FAMILY BUSINESS

Family Business

Table of Contents

Chapter 1: Introduction3

Background3

Problem Statement4

Scope of the Study4

Definition of Terms5

Chapter 2: Literature Review6

The Family Systems Approach8

The Three Circles Model10

The Genogram11

Family Myths12

Parallel Planning Processes12

Fair Process13

Chapter 3: Methodology14

Mixed Method Research14

Sample Size14

Data Collection and Analysis15

Timetable16

References17

Bibliiography18

Chapter 1: Introduction

Background

Family businesses play an important part in countries around the world. It is estimated that over two-thirds of all world-wide businesses are owned or managed by families (Gersick et al., 1997). More than 80 per cent of businesses in Europe and the United States are believed to be family-owned (Flintoff, 2002). Around half of all businesses in Australia are family businesses (Getz and Carlson, 2000). Family businesses also play a significant role in developing countries like India (Basu, 2000).

Despite the prevalence of family businesses, the exact concept of the family business remains elusive and open to interpretation. It is generally agreed that family businesses differ from non-family businesses and need to be considered separately. However, relatively few authors examine differences amongst family businesses. This paper aims to contribute to this debate by comparing family businesses in terms of their owners' aspirations. It focuses on ethnic minority immigrant entrepreneurs, a group that is relatively neglected in the family business literature despite the fact that immigrants from ethnic minority, especially Asian, communities tend to have strong family ties and family involvement in business. This paper explores differences in the entrepreneurs' background that might explain differences in their aspirations and examines whether aspirational differences are related to differences in business behaviour and outcomes. In the process, the paper aims to contribute to our understanding of the intersection between entrepreneurship and family business, by identifying strictly entrepreneurial and other less entrepreneurial or non-economic aspirations of family business owners.

Problem Statement

The declining number of larger family firms is often attributed to the family proprietor's desire to restrict firm growth in order to maintain control and ownership within the family (Daily and Dollinger, 1993). Consistent with this desire, it is argued that family proprietors tend to be risk averse, preferring an informal and conservative management style and efficiency-oriented strategies (Donckels and Frohlich, 1991; McConaughy et al., 2001). In contrast, non-family firms desire growth and short-term profits in order to attract outside resources and to meet the investment goals of outside owners. Management systems tend to be more formal in non-family firms to enable accountability to outside owners (following the agency relationship that evolves) (Daily and Dollinger, 1993; Kotey, 2005).

Scope of the Study

Much of the research into family businesses emphasises that vis-à-vis non family-owned firms they can operate under a different set of constraints and often with different objectives, since family and business/commercial objectives are often incompatible (Friedman, 1991). That is, since family-owned firms are businesses in which a single family exercises significant managerial and financial authority (Kirchoff and Kirchoff, 1987; Leach, 1994; Ward and Aronoff, 1991) and since families seldom relinquish control to non-family managers (Francis, 1980), there is often a tension between rational profit seeking activities and the non-commercial objectives of the family ...