The SAGE Handbook of Family Business

Leif Melin, Mattias Nordqvist, Pramodita Sharma, Leif Melin, Mattias Nordqvist, Pramodita Sharma, Author

• Publisher: SAGE Publications Ltd
• Year: 2013
• Print ISBN: 9780857023636
• eBook ISBN: 9781473971226
• Edition: 1
• Topic: Business
• Subtopic: Small Business
• Index: Business

The SAGE Handbook of Family Business captures the conceptual map and state-of-the-art thinking on family business - an area experiencing rapid global growth in research and education since the last three decades.

Edited by the leading figures in family business studies, with contributions and editorial board support from the most prominent scholars in the field, this Handbook reflects on the development and current status of family enterprise research in terms of applied theories, methods, topics investigated, and perspectives on the field?s future.

The SAGE Handbook of Family Business is divided into following six sections, allowing for ease of navigation while gaining a multi-dimensional perspective and understanding of the field.

Part I: Theoretical perspectives in family business studies

Part II: Major issues in family business studies

Part III: Entrepreneurial and managerial aspects in family business studies

Part IV: Behavioral and organizational aspects in family business studies

Part V: Methods in use in family business studies

Part VI: The future of the field of family business studies

By including critical reflections and presenting possible alternative perspectives and theories, this Handbook contributes to the framing of future research on family enterprises around the world. It is an invaluable resource for current and future scholars interested in understanding the unique dynamics of family enterprises under the rubric of entrepreneurship, strategic management, organization theory, accounting, marketing or other related areas.

1

Introduction: Scope, Evolution and Future of Family Business Studies

Pramodita Sharma, Leif Melin and Mattias Nordqvist

THE SCOPE AND POSITION OF FAMILY BUSINESS STUDIES

‘Family business studies’ is a multidisciplinary field of research that ‘is distinguished from its sister disciplines by its singular focus on the paradoxes caused by the involvement of family in business’ (Sharma et al., 2012: p.1). The overarching aim of this field of study is to build knowledge on one specific type of organizations – the family enterprises. These are the most prevalent form of business organizations in the world. In these organizations, the overlap between family and work systems is such that family members significantly influence the key decisions and direction of an enterprise, and vice versa.

Scholars from varied disciplinary backgrounds, theoretical perspectives, and methodological orientations are drawn to family business studies by their unified quest to understand the determinants and consequences of variations of family involvement in business. Research is directed to understand how such involvement influences the formation and evolution of family enterprises over time (e.g., Aldrich and Cliff, 2003; Chua et al., 2004; Hoy and Sharma, 2010). Similarities and differences of values, goals, resources, strategies, and performances of family firms from their non-family counterparts are studied as evident from several chapters in this Handbook (e.g., Amit and Villalonga, 2014; Rau, 2014; Salvato and Corbetta, 2014; Sorenson, 2014). Attempts are made to understand psychological and behavioral issues such as emotions, identity, trust, and conflicts within different categories of family firms (in this Handbook, e.g., Brundin and Härtel; 2014; McKee et al., 2014; Steier and Muethel, 2014; Whetten et al., 2014). In terms of age, size, scope, and legal form, the heterogeneity of family enterprises is large, necessitating and challenging authors to clearly define the segment of these enterprises under investigation in a study (e.g., Melin and Nordqvist, 2007).

Sharma et al. (2007) traced the practice driven evolution of family business studies. In doing so, it becomes evident that the seedlings of family firm research were sown in the early 1950s with Calder’s (1953) dissertation on the problems of small manufacturing family firms. The establishment of the first Family Business Center in 1962 by thoughtful practitioners – Léon and Katy Danco in Cleveland, Ohio – provided a means for interested practitioners and scholars to connect with each other. Individual efforts to understand the unique dilemmas and challenges of family enterprises continued for the next few decades (e.g., Donnelley, 1964; Ewing, 1965; Levinson, 1971; Davis, 1982). However, it was the appearance of the special issue of Organizational Dynamics in 1983 that further triggered interest in research on family firms. The establishment of Family Business Review (FBR) in 1988 – the first journal devoted solely to publishing research on family firms – further fueled this interest as it provided a reliable venue for interested scholars and practitioners to share ideas and knowledge on issues important to family enterprises and key stakeholders therein. The opening paragraph of the first issue of FBR pinpointed some key questions for the study of family firms:

