Family Business Dynamics Notes

Influence Strategies (Kerrane, et al., 2012)

  • Indirect vs. Direct Influence:
    • Bargaining
    • Persuasion
    • Emotional Appeal
    • Request
    • Laissez-faire
  • Pre-influence strategy.
  • Intra-familial processes.
  • Intra-familial interactions co-construct eventual influence strategies.
  • Results in the emergence of highly-constructed and networked strategies within the family setting.

Behavioral Dynamics (Ensley & Pearson, 2005)

  • The social system of the family creates a synergy in the top management team, referred to as “familiness.”
  • The unique dynamics created by the social aspects of “familiness” result in:
    • Higher cohesion
    • Potency
    • Task conflict
    • Shared strategic consensus
  • When the family is a closely knit social group, social interaction among members will result in shared learning, understanding, and consensus far greater than in groups that are more loosely connected.
  • Effective family firms (FF) utilize this knowledge management.
  • Beyond the founding immediate family, FF become political structures.

Tangible and Intangible Interrelationships in Family Businesses

  • Tangible:
    • Family Members
    • Economic Endowment
    • Capital Market Monitoring
    • Market Development
    • Staffing
    • Performance ($ Growth)
    • Expertise
    • Decision-Making Process
    • Management Composition
  • Intangible:
    • Motivation
    • Long-Term Orientation (LTO)
    • Succession
    • Social Capital
    • Personal Values
    • Personal Engagement
    • Individualism
    • Risk Behavior
    • Corporate Social Responsibility (CSR)
    • Networking

Components of Familiness (Ensley & Pearson, 2005)

  • Cohesion:
    • The degree to which members are attracted to each other (Shaw, 1981).
    • Cohesive teams:
      • Work well together
      • React faster
      • Are more flexible
      • Use superior problem-solving techniques
      • Are more productive and efficient
  • Conflict:
    • Cognitive (how)
    • Relational (whom)
    • Idea (what)
  • Potency:
    • Collective belief of a group that it can be effective.
    • Increases with social-emotional support and attachment security.
  • Strategic Cognition:
    • Consensus on what and how of strategy.

Issues in Family Management (Moore & Asay, 2013)

  • How a family makes decisions is often values-based.
  • Individuals have different needs and wants.
  • Individuals define their needs and wants differently.

Values (VABES)

  • Value: Measurement of exchange; guiding principles of thoughts or behaviors.
  • Moral Reasoning (Kohlberg):
    • Pre-conventional: Infant & early childhood
    • Conventional: Adolescence & early adulthood
    • Post-Conventional: Adult maturity

Needs vs. Wants

  • Need: A necessity for living.
  • Want: Something you would like to have.
  • Needs can be felt, expressed, normative, or comparative.
  • Consumer Resource Exchange Model (CREM) (Bristow & Mowen, 1998):
    • We manage resources to function more effectively.
    • People differ in assessing the importance of resources.
    • Resources exist as part of an interrelated/interdependent system.
    • Time is a finite temporal space, not a resource.

Birth Order (Jefferson et al., 1998)

  • Neuroticism, Extraversion, and Openness were unrelated to birth order.
  • Small effects on Altruism and Tender-Mindedness for later-born children.
  • Higher in Openness and Agreeableness for later-born children.
  • Birth order may have subtle effects on perceived personality.
  • First-borns rated significantly higher than later-borns on the facet of dominance, and later-borns rated significantly higher on the facet of sociability (Beck et al., 2006).

Birth Order Traits (Sulloway, 2001)

  • Competition between siblings leads children to cultivate family niches associated with birth order.
  • Firstborns:
    • Tend to pick niches.
    • Align interests with their parents.
    • Show strong motivation to fulfill parental expectations.
    • Be more amenable to their parents’ wishes, values, and standards.
    • More conscientious, responsible, ambitious, organized, academically successful, traditional and conservative.
    • More likely to endorse conventional morality.
  • Later-borns:
    • Challenged to find a niche not already occupied by an older sibling.
    • Identify less with their parents.
    • Subject to domination or bullying by older siblings.
    • More open to experience than firstborns.
    • More likely to empathize, to be supportive of egalitarian social change, to question the status quo, and to resist authority and pressure to conform.

Characteristics of Resources

  • Resources are exchanged in relationships.
  • Most people exchange resources similarly.
  • The meaning of the exchange is more important than the exchange itself.
  • Two components:
    • Particularistic: Selective in choosing (love vs. money).
    • Concreteness: How tangible is the resource (car vs. information).

