Universitatea Transilvania din Brașov

Facultatea de Științe Economice și Administrarea Afacerilor

Program de studii: ADMINISTRAREA AFACERILOR IN LIMBA ENGLEZA

LUCRARE DE LICENȚĂ

Conducator stiintific: Absolvent:

Conf. univ. dr. NICOLAU CRISTINA DRAGOIU OANA-ALEXANDRA

Brașov, 2018

Transylvania University form Brasov

Economic Sciences and Business Administration Faculty
Study program:Business administration
 Family businesses

Coordinator: Absolvent:
Conf. univ. Dr. NICOLAU CRISTINA DRAGOIU OANA-ALEXANDRA

Brașov, 2018
CONTENTS:
ABSTRACT
Family business is a vibrant area of growing interest today among researchers, theorists,
investors, policy makers, entrepreneurs, practitioners and many others. Recent research has
demonstrated that family firms are top performers. Whether measured by bottom line, value
creation for shareholders, or their capacity to create jobs, family companies often outperform
their nonfamily counter-parts. The turbulence brought about by global hypercompetition, too, has
created an increasing awareness that speed, sustainability, flexibility, quality of product and
service, brand, customer focus, employee care, social capital, and the long-term prospective
rooted in patient family capital are genuine sources of competitive advantage. These advantages
are often pursued via idiosyncratic business strategies deployed by firms that are family-owned
and family-controlled. Family businesses, to be sure, confront substantial challenges, but they
also possess unique advantage born out of a unique and dynamic owner-manager-family
interaction.
Many of the assets that differentiate a family-owned or family-controlled business from other
forms of enterprise revolve around the relationship between the family and its business, especially
the guidance that family members exert as managers and as shareholders.
Nowadays, family-owned enterprises dominate global business, generating 70–90% of the
world's gross domestic product.
In this regard, the aim of this paper is to underline the importance of family business in the
dynamism and power of the world economy, on one hand, and the challenges facing family
business and the characteristics of small enterprise owner, on the other hand.
As far as this is concerned, the paper presents a qualitative research on the family businesses,
their uniqueness, advantages and disadvantages, social issues, and the difference between these
and other types of businesses. The paper hereinafter outlines and presents the characteristics of
a family business owner-manager.
Key words: business, family business, manager.

INTRODUCTION
Family enterprise is the most common form of enterprise around the world.
The family businesses play an important role regarding the dynamism and strength of the
European economy, long-term stability and sustainability. Many of the challenges facing family
businesses also concern Small and Medium Sized Enterprises (SMEs), but due to the fact that
family businesses involve three overlapping elements (the family, the business, and the
ownership) they are different from other types of businesses. In Europe the family business
sector is dominated by particularly micro enterprises with less than 10 employees and SMEs.

Family businesses are an engine of a healthy economy and hold a significant position in world
trade. Across Europe, about 70 % - 80 % of enterprises are family businesses and they account
for about 40 % - 50 % of employment (Mandl, 2008). In North America, they are contributing 80
% - 90 % of all business and are employing 64 % of U.S. labor (CBIA, 2012). Globally, family-
owned businesses support some 50 % of the population, and four-fifths of all businesses are
family owned (Malhotra, 2010).

In this regard, this paper recognizes the importance of family businesses in world economy
and the need for in-depth research about the dynamics of family businesses, the difficulties
they face (strategy, succession, internal conflicts etc.) and factors influencing their survival
(endurance) and sustainability.

The founders of family firms are typical entrepreneurs. Actions like seeking the market gap,
deciding on the business branch, taking risks, and following innovations are roles all
entrepreneurs undertake actively in the start-up step. Family businesses are driven by
entrepreneurs who found them, set up the corporate culture, and transform visions into values.
Nevertheless, the founder decides what the subject of the business will be, who the customers
will be, and which products or services the business will provide.

Many entrepreneurs are really visionary game changers who believe both in their missions
and values. These types of entrepreneurs use their mindsets and essential entrepreneurial
thinking to build successful family businesses. Another aim of this paper is to describe this
special mindset, which manifests itself in entrepreneurial thinking, and offer a solution to help
successors in family businesses to refresh and improve the core businesses given to them.
Design thinking might be used as a method for helping successors to recognize new business
opportunities and refresh the core business, creating new visions and values. This paper is
divided into the following sections:

CHAPTER 1
FAMILY BUSINESS CONCEPT

Family firms are those enterprises in which the family controls the business through involvement
in ownership and management positions. Family involvement in ownership (FIO) and family
involvement in management (FIM) is measured as the percentage of equity held by family
members and the percentage of a firm’s managers who are also family members (Sciascia and
Mazzola, Family Business Review, Vol. 21, Issue 4, 2008).
The most majority of businesses in the world are owned or controlled by families. Family business
is by far the most prevalent form of business in the world. As many as 80%-95% of all businesses
in the United States are family owned or controlled. In Europe, the prevalence of family business
is approximately 70%-80%. It is estimated as much as 75%-90% of firms in the Middle East are
family owned. In Latin America 70% of all firms are owned or controlled by families. The
Australian economy is controlled by family firms, estimated at approximately 67% of all
businesses and Asia is dominated by family firms, many of them Chinese family firms that are
based in other countries.

Even though the biggest percentage of family firms are small businesses, yet numerous examples
of highly successful family-owned businesses have a sustainable competitive advantage and
dominate their markets. Regarding this, the table below lists some family-owned firms that have
managed to grow intro giant multinational corporations of world economy and the percentage
of control or ownership held by families in 2009.

Table 1: The world’s largest family firms and the percentage of family control/ownership.
Sales rank Company Percentage of family control

1 Wal-Mart Walton family owns 48%

2 Toyota Motor Corp Toyota family owns 2%

3 Ford Motor Co Ford family owns approximately 40% of voting

shares

4 Koch Industries Korch family owns 84% of America’s largest private

company

5 Samsung Lee family controls 22%

6 ArcelorMittal Mittal family owns approximately 50% of the

world’s largest steel company

7 Banco Santander Botin family owns 2.5%

8 PSA Peugeot Citroen Peugeot family holds 42%of voting shares

9 Cargill Cargill and MacMillan families own 85% of the 104

years old firm

10 SK Group Chey family controls 71 affiliated firms

11 Fiat S.p.A Agnelli family owns 30%

12 LG Group Koo and Huh families own 59%

 13 BMW Quandt family controls 47% of shares

14 Hyundai Motor Chung family members control large grop(chaebol)

of interrelated firms

15 Robert Bosch GmbH Bosch family owns 7% of shares, but family

charitable foundation controls 92% of voting rights

Source: Pearl and Krosties (2009, spring)