What is a Family Business? People seem to understand what is meant by the term family business, yet when they try to articulate a precise definition they quickly discover that it is a very complicated phenomenon. Consider the following situations: A business is owned by a family but run by non-family managers. A business is owned by a large, multi-national corporation but run by a local family. A business is jointly owned by two unrelated partners, each of whom has a son in the business. Are these all family businesses? (Lansberg et al., 1988: p. 1) (case modified)

Challenged by these questions and retaining a close link with practice, much research on family firms during the late 1980s and early 1990s focused on defining ‘a family business’ and understanding leadership succession in these firms (e.g., Handler, 1989; Litz, 1995). Most contributions were made by scholars who came from within the world of family businesses, that is, those who were interested in understanding family firms as their prime subject of study (Gedajlovic et al., 2012).

Since the mid-1990s there has been a significant momentum in research on family enterprises. The debate of whether the pursuit of research on family enterprises is a phenomenon, a discipline, or a field continues in some quarters. Increasingly, however, scholars are referring to the ‘field of family business studies’ indicating ‘a clear need to focus research efforts on the uniqueness of family firms which differentiates them from other organizational forms’ (Gomez-Mejia et al., 2011: p. 695). While concurring with this argument, we also posit that in addition to understanding the difference between family and non-family enterprises, it is equally important to understand the significant heterogeneity within the population of family firms (e.g., Sharma et al., 1996; Melin and Nordqvist, 2007). Furthermore, it is essential to keep the multi-disciplinary nature of the family business studies to draw insights from and give back to other fields of study (Zahra and Sharma, 2004). Along these lines, focusing on the interaction between the family business studies and the broader discipline of management and organization, Gedajlovic et al. (2012) recently concluded:

Our view is that future progress in the field will require important contributions from both family business ‘specialists’ as well as ‘generalists’ from traditional disciplines in the organizational sciences. For family business specialists, the primary challenge will be to widen their focuses to address questions that range beyond the narrow confines of the field as it is presently constituted. To those scholars who frame their research domains in more generalist terms, more frequent incorporations of the ubiquitous family firm into their theoretical frameworks and research designs would strengthen the validity and generalizability of their findings. (p. 1030)

The legitimacy and importance of family business studies in relation to other scholarly fields is on an upswing (Pérez Rodríguez and Basco, 2011; Craig and Salvato, 2012 and Sirmon, 2014 in this Handbook). Several factors have contributed to this trend. Since early 2000s, articles on issues and topics central to family enterprises have appeared with some regularity in leading management and finance journals. Examples include Gomez-Mejia et al. (2001) in the Academy of Management Journal; Lee et al. (2003) in the Academy of Management Review; Schulze et al. (2001) in Organization Science; and Anderson and Reeb (2003) in the Journal of Finance. Second, several leading journals have commissioned special issues on family enterprise research. Just a few examples include special issues of Corporate Governance: An International Review, Entrepreneurship and Regional Development, Entrepreneurship Theory & Practice, International Small Business Journal, Small Business Economics, Journal of Business Research, Journal of Business Venturing, Journal of Management Studies, and the Strategic Entrepreneurship Journal. These thematic issues introduce the regular readers of a journal to the ubiquity of and the unique dynamics of family enterprises, at times attracting leading scholars from disciplines such as anthropology, entrepreneurship, strategic management, international business, industrial psychology, human resource management, sociology etc., to conduct research on family enterprises. Further, the organizers of the annual Theories of Family Enterprise Conference, originally launched by the Universities of Alberta and Calgary in 2001, have regularly invited established scholars in related fields to develop and present papers on family business topics. The important role of this conference in building the field’s legitimacy cannot be overestimated.

As these scholars get more engaged in family enterprise research, their scholarly conversations even when contributing to their primary field of study are modified to reflect this new understanding of family firms. While family firm research may not yet have become ‘fully integrated into mainstream conversations in the organizational science’ (Gedajlovic et al., 2012: p. 1011), increased scholarly interaction with other disciplines has helped to strengthen the legitimacy of family business studies as an independent field of study. Consequently, today, virtually all journals and conferences in management or business and finance are encouraging research on family enterprises.

