Written by Mahan Mohammadi, Ph.D. Candidate & International Ambassadors
While families are regularly conquered by emotional issues, they also offer security, status, and strength for their contributors. Family companies are mainly based on meeting several members’ needs.
Perhaps the place to start a research volume on family firms is to define what a family firm is. To understand a family business, one must study the family, its individual members, as well as key nonfamily individuals.
Clearly, a massive number of definitions of “family business” exist, and a conventional definition would come with a for-profit organisation during which “two or more members influence the direction of the firm through relationships, management roles, or possession rights” (Davis and Tagiuri 1989). This complex dynamic is impacted by the external environment in which the business is located. These all must be considered as separate systems as well as interrelated parts of larger systems inside and outside of the business and the family.
To recognise a circle of family enterprise, we need to examine the circle of families and the characteristics of its members. This complicated dynamic is impacted with the aid of the surrounding environment where the company is located. These all ought to be taken into consideration as separate structures in addition to interrelated components of large structures outside and inside of the enterprise and the own circle of members.
Members of a family will judge the family’s value based on the way it meets their emotional needs. While in family-structured firms, these emotional needs are not the only ones to consider; some other aspects, like financial needs, may come first.
These corporations regularly start off their own circle of relative ventures. While most of the happenings are positive, there might be some horror testimonies. It appears that the shape inherent in a successful enterprise is regularly in a “range of tension” with the ones which signify a harmonious own circle of relatives. These “conflicts” are the heart of the uniqueness of the family business.
The emerging challenges from the surrounding environment of the family-owned business are fascinating to those who study privately held corporations. At the same time, they are operating their companies and coping with dynamic familial relationships that always impact the strategic and financial decisions they take. To survive and grow effectively in today’s dynamic economies, the family-owned and operated firm should meet their distinctive challenges with information resources that are typically not cognizant of family firm problems and regularly critical of family companies and their values. Furthermore, members of a family business should learn management skills that are rarely needed in public-owned companies and are frequently not taught in business schools – for example, how to manage your child who is also one of your employees.
Allen Fishman, 9 Elements of Family Business Success: A Proven Formula for Improving Leadership (2008, McGraw-Hill)