1.1. Entrepreneur (owner-manager) profile

The American management consultant, educator and author, Peter Drucker wrote about the
important role family businesses play in our economy and entrepreneurship. He considered that
most businesses start out as family businesses or use family resources.
The foundation stories of family firms are typical entrepreneur stories. Actions like seeking the
market gap, deciding on the business branch, taking risks, and following innovations are roles all
entrepreneurs undertake actively in the start-up step. This step is also the step in which family
values start to form (quoted by Erdem, Başer 2010).
Entrepreneurship is generally perceived of as a creative act involving opportunity identification,
evaluation, and exploitation (Shane & Venkataraman, 2000). This creative act involves a high
degree of self-determination, but not equally so for all entrepreneurs. In this paper we argue that
self-determination increases with the innovativeness of entrepreneurs firms in terms of the
novelty of production technologies, the extent to which no competitors offer similar products
and services, and the extent to which potential customers perceive products or services to be
new and unfamiliar (Schøtt & Jensen, 2016). Accordingly, and as based on arguments from self-
determination theory (Ryan & Deci, 2000), we construct a theoretical model of how innovation
promotes life-satisfaction among entrepreneurs by enhancing the conditions for the fulfillment
of basic needs, partly as a direct effect and partly by increasing job satisfaction and work-life
balance.
Family businesses are driven by entrepreneurs who found them, set up the corporate culture,
and transform visions into values. Nevertheless, the founder decides what the subject of the
business will be, who the customers will be, and which products or services the business will
provide (Keřovský and Vykypěl, 2002). The founders and their visions are essential for the future
success of family businesses because each business needs a driving force, just as a ship needs a
captain. These visions and missions should be clearly formulated and recorded to be easily
understood and also should be available to all employees, customers, and other stakeholders
(Keřovský and Vykypěl, 2002).
The values of each family business are derived from the founders. Flamholtz and Randle (2011)
present the example that if the founder is a perfectionist, then the performance standards for
the company will be concerned with that perfection. If the founder has a sense of humor and
wants have fun, than the corporate culture will reflect this. Flamholtz and Randle (2011) say that
this culture will be transmitted by the personal, day-to-day interaction of people with the
entrepreneur. As the entrepreneur makes decisions and takes actions, his or her values are
communicated behaviorally. Therefore, many companies, such as Southwest Airlines, are
presenting their missions and visions on their websites to be accessible to a wide audience.
When, in 1971, Southwest Airlines started operated between Dallas, Houston, and San Antonio,
the airline’s founders—Herb Kelleher and Rollin King— began with one simple notion: “If you get
your passengers to their destinations when they want to get there, on time, at the lowest possible
fares, and make darn sure they have a good time doing it, people will fly your airline” (quoted by
Southwest Airlines, 2013a). Today, the mission of Southwest Airlines is: “Dedication to the
highest quality of Customer Service delivered with a sense of warmth, friendliness, individual
pride, and Company Spirit” (Southwest Airlines, 2013b).
Some family businesses are aware of the connection between the founder and his or her
corporate values. A very good example is Walmart, an American multinational retail corporation
controlled by the Walton family. Their website features a direct reference to the founder: “Our
business is the result of Sam Walton's visionary leadership, along with generations of associates
focused on helping customers and communities save money and live better. This rich heritage
defines who we are and what we do today” (quoted by Walmart, 2013). Despite the fact that
Walmart is the world's third largest public corporation, and the biggest private employer in the
world withover 2 million employees, it remains a family-owned business with the Walton Family
(the richest family in the world) owning a 48 % share in Wal-Mart Stores, Inc. (Said, 2013).
Many entrepreneurs are natural leaders and work intuitively, which causes them not to consider
their behaviors or their ways of thinking as interesting subjects of academic research.
Entrepreneurs do not follow theoretical guides or concepts. They might have extraordinary ways
of thinking. This could be called entrepreneurial thinking or entrepreneurial mindset. There are
several different perspectives from which to view entrepreneurship (Bill, Bjerke, Johansson,
2010). Fairbrothers and Winter (2011) claim that when people start to talk about
entrepreneurship, they start with the definition of entrepreneurs and their enterprises. When
those people broaden their definitions, they might describe an entrepreneur as a person driven
to achieve with a high tolerance for risk and a huge desire to be successful. Remarkable business
leaders have the ability to combine imitation and creativity to come up with innovation. Acting
with creativity allows leading entrepreneurs to adapt to new circumstances and gives them
confidence to try new ways of doing things and keep them vital. Effective leaders continually
rethink the means by which goals are archived; they keep a results-driven focus while providing
maximum flexibility (Friedman, 2008). According to Friedman (2008), these leaders have the
courage to experiment with new arrangements and communication tools to better meet the
expectations of people. Other examined competences are selfmotivation, flexibility, adaptability,
growth-orientation, and seeking new opportunities.
Fairbrothers and Winter (2011) talk about “entrepreneurial” as an adjective and come up with a
list of synonyms describing the term “entrepreneurial”. The list starts with innovative and
creative, self-motivated, flexible and adaptable, and continues with assertive, growth-oriented,
opportunity driven, and active, and ends with driven to create value, people and team-focused.
In this paper, entrepreneurial thinking is understood as a collection of innovation, creativity,
ability to be self-motivated, flexible and adaptable, opportunity driven, and focused on creating
values while considering their people and team.

1.2. Characteristics of family business

Family businesses are a traditional way of conducting business within the private sector and are
active in all sectors of the economy (Mandl, 2008). Family businesses are extremely varied in
terms of size, structure, and legal form. The importance of family business relies on the long-
term stability it brings to the economy, the commitment to local communities, and also the
responsibility of entrepreneurs. According to the Family Business Survey (PwC, 2012), family
businesses are willing to invest for long term, and do not suffer from the constraints imposed
on their listed competitors by the quarterly reporting cycle and the need for quick returns.
Family businesses generally make the entrepreneurial community healthier and are also
reliable business partners. According to Ernst & Young (2012), family businesses are typical,
environmental, and they have economic and social responsibility, which are the result of the
long-term focus and sustainability outlook. The survey (PwC, 2012) says that 72 % of
respondents believe that family businesses contribute to economic stability. 78 % of
respondents consider that the family firm is notable for the strength of culture and values.
Many family businesses believe that they win business because they are closer to their
customers, and have a more personal relationship with them.
Family has a strong impact on the ownership and the management of the business and that is
the characteristic that makes family businesses different from other businesses (Kontinen, 2011,
30). Family businesses are a very heterogeneous group (Heinonen et al, 2005, 13). The concept
”family business” encompasses many different types of businesses varying from big companies
to smaller SMEs (Elo-Pärssinen & Talvitie, 2010, 11). Family businesses can be very similar to non-
family businesses, even if the family would have a strong impact on the business (Tourunen,
2009a, 36; Heinonen et al, 2005, 13). However, there are some common features between all
family businesses separating them from other businesses. There’s a phrase that describes family
businesses well and can be heard from the mouths of many family entrepreneurs: “family
business is much more than just a business”. (EloPärssinen & Talvitie, 2010, 11.) Feelings,
inwardness and maintaining stability are common characteristics for family businesses although
a successful business is usually mission oriented, outgoing and constantly ready for a change (Elo-
Pärssinen & Talvitie, 2010, 14). The unique characteristics of family businesses have been
described with the term ”familiness”, which means the casual relationships between an owner
family and the resources and capabilities of a business. Habbershon & Williams (1999, 11) have
defined familiness as follows: “the unique bundle of resources a particular firm has because of
the systems interaction between the family, its individual members and the business”. (Kontinen,
2011, 30.) Familiness makes family businesses unique and separates them from non-family
businesses (Heinonen et al, 2005, 13).
Table 1 describes the five dimensions that are related to family businesses: tradition, stability,
loyalty, trust and dependency. These dimensions represent the impact that family has on the
business.
Dimension Characteristics Relationship to business
Tradition ● Role expectations -Two family members
managing together
-Only men in managerial
positions
● Rituals -Founder’s birthday is
● Shared history celebrated
-Stories about former
generations are told

Stability ● Balance -Disagreements between

family members

● Permanence
-Opposition towards change
● Predictability
Loyalty ● Sense of responsibility -Following generation
● Commitment continues the business
because of sense of duty
● Communality
-Emotional commitment
toward the business and its
employees
Trust ● Safety -Work place safety
● Fairness -Choosing a continuator is
● Reliability difficult

Dependency ● Cohesiveness -Owner’s emotional bound

● Emotional bounds towards the business
Table 1. Five dimensions of family orientation (Retelling Elo-Pärssinen & Talvitie 2010, 46.)

