Family-Enterprise Management


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Family-Enterprise Management

  1. 1. Family-Enterprise Management Is family influence an asset or a liability? Basco Rodrigo PhD Witten/Herdecke University Witten Institute for Family Business 1
  2. 2. Family-Enterprise Management Is family influence an asset or a liability?
  3. 3. Family business field M. C. Escher Relativity, 1953 3
  4. 4. Family business field 4
  5. 5. Family business field Research Centers Family Business Institutes Family Business Chairs Conferences Academic Journals How has family business knowledge been created? How has family business knowledge evolved ? Researchers Family Owners Practitioners Family Managers 5
  6. 6. Family business field  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 6
  7. 7. Family business field  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. 7
  8. 8. Family-Enterprise Management. Is family influence an asset or a liability?
  9. 9. Family-Business Relationship
  10. 10. 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’.
  11. 11. Family-Business Relationship • 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 Family Firm economically matter?
  12. 12. Family-Enterprise Management. Is family influence an asset or a liability?
  13. 13. Family-Business Relationship
  14. 14. Family-Business Relationship It is known that: family business behave differently king ecision-ma D How to measure the family-business relationship? Where can family-business relationship be captured?
  15. 15. Family-Business Relationship
  16. 16. Family-Business Relationship  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)
  17. 17. Business orientation Family orientation
  18. 18. Family-Business Relationship Family involvement STRATEGIC PROCESS SUCCESSION HUMAN RESOURCES BOARD OF DIRECTORS How is an organization governed and managed? Family-oriented decisions Business-oriented decisions
  19. 19. Family-Business Relationship • 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.
  20. 20. Family-Business Relationship  Future research lines – theoretical/methodological » 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?
  21. 21. Family-Enterprise Management Is family influence an asset or a liability?
  22. 22. Heterogeneity of family firms
  23. 23. 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’
  24. 24. Heterogeneity of family firms Family-oriented decisions Are family firms a homogeneous group? Family-first firms Family-enterprise first firms Marginal type of firms Business-first firms Business-oriented decisions
  25. 25. Heterogeneity of family firms How does the family-business relationship affect family firm performance? Family-oriented decisions Business-oriented decisions Family-enterprise first firms Family-first firms Equifinality Family Performance Business-first firms Equifinality Business performance
  26. 26. Heterogeneity of family firms  Methodology » Scale development (questionnaire) - Performance (subjective measure based on degree of goal achievement) » Sample design and data collection (representative sample) » Data analysis - Descriptive analysis - Cluster analysis (underline structure of the sample – group) - Discriminant analysis - Ideal profile of firm – Euclidean distance - Configurative approach procedure (heterogeneity – equifinality - performance)
  27. 27. Heterogeneity of family firms • Heterogeneity based on behavioural elements • Family firms can achieve successful business results by using a combination of family and business orientations in their decisionmaking
  28. 28. Heterogeneity of family firms  Future research lines – theoretical/methodological » 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)?
  29. 29. Family-Enterprise Management Is family influence an asset or a liability?
  30. 30. Strategic position of family firms
  31. 31. 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?
  32. 32. Strategic position of family firms
  33. 33. Strategic position of family firms  Methodology » Scale development (questionnaire) - Strategic behavior (how does the firm compete – Porter’s scale: cost-leadership and differentiation leadership) » Sample design and data collection (representative sample) » Data analysis - Descriptive analysis - Configurative approach procedure (heterogeneity – performance) – – – – Factorial analysis Cluster analysis Euclidian distance Regression and correlation
  34. 34. Strategic position of family firms • 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
  35. 35. Family-Enterprise Management Is family influence an asset or a liability?
  36. 36. 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
  37. 37. Future steps Research – 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.) • Search breadth and innovation in family firms: evidence from a natural-resource based cluster in Chile (Basco, R.; De Massis, A. Kotlar, J.) • 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.) • An exploratory study of family firm objectives (Basco, R.; Pieper, T. ) • 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, perspective (Bartolami, F. & Basco, R) a behavioral economic