Search results

The importance of family firms for the development of capitalism, both past and present, has in recent years become widely recognized. Today there is a fast increasing body of literature about forms of family business and variations in family capitalism. Despite this new interest, few of these studies have made the family itself the focus of enquiry – and how different types of family structures and cultural traditions may influence the strategies and development of the family firm. Such connections are explored by comparing and discussing two cases of family firms and their history, set in Norway and Italy, respectively. It is argued that these two cases may be seen as examples of quite different ‘modes of familism’, with different implications for the running of an economic enterprise. These differences concern, first and foremost, cultural conceptions of gender, forms of inheritance, and the role of marriage in constituting the family firm.

The main purpose of the study is to examine the influence of family directors on the firm performance of public listed companies (PLCs) in Malaysia. This study provides empirical evidence on the agency problems between controlling shareholders and minority interests in the concentrated ownership setting.

Samples of the study are 112 PLCs in year 2006. Two measures of firm performance are used: return on assets (ROA) and Tobin’s Q. Managerial ownership refers to the percentage shareholdings of executive directors with direct and indirect holdings. It was further categorized into family ownership and non-family ownership.

In relation to ROA, managerial ownership is found positively significant. The results also show that the positive relationship between managerial ownership is contributed by the managerial-non-family ownership. In relation to Tobin’s Q, the results show a U-shape with turning point at 31.38% for managerial ownership and 28.29% for the managerial-family ownership. The results found significant and positive relationships between managerial ownership and both measures of firm performance which indicates that managerial ownership and family ownership yield greater efficiency.

The study highlights the effects of corporate governance on ROA and Tobin’s Q are somewhat different. It provides some evidence on the need to use appropriate measure of firm performance. The significant relationship supports the argument of Chami (1999), Fama and Jensen (1983), and DeAngelo and DeAngelo (1985) and empirical evidence of Lee (2004) that family ownership enhances monitoring activities.

Differentiating the types of managerial ownership into family and non-family categories enriches our knowledge about who actually contributes to the improved performance.

The decision of whether or not to start a new business is a question pondered by many people and something that about .004% of the U.S. population decides to do every month (Kauffman Foundation, 2005). This decision becomes more complicated with the involvement of family members. One would be hard pressed to find any business enterprise without some sort of family influence and involvement at some point in the start-up or ongoing operations of the business. While most entrepreneurship research points to legal, environmental, regulatory, technological, or demographic changes as triggers that spur individuals into action, the role of family influence in new business founding is often overshadowed or not addressed at all (Aldrich & Cliff, 2003).

Are the social domains of kinship and business on balance complementary or contradictory? Do ventures that invest heavily in both – conventionally referred to as “family firms” – bear a net gain or net loss? We are scarcely the first to raise these questions. How then will we try to contribute to an answer? We try this in five ways, all of them based on previous literature. First, we develop the dichotomy of kinship and business by taking seriously the metaphor of yin and yang, merging it with the anthropological constructs of structural domains such as “domestic” and “public.” This metaphor proves to shed light on the relevant literature. Second, we provide a qualitative survey of the costs and benefits of kinship in business. Third, we summarize the empirical work that addresses the performance outcomes from family involvement. Fourth, we consider the practitioner implications of these studies. Finally, we ask if scholars are as yet in a position to answer these questions.

Founders have significant influence over many domains within family businesses, and their impact on companies may be felt even after leadership succession. Founders have therefore received much attention from scholars, policymakers, and entrepreneurship educators. This chapter characterizes the current literature on family business founders by identifying the topics explored and the range of methods and methodologies used in recent years to outline a research agenda for future study of founders of family businesses.

A scoping review was conducted to examine the extent and essence of contemporaneous research activity related to family business founders. Scoping reviews describe current research activity without evaluating individual studies and are effective in summarizing significant concerns and themes, identifying areas of deficiency, and establishing recommendations for future directions in research. This scoping review used elements of a rapid review due to resource restrictions and this chapter discusses efforts to mitigate the limitations introduced as a result.