1.2.1. Three-circle model

There are three factors that are connected in the family business definition and these are family,
business and ownership (Heinonen et al, 2005, 12). The dependency and diversity of the different
dimensions of family businesses is usually depicted with the three-circle model created by Tagiuri
and Davis (Tagiuri & Davis 1992, 1996, According to Niemelä, 2006, 36).

The overlapping areas between these three circles depict the diverse interaction between family
and business. It is this diversity that makes the unambiguous definition of family businesses
challenging because inevitably there will be grey areas, in which some family business conditions
will be fulfilled and some won’t. This makes it hard to draw a clear line between family and non-
family businesses. (Heinonen et al, 2005, 12.) Every family business needs to have a clear control
over these three elements. Although controlled separately, the aim is to get these three elements
to complement and support each other. (EloPärssinen & Talvitie, 2010, 160) The unique features
of family businesses are generated by the interaction between family and business. This
interaction defines the basic nature and uniqueness of family businesses and studying this
interaction is central when trying to understand family businesses. (Heinonen et al, 2005, 12.)
There are different reasons and goals behind the existence of the family and the business causing
also tension between them. (Elo-Pärssinen & Talvitie, 2010, 14.) Family business is a tight and
cohesive community (Niemelä, 2006, 36). The business and the changes in it affect the life and
well-being of the family and the family members in their different roles affect the business.
However, the family has a bigger impact on the business than the business has on the family. For
example, a divorce or death of a family member can have a significant impact on the business.
(Elo-Pärssinen & Talvitie, 2010, 15) Also the double roles of family members (father / CEO) affect
the family, generational relationships and the business operations (Tourunen, 2009a, 31). People
can have different roles in a family business system (owner-manager, owner-family member,
owner-manager-family member), which creates special challenges when trying to combine these
different roles together (EloPärssinen, 2007, 58-59). Family businesses have to find the balance
between the different roles in order to succeed (Tagiuri, Elo-Pärssinen, 2007, 59).

Figure 2. Roles in the three-circle model (Retelling Tagiuri & Davis 1996, According to Elo-Pärssinen &
Talvitie 2010, 54)

