Family climate influences next-generation family business leader effectiveness and work engagement

Effective next-generation leadership is central to the multi-generational survival of family businesses. This study of 100 next-generation family business leaders found that business-owning families that openly express their opinions, take time to listen to each other, and squarely address difficult issues positively influence the development of the emotional and social intelligence competencies in next-generation family leaders that drive their leadership effectiveness. That kind of open and transparent communication in the family also makes it more likely next-generation leaders will be held accountable for their leadership performance by others, which increases the degree to which they are positively engaged with their work in the family firm. On the other hand, the results suggest that senior-generation family leaders who lead autocratically, a leadership style often observed in entrepreneurs who found family firms, make it less likely that next-generation family leaders will learn the emotional and social intelligence competencies that predict their leadership effectiveness. The study also found that autocratic senior-generation leaders negatively affect next-generation leader self-efficacy and make it less likely that others will hold them accountable, which limits their engagement with work in the family business. One of the study's most important findings is that next-generation leader acceptance of personal responsibility for their leadership behaviors and results serves as a mediator through which the nature of the family climate influences their leadership effectiveness and work engagement. This suggests that while the nature of family relationships may make it easier or more difficult, next-generation family leaders have ultimate control over the development of their leadership talent and the inspiration, enthusiasm, energy, and pride they feel when working in the family business.

Entrepreneurship in family firms: an updated bibliometric overview

Research on entrepreneurship in family firms has grown exponentially over the past two decades. Due to the various theoretical perspectives and contexts found here however, this body of research remains fragmented, with a unified understanding of the current state of knowledge and the opportunities for future research in the field continuing to lack. In this study, we address this gap by conducting an updated bibliometric analysis of the research on entrepreneurship in family firms. Here we integrate two different bibliometric methods to provide a more comprehensive picture of the field, unveiling its intellectual foundations and current research discourses and how these two are related. To do this, we first conduct a co-citation analysis clustering the intellectual foundations of the research on entrepreneurship in family firms. Second, a bibliographic coupling of recent publications from 2010 to 2021 provides a transparent structure of current research discourses. Third, analyzing which intellectual foundations are primarily cited in each current research stream unveils the dominant theoretical paradigms in the current state of research. Analyzing 570 published studies, we identified four intellectual foundations of entrepreneurship in family firms: socioemotional wealth (SEW), entrepreneurial orientation, family-embedded resources, and agency theory. The current research can be clustered into seven main discourses: entrepreneurial motivation, gender and success, entrepreneurial orientation, individual and firm-level characteristics, the family embedded network, family firm internationalization, and family heterogeneity. An integrative network diagram provides an overview of the research field’s development while also identifying the gaps to be addressed by future research.

A Multivariate Analysis of the Interest in Starting Family Businesses within a Developing Economy

The main objective of the research is to analyze the factors which influence the intention to start an intergenerational family business in a developing economy, highlighting the measures that can be implemented by decision-makers to stimulate these initiatives. PLS-SEM was used to analyze the data issued from 200 valid questionnaires. The survey was applied to 950 individuals from Romania. We focused on four variables: the closeness to family members, the financial support expected from family, the independence of individuals regarding the intention to start their own business and the intention to form partnerships with family members. All the hypotheses were validated, according to the final results. Thus, closeness to family members has a direct and positive impact on both the financial support expected from the family and the intention to form intergenerational family businesses. There is also a direct correlation between the financial support received from family and the intention to have partnerships with family members. Individuals who are closer to their families are not interested in developing independent businesses. There are several studies on family businesses in Romania, but there is no research analyzing the impact of closeness to family on the intention to develop an intergenerational family business. The study is useful for the decision-makers who can create national strategies in order to stimulate families to develop their own businesses.

Managing Organizational Inertia: Indonesian Family Business Perspective

The ability to transform on a regular basis is critical in the effort to adapt to external challenges; however, changes to an organization's fundamental characteristics may increase the likelihood of failure. Because of this, organizational restructuring efforts appear to engender cynicism, which appears to be one of the most significant obstacles facing contemporary businesses, particularly in this area. Organizational inertia is the term used to describe this aversion to change, as well as the desire to maintain the current status quo. A new organizational culture capable of combating the incidence of organizational stagnation is required by massive social, economic, and technological difficulties, and firms that employ the concept of empowering leadership will be able to meet these challenges. For the purposes of this study, a framework for discussing the phenomena of organizational cynicism was developed and implemented.

