Family Business - Sustainability Model

Abstract

Family firms form a considerable global economic pillar and have a long tradition. Due to their restricted ownership structure and extended value structure, they deal with specific managerial challenges. In comparison with their generally owned competitors, family firms tend to be more stable, accountable and trustable. On the other hand, they have to combine private and business life, deal with succession issues and the relative closeness of the top management while resolving nonstandard governance mechanisms. The main objective of this paper is to propose how to create a dynamic model that can further propose viable strategies for the long-term sustainability of family businesses that maximise the stakeholders` utility. To be able to understand the internal dynamics of family businesses, as well as to fully incorporate the changing external environment, an underlying systemic model is required. It is proposed to incorporate several gradually evolving and mutually interlinked stages and to formalise knowledge acquired from the present literature extended with available data. The initial modelling stage, the mind mapping, summarises the key terminology and outlines the basic structure. These findings are subsequently refined through system and causal loop diagrams. The latter allows the formulation, discussion and generalisation of behavioural hypotheses related to the researched sustainability phenomenon. It was found that standard techniques and strategic planning tools do not fully support all the abovementioned aspects of family businesses. Thus, these specific features, reflecting various aspects of "familiness" were modelled and incorporated into a general framework for strategic planning and management. The proposed paper deals with specific internal matters of family-owned firms. It suggests and justifies a transparent model for their implementation, thus eliminating the major bottlenecks. With this knowledge, the addressed companies can sustainably develop their businesses and keep the quality of their private life on a desirable level.