Joseph H. Astrachan

The F-PEC Scale of Family Influence: A Proposal for Solving the Family Business Definition Problem

This article proposes an alternative method for assessing the extent of family influence on any enterprise, enabling the measurement of the impact of family on outcomes such as success, failure, strategy, and operations. This proposed method, utilizing a standardized and valid instrument— the F-PEC—enables the assessment of family influence on a continuous scale rather than restrict its use as a categorical (e.g., yesqno) variable. The F-PEC comprises three subscales: power, experience, and culture. This article discusses these scales in detail.

Family Businesses' Contribution to the U.S. Economy: A Closer Look

In 1995, we were commissioned to conduct research on the impact of family businesses on the U.S. economy. A search of all relevant research led to the conclusion that the majority of existing data relating to family businesses’ economic contributions were not grounded in empirical research, and the definitions used to distinguish family businesses from other enterprises were ambiguous or non-existent. In 1996, we published a paper providing a framework for assessing the economic impact of family businesses across three ranges, defined by the degree of family involvement in the businesses. This paper revisits that research and updates and improves the original findings based on more recent data.

Myths and Realities: Family Businesses’ Contribution to the US Economy–A Framework for Assessing Family Business Statistics

This article presents a framework for assessing commonly accepted family business statistics, based on the criteria used to define a family business. Using existing research from multiple fields and sources, a range is extrapolated for the total number of family businesses in the US, their contribution to Gross Domestic Product (GDP) and employment.

The F‐PEC Scale of Family Influence: Construction, Validation, and Further Implication for Theory

For a solution to the family business definition dilemma, we propose the application of a scale that assesses the extent and the quality of family influence via the measurement of three dimensions: Power, Experience, and Culture. The Family Influence on Power, Experience, and Culture (F–PEC) scale is tested rigorously, utilizing a sample of more than 1,000 randomly selected companies, through the application of exploratory and confirmatory factor analytic techniques. The scale demonstrates high levels of reliability. F–PEC has been applied in a number of studies, contributing to theory development, particularly in terms of the impact of family influence on distinct resources, and as a source of competitive advantage.

A Neglected Factor Explaining Family Business Success: Human Resource Practices

Over 600 family firms were involved in this examination of the impact of human resource management (HRM) and professional governance practices on family business success and survival. Our findings identified some of the most prevalent family firm HRM practices and found significant positive correlations among HRM practices, gross firm revenues, and CEO personal income levels. The results support prior arguments for competitive advantage in the marketplace gained through effective use of HRM practices. An interesting additional finding was that while boards of directors, strategic planning, and frequent family meetings were correlated with business longevity over multiple generations, succession planning was not. Such practices are important. for current competitive advantage and may also be crucial to the longevity of the business.

Emotional Returns and Emotional Costs in Privately Held Family Businesses: Advancing Traditional Business Valuation

This article introduces a formula to assess the total value of privately held family businesses from the owners perspective. It is argued that the total value of a business is not only composed of its financial worth and private benefits, as is usually assumed by traditional financial theory, but that emotional components also have an impact on valuation. In particular, it is assumed that emotional returns (ER) positively affect total value, whereas emotional costs (EC) negatively affect total value. Even though every stakeholder faces emotional costs and returns, it is solely the family business owner who ultimately decides on the worth of a business and consequently factors ER-EC into his or her valuation. The presented formula provides a better understanding of investment decisions in family businesses and a more accurate valuation of these businesses.

Family Business Research: The Evolution of an Academic Field

The establishment of a field of study or a discipline with academic or professional standing requires, among other things, a body of knowledge that expands understanding of that domain. This paper looks at the literature on establishing a unique field of study, reviews the foundational research in family business (1980s) and four recent years (1997-2001) of published family business research found in several outlets. We find that family business research is becoming increasingly sophisticated and rigorous. This bodes well for the development of an independent field for family business. Recommendations are offered to further the professionalization of family business as an academic and professional domain.

Commentary on the special issue: the emergence of a field

The 2003 special issue of the Journal of Business Venturing presents research focusing on various aspects of family owned businesses and venture creation. This commentary on the inaugural issue of the journal discusses the importance of family businesses and venture creation as topics in entrepreneurship development and identifies the emerging sub-topics in the field of family entrepreneurship. The articles selected for publication in this special issue are briefly overviewed.(VRS)

Strategic Planning in Family Business: A Powerful Developmental Tool for the Next Generation

This article addresses the issue of training next-generation family members once they have joined the management team in their family firm. The qualitative analysis of strategic planning processes of 18 Italian family firms shows that involving next-generation family members in the planning process benefits their developmental process. The findings indicate that this involvement provides the next generation with crucial tacit business knowledge and skills, facilitating interpersonal work relationships between incumbents and next-generation leaders and building credibility and legitimacy for the next generation. The comparative analysis of the cases allowed us to identify the five variables that seem to combine in explaining much of the observed differences in the amount and composition of benefits experienced in the 18 firms. Our findings extend current understanding of two understudied topics in family business: the postentry-phase training of the next generation and strategic management in family firms.

Creating an Environment for Successful Nonfamily CEOs: An Exploratory Study of Good Principals

Nonfamily CEOs are an important part of the managerial efforts of many family businesses. However, little academic work has focused on these managers, who reside in the dual worlds of business and family. This article presents a study based on interviews with 27 family members and nonfamily CEOs (NFCs) with the objective of exploring what makes for successful NFCs. We find that successful nonfamily CEO engagements are characterized by the selection of an individual with both business and interpersonal competencies, and the support of both family business boards and councils.