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.

Brașov, 2022
 Transylvania University form Brasov
Economic Sciences and Business Administration Faculty
Study program:Business administration

Family businesses

Coordinator:
Absolvent:
Conf. univ. Dr.

Brașov, 2022
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 Toyota family owns 2%

Corp

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 Peugeot family holds 42%of voting shares

Citroen

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 Bosch family owns 7% of shares, but

GmbH 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
● Predictability -Opposition towards
change
Loyalty ● Sense of -Following generation
responsibility continues the business
because of sense of
● Commitment
duty
● Communality -Emotional commitment
toward the business and
its employees
Trust ● Safety -Work place safety
 ● Fairness
● Reliability -Choosing a continuator
is difficult
Dependency ● Cohesiveness -Owner’s emotional
● Emotional bounds bound 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 Reference
business

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;
 non-diversified. well diversified. Yeung, 2005

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

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
discussion
1.General -production -services -transports -agriculture
business data -4 family members -5 family members -8 family members -third generation
-second generation -first generation -first generation -4 family membe

2. How the -grandparents had a -on EU funds -3 brothers started -from the grandp
business little cow farm -the only child of the the business from 0 -their niece
started? -parents family -the founders
-Who was the -parents -the same
founder?
-Who is now?
3. Challenges -transporting the -not knowing the -no notoriety on the -lack of technolo
met in time products to a market, procedures implied by market equipment
since there were no the project -not easy to find -economic chang
cars in the ’70-‘80 -not enough money drivers -the developmen
and the farm was at -it it difficult for a new -not enough money technology
the countryside small business to enter -hard work for the -misunderstandin
-lots of conditions for the market family members at with the family
now for selling cheese -at the beginning, the the beginning members
products business was not -problems met -industrialization
-children do not like producing enough outside the country
the domain of activity -difficulties in with some trucks
-hard to find convincing the family -not having the
personnel that the business will same opinion with
work the brothers
-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
4.Combining -the family members -the family is working -the relationships -not enough tim
family and work together and whenever necessary are more intimate family
business they help each other -there is always -there is a friendship -a more stressed
together -there is always somebody at the firm between all the atmosphere in th
4.1. Which are somebody who is to supervise the employees family
the effect of aware of the activity -always having -are favoured fam
combining production and -to preserve a someone how helps members, and th
family and business itself boundary between you persons with abi
business -there is not a fussiness and family -different way of and knowledge i
together? business structure, -business has more thinking of family agriculture field
4.2. Family everybody is doing impact on the family members -the men use to
business what is necessary -the family member -business has a hard work
structure -employees are were not selected, they bigger impact on the -family members
4.3. How does treated like family were part of the family managerial posit
family members and we business from the -the family members -there is a pleasa
entrepreneursh always take into beginning are on management atmosphere amo
ip show in your account their opinion -there is no training for positions since the enterprise
employee -business had more the family business. beginning -the employees a
relationships? impact on the family They all learnt from the -the family members involved in the d
start are favoured making process
-the hole family is -there is no criteria -employees are s
involved in the decision for hiring family a part of the fam
making process members -no criteria for hi
-the founder is young, -new family member family members
so the hole business hired are trained by
has a dynamic rhythm their parents or
-relationship with the relatives
employees is intimate, -roles are distributed
they use to make each according to the
other gifts 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
5.Conflicts and -the current conflict is -there exist conflicts -the conflicts -there were som
family business with our children and they have an between family conflicts because
since no one is willing impact on the family, members have generational diff
to continue this since the founder is -they learnt to
 business, maybe their young and they tend to sometimes effects communicate mo
husbands will be treat him like a child on the business effectively
interested in -we communicate, but -there could be -the conflicts did
improving the firm there are still some conflicts regarding have impact on t
-the conflict do not conflicts on some the work of each family.
have a big impact on aspects, but the owner family member
the family or the tends to be more -they speak open
business comprehensive when it about the conflicts
comes to family or issues met
6. Family -our business is the -family had impact in -the trust and -the most import
entrepreneursh mirror of our the business’s value fairness are their value is commitm
ip and business character -the fairness to our family values and this gives
value -the most important customers -they implemented competitive adva
vale for us is the -the values of the them in their -the family’s valu
quality of our company are a business a big impact on t
products competitive advantage -they consider the business
-we want to preserve trust an important
the Romanian old advantage when it
cheese taste comes
To their customers

7. Advantages -we tend to put the -the family became -the relationship -the long term-v
and best of us for our more united with the family is -the business is u
disadvantages business -there appeared some closer the conflict reaso
of owning a -we cannot fire our conflicts with the -the use of their -the effects of th
family business children parents money in the business on the
-the comfortable -it is difficult to business -the closer relati
atmosphere in our maintain a boundary -there is a more with the employe
business between family and relaxant interaction
business with the employees
-the atmosphere in the -undefined
firm is comfortable so boundaries between
the employees are the roles of each
more satisfied family member

