No abstract

Two major perspectives can be construed in the literature concerning the nature of family owned businesses (FOBs). The first implies that these enterprises have unique characteristics of stewardship. FOB owners are said to care deeply about the long-term prospects of the business, in large part because their family's fortune, reputation and future are at stake. Their stewardship is said to be manifested by unusual devotion to the "continuity" of the company, by more assiduous nurturing of a "community" of employees, and by seeking out closer "connections" with customers to sustain the business. The second perspective is less flattering. It proposes that FOBs are unusually subject to stagnation: they are said to face unique resource restrictions, embrace conservative strategies, eschew growth, and be doomed to short lives. This paper develops and examines the merits of the two perspectives, neither of which has been systematically articulated or researched. It does so in an empirical study of only small firms that are owned and managed by their founder. Within this sample, it compares firms that are FOBs, that is, family owned and managed, with non-FOBs, that is, owned and managed by a founder with no other relative involved in the business. The findings show significant support for all three aspects of the stewardship perspective of FOBs, and no support for any elements of the stagnation perspective. Copyright Blackwell Publishing Ltd 2007.

After decades of being viewed as obsolete and problem ridden, recent research has begun to show that major, publicly traded family‐controlled businesses (FCBs) actually outperform other types of businesses. This article examines the nature of such family businesses in an attempt to explain why some seem to do so well and others so poorly. It begins with four fundamental governance choices that distinguish among different kinds of family businesses: level and mode of family ownership, family leadership, the broader involvement of multiple family members, and the planned or actual participation of later generations. Using precepts from agency and stewardship theory, it relates these dimensions to the nature of the resource‐allocation decisions made by the business and capability development, which in turn have implications for financial performance. Propositions are drawn about the drivers that make some family businesses great competitors—while leaving others at a disadvantage.

Given that less than 10% of family owned businesses (FOBs) survive into the third generation, the issue of top executive succession has received a good deal of attention. Unfortunately, the literature on the topic is fragmented, as it deals with different parts of the elephant. This synthetic effort tries to put together the pieces to (1) derive a more encompassing model of what it takes for a succession to succeed, (2) determine the trends, consensus findings, as well as the gaps in our conceptual and empirical knowledge, and (3) suggest areas for further research.