Family Business: Bump & Beyond

Family businesses are a crucial area of business operations, where complexity and interdependence significantly influence the outcome. Understanding the definition of a family business, its scope, and the importance of family businesses enables an understanding of their role in the global economy. The types of family firms include closed, open and balanced, depending on ownership, management and transfer (Westhead & Howorth, 2007). They are often more complex than non-family businesses due to closely connected family relationships and business interests. A challenge that I noticed during my week's activity is assigning roles and expectations based on individual value, which directly links to business decisions. However, my peer’s posts on the ‘importance of understanding generational gap’ in business plans were an important insight for me to address why marketing and product development vary over the generations within the same business. My contribution in such an area was to add a formal governance structure to reduce conflict.  Reference: Westhead, P., & Howorth, C. (2007). ‘Types’ of private family firms: an exploratory conceptual and empirical analysis. Entrepreneurship and Regional Development, 19(5), 405-431.https://doi.org/10.1080/08985620701552405 

The family business model works depending on a three-circle model: family, ownership and business, where it helped to understand how these areas directly and indirectly overlap with each other. We also identified Agency Costs and Stewardship Theory in family business, where I learned that owners are intrinsically motivated by their interest to act, which navigates their Shareholder-Manager Conflict (Chrisman, Chua & Sharma, 2005; Schulze, Lubatkin & Dina, 2003).  These learnings were helpful to me to understand how different members of a family may have different priorities based on their social circle. My peer’s comment on how religion and culture affect business decisions was significant. However, I added the role of different legal frameworks in different countries to shape family businesses. This comparative view helped me to gain multiple insights on factors related to managing a family firm. Reference: Chrisman, J. J., Chua, J. H., & Sharma, P. (2005). Trends and directions in the development of a strategic management theory of the family firm. Entrepreneurship Theory and Practice, 29(5), 555-576. doi:10.1111/j.1540-6520.2005.00098.x  Schulze, W. S., Lubatkin, M. H., & Dino, R. N. (2003). Toward a theory of agency and altruism in family firms. Journal of Business Venturing, 18(4), 473-490. doi:10.1016/S0883-9026(03)00054-5 

There are different stages and cycles of family business; for example, ownership stages can contain owner-manager, sibling partnership, and cousin collaboration (Chakrabarty & Bass, 2014). This aspect made me interested to learn about how business needs change as the family grows. Introduction to YouTube video ‘crazy rich asians’, offered themes like family, tradition, class and cultural difference to play a major role in family. We also taught that each stage comes with different leadership and communication challenges, where my peers led a discussion on how sons and daughters may have different experiences in business roles. My response regarding the need for a clear role and promoting gender equality supported this aspect’s solution, reflecting the role of inclusive leadership in long-term business success.  Reference:  Chakrabarty, S., & Bass, A. E. (2014). Corporate governance in microfinance institutions: Board composition and the ability to face institutional voids. Corporate Governance: An International Review, 22(5), 367-386. doi:10.1111/corg.12071