After summarizing the current academic conversation about family business founders, opportunities for future research topics and methodological approaches to the study of founders of family businesses are introduced.

Family businesses have several distinct features that distinguish them from other businesses. This aspect makes it imperative that scholars investigate issues with an additional focus on the interplay of family business dynamics. In this chapter, we explore the issues of power and corruption within family business, with the understanding that prior examinations of this phenomenon were primarily restricted to large public corporations that are not family owned. The key contribution of this chapter is to shed light on the dark side of family business, namely power enabled corruption. We do so by considering three dimensions that are unique to family firms, namely, ownership and control, generations, and governance. In particular, we highlight how these dimensions can facilitate corruption. It is possible that they may also challenge family business that try to detect, deter, and control corruption within their ranks. The lack of objective external evaluation, the ineffectiveness of internal checks, generational issues, family control, and the restricted nature of governance appear to contribute to exacerbating tensions that promote corruption becoming entrenched within family businesses. Following a case method approach, several illustrative examples of cases of power and corruption within family firms are provided, representing different geographic regions of the world, to showcase the widespread nature of this phenomenon. The three family business cases we illustrate (Grupo Odebrecht in Latin America, Sahara Group in South Africa and Foremost Maritime Group in China) represent multiple countries, continents, and geo-political frontiers. Each case illustrates how both corruption and power reinforce each other in family businesses. Implications of the magnifier effect of power on corruption in family business are discussed in terms of its impact, scale, and its enabling effect by providing a road map to corruption.

Family businesses must be examined within the cultural contexts in which they are bred, nourished, and grown. According to Chrisman, Chua, and Steier (2003), family businesses are launched for reasons other than the desire for dollars and cents (or rupees and yen). In fact, the authors note, “Family businesses… bring together so starkly the economic and non-economic realities of organizational life…” (2003, p. 442). Calls for family business research that extend beyond traditional geographical boundaries to include global comparisons have been issued by Hoy (2003) and others. Fortunately, recent developments in cultural assessment and measurement methodology have provided tools to enable a better understanding of families and family businesses vis-à-vis the use of regional clusters and comparative lenses (Gupta & Hanges, 2004). Gupta and Hanges (2004) note three clusters of the Catholic ethic: Southern (or Latin) Europe, Latin America, and Eastern Europe. As shown in Table 1, more than three-fourths of the population in these clusters follows the Catholic faith. In this study, we examine the spirit of family business in these three clusters.

Entrepreneurs may wish to be selective about which relatives to include or exclude in their businesses. For example, their child might be inept but their niece might be outstanding. What aspects of kinship systems affect their ability to make these sorts of choices? What enables them to bend their ties of kinship and marriage to the interests of their business? Most broadly, what dimensions of kinship lend themselves to tactical or instrumental actions? This question is sweeping just as my meaning of “entrepreneurs” is very broad: those who take actions with the goal of growing their capital (Stewart, 1991). This capital may take the form of newly started ventures, dynastic firms, or even in precapitalist systems other social forms, for example, rural estates farmed by followers.

Purpose – This chapter explores the m+eaning and significance of family business social responsibilities (FBSRs) using a metasystem approach, placing emphasis on the role of the family.

Design/Methodology/Approach – We employ a revelatory case study to investigate the complexity of family business (corporate) social responsibility. The main case, a German shoe retailer, is supplemented by other case illustrations that provide additional insights into FBSR.

Findings – To fully understand social responsibility in a family firm context, we need to include social initiatives that go beyond the actual family business as a unit. This FBSR connects family members outside and inside the business and across generations. As FBSR is formed through individual and family-level values, its character is idiosyncratic and contrasts the often standardized approaches in widely held firms.

Practical Implication – Family businesses need to go beyond the business as such when considering their engagement in social responsibility. Family ownership implies that all social initiatives conducted by family members, regardless if they are involved in the firm or not, are connected. This includes a shared responsibility for what family members do at present and have done in the past.