1.3. Strengths and weaknesses of family businesses

Family firms vary in terms of size, industry, regional context, and the type and level of family
involvement. Still, an overview of the most common strengths and weaknesses of family firms is
useful because it should point the most critical aspects of running a family firm. From a practical
standpoint, the list of typical strengths and weaknesses may serve as a self-assessment tool
indicating critical issues and opportunities for improvement in a firm. The strengths and
weaknesses discussed in this chapter thus represent potential sources of competitive advantage
and disadvantage which will be important for strategic positioning of the firm .
1.3.1 Typical strengths of family firms
1. Fewer conflicts of interest between owners and managers
One important strength of family firms is the alignment of interests of owners and managers who
are form the same family. Interest alignment may spare family firms costly control and incentive
mechanisms and lead to fewer agency conflicts between owners and managers. In order for a
firm to see these benefits, however, two conditions must be met: first, family members must be
present at both the ownership and the management levels. Second, the family must exhibit
harmonious and benevolent relationships among family members. All in all, the central
argument here is that family relationships between owners and managers typically bring about
a particular level of trust and goal alignment, which spares family firms costly monitoring and
incentive alignment systems.
2. Efficient leadership
Efficient leadership is an advantage that is related to the lower owner-manager agency cost
described above and to the incentive that family block-holders have to ensure the efficient use
of their resources. Efficient leadership relies on the lean organization of managerial work and
should result, for instance, in more parsimonious, cost-conscious company administration and
smaller headquarters. This quality includes the ability to take and enforce decisions more quickly
because of the family’s powerful position and the trusting relationships and shared goals and
values among the family managers involved.
3. Resource advantages
The family-influenced resources base called familiess (Habbershon and Williams 1999) is another
proposed source of competitive advantage of family firms. For example, consider the following
resources:
● Human capital and knowledge: Family firms may have advantages in developing and
upholding deep, long-term knowledge about products, markets and clients.
● Financial capital: Family firms tend to have very loyal (family) equity investors that provide
patient capital (i.e. capital that is invested in the firm for the long run and that does not
require a fast return).
● Social capital: Family firms often have unique networks with clients, suppliers, industry
experts, capital providers and community leaders that they can draw from for support.
These are just a few examples of the resources that may fall under the concept of familiness;
others, such as physical assets for example, may qualify as well.
4. Long-term orientation and continuity
Family firms tend to pursue long-term goals. This is reflected in the lower turnover in top
management and in longer investment horizons. The long-term view allows family firms to
pursue strategies (such as market development, innovation and internalization)that are
costly in the short run but highly profitable in the long run. These types of strategies are
harder to pursue form firms that employ a shorter time horizon. Also, family firms’ tendency
to pursue one strategy consistently may increase their credibility among stakeholders. Family
firms tend to act on chosen strategies and deliver on their promises, whereas nonfamily firms
may make more erratic strategic moves due to frequent changes in top management.
5. Culture of commitment and support
Family involvement in a firm and the related social norms of support, harmony and
benevolence often give rise to a very particular form of corporate culture. This culture tents
to be characterized by a heightened commitment among family and nonfamily employees.
For example, family firm employees may be willing to contribute beyond expectations and to
support the firm in difficult situations, thus increasing the firm’s resilience. In return,
employees may not earn the highest wages, but they often benefit from greater job security.
The resulting atmosphere of trust and mutual support is absent in many nonfamily firms,
which tend to promote a more impersonal corporate culture.
6. Identity and reputation
Family-controlled companies are also unique because family owner-managers stake their
money and often even their personal names and reputations on the firm. As a result, there is
a heightened awareness at the ownership and firm levels about the public perception of the
firm and its offerings. The concern of reputation at the family ownership and management
level translates into a firm-level goal of maintaining the firm’s success and the respect and
trust of its stakeholders. In turn, family firms often benefit from a trusted reputation. Given
the reputation concern, family firms also prioritize the development of strong brands over
time. The long-term horizon of family firms mentioned above helps firms achieve the
reputation-related goal of brand building.
13.2. Typical weaknesses of family firms
1. Dependence of family
A critical feature of family firms relates to their dependence on family as consulting
stakeholders. The controlling family’s formal and informal power allows it to determine the
fate of the company, for good or ill. This power harkens back to the classical right of the owner
use(usus), enjoy 9usufructus) and abuse (abusus) the property in question. The family’s
dominating influence may be used to the benefit of the company as a whole, for instance via
lower owner-manager agency costs compared to nomfamily firms. However, the firm may
also be exploited or mismanaged by incompetent or even unethical (family) owner-managers.
The dependence on a family may be a blessing for the firm, as outlined in section 1.3.1. , but
it may also be a curse.
In addition, relational conflicts between family members or between branches of the family
can be very destructive for the firm under family control. Conflicts may implair a firm’s ability
to take important strategic decisions and can lead to organizational paralysis. In such cases,
because the exist for one party is often very costly-for both financial and emotional reasons-
the firm itself may be at risk.
2. Agency costs because of altruism
According to agency theory, problems arise when there is a conflict between the owner’s and
manager’s interests (Eisenhardt, 1989a; Schulze et al., 2001, According to Kontinen, 2011,
30). There are some other kinds of agency costs that may concern family businesses, mostly
related to altruism created by the parent-child relationship (Schulze et al., 2001, According to
Kontinen, 2011, 30).
The classical argument is that family firms should have lower owner-manager agency
conflicts, as outlined above. However, family relationships between owners and managers
may give rise to other types of agency problems (agency costs due to altruism). Such an
example is the case of nepotism, in which family members are appointed to positions not
because they have the abilities required for a special task, but simply because they are family
members. Nepotism may lead to inappropriate staffing decisions and hence to an adverse
selection problem ( Schulze et al.2001). in addition, it signals to other firm members that
ability and performance are not the essential criteria for employment or promotion. This has
the effect of undermining the perception of fair treatment and reducing employee
motivation, especially among employees with the highest level of expertise.
Family-related agency conflicts may also come in the form of family members (e.g., children)
free riding on the goodwill of other family members (e.g., parents). Children working in the
company may abuse parental loyalty and love, for instance by shirking their duties or failing
to comply with governance rules. In such cases, when parents resist sanctioning their children
(e.g., by reducing their salaries or even terminating their employment), children may take
unilateral advantage of their family status. Alternatively, parents may free ride on the
benevolence of their children and the norm of filial support. For example, parents who are
still involved in the firm may oppose necessary innovations and adaptations proposed by the
younger generation.
Taken together, these cases show that many family firms do not escape owner-manager
agency costs, but incur them in a different form.
3. Succession challenges
Probably the most challenging part of managing a family firm relates to the succession
problem. In his study of manufacturing companies in the United States, Ward (1987) finds
that only 30% of all family firms ‘survive’ succession as independent family-controlled and
managed companies. Over three generations, this share drops to only 3%. Although the
change form family to nonfamily control does not necessarily represent a failure for the firm,
 many family firms consider succession to be an important concern. These firms face the
following questions:
● Is there somebody in the family who wants to take over?
● If yes, is he/she able to do the job?
● What role should the successor play in the firm?
● Should the predecessor have a role in the firm after handing over control?
● How should younger family members enter the firm, and what should they be
responsible for?
● How do we structure governance, management and the firm overall so that a
successor can take over?
The solutions to these questions are highly individualized and require a cross-disciplinary
approach that takes into account impersonal, managerial, financial and legal aspects. Ownership
transfer between parties without family ties are more or less standardized corporate
transactions.
4. Resources constrains
Regarding the resource advantages, family firms face also some resource disadvantages. For
example, relying on family to full fill management positions limits the availability of nonfamily
talent and may also spark frustration among nonfamily managers about a perceived nonfamily
‘glass ceiling’. F nonfamily managers believe that important decisions are always left to family
managers, they may conclude that they will never actually reach the inner circle of the firm.
Similarly, relying on the family as the main source of financial capital may impose a serious
constraint on innovation and growth. Because of their heavy investment in the firm, most
business-owning families have a fairly undiversified wealth position, which could limit their
willingness to take risks-even ones that might ultimately benefit the firm. Given these possible
constrains, one should carefully consider whether and in what ways a particular family firm faces
resource advantages( positive familiness) and disadvantages (negative familiness) (Habbershon
and Williams 1999).
5. Declining entrepreneurial orientation
By definition, any firm has to be entrepreneurial to survive. A firm’s entrepreneurial orientation
includes an inclination to take risks, a proactive stance towards new strategic actions and an
overall goal of autonomy. Over time, however, firms mature, and as a result of their (past) success
and resource accumulation, firms and their owners may lose their entrepreneurial drive and
hunger for growth and success. In mature family firms, family orientation, and hence an excessive
focus on harmony and continuity, may lead to the short complacency that is incompatible with
entrepreneurship (Lumpkin, Martin and Vaughn 2008). The decline in entrepreneurial
orientation in by no means inevitable, and may be counteracted by suitable governance
structures and the owners’ continued support of entrepreneurship. Nevertheless, keeping up an
entrepreneurial spirit across generations is a serious challenge for many family firms.
6. Role ambiguity
Actors in family firms often have to play multiple roles. In the most complex cases one actor may
e active in management, ownership and family at the same time. The multiple and sometimes
conflicting perspectives inherent in these roles complicate decision making and communication.
For instance, form the family’s viewpoint it may make sense to continue a failing business
operation. From the ownership perspective, however, closing or divesting the failing until will
increase the value of the ownership stake. And form a managerial standpoint, it may make sense
to try to turn the unit around-but this will require a new capital injection form the owners. These
differing points of view may coincide in family business actors (especially in family owner-
managers), posing severe challenges for the people involved.
Role overlap in family firms require a tolerance for ambiguous situations that cannot be resolved
by considering only one dimension of the problem. By definition, a family firm cannot simply
negate one of its constituting elements; the family and the firms are bots necessary to this
organizational form. Of course, governance structures can be set up to reduce role ambiguity; for
example by specifying whether a context or a decision applies to family, ownership or
management. Nevertheless, role ambiguity poses severe challenges for family firms and may
result in confusion, frustration and conflicts among actors.

Chapter 2:
2.1. Advantages and disadvantages of family enterprise

Succession problem of family business Worldwide statistics indicate that approximately 70 % of

family-owned businesses do not survive into the 2nd generation and 90 % are no longer
controlled by the 3rd generation of the family (Leach, 2011). Ward (2011) provides many reasons
why family business fail: (1) markets and technology change, (2) competitors quickly copy
successful strategies, (3) overtaking with outside buyer willing to pay more to acquire the
company than it is worth and owners are unable to resist the premium to sell out, (4) lack of
financial capabilities, and (5) lack of staff skills. But beyond these typical family business pitfalls,
Ward (2011) believes that the main reasons for failures are mistakes in succession planning.
Succession should be well planned and prepared in advance because it is not a one-time event
but a long process that cannot start too early. The entire process needs to be carefully managed.
Succession includes not only transition of leadership and ownership, but also brings transition of
values and mission of the entire family business. In the beginning, the most powerful
determination of family business values is the founders, but those founders can be affected in
time by other members of the family and other groups in the family business (Erdem, Başer,
2010). Especially the second generation is developing the family Milan Hnátek / Procedia - Social
and Behavioral Sciences 181 ( 2015 ) 342 – 348 345 business the most. During the succession
process, the vision and values must be transferred as well and the new family business leader
must be able to add a new value to the family business. Grout and Fisher et al. (2007) say that
many leaders were born into extraordinary families, in the sense that they were surrounded with
either a strong work ethic or were instilled with the belief that they could do whatever they
wanted. The entrepreneurial spirit is just as prevalent in their families and entrepreneurial
thinking is natural for them. For those future leaders, it is easier to absorb and understand the
entrepreneurial spirit and also entrepreneurial thinking. However, we can also find self-made
leaders who are successful thanks to their inner power and great personality. Erdem and Başer
(2010) believe that the personality, values, and beliefs of the founder are generally essential
determinants for the formation of the firm culture, and values of the founder closely affect family
and job socialization of the second generation. Especially for the second and third
entrepreneurial generation, the influence of the founder is significant. The founder is in direct
interaction with his successor and is introducing him or her to the business and training him or
her for future leadership. Because of this influence, successors might feel strong connections
with the family business and values. Developing this connection and carrying the values forward
are very important, especially during the succession planning and generational transition.
Nevertheless, due to technological improvements and market change, these predecessor’s
visions and missions must be refreshed by new stimulus. New leaders of the family business
naturally bring their own ideas; they have a passion to contribute and are more willing to
challenge traditional assumptions than are their elders (Ward, 2011). One of the perspectives for
how to help the next generation to improve their way of thinking and inner power is a concept
called design thinking which could be used as methodology for opportunity recognition

