Amir Zakaria Consulting Group | Family businesses
Family businesses Family business researchers highlight several unique characteristics of family businesses that allow them to strategically organise their business activities efficiently and effectively. Hoffman et al. (2006) argue that the characteristic that distinguishes FBs from NFBs is the effect of the family relationships on the business. Gomez-Mejia et al. (2011) argue that an additional feature that distinguishes FBs from NFBs is their desire to preserve the family’s socioemotional wealth and the pursuit of nonfinancial outcomes. These relationships and features are revealed by the following characteristics. First, in FBs there is not only a paternalistic relationship between the owners/managers and employees (Bertrand & Schoar, 2006), but there is also a maternalistic relationship between the family owners and the employees because of the former’s nurturing attitude. Second, FBs have cohesive clan cultures in which employees are hired for the long-run and treated generously (Miller & Le Breton-Miller, 2005). Third, FBs have unique capabilities that propagate trust, inspiration, motivation, and commitment among the employees. Fourth, FBs have a strong desire to develop customer relationships and demonstrate flexibility in their business activities and decision-making processes (Tokarczyk, Hansen, Green, & Down, 2007). Moreover, FBs are apt to develop social relationships and connections and are also known to have the integrity and commitment to maintain those relationships (Miller, Lee, Chang, & Le Breton-Miller, 2009). Fifth, the reputation of FBs enables them to experience both a higher level of trustworthiness and lower overall transaction costs (Tagiuri & Davis, 1996). amir zakaria, nazli monajemzadeh, اميرذكريا, امير ذكريا, نازلی منجم‌زاده
Family businesses, efficient, business, amir zakaria, nazli monajemzadeh, اميرذكريا, امير ذكريا, نازلی منجم‌زاده
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Family businesses

Family businesses

Family business researchers highlight several unique characteristics of family businesses that allow them to strategically organise their business activities efficiently and effectively. Hoffman et al. (2006) argue that the characteristic that distinguishes FBs from NFBs is the effect of the family relationships on the business. Gomez-Mejia et al. (2011) argue that an additional feature that distinguishes FBs from NFBs is their desire to preserve the family’s socioemotional wealth and the pursuit of nonfinancial outcomes. These relationships and features are revealed by the following characteristics. First, in FBs there is not only a paternalistic relationship between the owners/managers and employees (Bertrand & Schoar, 2006), but there is also a maternalistic relationship between the family owners and the employees because of the former’s nurturing attitude. Second, FBs have cohesive clan cultures in which employees are hired for the long-run and treated generously (Miller & Le Breton-Miller, 2005). Third, FBs have unique capabilities that propagate trust, inspiration, motivation, and commitment among the employees. Fourth, FBs have a strong desire to develop customer relationships and demonstrate flexibility in their business activities and decision-making processes (Tokarczyk, Hansen, Green, & Down, 2007). Moreover, FBs are apt to develop social relationships and connections and are also known to have the integrity and commitment to maintain those relationships (Miller, Lee, Chang, & Le Breton-Miller, 2009). Fifth, the reputation of FBs enables them to experience both a higher level of trustworthiness and lower overall transaction costs (Tagiuri & Davis, 1996).

Finally, families may control their businesses by giving priority to family members in top management and other sensitive positions and are also selective in their recruitment procedures (Bertrand & Schoar, 2006). This allows FBs to have lower recruitment and human resource costs and a tendency to be parsimonious in the use of their resources (Carney, 2005), thus making them more efficient than other labour-intensive businesses (Levring & Moskowitz, 1993). However, this study recognises that FBs are not monolithic with respect to family involvement in the business, which is why several researchers have distinguished different family businesses by using terms such as ‘‘family owned’’, ‘‘family managed’’, ‘‘family owned and managed’’ and ‘‘family controlled’’ (Gomez-Mejia et al., 2011; Shankar & Astrachan, 1996). Nevertheless, the characteristics enumerated above generally apply to all family businesses and could be used to distinguish FBs from NFBs, and these characteristics allow them to create a unique and flexible work environment that inspires employees to be motivated, committed and loyal to the business. They also allow employees to focus on the well-being of customers, thereby enabling the business to implement an efficient and effective business strategy.

Reference

  • Hoffman, J., Hoelscher, M., & Sorensen, R. (2006). Achieving sustained competitive advantage: A family capital theory. Family Business Review, 19(2), 135–145.
  • Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms. The Academy of Management Annals, 5(1), 653–707.
  • Bertrand, M., & Schoar, A. (2006). The role of family in family firms. Journal of Economic Perspectives, 20(2), 73–96.
  • Miller, D., & Le Breton-Miller, I. (2005). Managing for the long run: Lessons in competitive advantage from great family businesses. Boston, MA: Harvard Business School Press.
  • Tokarczyk, J., Hansen, E., Green, M., & Down, J. (2007). A resource-based view and market orientation theory examination of the role of ‘‘familiness’’ in family business success. Family Business Review, 20(1), 17–31.
  • Tagiuri, R., & Davis, J. A. (1996). Bivalent attributes of the family firm. Family Business Review, 9(2), 199–208.
  • Levring, R., & Moskowitz, M. (1993). The ten best companies to work for in America. Business and Society Review, 85(1), 26–38.
  • Carney, M. (2005). Corporate governance and competitive advantage in family-controlled firms. Entrepreneurship Theory and Practice, 29(3), 249–266.
  • Shankar, M. C., & Astrachan, J. H. (1996). Myths and realities: Family business’s contribution to the US economy – A framework for assessing family business statistics. Family Business Review, 9, 107–119.

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