
  • In addition to considerations on firm size, the inclusion of family firms that are well distributed in terms of firm age further extends the possibility of providing valuable insights into goal formulation processes in family firms.
  • Specifically, to facilitate the theory building, the authors searched for a context that could serve as an “extreme case” (Eisenhardt, 1989) with dynamics that are more visible than in other contexts.
  • First, the authors selected individuals incentives and priorities of organizational members (Jensen & Meckling, 1976).
  • Informant age ranged between 25 and 68, the average informant age is 39.

Data

  • The primary data collection method involved semi-structured interviews with the aforementioned informants.
  • For this reason, the authors used interviews as their primary source of data but also attempted to offset the limitations of this method by using additional methods where possible.
  • At times, the revisited data did not fit well into a category, which led to either abandoning or revising a category.
  • Figure 1 summarizes the process that the authors followed, showing their first-order codes, second-order themes and aggregate theoretical dimensions for each theory question.
  • In describing this process, the authors begin with a discussion of the goals pursued by organizational members in family firms, which helps inform on the individual-level antecedents of goal setting in family firms and, ultimately, on how goal diversity and goal conflicts arise therein.

Behavioral Relevance of Goal Categories: The Emergence of Goal Diversity

  • A taxonomy of organizational member individual goals in four goal categories emerged from the iterative comparison of the empirical evidence and previous literature, and this contributed to answering their first theory question on the goals pursued by family firm organizational members.
  • First of all, the authors must aspire to keeping the business alive.
  • Each organizational member discussed multiple goals belonging to different categories and each organizational member was also able to identify a subjective hierarchy among these goals, which allowed us to define the goal category that is most relevant to each informant.
  • The full analyses are available from the authors on request.
  • In the next section, the authors uncover the implications of goal diversity for goal formation processes in family firms.

Professional and Familial Social Interaction Processes

  • To enable understanding goal setting in family firms entailed exploring organizational member individual goals and their determinants, which led us to develop the concept of goal diversity that encapsulates the complex set of inputs to goal formulation processes in family firms.
  • After the meeting, the PM commented: “This is not the first time their views have differed, but after all, the authors respect each other and both believe they can always find a compromise as long as they want it” (PM).
  • Moreover, professional and familial social interactions contrast administrative with affective bargaining, and formal with social stabilization.
  • A CEO used economic threats to persuade a non-family shareholder to create a financial instrument to support younger family members: “I was really unhappy with this closure, after all I am the majority owner, I would have preferred to make a joint decision. ….
  • To sum up, the evidence presented thus far explains how family-centered goals enter the agenda of organizational members in family firms, pointing to two distinct social interaction processes through which family-centered goals are bargained and stabilized, and goal diversity is thus turned into a consistent course of actions to be applied by individual members.

Collective Commitment to Family-Centered Goals

  • The differences between professional and familial social interaction processes have relevant implications on organizational outcomes.
  • Likewise, a CEO was pleased about how a discussion with his brother - a shareholder not involved in the firm - was concluded: “When one speaks clearly and sincerely the relationship will benefit both parties.
  • In sum, the stabilization mechanisms in both professional and familial social interactions resulted in stronger commitment to family-centered goals by the members involved, as observed in terms of conformation to family values and resource dedication .
  • In each firm, both professional and familial social interactions were observed.
  • This led us to the interpretation that the formation of family-centered goals in family firms is favored by familial social interactions during which family members create norms of behavior that are consistent with the family vision, increasing organizational member commitment to familycentered goals.

Towards a Process View of Goal Setting in Family Firms

  • To help interpret the various concepts and their relationships in their data, the authors constructed Figure 3, which summarizes and generalizes their main findings, graphically presenting the observations and propositions that emerged from their empirical analysis.
  • The overlap of the family system with ownership and management thus leads not only to the adoption of family-centered goals (Chrisman et al., 2012), but also entails goal diversity, working as a latent force in family firms that may generate resistance to the family coalition.
  • The framework derived from their findings outlines two distinct social interaction processes through which goal diversity can be managed to build collective commitment to family-centered goals.
  • The authors findings have theoretical and empirical implications.
  • The authors study also adds to their knowdge of intra-family succession processes and indicates the decisive effects of intra-family succession for family-centered goals.