2.2. Internal conflicts in family enterprises: emotional or rational

The origins of conflicts within family enterprises vary. Most of them are due to the change in
management. In some family enterprises, the old family pa triarch has come to the age of the
retirement, and the younger generation are ready to take over. But being infatuated with power
and position, the old patriarch refused to retire, holding the power tightly in his own hands.
Therefore, the younger generation would either rely too much on him or feel oppressed. When
they find that they cannot take over the management, the younger generation would be
extremely discontented and indignant and if not properly addresses, this may affect the stability
and development of the enterprise. Of course, the source of conflicts can be the other way round,
form the younger generation. If the younger generation lacks the capability and experience of
leadership, the older generation would not have trust and confidence in them, and would be
unwilling to delegate more power and responsibility. As a result, it would reduce the learning
opportunities for the younger generation. The younger generation may become more self-
contemptuous, or they would probably go to the other extreme of rushing and making quick
fixes; leading the enterprise to vulnerability and possible loss. The conflicts between the two
generations would be intensified in this case.

Conflicts within the same generation would also affect family enterprise. In traditional families,
the elder brothers are usually superiors to the younger ones. The distribution of wealth would
impact on the relationships among siblings and cousins. Over time, the brothers would become
presumes enemies, and the discontent and indignation among members of the same generation
would emerge. As the children grew up, get married and settle down, more complicated across
families and generations, which could directly threaten the management, operation and survival
of family enterprises. Furthermore, this conflict would become apparent with the passing away
of the patriarch. With the number of family branches, increasing and the educational levels
widening, the divergences and conflicts within the family would also be intensified. If the conflicts
cannot be resolved at any early stage with or without intervention form some objective outsiders,
the severity and complexity of internal conflicts would be aggravated. Sometimes, there is even
the possibility of ending up in court. The final and worst ending would be the dissolution of both
the family and the enterprise.

The main reason why minor and benign divergences can lead to severe conflicts lies in the fact
that the intimacy and interdependence among the family members no longer exist. Instead, they
become suspicious and jealous. As a result, even some minor differences would turn into ugly
conflicts, which would ultimately hurt the solidarity of the family and the operation on the
enterprise.

The emergence of these conflicts can be traced back to the family members themselves, to the
interior regime of family enterprises and to enterprise culture. If the older generation could
accept, with an open attitude, the different ideas and reform measures by the younger
generation, and at the same time entrust them with important tasks, then many potential
divergences would disappear. If family members have the courage to face the divergences, and
could carry out discussions with an open attitude and objective view, then many conflicts and
disputes could be resolved in constructive ways. With respect to the regime, if work division
within family enterprises is not clear, and if there exists overlapping conflicts between rights and
obligations, this can easily lead to dissension, estrangement and tension. In addition, the
unprofessional, unfair, and non-transparent management system and measures would give way
to a sense of distrust among family members and non-family employees. As a result, different
power factions would come into being, hence running the relationships and morale within the
enterprise. If there is no effective channel or regime to alleviate or resolve existing divergences,
these minor differences would probably degenerate into ugly conflicts. Therefore, an effective
communication channel is crucial.

Distrust and conflict within family enterprises are sometimes caused by informal asymmetry and
lack of communication among family members. To push forward the development of
interdependent relations, it is necessary to build up an effective communication system to
eliminate misunderstandings and informational obstacles. This communication, formal or
informal, face-to-face or conducted by a third party, may help improve the quality of the
communication in family enterprise.

In fact, not all divergences and conflicts within family enterprises are negative. Some conflicts
can lead to an in-depth understanding. Therefore, some win-win solutions can be found to
promote better interaction and competition. And the development of the enterprise will also
become more healthy and mature. Sometimes, disputes can boost communication among family
members, and subsequently eliminate accumulated misunderstanding and prevent the
destruction brought on by conflicts. Moreover, some insignificant conflicts can be easily resolved
within the family, which would definitely eliminate or suppress potentially overwhelming
conflicts.

