Julie Dekker

Family Firm Types Based on the Professionalization Construct: Exploratory Research

This article responds to the calls from the research field to find effective ways to distinguish between different categories of family firms. The authors contribute to this literature by extending and refining previous family firm typologies. To attain this objective, the authors introduce the professionalization construct as basis for distinguishing family firms. As this construct is often approached in an oversimplified, one-dimensional manner, they first conduct an exploratory factor analysis to reveal its multidimensional nature. Based on these results, drawn from a representative sample of 532 Belgian family businesses, a cluster analysis facilitates a distinction between different “types” of family firms based on a multidimensional conceptualization of firm professionalization.

The Effect of Family Business Professionalization as a Multidimensional Construct on Firm Performance

In family business literature, business professionalization is often simplified into a binary characteristic, that is, the presence of a nonfamily manager. We contend that other professionalization features, which may act simultaneously, can influence firm performance. This study addresses professionalization as a multidimensional construct, as intended by general management literature, and assesses the impact on business performance based on these underlying dimensions. Using a representative sample of 523 private elgian family businesses, we identify five different dimensions of the professionalization construct by means of an exploratory factor analysis. Further regression results revealed significant positive effects of increasing nonfamily involvement, implementing human resource control systems, and/or decentralizing authority on firm performance. However, nonfamily involvement only seems to improve firm performance if there is sufficient decentralization of authority and an average or even low amount of formal financial control systems.

Management Control Systems In Family Firms: A Review Of The Literature And Directions For The Future

Family firms play a significant role in the global economy. Although family firm literature has devoted much time and effort to investigating topics concerning corporate governance, leadership, ownership and succession, accounting issues have received relatively scant attention. In this paper, we assemble and critically review extant literature on the choice of management controls. This is an essential topic for firms as management control systems (MCS) are used to make sure subordinates behave in function of the goals of the firm. Family firms, however, have distinct features, such as differences in governance structures and goals, which can have a significant impact on whether and how MCS are used. We conclude this review paper by providing avenues for future research that can advance our understanding of both the determinants and the outcomes of the choice of MCS.

Formal human resource practices in family firms

Purpose The importance of formal human resource (HR) practices is widely recognized in management literature, but under-researched in the small business and family firm domain. Previous research indicates that family firms rely more on informal HR practices, based on social networks. However, given the heterogeneity of family firms, one cannot assume that all family firms are reluctant to formalize their HR. As the CEO is the key decision maker who covers HR management in family firms, the effect of the CEO type on formal HR practices will be studied. The paper aims to discuss these issues. Design/methodology/approach Based on a large-scale survey, resulting in a response of 532 family SMEs, the authors perform a hierarchical regression analysis studying the effect of a family/nonfamily CEO on the use of formal HR practices, introducing several moderating effects: CEO generational stage, tenure and education. Findings Results indicate that family firms with a family CEO have more formal HR practices than those managed by a nonfamily CEO due to higher levels of goal alignment and intentional trust between the owning family and family CEO. Moreover, family firms managed by first generation family CEOs and family CEOs with a higher education have more formal HR practices. Practical implications The findings suggest that family CEOs can be equally or even more able as nonfamily CEOs to run a family firm in a formalized/professionalized manner. Originality/value Given the scant amount of research on HR formalization in family firms, even though literature documents performance increasing effects, this study fulfils the need to study the effect of the CEO on HR formalization.