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1
Goal Setting in Family Firms:
Goal Diversity, Social Interactions, and
Collective Commitment to Family-Centered Goals
Josip Kotlar
University of Bergamo
Center for Young & Family Enterprise
Via Pasubio 7B, 24044 Dalmine (BG) – Italy
josip.kotlar@unibg.it
Alfredo De Massis
University of Bergamo
Center for Young & Family Enterprise
Via Pasubio 7B, 24044 Dalmine (BG) – Italy
alfredo.demassis@unibg.it
Please cite as: Kotlar, J. & De Massis, A. (2013). Goal setting in family firms:
Goal diversity, social interactions, and collective commitment to family-centered
goals. Entrepreneurship Theory and Practice, 37(6).
2
Goal Setting in Family Firms:
Goal Diversity, Social Interactions, and
Collective Commitment to Family-Centered Goals
ABSTRACT
Goal setting in family firms is very complex due to the interplay between family and business
systems. However, this topic is largely overlooked in family business research. In this qualitative
study of goals and goal formulation processes among 76 organizational members across 19
family firms, we identify goal diversity as a direct consequence of the overlap between the
family, ownership and business systems. We found that goal diversity is expressed more strongly
in the proximity of generational transitions, triggering social interaction processes through which
organizational members contrast their goals. Our findings suggest that different types of social
interactions lead to different behaviors, with familial social interactions being more effective
than professional social interactions in managing goal diversity toward the formation of
collective commitment to family-centered goals.
INTRODUCTION
Goal setting, in all organizations, is a vital function through which individual goals are
transformed into organizational policies and actions (Cyert & March, 1963; Simon, 1964). For
family firms, these activities are likely to be more complex owing to the unique systemic
interactions between the family and the business (Habbershon, William, & MacMillan, 2003). A
family can use its power and discretion to influence decisions and foster the adoption of family-
centered goals (Chua, Chrisman, & Sharma, 1999; Chrisman et al., 2012). Given that family
firms are very common (e.g., La Porta et al., 1999), and given that family-centered goals play an
important role in the theory of family firms (Chrisman & Patel, 2012; De Massis et al.,
forthcoming; Habbershon et al., 2003), it is surprising that only limited attention has thus far
been paid to how organizational goals are determined in these organizations (De Massis et al.,
2012). Thus, addressing the issues underlying the goal formulation processes in family firms
appears warranted.
3
The family is seen as a dominant group within the family firm (Chua et al., 1999).
According to Cyert and March (1963), it follows that family-centered goals will become more
salient as the family coalition increases its representation and authority within the organization.
However, the relationship between family involvement and the adoption of family-centered goals
is likely to be complex, and mediated and moderated by several factors (Chrisman, Chua, &
Sharma, 2005; Chrisman et al., 2012). Goal setting involves individuals, groups and firms,
nevertheless, the relatively scarce studies available are limited to the firm level, typically relying
on single informants (e.g., Chrisman et al. 2012; Tagiuri & Davis, 1992) and overlooking the
individual organizational member’s role in the process. In this study, we attempt to broaden and
refine the extant theory in the area of organizational goals and goal formulation processes in
family firms by addressing the following research question: How do the individual goals of
organizational members influence the organizational goals pursued by family firms?
Given the ambiguities inherent in multilevel research, qualitative methodologies were
considered particularly appropriate to accomplish our purpose (Hitt et al., 2007). We undertook
interviews and gathered non-participant observations and archival documents from 19 family
firms; thereafter analyzing these qualitative data to disclose the unexplored dynamics of goal
setting in family firms. The evidence presented in this article refines and extends current
understanding of how family involvement engenders the adoption of family-centered goals in
organizations, and offers new insights on intra-family succession as an ideal occasion for