2.3. Family versus Nonfamily Business

Are family businesses different from nonfamily businesses? (Daily & Dollinger, 1992). According
to Poza (2010), there are several assets that differentiate a family owned or family-controlled
business from other forms of enterprise, manly resolving around the relationship between the
family and business, especially the guidance and orientation that family members exert as
managers and as shareholders. Parallel to this, several significant differences are apparent
between family and nonfamily firms.
Family business often have a long-term view, a lasting mission, vision and purpose, showing a
desire to create a nurturing, caring community, and an ability to build strong and unique
relationships, bonds, and connections with customers, suppliers and other outsiders. As
addressed before, the greatest difference between a family firm and a nonfamily firm is the
addition of the family unit. The participation, influence and involvement of family members is
both an advantage and a disadvantage, since it not only can lead to an exceptional competitive
advantage but also can be the cause for serious dysfunction and complications. In this regard,
nonfamily firms do not have to deal with many of the complex issues that family firms face, such
as familiar and interpersonal conflicts, succession, inheritance, and the non-employed family
members with decisional power and authority. Employed family business members have to cope
with the fact that their life’s work, employment, and wealth are all intermingled with their
extended family. According to Alderson (2011), the characteristics of families include an inward
focus, unconditional acceptance, sharing, and the offer of lifetime membership. Families are
based on love and are, in most circumstances, very emotional. Conversely, businesses are
outward oriented, based on tasks, and are unemotional. They embrace and encourage change
and they reward performance, adopting “perform or leave” philosophy. In this sense, these two
types or systems of organizations are diametrically opposed to each other. In this context, the
family plays a dual role. First and foremost they are a family, with the same concerns as everyone
else, with all the pros and cons that regular families have. Management becomes complicated
when the family is involved in the business, since family issues and stresses may be brought to
the business and vice-versa. Now the usual concerns of business, such as investments, finances,
employment, and reputation, intertwine with the family (Alderson, 2011). A family-owned
business has complex family dynamics at work. Within family business, conflicts can grow,
escalade and become exaggerated, in the same way, communication within families is less formal
that it is in professional settings. Some families communicate with respect, understanding and
compromise, while others communicate by arguing, slinging accusations, and displaying feelings
of distrust, dislike and jealousy (Alderson, 2011). Moreover, family firms have different priorities
than nonfamily firms have (e.g., stability and continued ownership of the business, employing
family member, preserve social emotional wealth maintain the identity of the firm, etc). It is
commonly accepted by most scholars that family firms are different from nonfamily firms for
three reasons. First, the family’s influence over the strategic orientation and direction and
sustainability over generations of the family firm contribute to the essence of family businesses,
which differentiates them from nonfamily firms (Chrisman, Chua, & Sharma, 2005). Second, the
social emotional wealth represents a major frame of reference that families use in making
decisions (Berrone, Cruz, & Gomez-Mejia, 2012; Cennamo, Berrone, Cruz, & Gomez-Mejia, 2012).
Social emotional wealth is defined as the nonfinancial aspects of the firm that meet the family’s
affective needs, such as identity, the ability to exercise family influence, and the perpetuation of
the family dynasty (Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007).
Therefore, the management of family firms is related to feelings and emotions (Morgan &
Gómez-Mejía, 2014). This influence has to do with family owners willing to preserve family ties
over time (Litz, 1995; Zellweger, Kellermanns, Chrisman, & Chua, 2012). Third, the resource-
based view highlights the concept of “familiness” as a distinctive set of human, organizational,
processes, resources, and capabilities arising from family influence and involvement and
interactions (Habbershon & Williams, 1999). Habbershon and Williams (1999) define familiness
as the “unique bundle of resources a particular firm has because of the systems interaction
between the family, its individual members, and the business” (p. 11). Although, family
companies have particular aspects and particularities, evidence suggests that over time family
firms are often more successful than nonfamily firms (Anderson & Reeb, 2003b; Miller & Le-
Breton-Miller, 2006).
A number of studies citing “the founder effect” suggest that the family founder’s influence on
the firm often translates into a competitive advantage (Dyer, 2006) perhaps due to the founder’s
long-term orientation and emphasis on growing and preserving the firm for future generations.
Early positive emotional experiences of the family founders may be one causal mechanism by
which family firms achieve higher levels of performance. A stock of positive experiences may
serve as a competitive advantage for family firms and increase survival, sustainability, and,
ultimately, performance. Individuals experiencing positive affect are: better able to acquire
valuable human resources, more creative, and better able to tolerate stress (Baron, 2008).
Furthermore, family ownership can confer a strong competitive advantage through the creation
of value-driven organizational cultures that inspire identity, trust, and a sense of belonging
among employees. In a sense, they speak to people’s hearts in a way that other businesses do
not. Several different studies on family business report a wide range of differences between
family and nonfamily firms. Table 1.7 presents a comparison between family and nonfamily
enterprises.
Table 2. 4. Comparison between family and nonfamily business.
Family business Nonfamily business Reference

Ownership Concentrated, kinship Dispersed, non- Achmad, Rusmin,

based wedge kinship based wedge Neilson and Tower,
between cash flow between cash flow 2009; Morck and
and ownership rights; and ownership rights; Yeung, 2005
non-diversified. well diversified.

Governance Ownership and Ownership and Sirmon, Arregle, Hitt

control united; internal control split; external and Webb, 2008;
dominance of the influence on the Parada, Nordqvist
board. board. and Gimeno, 2010

Returns Noneconomic Largely economically Chrisman,

outcomes important; defined; no private Kellermanns, Chan
private benefits for the benefits; minority and Liano, 2010;
family; minority shareholders Anderson and Reeb,
shareholders protected 2003; Matinez, Stohr,
unprotected. and Quiroga, 2007.

Networks and Emebebbed in kinship External ties based on Ingram and Lifschitz,

relationships networks; role business; Distinct 2006; Lomnitz and

diffuseness; business and family Pérez-Lizuar, 1987;
personalized social spheres; impersonal Muntean, 2009.
responsibility. social responsibility.

Leadership Entrenched, long High turnover with Oswald, Muse and

tenured; trained on market discipline; Rutherford, 2009;
the job; succession formally educated; Pérez-González,
draws on kinship pool. succession draws on 2006.
large pool.
 Career Family members; Salaried managers; Galambos, 2010;
longer-term career shoter-term career Benedict, 1968.
horizons. horizons.

Management Emotional and Delegation to Zellweger and

intuitive; rentseeking,
stifling innovation;
mutual
accommodation.
professionals; rational
and
analytical;innovative;
formalized, command
and control.
Astrachan, 2008;
Morck and Yeung,
2003; Zhang and Ma,
2009.

Source: adapted from Steward A., & Hitt, M. A. (2012). Why can’t a family business be more like a nonfamily business?
Modes of professionalization in family firms. Family Business Review, 25 (1), 58-86.

CHAPTER 3
RESEARCH FRAME WORK AND METHODOLOGY
3.1. Introduction
Family firms have a major impact on any economy, being responsible for the largest portion of
wealth generation, along with the creation of the majority of jobs in most countries, therefore,
playing a central role not only in nations’ economy but also in social growth. Family has a strong
impact on the ownership and the management of the business and that is the characteristic that
makes family businesses different from other businesses (Kontinen, 2011, 30). Family businesses
are a very heterogeneous group (Heinonen et al, 2005, 13). The concept ”family business”
encompasses many different types of businesses varying from big companies to smaller SMEs
(Elo-Pärssinen & Talvitie, 2010, 11).
This chapter describes the scope, objectives and hypotheses of the research and the
methodology that was used in this paper. The adopted methodology to accomplish this study
uses the following techniques: the information about the research design, research population,
template design.
This paper represents an empirical study on the Romanian family and nonfamily businesses,

3.2. Research methods

Research methodology refers to a way of systematically solving a research problem.
Methodology concentrates on how research is done scientifically. (Kotarhi, 2004, 8) Research
methods then again refer to techniques that are used for conducting a research. (Kotarhi, 2004,
7) Research methods constitute of all the methods and techniques, which are used during the
course of studying the research problem. Research methods actually constitute a part of wider
research methodology. Research methodology tries to consider the logic behind research
methods and explain why certain method is used and why some methods are not used. (Kotarhi,
2004, 8) There are several methods and techniques of collecting research data. Different research
methods can be divided into two categories, which are quantitative and qualitative method.