Family businesses under COVID-19: Inspiring models – Sometimes

We examine the behavior of family firms during the COVID-19 pandemic through the lens of Miller and Le Breton-Miller’s (2005) “4C model” of continuity, community, connection, and command. We show how some family firms embracing temporally and socially extended priorities have excelled along these Cs and conducted themselves as exemplary citizens during the COVID crisis. By contrast some family firms with more restricted priorities have behaved in ethically disreputable ways. We discuss the contingencies that affect these forms of behavior and suggest why family firms may be subject to both positive and negative ethical extremes.

Surviving the coronavirus pandemic and beyond: Unlocking family firms’ innovation potential across crises

In this research note, we examine Finnboat, a traditional Finnish family firm, from the interrelated perspectives of crisis behavior and innovation. The firm under study has endured three major crises: the economic recession of the 1990s, the 2008–2009 financial crisis, and the coronavirus pandemic. Our study shows that Finnboat has undertaken only very modest, if any, innovations during stable periods but has conducted a series of radical business-model and technology innovations, triggered by the different crises. This finding implies that during crises, a risk-averse family firm can productively engage into risk-taking and innovative behavior, effectively engaging in a “preference reversal.” We also find evidence of a deliberate accumulation of slack resources during periods of calm, which are mobilized to back up innovation and renewal efforts when a crisis hits. Our findings highlight family firms’ potential to endure crises by adopting a temporal separation logic to the risk-aversion vs. risk-taking paradox, and relatedly, by strategically managing the resource portfolio. Based on the case study, we suggest several research directions, approaches, and methodologies for studying family firm behavior and change during and in-between crises.

Exploring the growth process of successors in long-lived small and medium-sized manufacturing companies: a qualitative study

Background: Japan is the world's largest country in terms of the number of long-lived companies, the majority of which are family-owned small and medium-sized enterprises. On the other hand, many business owners will be retiring without successors, and the closure of these small and medium enterprises may have a significant impact on the future economy. The purpose of this study is to explore the growth process of successors in long-lived small and medium-sized manufacturing companies so that potential successors can know what they will experience as managers and be prepared for the future, and professionals who support successors can be provided with information on the growth process of successors to provide appropriate support.

Methods: Semi-structured interviews were conducted with six successors of small and medium-sized manufacturing companies that are more than half a century old. Their answers were analyzed using the modified grounded theory approach to construct a hypothetical model.

Results: In total, 46 concepts, four categories, 17 subcategories, and one core category with an analysis result diagram were formed. The diagram shows the successors gained confidence in management through the dilemma between autonomy and constraint in the early stage of succession, which was found in previous research. Following the initial stage, the successors responded to the crisis caused by market constraints such as being stuck in a new market, unreasonable treatment from customers, and created autonomous strategies in their businesses.

Conclusions: By experiencing repetitive crises, the successors tend to acquire new perspectives toward the naturally occurring crises. This change of premise by the successors is considered as the process of double-loop learning. Relationships inside and outside the company influence the generation of this viewpoint. From a long-term perspective, a sense of unity with employees, stable employment, and the pursuit of enjoyment constitute the successors' values in this model.

Mental Health in Family Businesses and Business Families: A Systematic Review

Mental health issues in family businesses and business families have been studied in multiple disciplines within the past three decades. This article systematically reviews 51 articles on mental health issues in family businesses and business families, published in a wide variety of psychology, entrepreneurship, and management journals. Based on a systematic review of extant literature, this article first provides an overview of the state of the art, followed by specific suggestions on novel research questions, theoretical frameworks and study design. This way, the review systematizes evidence on known antecedents and consequences of mental health issues in family businesses and business families, but also reveals overlooked and undertheorized drivers and outcomes. The review reveals major gaps in our knowledge that hinder a valid understanding of mental health in the specific context of family businesses and business families, and articulates specific research questions that could be tackled by future research among management as well as mental health scholars. Finally, we point to the relevance of this study for policy makers, family business advisors, therapists and managers.