challenging the status quo and fostering the restabilization of new organizational goals. Finally,
this study reveals the critical contribution that studying these aspects of goal setting can make to
theory building in the area of organizational behavior and stakeholder management, as well as
enhancing practical understanding of organizational goals in family firms.
4
The article is organized as it follows: in the next section, we set the foundations for our
study by reviewing insights from prior research on goal setting and from family business
literature. In the third section, we outline the research design and methods. Thereafter, we
present the key findings and the inductive process that led us to formulate our theoretical
propositions. Finally, we discuss the implications of our findings and draw conclusions.
BACKGROUND
Organizational goals are an important yet controversial concept in organization theory
(Argote & Greve, 2007; Cyert & March, 1963; Simon, 1964). In contrast to the economic
approach of modeling firm decisions made by unitary actors, organizational theorists challenge
the assumption that organizations have simple, well-defined goals and conceive work
organizations as political entities in which coalitions are formed among individuals to influence
the goals that the firm will pursue (Cyert & March, 1963; Stevenson, Pearce, & Porter, 1985).
According to this perspective, organizational goals may change over time, reflecting the goal
setting processes among coalitions that presumably pursue conflicting and inconsistent goals
(Cyert & March, 1963). Thus, defining the goals adopted by an organization requires specifying
who is able to influence firm decisions, the elements that may affect their individual goals and,
more importantly, the processes through which the individual preferences are translated into
organizational policy and action (Stevenson et al., 1985).
Some researchers assume that the relative importance of different goals in an
organization is a function of the power of individuals or groups of individuals in decision-
making processes (e.g., Cameron, 1978; Pearce & DeNisi, 1983). The theory of stakeholder
salience (Mitchell, Agle, & Wood, 1997), for example, suggests that managers pay sequential
attention to internal and external stakeholders based on the evaluation of their attributes of
5
power, legitimacy and urgency. However, managers are not necessarily a cohesive group (e.g.,
Pitcher & Smith, 2001), and thus can only loosely be defined as a coalition. Furthermore, several
organizational members can influence firm behavior through their decisions in different
organization units (Simon, 1964), while goal setting processes do not necessarily follow
hierarchical arrangements among coalitions (Jacobides, 2007; Pfeffer & Salancik, 1977;
Stevenson et al., 1985). Consequently, in order to avoid implementation gaps, the formulation of
organizational goals cannot be limited to the top management team, but should also involve other
individuals at different levels of the organization (e.g., Floyd & Wooldridge, 1992).
According to Cyert and March (1963), organizational goals are formed through a process
that is articulated in three steps: first, coalitions are formed and coalition goals are defined
through internal bargaining and side payments; second, goals are stabilized and elaborated into
control-systems that define policy constraints to organizational member actions; finally,
organizational goals are continuously updated on experience gained (Cyert & March, 1963, p.
33). Research in social psychology and political science provides further insights in this regard,
suggesting that individuals purposefully form coalitions to pursue their goals (e.g., Pearce &
DeNisi, 1983), and that coalitions will tend to be inclusive to increase their bargaining power and
maximize policy outcomes for its members (e.g., Komorita & Chertkoff, 1973; Rosenthal, 1970).
Combining the insights from this body of research with the description of goal setting processes
proposed by Cyert and March (1963), Stevenson et al. (1985) concluded that the problem of
defining organizational goals is closely linked to that of defining coalitions. They suggest that
coalitions are continuously formed in organizations in response to variations in organizational
resources, creating conflicts among organizational members and subsequent bargaining
mechanisms that lead to determining joint actions.
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"Goal Setting in Family Firms: Goal ..." refers background in this paper

