Carole Howorth

Ownership and Management Issues Associated With Family Firm Performance and Company Objectives

Agency and stewardship theories are used to explore associations between ownership and management profiles and the performance and objectives of family firms. Using data from privately held family firms in the United Kingdom, a range of performance measures and objectives were examined. Multivariate regression analysis detected that closely held family firms did not report superior firm performance. The results show that the management rather than the ownership structure of a family firm was generally associated with selected firm-performance indicators and nonfinancial company objectives. Although family CEOs were associated with lower propensity to export, presented evidence generally fails to suggest that private family firms should avoid employing family members in management roles.

‘Types’ of private family firms: an exploratory conceptual and empirical analysis

Family firms that can leverage entrepreneurial experience and knowledge can shape local economic development. Practitioners concerned with fostering enterprise sustainability need to be aware that family firms cite contrasting goals, resource profiles and requirements. Family firms are not a homogeneous entity. The ‘targeting’ of support to ‘types’ of family firms could enable practitioners to satisfy their wealth creation and social inclusion objectives. To stimulate increased critical reflection, insights from agency and stewardship theories were drawn upon to illustrate six conceptualized ‘types’ of private firms based on company ownership and management structures as well as company objectives. Cross-sectional survey evidence was gathered from key informants in family firms in the UK. An agglomerative hierarchical QUICK CLUSTER analysis identified seven empirical ‘types’ of family firms. Four out of the six conceptualized ‘types’ were validated by the exploratory empirical taxonomy. Implications for policy-makers and practitioners as well as researchers are discussed.

The Development of Family Companies: Management and Ownership Imperatives

This study explores management and ownership imperatives facing 427 independent unquoted (i.e., nonpublic) companies in the United Kingdom. To detect real rather than sample differences, the study used a matched pairs methodology. Chi-square and students T-tests confirmed several similarities among the 73 family companies and the comparable 73 nonfamily companies. The tenure periods of CEOs in both groups of firms before being appointed to the CEO position were similar. CEOs in family firms had not remained in this position for significantly longer periods than CEOs in nonfamily firms, and the majority of directors in family and nonfamily firms did not hold outside directorships in other companies. Several significant differences were also detected. CEOs from the kinship group owning the family business had been in the CEO position for much longer than “outside” CEOs in family firms. Furthermore, the proportion of total shares owned by directors in family firms was significantly more than the proportion owned by directors in nonfamily firms. A significantly larger proportion of nonfamily rather than family firms had employed a nonexecutive director. In concluding, it is highlighted that a firms identification of itself as a family firm is important in defining family firms and that firms that do not currently perceive themselves to be family firms may in the future.

The language of social entrepreneurs

This paper questions the application of the entrepreneurship discourse to social entrepreneurship in the UK and looks at how people ‘doing’ social enterprise appropriate or re-write the discourse to articulate their own realities. Drawing on phenomenological enquiry and discourse analysis, the study analyses the micro discourses of social entrepreneurs, as opposed to the meta rhetorics of (social) entrepreneurship. Analysis using both corpus linguistics software and Critical Discourse Analysis showed a preoccupation among interviewees with local issues, collective action, geographical community and local power struggles. Echoes of the enterprise discourse are evident but couched in linguistic devices that suggest a modified social construction of entrepreneurship, in which interviewees draw their legitimacy from a local or social morality. These findings are at odds ideologically with the discursive shifts of UK social enterprise policy over the last decade, in which a managerially defined rhetoric of enterprise is used to promote efficiency, business discipline and financial independence. The paper raises critical awareness of the tension in meanings appropriated to the enterprise discourse by social enterprise policy and practice and illustrates the value of discourse analysis for entrepreneurship and social entrepreneurship research.

Intrafamily Entrepreneurship: The Formation and Membership of Family Entrepreneurial Teams

Family entrepreneurial teams are groups of related individuals who engage in entrepreneurship. Entrepreneurial teams studies emphasize the resources that members bring to the team. Family business studies suggest that relationships and social theories are important. Social capital explains the formation and composition of family entrepreneurial teams (FETs). Analysis is of case studies of FETs based in Honduras. A shared commitment to entrepreneurial stewardship of the familys assets underpins formation of FETs. Trust and shared values were important for membership. This study highlights that families are not internally consistent, and family ties are not equally strong.