Business in times of crisis

Government bailouts of corporate sectors in the COVID-19 crisis are part of a tripartite arrangement between government, business and institutional investors. Business should respond to the changing preferences of customers, employees and societies by identifying value propositions that justify the provision of risk capital by institutional investors. Critical to this is the determination and implementation of corporate purposes by owners and board directors that focus on inter-generational horizons. Family owners are particularly well placed to do this, but institutional investors need to make it part of their stewardship function as well. Measurement is key and significant reforms are required in the areas of accounting, valuation and reporting. Consistent with these observations, companies that had strong environmental, social and governance records performed better during the initial stages of the crisis, as did family owned firms and those that avoided high levels of leverage prior to the crisis.

Behavior of Internal Customer in Family Business: Strategies and Actions for Improving Their Satisfaction

Determining the relevant aspects of family businesses (FBs) that make them increasingly competitive is the main objective of researchers in this field. Despite this, there is little empirical literature on the behavior of the internal customer (IC) in FBs or how businesses increase their satisfaction. Basing our work on psychological theories and with both quantitative and qualitative information from 31 semi-structured interviews, this work establishes certain characteristics of the ICs of the FB and proposes a series of guidelines for increasing their satisfaction, thereby facilitating the continuity of this type of business. FBs that are able to understand that the motivation of their ICs is more important than other qualities, and that this requires a more comprehensive management will be able to get sustainable competitive advantages in the future.

Shared vision between fathers and daughters in family businesses: the determining factor that transforms daughters into successors

Family businesses are critical to the United States economy, employing 63% of the workforce and generating 57% of GDP (University of Vermont, 2014). Family business continuity, however, remains elusive as approximately 70% of family businesses do not survive the second generation (Poza, 2013). In order to augment our understanding of how next generation leaders are chosen in family businesses, we examine daughter succession. Using a sample of pairs of family business fathers and daughters and drawing on an earlier study of the dearth of successor daughters in family businesses (Overbeke et al., 2013), we reveal that shared vision between fathers and daughters is central to daughter succession. Self-efficacy and gender norms influence shared vision and when fathers and daughters share a vision for the future of the company, daughters are likely to be transformed into successors.

Shared vision promotes family firm performance

A clear picture of the influential drivers of private family firm performance has proven to be an elusive target. The unique characteristics of private family owned firms necessitate a broader, non-financial approach to reveal firm performance drivers. This research study sought to specify and evaluate the themes that distinguish successful family firms from less successful family firms. In addition, this study explored the possibility that these themes collectively form an effective organizational culture that improves longer-term firm performance. At an organizational level of analysis, research findings identified four significant variables: Shared Vision (PNS), Role Clarity (RCL), Confidence in Management (CON), and Professional Networking (OLN) that positively impacted family firm financial performance. Shared Vision exhibited the strongest positive influence among the significant factors. In addition, Family Functionality (APGAR), the functional integrity of the family itself, exhibited a significant supporting role. Taken together, the variables collectively represent an effective family business culture (EFBC) that positively impacted the long-term financial sustainability of family owned firms. The index of effective family business culture also exhibited potential as a predictive non-financial model of family firm performance.

Next-generation leadership development in family businesses: the critical roles of shared vision and family climate

The multigenerational survival rate for family-owned businesses is not good. Lack of a shared vision for the family enterprise and weak next-generation leadership are often cited as two of the leading reasons for the failure of family firms to successfully transition from one generation of family ownership to the next. The climate of the business-owning family has also been suggested as important to the performance of the family enterprise. Despite these commonly held tenets, there is a lack of rigorous quantitative research that explores the relationships among these three factors. To address this gap, a quantitative study of 100 next-generation family firm leaders and 350 family and non-family leaders and employees with whom they work was conducted. The results demonstrate that a shared vision for the family business has a strong effect on the leadership effectiveness of next-generation family leaders and a moderate effect on the degree to which they are positively engaged with their work. The findings also show that two dimensions of family climate significantly influence the likelihood that a shared vision for the family firm has been created. Open communication in the family is positively related to the presence of a shared vision for the business. Intergenerational authority, which refers to a senior generation that exercises unquestioned authority and sets the rules, is negatively related to the presence of a shared vision. Surprisingly, a third dimension of family climate, cognitive cohesion, which includes shared values in the family, had no relationship with the degree to which there was a shared vision for the family business. The implications for family business owners is that they would be wise to spend as much time on fostering a positive family climate characterized by open communication as they do on creating and executing a successful business strategy if their goal is to pass the business from one generation of family owners to the next.