  • ...Specifically, to facilitate the theory building, we searched for a context that could serve as an “extreme case” (Eisenhardt, 1989) with dynamics that are more visible than in other contexts....

    [...]

  • ...searched for a context that could serve as an “extreme case” (Eisenhardt, 1989) with dynamics that are more visible than in other contexts....

    [...]

Book•
Qualitative Data Analysis

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Miles Matthew B, Huberman A. Michael
01 Jan 1994
TL;DR: In the field of qualitative data analysis, qualitative data is extremely varied in nature. It includes virtually any information that can be captured that is not numerical in nature as mentioned in this paper, which is a generalization of direct observation.
Abstract: Qualitative data is extremely varied in nature. It includes virtually any information that can be captured that is not numerical in nature. Here are some of the major categories or types: In-Depth Interviews In-Depth Interviews include both individual interviews (e.g., one-on-one) as well as "group" interviews (including focus groups). The data can be recorded in a wide variety of ways including stenography, audio recording, video recording or written notes. In depth interviews differ from direct observation primarily in the nature of the interaction. In interviews it is assumed that there is a questioner and one or more interviewees. The purpose of the interview is to probe the ideas of the interviewees about the phenomenon of interest. Direct Observation Direct observation is meant very broadly here. It differs from interviewing in that the observer does not actively query the respondent. It can include everything from field research where one lives in another context or culture for a period of time to photographs that illustrate some aspect of the phenomenon. The data can be recorded in many of the same ways as interviews (stenography, audio, video) and through pictures, photos or drawings (e.g., those courtroom drawings of witnesses are a form of direct observation). Written Documents Usually this refers to existing documents (as opposed transcripts of interviews conducted for the research). It can include newspapers, magazines, books, websites, memos, transcripts of conversations, annual reports, and so on. Usually written documents are analyzed with some form of content analysis. sumber : http://www.socialresearchmethods.net/kb/qualdata.php

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Frequently Asked Questions (9)
Q1. What have the authors contributed in "Goal setting in family firms: goal diversity, social interactions, and collective commitment to family-centered goals" ?

However, this topic is largely overlooked in family business research. In this qualitative study of goals and goal formulation processes among 76 organizational members across 19 family firms, the authors identify goal diversity as a direct consequence of the overlap between the family, ownership and business systems. Their findings suggest that different types of social interactions lead to different behaviors, with familial social interactions being more effective than professional social interactions in managing goal diversity toward the formation of collective commitment to family-centered goals. 

Their study is a first step to uncovering the intervening mechanisms that characterize goal setting in family firms, however, as any other qualitative study, it has a number of limitations that lay the foundations for future research. Future research aspirations include capturing and linking the how organizational goals are determined. Refining the original constructs proposed in this article and developing reliable scales to measure these constructs is thus proposed as a promising area for future research. For example, the construct of goal diversity requires further examination and more work is required to advance their understanding of its antecedents and consequences by exploring its meaning, its maximum shape and the potential existence of distinct types of goal diversity ( e. g., see Harrison & Klein, 2007 ). 

while the inclusion of a consistent mediator in a statistical model will reduce the main effect, the inclusion of an inconsistent mediator is acknowledged as increasing its predictive validity (MacKinnon, 2008). 

Although large firms may present greater goal conflict due to the larger number and variety of internal and external parties that are able to make claims and influence the business agenda, in smaller firms such conflicts are more likely to concern familycentered goals. 

their sample was approximately 18 percent female, with women quite uniformly distributed among members involved and not involved in the business (6 out of 14 were involved in the business), family and non-family members (8 out of 14 were familygeneration currently leading the company, 3 to the young generation, and 1 to the old generation). 

Among these, 5 CEOs declined participating due to time limitations, while the authors obtained informed consent frombusiness meetings and to access their archives. 

professional social interactions usually leave intact - and may even exacerbate - goal divergences, thus negatively affecting organizational member commitment to family-centered goals. 

the authors propose:Proposition 5: Stabilization of family-centered goals is more likely to occur through familial than professional social interactions. 

In this vein, the framework derived from their findings outlines two distinct social interaction processes through which goal diversity can be managed to build collective commitment to family-centered goals.