Managerialization, professionalization and firm performance in family business: A Systems Thinking perspective

Abstract

This paper proposes a systemic model on the intertwined relations among managerialization, professionalization and firm economic performance, considering both business‐ and family‐specific features and issues. It sheds light on the role that, in the family business, the firm economic performance may play in favouring a positive development of both the business and the family itself. It aims at understanding how, in family businesses, the firm managerialization and professionalization may represent relevant drivers of firm performance. A Systems Thinking model based on causal loop diagrams was developed, to provide a clear framing of the interrelationships among the various aspects at stake. The conceptual model combines with systemic perspective all the variables and relationships that come into play when considering jointly the growth and development of the company and the family. This paper provides not only a conceptual background but also practical insights for family business' owners, managers and consultants.

Beyond Tradition: Exploring the Dimensions of Professionalization and Competitiveness in Hungarian Family Firms

“…Although the field started with a simplified interpretation, as hiring non-family managers are a sufficient way of professionalizing the business (Klein & Bell, 2007;Zhang & Ma, 2009) recent studies showed that it is only a particular element of the development of family firms, and it consist many more elements, such as governance (Suess, 2014), strategic planning (Songini, 2006) formal human resource systems (Madison et al, 2018), cultural (Camfield & Franco, 2019), financial systems (Hiebl & Mayrleitner, 2019), decision-making (Basco, 2013) socio-emotional wealth (Gomez-Mejia et al, 2011) performance (Chang & Shim, 2015;Songini, Armenia, Morelli & Pompei, 2023) and business family (Polat, 2021) aspects.…”

“…Although professional managers are not the only way to develop the organization, they can bring new expertise and knowledge the company may not possess (Fabel et al, 2022). The integration of external managers can result in tangible benefits such as reducing the opportunistic behavior of family members (Songini et al, 2023) and an increase in financial performance. The study provided practical implications for family business owners and managers.…”