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The chemistry of the family business

With families dedicated to their businesses and businesses drawing their lifeblood for growth from their families, one thing is certain: the bond between a business and its leader can be as strong as the one between that leader’s family and the business they created. But things don’t always go as hoped. Being a family that created a business is not the same as being a good business family, and it’s important to understand why that is, particularly in the complex world in which we now live. Nowadays, the already delicate balance between the bond of a business family and the business itself can be thrown off even more easily than in the past.

Examining relationships among family influence, family culture, flexible planning systems, innovativeness and firm performance”, a study conducted by three US universities (Northeastern University in Boston, University of Mississippi in Oxford, and the University of Louisville), has sought to shed some light on how a business and its family intertwine.

The stated goal of the three researchers, Justin B. Craig, Clay Dibrell and Robert Garrett, was to study the influences family business culture and business management have on each other. More specifically, the three sought to “draw on the resource-based view of the firm” to understand the influence that the family, family business culture and flexible planning systems as drivers of innovation have on firm performance.

To conduct the study, questionnaires were given to small and mid-sized family businesses. The key point to come out of the work (published in the Journal of Family Business Strategy this November) was that the existence of a good culture of enterprise within the family positively influences firm performance and, in particular, its flexibility in operations and its ability to innovate, but the success of a business comes out of an often fragile, unfathomable sort of chemistry, a combination of culture and background, of intuition and calculation, that is difficult to replicate and entirely unsuited to being captured by simple models.

Examining relationships among family influence, family culture, flexible planning systems, innovativeness and firm performance

Justin B. Craig, Clay Dibrell, Robert Garrett

Journal of Family Business Strategy, November 2013