8. Financial -income around -the business is on -the business is on -the business is o

situation 90000 lei/month profit profit
-income of 265683 lei
at the last balance shit
Family business owners
Topic of Subject 1 Subject 2 Subject 3 Subjec
the
discussion
1.General -retail -services -tourism -service
business data -first generation -second -first generatio
-first generation
2.How the -the actual owner -mother -parents -the owner
business -the owner -daughter -the owner
-daughter
started?
-Who was the
founder?
-Who is now?
3. Challenges -financial issues -financial -difficult to obtain -the business
met in time -very little -managerial notoriety on the -finding a loca
knowledge about problems market -financial prob
the domain -hard to find -taxes -bureaucracy
-seasonal business trained stuff -the business is -the need for
-some periods with -keeping the influenced by the independence
low profit customer trust and weather conditions
-trust issues interest -requires a lot of
-family problems manager’s time
4.Combining -no favoured --no favoured -no qualification -no favoured e
management persons in persons -qualification o
needed
and recruitment -employees have to some jobs
ownership -knowledge in the have qualification -no favoured -fairness and
together domain for the job employees needed
4.1.. Business -employees are -not difficult to -the new workers -workers are t
structure trains by the control ownership are trained by the the manager
4.2. When it manager and by and business, it manager or other -it was difficul
comes to take practicing the job comes with more employees the employee
decisions, -it was not hard to responsibilities -only the manager must find a ba
there is only combine the -only the manager makes decisions between boss
the manager ownership and makes decisions -if the matter is in order to cre
who decides business, since you -showing to concerned with relationships
or all the work for yourself employees the employees, then -the manager
employees -only the manager manager’s vision they are consulted decisions rega
are involved takes decisions -showing her -they work as a business, but
in the -the manager satisfaction to team, so this keeps consulting wit
decision always knows how employees them motivated employees in
process? to motivate his -employees are -the employees are concerned to
employees seen as workers, considered friends -the close rela
4.3. How does -the manager has a but there is a with employee
entrepreneurs close relationship relaxed her to keep th
hip show in with the employees atmosphere motivated
your -employees are seen -the employee
employee as a part of family, as individuals,
relationships? they are all friends work tools

5.Conflicts -there were not -no conflicts to -no conflicts which -there were so
and business important conflicts impact the can affect the conflicts regar
within the business business business manager
-all problems are -communication is -the small issues -these conflict
solved by solving everything are solved through good impact o
communication communication business, sinc
to perform in
domain
-communicatio
important in t
business; ever
it like a tool in
different prob
6.Ownership -the manager guides -the manager’s -seriousness -the image of
and business the business by his values are seen in -punctuality business mirro
own values as the business The values of the manager’s cha
value
human being - the fairness manager are a -the values of
-negotiation power , -the values of the competitive manager are t
empathy and open company ensure advantage into the busin
mind are the strong the future of it -she is not looking -loyalty, fairne
values only for the profit, professionalis
-even if the values the customers -these represe
are a competitive satisfaction is more a competitive
advantage, important
sometimes it is hard
to deal with the
competition
 7.Advantages - you are your own -lifestyle flexibility -having her own -the absolute
and boss -total control an the business a
schedule
disadvantage -you can make your business decisions rega
s of owning a own schedule -risk of losing -being her own -the opportun
business -you control your money boss develop yours
business -sacrifice -work for your
-financial risk -lack o f free time -very hard wo
-income is not -lots of -lack of free ti
steady
-always have to responsibilities
learn
8. Financial -business on profit -business on profit -business on -no profit for n
situation
profit

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)?
http://www.revistadesociologie.ro/pdf-uri/nr.1-2-2011/07-FScirneci.pdf

https://biblioteca.regielive.ro/proiecte/psihologie/studiul-de-caz-metoda-de-
cercetare-calitativa-147509.html

https://ctrl-d.ro/inspiratie/tehnici-de-cercetare-calitativa/

http://eyromania.ro/wp-content/uploads/2017/07/Barometrul-afacerilor-de-
familie_Romania-2017_FINAL_.pdf

http://old.unitbv.ro/Portals/11/Licenta/2015_2016/12.10.2015%20-
%20Recomandari-licenta-2015-2016-dep%20MN.pdf

https://books.google.ro/books?
id=0iDE8SL1IusC&printsec=frontcover#v=onepage&q&f=false

https://books.google.ro/books?
id=KRKa6WQD8dAC&printsec=frontcover#v=onepage&q&f=false

https://books.google.ro/books?
id=N9EmYSzdiaAC&printsec=frontcover&dq=subject:%22Family-
owned+business+enterprises
%22&hl=en&sa=X&ved=0ahUKEwjXjYSx9YzaAhXF_aQKHWl3BCMQ6AEIKDAA
#v=onepage&q&f=false

https://books.google.ro/books?
id=tJJ6Mf6jakwC&printsec=frontcover#v=onepage&q&f=false

https://books.google.ro/books?
id=AO2LRjMHi9sC&printsec=frontcover#v=onepage&q&f=false

https://hbswk.hbs.edu/Pages/browse.aspx?HBSTopic=Family%20Business

https://biblioteca.regielive.ro/licente/marketing/afaceri-in-familie-
177955.html

https://www.pwc.ro/en/publications/assets/2015/fbs-2014-ro.pdf

https://econ.ubbcluj.ro/Scoala_Doctorala/rezumate/RUSU%20Carmen
%20Ramona.pdf

file:///C:/Users/Oana/Downloads/ijfs-02-00280-v2.pdf

https://doclib.uhasselt.be/dspace/bitstream/1942/12222/1/A%20different
%20perspective%20on%20defining%20family%20firms-%20the
%20ownership%20construct%20revisited%20-Bart%20Henssen.pdf

https://link.springer.com/chapter/10.1007/978-3-658-00063-9_2

http://www.ffi.org/?page=definitions