3.3. Data collection

Qualitative research is an investigation with different levels of complexity, designed to identify,
clarify and define what is relevant, meaningful and important to a problem, opportunity or
marketing context. It allows for a deeper understanding of the concepts and essence of the
phenomena and processes involved.
Qualitative research has specific features such as:
● the researcher is considering understanding and explaining the phenomena studied;
● methods and techniques used in psychological and sociological investigations are used;
● samples of small size are strictly established, because in qualitative research the statistical
representation of the sample is no longer important;
● the researcher has an active role in the research process, in obtaining information of a
qualitative nature, usually measured with the nominal scale.
Qualitative method was chosen for this research. It was seen as a better option for this particular
research because it generates more in-depth and more specific data to answer the research
questions. All the primary data was collected through semi-directed in-depth interviews ensuring
validity, the sample being composed of 5 family business owners and 5 nonfamily business
owners form the area of Brasov. The template contained a series of questions, organized in more
topics of discussion, meant to determine the .....
3.4. Research objectives
The research topic in entitled ‘’ RESEARCH TOPIC’’. The general objective of this piece of research
is the GENERAL OBJECTIVE. HOW FAMILY BUSINESS DIFFER FORM NONFAMILY BUSINESS
Thus, we define five specific objectives of the research:
● Underlining the family’s role in family business
● Identifying the key-elements in solving the conflicts in family business
● Determining the differences between family and nonfamily business
● Identifying the differences between family and nonfamily enterprise as far as the
relationship with the employees in concerned
● Analysing the advantages and disadvantages of family business versus nonfamily business

3.5. Research hypotheses

Defining the specific objectives of the research is helping us formulating the hypotheses of this
research describes as follows:
H1: There are disadvantages in owning a family business.
H2: Each employee in family business, as well as in the nonfamily business, have studies in
the field.
H3: There is a strategy for solving the conflicts in both family and nonfamily enterprises.
H4: The participative type of management is applied in family firms.
3.6. RESEARCHED POPULATION

CHAPTER 4
RESEARCH ANALYSIS
4.1. Analysis and interpretation of the data obtained by interviewing family business
owners
We made a synthesis grid in order to analyse the data vertically (we approached within the same
interview the way every participant approached the topics and subtopics) and horizontally (the
way every topic or sub-topic was approached by all the subjects), in this paper we presenting
every subject conclusions with regard to the research topic.
Thus, the vertical analysis of the individual in-depth semi-directive interviews made with the 5
family business owners reflects their opinions with regard to their business activity and their
relationships with their customers, in a family enterprise. Furthermore, the results of this vertical
analysis of the interviews made within the family business owners by the synthetic approach of
every topic and sub-topic are presented as follows:
The first respondent is the owner of a small factory which is producing cheese. He is explaining
that the business was started by his parents in law, in the communist period. In those days, they
were growing lots of animals and they were doing the cheese products in their farm, selling them
on the local markets. Latter, he got married with one of their daughter and took over the
business. Year by year, the new family worked to improve the processes, to include technology
and to grow the whole business. Currently, the business last for more than 50 years and it is
producing traditional Romanian cheese products sold all over the country.
Regarding the third topic of the discussion, which refers to the challenges met in time, the first
respondent says that in the first years of business, the transportation of the products was the
biggest problem. At the beginning, the farm was established in the countryside, and in ’70-’80
there were neither car, nor accessible roads for these. Another problem the family is currently
facing is the lack of personnel. ‘’ At the beginning, there were a lot of people asking for a job in a
farm. Now, nobody wants to work in this domain. The most majority stay for a short period of
time, then leave simple as that. The wage in not motivating them anymore, they are ashamed of
working with cows.’’- M.D., cheese factory owner. Other challenges met are the legislation
regarding the cheese production, the regulations and conditions needed to produce and sell
cheese products.
As far as the fourth topic, combining family and business and business together, is concerned,
the respondent states that family members help each other and the best part is that there is
always someone to supervise the whole activity. There are not specific roles for the family
members, everybody is doing whatever necessary. When it comes to the decision process, both
family members and the other employees are implied. According to the respondent, the family
had a bigger impact on the business.
Through the topic number five, we tried to outline the conflicts in family businesses. At this part,
the respondent says that sometimes there appear conflicts either with the children, or with the
parents in law since the generational differences cannot be always ignored. The most important
conflict seems to be the with the children, because no one of the two daughters show a great
interest in the domain, but the future husband of one of them is willing to go farther with the
fabric, even to improve it with more technology and equipments. But, all in all, these conflicts do
not affect the business for the moment.
Regarding the six subject which stands for the family entrepreneurship and business values, the
respondent proudly affirms that the business is the mirror of their character. Through their
business, the family wants to preserve the Romanian old cheese tastes. They always try to put
their mark on their products and to preserve their most important value, the quality. The most
important thing for them is the quality of their products, because of which they managed to
obtain respect and customer loyalty.
Advantages and disadvantages of family firms is entitled our seven topic. Regarding it, the
respondent says that the great advantage this business is offering them is the opportunity to stay
always in the family atmosphere. For disadvantages, he mentioned the fact that they tend to put
more than the best for the business and the fact that they cannot fire their children or parents.
Regarding the financial part, which constitute theme number eight, the business is on profit, with
incomes around 150000 lei monthly.

CHAPTER 5
CONCLUSIONS AND PROPOSALS
ANNEX 1
 Topic of the Subject 1 Subject 2 Subject 3 Subject 4
discussion
1.General business -production -services -transports -agriculture
data -4 family members -5 family members -8 family members -third generation
-second generation -first generation -first generation -4 family members

