Familines Qualities, Entrepreneurial Orientation and Long-term Performance Advantage

Wayne J. Irava, Bond University

*Note: For more information on the full text please email step@babson.edu

Abstract

Familiness has become widely accepted as the appropriate construct representing the unique bundle of resources arising out of family involvement in business. However as yet we do not fully understand the types of familiness or the conditions that give rise to them and as such familiness remains in need of further exploration. This research explores the familiness construct and its role in perpetuating entrepreneurial activity in the family business through the development and deployment of an entrepreneurial orientation (EO) over multiple generations. The Resource-Based View (RBV) is the adopted firm level framework used to identify the unique bundle of family resources that represent familiness. These resources are then explored for their contribution to nurturing and perpetuating an EO, thereby creating a source of competitive advantage. The research also explores the association of EO to the achievement of the firm’s nonfinancial objectives. Using exploratory in-depth qualitative case studies of four multigenerational Australian family firms, data was collected via semi-structured interviews, observations, and secondary documents. NVivo assisted with the coding and analysis of data to identify common patterns and themes from both within-case and across-case analyses.

Six resource dimensions were found to represent the familiness resource bundle: reputation, experience – insights and skills, learning, decision-making, relationships, and networks. These resource dimensions, identified by their prevalence across all four cases, are spread across the resource categories (human, organizational, and process) and thus confirm the widespread potential of the family’s influence in business. The resource dimensions displayed a paradoxical nature and the ability to manage these paradoxes enabled these firms to exploit their familiness advantages (f+) and simultaneously mitigate the disadvantages (f-). Managing the paradoxical nature was central to the multigenerational success of these firms. Three of the six dimensions (experience – insights and skills, decision-making, and networks) were instrumental in influencing the development of the firm’s EO while three other dimensions (reputation, learning, and relationships) were more closely aligned with a market, learning, and communication orientation. The findings also suggest that family firms are better able to address non-financial objectives when they have strong EOs that engaged them in entrepreneurial activities. All interpretations of the findings are integrated into a conceptual model for future empirical analysis.

The study contributes to research by identifying six dimensions (familiness resources model) that constitute the familiness resource bundle and through which family influence is most prevalent and best examined within the business. The study suggests that the paradoxical nature of these dimensions highlights conditions that give rise to familiness advantages (f+) or disadvantages (f-) and that managing these paradoxes gives rise to sustained competitive advantage. The study also proposes that the family is most influential in driving the firm’s EO: by being exposed to internal and external experiences that heighten their ability for opportunity recognition; by balancing the process (informal or formal), speed (fast or slow), and forum (concentrated or collaborative) of decisions; and by integrating and exploiting the firm’s strong and weak network ties. Finally the study confirms a close association between a firm’s EO and its non-financial objectives. The study thus encourages family firms to pursue entrepreneurial activity, not only because it sustains their livelihood over generations, but because it also assists in meeting the family’s non-financial objectives.

 

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