The Model identifies where key people are located in the system and enables us to think about different roles that family members have: being a family owner, or a family employee. These overlap areas in the Model indicate role overlaps and potential role confusion.The model of the family business system shows three overlapping circles or subsystems that are interconnected, which indicates that what happens in one circle influences the others. If one circle, say the family, is in conflict or stuck, it can pull down the performance of the other circles and stall out the development of the entire family business system.
Part of the reason why the Model has withstood the test of time, and is still relevant today, is that the Model, in its unaltered form, is adaptable. As the definition of “family” has changed in society, the Model allows for that. In-laws, blended families, divorce, adoption, domestic partners, and whoever the family calls a member of the “business family” because they are connected through ownership – all of these roles are consistent with the Model.
In my family business however there is a lack of clear division of roles and authority.
The agency theory
Agency theory describes the problems that occur when one party represents another in business but holds different views on key business issues or different interests from the principal.
However, control mechanisms suggested on the basis of agency theory are not only expensive, but also economically ineffective, because mechanisms protecting shareholders' interests may interfere with realisation of strategic decisions, may restrict collective actions resulting in conflict. I am not a part of my family business yet but to my knowledge we believe to keep the authority amongst the family members because I believe its easier to resolve conflicts within the family rather than a non-family agent.