2. How the -grandparents had a little
business started? cow farm
-Who was the -parents
founder? -parents
-Who is now?
3. Challenges met -transporting the products
in time to a market, since there
were no cars in the ’70-‘80
and the farm was at the
countryside
-lots of conditions for now
for selling cheese products
-children do not like the
domain of activity
-hard to find personnel
4.Combining family -the family members work
and business together and they help
together each other
4.1. Which are the -there is always somebody
effect of combining who is aware of the
family and business production and business
together? itself
4.2. Family -there is not a business
business structure structure, everybody is
doing what is necessary
-on EU funds
-the only child of the family
-the same
-not knowing the procedures
implied by the project
-not enough money
-it it difficult for a new small
business to enter the market
-at the beginning, the
business was not producing
enough
-difficulties in convincing the
family that the business will
work
-the firm is established in the
house yard, so there were
some conflict with the family
regarding this aspect
-the fear of the founder that
the business will not work
-the family is working
whenever necessary
-there is always somebody at
the firm to supervise the
activity
-to preserve a boundary
between fussiness and
family
-business has more impact
on the family
-3 brothers started the -from the grandpare
business from 0 -their niece
-the founders
-no notoriety on the -lack of technology a
market equipment
-not easy to find drivers -economic changes
-not enough money -the development of
-hard work for the family technology
members at the -misunderstandings
beginning with the family mem
-problems met outside -industrialization
the country with some
trucks
-not having the same
opinion with the brothers
-the relationships are -not enough time fo
more intimate -a more stressed atm
-there is a friendship in the family
between all the -are favoured family
employees members, and the p
-always having someone with abilities and kn
how helps you in agriculture field
-different way of thinking -the men use to do t
of family members work
4.3. How does -employees are treated like
family family members and we
entrepreneurship always take into account
show in your their opinion
employee -business had more impact
relationships? on the family
5.Conflicts and -the current conflict is with
family business our children since no one is
willing to continue this
business, maybe their
husbands will be interested
in improving the firm
-the conflict do not have a
big impact on the family or
the business
-the family member were
not selected, they were part
of the business from the
beginning
-there is no training for the
family business. They all
learnt from the start
-the hole family is involved in
the decision making process
-the founder is young, so the
hole business has a dynamic
rhythm
-relationship with the
employees is intimate, they
use to make each other gifts
-there exist conflicts and
they have an impact on the
family, since the founder is
young and they tend to treat
him like a child
-we communicate, but there
are still some conflicts on
some aspects, but the owner
tends to be more
comprehensive when it
comes to family
-business has a bigger -family members are
impact on the family managerial positions
-the family members are -there is a pleasant
on management positions atmosphere among
since the beginning enterprise
-the family members are -the employees are i
favoured the decision making
-there is no criteria for -employees are seen
hiring family members of the family
-new family member -no criteria for hiring
hired are trained by their members
parents or relatives
-roles are distributed
according to the family
members wishes
-business interferes with
family
-it is difficult for a parent
to not be subjective when
it comes to his child
-the family members are
more responsible of the
business than other
employees
-the employees are
always taken into
consideration when a
decision it taken
-the conflicts between -there were some co
family members have because of the gene
sometimes effects on the differences
business -they learnt to comm
-there could be conflicts more effectively
regarding the work of -the conflicts did not
each family member impact on the family
-they speak open about
the conflicts or issues met
6. Family -our business is the mirror
entrepreneurship of our character
and business value -the most important vale
for us is the quality of our
products
-we want to preserve the
Romanian old cheese taste
7. Advantages and -we tend to put the best of
disadvantages of us for our business
owning a family -we cannot fire our
business children
-the comfortable
atmosphere in our business
8. Financial -income around 90000
situation lei/month
-family had impact in the
business’s value
-the fairness to our
customers
-the values of the company
are a competitive advantage
-the family became more
united
-there appeared some
conflicts with the parents
-it is difficult to maintain a
boundary between family
and business
-the atmosphere in the firm
is comfortable so the
employees are more
satisfied
-the business is on profit
-income of 265683 lei at the
last balance shit
-the trust and fairness are
their family values
-they implemented them
in their business
-they consider the trust
an important advantage
when it comes
To their customers
-the relationship with the
family is closer
-the use of their money in
the business
-there is a more relaxant
interaction with the
employees
-undefined boundaries
between the roles of each
family member
-the business is on profit
-the most important
commitment and thi
competitive advanta
-the family’s values h
impact on the busine
-the long term-vision
-the business is usua
conflict reason
-the effects of the bu
the family
-the closer relationsh
the employees
-the business is on p
Family business owners
Topic of the Subject 1 Subject 2 Subject 3 Subjec
discussion
1.General -retail -services -tourism -service
business data -first generation -second -first generation
-first generation
2.How the -the actual owner -mother -parents -the owner
business started? -the owner -daughter -the owner
-daughter
-Who was the
founder?
-Who is now?
3. Challenges met -financial issues -financial -difficult to obtain -the business plan
in time -very little knowledge -managerial problems notoriety on the market -finding a locatio
about the domain -hard to find trained -taxes -financial problem
-seasonal business stuff -the business is -bureaucracy
-some periods with low -keeping the customer influenced by the -the need for ind
profit trust and interest weather conditions
-trust issues -requires a lot of
-family problems manager’s time
4.Combining -no favoured persons in --no favoured persons -no qualification -no favoured emp
management and recruitment -employees have to -qualification onl
needed
ownership -knowledge in the have qualification for jobs
together domain the job -no favoured employees -fairness and loy
4.1.. Business -employees are trains by -not difficult to control -the new workers are -workers are train
structure the manager and by ownership and trained by the manager manager
4.2. When it practicing the job business, it comes with or other employees -it was difficult re
comes to take -it was not hard to more responsibilities -only the manager employees; she m
decisions, there is combine the ownership -only the manager makes decisions balance between
only the manager and business, since you makes decisions -if the matter is friend in order to
who decides or work for yourself -showing to employees concerned with relationships
all the employees -only the manager takes the manager’s vision employees, then they -the manager ma
are involved in decisions -showing her are consulted regarding the bus
the decision -the manager always satisfaction to -they work as a team, so she is consulting
process? knows how to motivate employees this keeps them employees in iss
his employees -employees are seen as motivated concerned to the
4.3. How does -the manager has a close workers, but there is a -the employees are -the close relation
entrepreneurship relationship with the relaxed atmosphere considered friends employees helps
show in your employees them motivated
employee -employees are seen as a -the employees a
relationships? part of family, they are all individuals, not li
friends
5.Conflicts and -there were not -no conflicts to impact -no conflicts which can -there were some
business important conflicts within the business affect the business conflicts regardin
the business -communication is -the small issues are manager
-all problems are solved solving everything solved through -these conflicts h
by communication communication impact on the bu
he wants to perfo
domain
-communication
important in the
everybody see it
solving different
6.Ownership and -the manager guides the -the manager’s values -seriousness -the image of the
business value business by his own are seen in the business -punctuality mirrors the mana
values as human being - the fairness The values of the character
-negotiation power , -the values of the manager are a -the values of the
empathy and open mind company ensure the competitive advantage transposed into t
are the strong values future of it -she is not looking only -loyalty, fairness
-even if the values are a for the profit, the professionalism
competitive advantage, customers satisfaction is -these represent
sometimes it is hard to more important competitive adva
deal with the competition
7.Advantages and - you are your own boss -lifestyle flexibility -having her own -the absolute con
disadvantages of -you can make your own -total control an business and the
schedule
owning a schedule business regarding it
business -you control your -risk of losing money -being her own boss -the opportunity
business -sacrifice -lack o f free time yourself
-financial risk -work for yoursel
-income is not steady -lots of -very hard work
-always have to learn responsibilities -lack of free time

8. Financial -business on profit -business on profit -business on profit -no profit for now
situation
ANNEX 2
INTERVIEW
1. General business data
-What is the activity domain......................................................................................................
-How many family members are involved.............................................................................
-What generation...........................................................................................................................

2. How the business started?

-Who was the founder of the business?
- Who is the manager now?

3. Challenges met in time

-At the beginning (foundation of the business)
-Maintaining the business
-Financial problems
- Personal issues

4. Combining family and business together

4.1. What are the effects in combining family and business together?
- How does the family environment affect the business and vice versa?
- What are the opportunities
- Challenges in combining family and business together?
- Which one do you think has the bigger impact on the other: family on the business or business on the family?

4.2. Family business structure

What criteria do you have for taking family members in the business?
- Are family members favoured in recruitment situations or do they have to have an added value and something
essential to give to the business operations just like the applicants from outside the family?
- How are family members trained to work in the business?
- Rolul fiecaruia (vezi email)

4.2.1. Family business combines family, business and ownership. Is it difficult to control and
coordinate the different roles (for example owner-father or owner-son-CEO) created by these
three elements and the expectations behind them? Rolul in luarea deciziilor, sunt implicate toti
sau nu, exista un director si partea executive sau se conlucreaza...?

4.3. How does family entrepreneurship show in your employee relationships?

- Does the commitment and responsibility of the family show also in employees’ work motivation and commitment
towards the business? How?
- Are employees seen as work force or more as individuals and part of the family?

5. Conflicts and family business

Has combining family and business together created any conflicts?
- Have these conflicts had an impact on the family or the business?
- Have you been able to implement a communication strategy on learning, improving open conversation and
creating new practices in the business and solving these conflicts?

6. Family entrepreneurship and business values

How does family entrepreneurship show in your business values?
- Has family’s values had an impact on the business’s values?
- Because of the family’s impact also other than purely economic values are emphasized in family businesses. What
are the most important “higher” values of your business?
- Do the values of your family business act as a source of competitive advantage and give a chance to differentiate
from other businesses?

7. Advantages and disadvantages of owning a family business

8. Is currently your business on profit (What is the current financial situation of your business)?
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