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

Mark Leenders and Eric Waarts

European Management Journal, 2003, vol. 21, issue 6, 686-697

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.

Keywords: Family; businesses; Business; orientation; The; Netherlands (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (11)

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