Entrepreneurial Family Businesses

This chapter treats the most important issues related to family businesses, such as family business definitions and categories, members of family businesses, family business systems, theoretical approaches, etc. Family businesses represent the oldest and the most common form of organizations and generate the most of new jobs in most of the countries. Researchers have recorded the predominance of family businesses in countries throughout the world, where approximately 90% of all businesses worldwide are family businesses. These businesses play a very important role in the economy and society. It should be emphasized that not all family businesses are small—they range from neighborhood’s micro-businesses to multibillion-dollar companies. According to Bloomberg Businessweek, around 35% of Fortune500-listed companies can be classified as family businesses.

The key factor distinguishing family firms from others is the family’s involvement in the governance of their firm through participation in ownership, management, and board (if any) along with their intentions for maintaining family control over the firm across generations. Firma Roleski in the profile of this chapter is an example. The level of family involvement in governance depends on a firm’s being private or publicly traded, firm age, firm size, industry in which it operates, and family size as well as other family dynamics. In the profile firm Firma Roleski, aside from 100% family ownership and involvement in management, a family constitution is in place not only to ensure the continuity of the family business success but also to facilitate the succession to future generations.

The “essence” of a family firm is thought to be a function of a family’s influence on the culture, functioning, and behavior of the firm owing to the pursuit of a family’s vision for the firm. Accordingly, a family firm’s strategic behaviors tend to be oriented toward preserving the economic as well as noneconomic value of the firm for the family in the long run. In this chapter, the profile family firm Sheetz exhibits growth as a primary strategy through employee care and empowerment, community engagement, and social responsibility. The fast growth of the convenience store chain is proficiently managed by the family as well as employee ownership. The strategies such as employee care, community engagement, and social responsibility are reflective of the family’s strong commitment to values such as unity, harmony, and continuity not only within the family but also in the communities they serve in.

This chapter considers innovation to be a key component for assuring continuity and involvement of family in the business. The dilemma of innovate or perish moves the family to explore for options that may even alter its current offering of products or services. After reading the chapter, students will learn the different forms of innovation, the importance of the product life cycle, the need for involving family in the innovation process, and the implementation stages to accomplish both business and family goals.

This chapter treats issues related to the succession and longevity of entrepreneurial family businesses. It discusses the succession challenges that face every family business owner. Several succession process models are provided as guidelines for the founders to deal in a better manner with the succession issues. Succession and longevity are very important for entrepreneurial family businesses. Succession is one of the most difficult decisions for entrepreneurial family businesses. If the business leadership transition is not well structured, it may cause serious difficulties that may lead to the sale or eventual loss of the business.

Socioemotional wealth in private companies is a very important asset. As the family business grows and develops further, it gives an impression to the public of its current status. However, perceptions about this issue are different among family members and employees, and thus, a different attitude in family firms, toward the socioemotional wealth, exists. This chapter portrays the nature and important role of socioemotional wealth and how it is being created and maintained over time. Moreover, it compares family with non-family businesses concerning the socioemotional wealth. Also, the chapter elaborates on tools and mechanisms to create the socioemotional wealth. Other issues and positive practices are explored and narrated.

This chapter overviews the human resource management (HRM) role in private firms, providing the best guide to the whole organizations. As a powerful tool, HRM mediates between the top management and employees, providing both sides their satisfaction. Thus, the content of this chapter stresses the general practices in HRM while providing the best ways regarding employees’ welfare, rights, and obligations. Additionally, it describes how private firms try to get the best talents necessary to contribute to firms’ growth and development. Moreover, other motivational means like appraisals, compensation, professional training, and development of employees in private firms are depicted.

Like every other business, a family firm is not safe from conflicts, whether they are created intentionally or unintentionally. Sometimes, the organizational design and/or organizational culture can cause conflicts that might result in a bad image of the whole organization. This chapter overviews the most critical elements in conflict management that can happen in family businesses as it happens in other organizations. The best practice and examples of how such conflicts are solved are provided in this content. The role of organizational culture, as well as the best approaches in resolving these issues, are elaborated. Other important issues related to conflict management that can be applied to family businesses are explored.

This chapter covers the challenges that entrepreneurial family businesses will encounter after the discovery of opportunities outside its domestic market. The global markets offer an array of business and trade opportunities regardless of the family business type. After reading the chapter, students will learn about the motivations and challenges for family firms willing to expand to the international area; the needs of family businesses to understand how to expand and to which foreign markets; the different entry modes for international expansion; the strategies to adopt; and the involvement of the family to support the expansion.

The New York Times Company is a mass media company headquartered in Manhattan, New York, which publishes its newspaper, The New York Times with global readers and audiences. The paper has won a record number (127) of Pulitzer Prizes by 2020. Aside from the newspaper, the company also owns the New York Times International Edition and their related digital properties including NYTimes.​com, along with other brand-associated properties. The company was founded by Henry Jarvis Raymond and George Jones in New York City in late 1800s. Adolph Ochs purchased The New York Times newspaper in 1896. In 1960s, the company has been publicly traded and listed in the New York Stock Exchange under the symbol NYT. The company provides two categories of the company stock, Class A and Class B. The former is publicly traded and the latter is held mostly by the Ochs-Sulzberger family.

Merdeka College ICB is a family business engaged in English education located in Garut, West Java, Indonesia. Adang Kurnia (AK) is a successful entrepreneur in Garut, and various businesses have been developed by him including tourism and hospitality. He founded the Merdeka College ICB in 1986. At that time, Merdeka College ICB became the only English language institution in Garut and was very popular among the Garut community. The number of students registered until 2019 was 21,335. AK has five children, four daughters and one son. However, AK did not want to involve his children in the family business because of concerns that his children could not run the business. In 2008, when various other language education institutions emerged, his business began to decline. However, he still insisted on running his business without involving his children. In 2018, he gave up because of his age and illness. Finally, the business was taken over by his fourth child, Dineu Maulani (DMA). This case study is interesting to discuss further to explore the reasons behind why AK cannot entrust its business to his children, and how are the successors’ efforts in demonstrating their ability to continue their business.

Ugarak Product is a family business manufacturing all types of products with various dimensions of windows with and without shutters, doors, hanging glass facades, winter gardens, multipurpose kiosks, business buildings, interior and exterior window benches. Also, it produces and installs a high-quality PVC joinery and aluminum metalworks. It runs from three offices. The headquarter is located in home town, Visoko, Bosnia and Herzegovina. The remaining two offices are, one in Sarajevo, and the other one is in Munich, Germany. Currently, the family enterprise is run by a young team, led by the 39-year-old CEO, who perceives the family business as successful in the future.

This case study is interesting to discuss the further succession of the family business while preserving the socioemotional wealth of the family enterprise. It will be interesting to explore the fact that coming generations are the one who may make or break the preserved values of the firm.

Queensland Camel Company (or simply QCamel: https://​qcamel.​com.​au) is a family-owned company in Australia. In 2014, it became the first producer of pasteurized Camel milk in Australia with an emphasis on sustainable and ethical farming. Although camels have been milked for several centuries in Africa and the Middle East, farmers in countries like Australia and the United States have seen the potential for entering the market to supply milk and different products. The future challenges for QCamel are related to expanding the line of products and getting more Australian retailers to stock them. In addition, camel milk is getting the attention in global consumer markets because of its health benefits and its potential use for treating diabetes or autism. Thus, QCamel is positioned in an emerging market niche with growing expectations in the long term.