The field’s original journal, Family Business Review, has rapidly moved from being a venue primarily for the sharing of best practices to become a highly regarded scholarly journal with a strong and growing impact on the theoretical and empirical development of knowledge on family firms. In addition to FBR, today there are two other journals exclusively focused on publishing research on family enterprises – the Journal of Family Business Strategy launched in 2010 and the Journal of Family Business Management launched in 2011. Senior scholars predict a strong future for family business studies and applaud the performance of the field’s own journals. However, they encourage researchers to not only publish in the field journals but also in general outlets. Such diversification strategy is likely to expand knowledge on family enterprises while enhancing the field’s legitimacy and impact. In the words of Michael Hitt:

[F]amily business research is going to blossom! … it is blossoming right now and that will increase ... the field is at a precipice of the next step ... the future is very bright … family business studies have been published more broadly now (not only in entrepreneurship but also in management and social science journals) which serves as delivering legitimacy to the field … having publications in broader journals enhances the legitimacy in the eyes of many stakeholders … disciplines or sub-disciplines need to be able to publish in specialized journals but also need to publish in more general outlets to increase their overall status and legitimacy. (Hitt, quoted in Craig and Salvato, 2012: p. 113)

Another important development in relation to the scope and position of family business studies is the skew of the field towards business rather than towards the family system or a balanced perspective. Perhaps, this fact is most strikingly highlighted by James et al. (2012). Based on a review of 2240 articles on family enterprises published between 1985 and 2010, these authors observe that:

The analysis vividly illustrates not only the increased dominance of publication outlets and theoretical perspectives associated with business but also the near disappearance of those associated with family. (p. 87)

James et al. (2012) join the growing coterie of scholars from economics (Bertrand and Schoar, 2006), sociology (Aldrich and Cliff, 2003), management (Dyer Jr., 2006; Litz et al., 2012), entrepreneurship (Nordqvist and Melin, 2010), and family science (e.g., Heck and Trent, 1999; Rogoff and Heck, 2003 and Danes, 2014) arguing in favor of focusing more attention on the family variable in family business research. Many of these perspectives are reviewed and elaborated upon in this Handbook (e.g., Jennings et al., 2014; Martinez and Aldrich, 2014; Nicholson, 2014; Rosa et al., 2014; von Schlippe and Schneewind, 2014; Shukla et al., 2014; Stewart, 2014).

In terms of the level of analysis, thus far scholars have focused largely on firm level of analysis, as opposed to individual/s or groups within a firm,¹ or multiple firms run by an enterprising family (e.g., Habbershon and Pistrui, 2002; Sharma, 2004). In other words, research has focused ‘on a family business’ and not ‘in a family business’ or ‘on the business family’. Evidence of this focus is seen in studies aimed to understand the impact of family firms on an economy (e.g., Shanker and Astrachan, 1996), the success rate of family firms over generations (e.g., Ward, 1987), and even in topics such as financial performance, governance, and succession that have dominated the literature. For reviews on these topics, see Amit and Villalonga (2014), Gersick and Feliu (2014), Goel et al. (2014), and Long and Chrisman (2014) in this Handbook. To study the financial success or longevity of a firm is a different concern than understanding the entrepreneurial behaviors of an enterprising family or the overall success of a family enterprise group (Colli, 2012). It was only recently that the focus of the field has been redirected towards the portfolio of enterprising family, also referred to as, family business groups in some contexts, as it became clear that a majority of enterprising families launch, grow, and shed multiple firms over time (Carney et al., 2011; Zellweger et al., 2012; Rosa et al., 2014).

Great promise lies in understanding the change and renewal processes over generations of enterprising families – a core focus of the global Successful Transgenerational Entrepreneurship Practices (STEP) project (Habbershon et al., 2010). How do long-lived dynastic families maintain their entrepreneurial spirit over generations? How do they acquire and shed resources over time? If patient or survivability capital is integral to the success of family enterprises, how do they determine when it is time for organic growth and when the best course of action is aggressive acquisition based growth? Or, when is it time to engage in incremental efficiency focused innovations instead of the rapid path-breaking innovations? And, what type of leader is suited...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Notes on Editors and Contributors
• 1 Introduction: Scope, Evolution and Future of Family Business Studies
• PART I THEORETICAL PERSPECTIVES IN FAMILY BUSINESS STUDIES
• PART II MAJOR ISSUES IN FAMILY BUSINESS STUDIES
• PART III ENTREPRENEURIAL AND MANAGERIAL ASPECTS IN FAMILY BUSINESS STUDIES
• PART IV BEHAVIORAL AND ORGANIZATIONAL ASPECTS IN FAMILY BUSINESS STUDIES
• PART V METHODS IN USE IN FAMILY BUSINESS STUDIES
• PART VI THE FUTURE OF THE FIELD OF FAMILY BUSINESS STUDIES
• Index