Trust within entrepreneur bank relationships: insights from Italy

Previous research has focused on economic factors that influence relationships between entrepreneurs and banks. Trust is relevant because it can reduce agency problems. A conceptual framework is developed from previous literature and from a study of entrepreneurs and bank managers from two regions of Northeast Italy. Testable propositions are derived regarding determinants of trust and the process of development in the entrepreneur–bank relationship. Within close–knit communities, information from third parties and community involvement affect the build up of trust. The implications are that bestowing trust may increase trustworthy behavior leading to a spiral of trust. Heavy monitoring may lead to lower levels of trust in a bank and lower demand for finance and/or less trustworthy behavior.

Rethinking entrepreneurship methodology and definitions of the entrepreneur

Purpose – The paper aims to highlight the potential of paradigm interplay for providing greater insight into entrepreneurship research, in this case definitions of the entrepreneur. Design/methodology/approach – Literature from entrepreneurship, organisation studies and strategy highlights the potential of multiple paradigm research. We demonstrate how to conduct such a study through paradigm interplay by applying four contrasting research perspectives to four case studies of habitual entrepreneurs. Findings – The practical challenges of conducting multiple paradigm research are illustrated. A number of consistent themes across all four paradigms provide some insight into the reasons why it is difficult to agree on a single definition of the entrepreneur. Insights into the value and operationalisation of multiple paradigm research in the field of entrepreneurship are provided. Research limitations/implications – An exhaustive review of definitions of the entrepreneur is not provided. This is a study into how multiple paradigm research can be used to enrich understanding. Advice for the conduct of studies employing paradigm interplay is presented. Practical implications – The same individuals or firms can be included or excluded depending on the definition employed. This can lead to confusion particularly in establishing eligibility and applicability of specific policy measures. Full awareness of underlying assumptions is required. Originality/value – Paradigm interplay is a new approach for entrepreneurship research

Ownership and management issues in first generation and multi-generation family firms

A matched sample methodology was utilized to detect ownership and management differences between first generation and multi-generation independent unquoted family companies in the UK. Chief Executive Officers (CEOs) in first generation and multi-generation companies were generally drawn from the family owning the company. Both types of companies also had small management teams. Several statistically significant differences were detected. CEOs served longer apprenticeships in multi-generation rather than first generation companies. Multi-generation rather than first generation companies were more likely to employ managers drawn from the family owning the company. In other respects, multi-generation companies generally appeared to be better managed than first generation companies. Multi-generation companies had larger boards of directors. Moreover, a larger proportion of multi-generation rather than first generation companies employed a non-executive director. Owners of both types of family companies, but particularly the owners of first generation companies may be ‘control averse’. Many first generation companies (and some multi-generation companies) associated with a shallower managerial pool had failed to address this potential managerial and strategic weakness by selective use of ‘outside’ managerial expertise. Implications for practitioners and researchers are discussed.

Family firm diversity and development: An introduction:

Issues relating to private family firm diversity and development are discussed with reference to established and emerging debates. Family firm assets and liabilities are highlighted. Key issues for family firms research and practice relating to family firm definition and family firm diversity are raised. Issues relating to context, culture and time are also discussed. Conceptual and empirical ‘types’ of family firms are illustrated. The contributions of ‘invisible’ members, women and couples in family firms are discussed. Various ownership forms relating to the perpetuation of family firms and business ownership transfer issues are highlighted. Articles in this special issue are then briefly summarized.

A review of sampling and definitional issues in informal venture capital research

This paper presents the argument for broadening the definition of informal venture capital populations and improving sampling methodologies for informal venture capital research. It is argued that the widely enumerated difficulties regarding sampling methods are driving the definition of a business angel. Sampling difficulties such as unknowable populations limit the ability of researchers to study (survey) business angels. This limitation precipitates narrow definitions of business angels in order to justify the sampling method used. The more narrow definition ultimately results in precluding various cohorts of angels from appearing in the data. This paper reviews a range of studies, their definitions and methodologies, and speculates on the angel cohorts that chosen methodologies may exclude. The paper proposes a protocol that adopts a broad definition of informal venture capital, and a sampling method that produces a more representative range of informal venture capital investors. The method samples from a known population, namely publicly available business registration data, to create a representative sample of business angels. A broad definition and a representative sampling method allow comparisons and generalisable results that current sampling methods preclude. The conclusion highlights that standardised definitions and representative samples will allow studies to make reliable comparisons across types of informal investors, such as family, friends, arch angels and micro-investors.