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Competitiveness and Evolution of Family Businesses:: The Role of Family and Business Orientation

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  • Leenders, Mark
  • Waarts, Eric

Abstract

The purpose of this study is to systematically examine the advantages and disadvantages of different types of family businesses operating in Europe. For this, we make a distinction between a firm's family and business orientation. The two dimensions are used to develop a space of family businesses that include 'Houses of Business', 'Family Money Machines', 'Family Life Traditions', and 'Hobby Salons'. We argue that the firm's location in the orientation space, which may change over time, relates to specific competitive strengths and weaknesses. In the first part of this study, we test the validity of the dimensions. Our empirical research among family businesses (n=220) shows that, based on the orientations, different types of firms co-exist. As expected, we find that differences in family and business orientation result in different advantages and disadvantages with respect to performance indicators such as motivation, conflict resolution and continuity. In an in-depth follow-up study among 24 family businesses, we learned that evolutions on the family dimension do not follow a clear pattern. For the business dimension, there is a natural tendency to become stronger over time, resulting in a trajectory towards a House of Business and a Family Money Machine. Since no type of firm is superior on all criteria (e.g., Houses of Business and Family Money Machines are good in management control but weak in conflict resolution), the competitive profiles can be viewed as mobility barriers or mobility opportunities.

Suggested Citation

  • Leenders, Mark & Waarts, Eric, 2003. "Competitiveness and Evolution of Family Businesses:: The Role of Family and Business Orientation," European Management Journal, Elsevier, vol. 21(6), pages 686-697, December.
    • Handle: RePEc:eee:eurman:v:21:y:2003:i:6:p:686-697
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    Citations

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    Cited by:

    1. Andrea Dello Sbarba & Alessandro Marelli, 2018. "Family-controlled businesses and management control: the framing of “shareholder-oriented” practices," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(4), pages 417-456, February.
    2. Lorraine Uhlaner & Franz Kellermanns & Kimberly Eddleston & Frank Hoy, 2012. "The entrepreneuring family: a new paradigm for family business research," Small Business Economics, Springer, vol. 38(1), pages 1-11, January.
    3. Angel L. Meroño-Cerdán, 2023. "Unexpected Successor in Family Firms: Opportunity or Trap for Women?," Journal of Family and Economic Issues, Springer, vol. 44(2), pages 313-324, June.
    4. Medet Yolal & Fatmagül Çetinel, 2010. "Business Goals Of Family-Operated Accommodation Enterprises: The Case Of Mugla, Turkey," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    5. M. Scholes & Mike Wright & Paul Westhead & Andrew Burrows & Hans Bruining, 2007. "Information Sharing, Price Negotiation and Management Buy-outs of Private Family-owned Firms," Small Business Economics, Springer, vol. 29(3), pages 329-349, October.
    6. Bhansing, Pawan V. & Leenders, Mark A.A.M. & Wijnberg, Nachoem M., 2012. "Performance effects of cognitive heterogeneity in dual leadership structures in the arts: The role of selection system orientations," European Management Journal, Elsevier, vol. 30(6), pages 523-534.
    7. Basco, Rodrigo & Pérez Rodríguez, María José, 2011. "Ideal types of family business management: Horizontal fit between family and business decisions and the relationship with family business performance," Journal of Family Business Strategy, Elsevier, vol. 2(3), pages 151-165.
    8. C.-F. Wu, 2006. "The Study of the Relations among Ethical Considerations, Family Management and Organizational Performance in Corporate Governance," Journal of Business Ethics, Springer, vol. 68(2), pages 165-179, October.
    9. Kim, Y. & Gao, F.Y., 2013. "Does family involvement increase business performance? Family-longevity goals’ moderating role in Chinese family firms," Journal of Business Research, Elsevier, vol. 66(2), pages 265-274.
    10. Irava, Wayne J. & Moores, Ken, 2010. "Clarifying the strategic advantage of familiness: Unbundling its dimensions and highlighting its paradoxes," Journal of Family Business Strategy, Elsevier, vol. 1(3), pages 131-144, September.
    11. Priya Dhamija Gupta & Sonali Bhattacharya, 2016. "Impact of Knowledge Management Processes for Sustainability of Small Family Businesses: Evidences from the Brassware Sector of Moradabad (India)," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 15(04), pages 1-46, December.

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