Power Resources (McDonald, 1980)

  • Normative: Culture/society dictates.
  • Economic: Those with money have power.
  • Affective: Relational – Principle of least interest has the most power.
  • Personal: Inherent in an individual (personality).
  • Cognitive: Intelligence or competence-based.

Family Patterns (Galvin et al., 2004)

  • Based on conversation and conformity orientation:
    • High Conversation, High Conformity: Consensual
    • Low Conversation, High Conformity: Protective
    • High Conversation, Low Conformity: Pluralistic
    • Low Conversation, Low Conformity: Laissez-faire

Intention in Communication

  • True communication: Sender intended and receiver perceived the intent.
  • Communication attempts: Sender intended but it was not received.
  • Attributed communication: Receiver attributed intent when there was none from the sender.
  • Behavior: Action not intended to communicate and no intention was received (informational).
  • 5:1 ratio of positive to negative communication is most satisfactory.

Communication & Power

  • Withdrawal (Ignore): “I’m not speaking to you.”
  • Guilt Induction: “How could you ask me to do this?”
  • Positive Coercion: “Kiss me and help me move the sofa.”
  • Negotiation: “I’ll do that if you do this.”
  • Deception: “I’ll just charge it, and they will never know.”
  • Blackmail: “If you do that, I will tell about…”
  • Abuse: “Watch your back.”

Communication Symmetry (Fitzpatrick, 1988)

  • Competitive:
    • M: I don’t want to go to your family; it’s too far.
    • D: It’s not much farther than your family; you don’t like my mom.
    • M: I don’t; she’s bossy and can’t cook.
    • D: My mom’s bossy; what about yours?
  • Submissive (neither takes responsibility):
    • M: I don’t care where we go as long as it’s not here.
    • D: I don’t care either; my family won’t be unhappy.
    • M: My family won’t be unhappy either; call your sister?
    • D: Call your brother?
  • Neutralized (compromise tactics):
    • D: Where did we go last year?
    • M: Mine for Eve, yours for Day.
    • D: That worked for me, how about you?
    • M: I think it might be good to switch this year?
    • D: That sounds fine.
  • Complementary (adopt different tactics):
    • M: My mother really wants us to come this year.
    • D: My parents will be disappointed but will understand.
    • M: We will find a way to make it up to them.

Supportive Communication (Burleson & Mortenson, 2003)

  • Solve Strategies: Task-focused on helping to solve the problem.
  • Solace Strategies: Emotion-focused response where the supporter tries to be a source of comfort.
  • Person-centered Strategies: Explicitly acknowledge, elaborate, legitimize, and contextualize feelings of distress.
  • Avoid dismissive, escapist strategies.
  • Aim to be helpful, supportive, and sensitive.

Reflexive Spiral Model (Broderik, 1993)

  • Families commonly and repetitively engage in patterns of interaction that lead toward outcomes that bear no obvious relationship to the values or goals of any of the family members (LePoire, 2006, 77).
  • Behavior may often be less affected by personal goals and values than interpersonal reflexes (emotional vs. cognitive communication).
    • Escalation factors: Hostility & reactivity.
    • Dampening factors: Costs of own hostility.
    • Contingency factors: History between parties.

Family Conflict Communication Summary

  • More positive strategies are perceived as being more persuasive (Newton & Burgoon, 1990).
  • Reciprocity is important.
  • How you think is what you feel… Perception is Reality.
  • Relationships are more satisfactory and stable when:
    • We positively distort our perceptions and focus on positives vs. negatives (idealized).
    • We have realistic and lowered expectations.

Learning Directed Activities

  • Rarely explicit or intentional.
  • Everyday family activities where the family learns together.
  • Processes of acculturation that develop and reaffirm their belonging & familyness.
    • Leisure activities: Watching TV, playing computer games, attending sporting / cultural events (e.g., football matches, cinema, concerts).
    • Participation in daily life activities: Shopping, cooking, using technologies, play, work.

Learning as a Verb

  • Project or Task
  • Interactions
  • Reflections

Dichotomous Decision-making Model

  • Consideration of Business Opportunity (what do we do?)
  • Evaluate according to:
    • Current Business AND Family Situation
    • Business Mission AND Family Mission
    • Affect on Business AND Family

House Metaphor for Decision-Making

  • Master bedroom: Board room (formal dining room)
  • Management room: Kitchen
  • Family room
  • Discrete decisions are made in each room:
    • Owners set the high-level ownership goals for the business and elect the board (master bedroom).
    • The board monitors the performance of the business and hires/fires the CEO (formal dining room).
    • Management directs operations (kitchen).
    • Families build unity and develop family talent (family room).
  • Avoid one-room houses.
  • Make sure you’re not missing rooms.
  • Prevent messy rooms.