Abstract
D.Phil.
In both developed and under-developed countries, family businesses are the most
prevalent, best-performing and resilient expressions of applied entrepreneurship.
Despite this, however, the general impression one gathers from both the academic and
the popular literature is a negative one, suggesting that family businesses tend to be
fragile, transient of nature, and prone to destructive, internal conflict. Consequently,
the positive performances and valuable socio-economic contributions that family
businesses do actually generate in global economies, are inadequately acknowledged
and largely inconsistent with the negative images that prevail in the bulk of the
literature on the subject.
Mainstream family-business theory, known as the orthodox approach, regards the
family and the business as separate entities. The current study is conducted in
opposition to this view, preferring the heterodox approach, which acknowledges
family and business as an interrelated, virtually indivisible unit of productive and
profitable association between the two constituent parts. In successful family firms,
the business and the family seem to be inseparable. This homogeneity is termed a
"unified systemic" relationship, and the reciprocal inter-relationship between family
and business is regarded by the "systems" school of thought as the leading factor
contributing to the generally superior performance of family businesses. Central to
the unified, systemic model is the concept of "familiness". This characteristic
underpins the co-ordination of the family inter-action with the firm, leading to
flexibility, resilience, sustainability and superior performance.
The current study does not attempt to deny the difficulties that confront family
businesses. This would be unreasonable in the light of an alleged 30-percent-onaverage
generation-transition survival rate in family businesses. However, the study
has chosen to focus on a more positive view of family-business relationships,
acknowledging an inseparable association between the family and the business, and
the pro-active management thereof. More specifically, this study investigates the role
of familiness in the success and failure of family-business groups in South Africa. Because of the vastness of the field, the study does not attempt to include familybusiness
groups on a global scale.
For the purposes of the current study, familiness is investigated as the development
of, and the relationships formed between, founder capital, family capital and
generation capital, leading to family-business-capital-behaviour, as these concepts
are defined in the study. To facilitate this investigation, a conceptual model,
comprising fourteen different, developmental channels, was created. Collectively, the
model represents familiness in all the different phases of growth and advancement of
family-business groups (see Familiness Transmission of Capital Model, Figure 2.14,
p. 86). In evaluating the model, semi-structured interviews were used to do a
qualitative investigation of all fourteen proposed transmission channels. Eight of the
most prominent and influential family-business groups in South Africa participated in
the study. Family-business groups were specifically chosen for the current study
because they are more complex than smaller family businesses and secondly, because
it is virtually impossible to gain access to the family-business owners of multinational,
multi-billion-rand enterprises. The sample of family-business groups
selected for the current study had already achieved successful transitions through their
second, third and fourth generations.
The results of the current study indicate that the concept of familiness appears to play
a vital role in the success or failure of generation-transmission in the eight prominent
South African family-business groups investigated. More specifically, it would seem
that the systemic inter-relatedness between the family and the business, through the
concept of familiness, plays a pivotal role in the various transmission channels that
lead not only to the advanced success of family businesses, but also to the successful
transition of the business to the succeeding generations of the founding family.
The findings of the current study endorse the heterodox view that the family and the
business cannot be separated, but should rather be seen as an interactive system with
unique, collectable resources. The findings respond to a need created, according to
Bornheim (2000:163), by the principal deficiency in the family organisation
literature, namely a theory that explains the developmental stages of each generation
succession.
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The study concludes that family businesses seem to engender a "soul" into the
functioning of such enterprises by means of service leadership in eight areas of
operation, identified by means of a conditional matrix, namely: customer-care; social
responsibility; culture; innovative behaviour; leadership-by-example; legacy of family
ownership; passion for the family business; and the treatment of employees as if they
are members of the family.
The concept of familiness engendering a "soul" into a business, offers a possible
explanation for the superior performance of family businesses when this is compared
with the general performance of non-family businesses. Several recommendations
and suggestions are offered for further research on the topic.