“Family Business and Regional Development”

Journal of Family Business Strategy—Special Issue

“Family Business and Regional Development”

 

Guest Editors

Rodrigo Basco (Witten/Herdecke University)

Joern Block (Universität Trier and Erasmus University Rotterdam)

Roger Stough (George Mason University)

Friederike Welter (Institut für Mittelstandsforschung Bonn and University Siegen)

Karl Wennberg (Stockholm School of Economics)

Submission Deadline: September 15, 2014

Family firms are an important form of business organizations that exist in different sizes and sectors as well as in developed and emerging economies. However, surprisingly little is known about how family firms interact with the region in which they are located.

While family firms have been considered a driver of economic development for regions in the early stages of industrialization (Jones & Rose, 1993), some researchers have attributed the decline of economies (e.g., the economies of the United Kingdom and France in the late 19th and early 20th centuries) to the prevalence of family firms and the lack of separation between ownership and management (Burkart, Panunzi, & Shleifer, 2003; Chandler, 1990; Landes, 1951). This negative view of historical family firms is in stark contrast to the view in several contemporary economies, where family firms are seen as crucial for regional development. For example, the German Mittelstand (Berghoff, 2006), which consists mostly of family firms, is regarded as the backbone of the German economy. Family firms are also considered to be of key importance in Italian industrial districts and in economic districts characterized by flexible specialization (Piore & Sabel, 1984; Porter, 1990).

The time is ripe to begin developing research that can offer a better understanding of the relationship between family firms and regional development in the contemporary economy. The aim of this special issue is to examine the role of family firms in regional economic environments and to enhance our understating of the ways family firms may (or may not) contribute to regional economic growth and development.

This special issue will consider qualitative and quantitative empirical studies, case studies, and more theoretical and conceptual research contributions. Because the existing literature on family businesses is found across multiple disciplines and research fields, we encourage cross-disciplinary approaches to advance our understanding of family business and regional development. The cross-disciplinary nature of current research on family firms suggests that a new understanding of the role family firms play in regional economic development will likely come from a melding of theory and research across fields like regional economics, regional studies, entrepreneurship, geography, business, management, political science, psychology, and sociology. Some examples of relevant questions that might be considered include, but are not limited to, the following:

  • How do family firms contribute to regional economic development (both economic and social), regional innovation, and regional employment?
  • What causal mechanisms underlie the role of family firms in regional economic development?
  • Do family firms care more than other firms about the region in which they are located? Which characteristics of family firms (e.g., management, ownership, control) matter? What is the role of the founder, and what is the role of succeeding family generations?
  • What is the role of family-owned businesses in the region in which they are located?
  • How do regional policymakers view family firms? Which regional policies help family firms grow? Which regions attract family firms, and which do not? Which regional conditions foster family firm development? Which barriers do family firms experience at the regional level?
  • Are family firms tunnels through which traditional production factors (e.g., land, capital, and labor) as well as new factors (e.g., knowledge and entrepreneurship) can be channeled to foster regional development? What characteristics of family firms are more productive for those production factors?
  • How can family firms benefit from a strong regional orientation? When does it harm their competitiveness?
  • Are family firms a unique dimension of regional growth, or do family firm players channel or guide factors like innovation, trans-generational entrepreneurship, and knowledge into regional economic growth?
  • How do family firms contribute to the development and formation of industrial clusters and regional milieus?

Timeline and Submissions

Submissions are due by September 15, 2014. Contributors should follow the directions for manuscript preparation and submission available at http://ees.elsevier.com/jfbs. Manuscripts may be submitted online at http://www.ees.elsevier.com/jfbs. All articles will be subject to the standard JFBS double-blind review process. Final revised submissions will be due by July 31, 2015. It is expected that articles for this special issue will be published in 2015. For questions regarding this special issue, please contact any of the guest editors: Rodrigo Basco (bascorodrigo@gmail.com), Joern Block (block@uni-trier.de), or Karl Wennberg (Karl.wennberg@hhs.se). For general questions or inquiries about JFBS, please contact the Assistant Editor, Torsten Pieper (tpieper@kennesaw.edu).

Intergenerational Learning

By Rodrigo Basco, Ph.D.

The need to internationalize our company was not an alternative, it was a necessary step in a market we perceived saturated‘. These are the words of a family business CEO at an interview, referring to the future of the family saga in his company. The corporate vision is a characteristic of a good entrepreneur as it involves anticipating the path the company should take in order to avoid stagnation in the future.

The internationalization of a firm can be understood as a process that has different stages and constitutes a learning process in itself.

The interview with the CEO continued with amusing anecdotes about the internationalization process. I refer to them as ‘funny’ because past stories mixed with selective memory and time result in legends that will surely make us smile.

The company had been internationalized in his father’s time. ‘Of course,’ he said, ‘at our first attempt at internationalization everything went wrong’. He told us about a series of mishaps that made this first international experience of the business a total failure: they were scammed by their partners from the foreign country, foreign banks charged them a ridiculously high interest rate, all the shipments arrived late … there seemed to be an endless list of mistakes. And the story, quixotic, to say the least.

‘How can you go wrong in a process of internationalization?’, I thought. If you read a book on business administration, you know that the first thing to do is to plan, to minimize the problems that may cause the venture to fail. But reality is far from what the books portray as ‘technical’ when in fact they are prescriptive. Firstly, when an opportunity arises, more often than not, there is not much time for planning. Secondly, a small to medium size firm may not have enough resources, specifically human resources, to know all necessary knowledge for a new business venture (such as internationalization).

But just like an orchestra conductor, the businessman/entrepreneur has a specific ability to organize firm resources. This includes the ability to visualize where the firm should go, the ability to recognize a good opportunity, and the ability to create learning opportunities out of past mistakes and errors in the strategic implementation. Perhaps this last feature is what makes family businesses have greater resilience than the company which is non-family based.

Many entrepreneurs are able to visualize the future and recognize different opportunities, but at their first experience with failure, they leave the organization. The difference they have with a family businesses and family entrepreneurs lies in generational learning. In the family business, learning experiences between generations implicitly occurs because of interrelationships and interactions. The relationship between young and old in formal settings (such as a company meeting) and/or in informal meetings (such as a family meal) enables communication of experiences and transference knowledge through stories and anecdotes. That kind of learning, which is not regulated and is not learned in any classroom, is the one that allows the family business transcend through time.

In the interviewee’s opinion, the failure of the first international experience led by his father has become their main business asset: knowledge. That knowledge is an intangible resource that is embedded in the genetic code of the family members. The experience has been transmitted through formal and informal channels in family reunions, at business meetings, in different anecdotes… Their business is now successful at internationalization and growth, since past mistakes have not been committed again, and they know now how to proceed.

Knowledge and knowledge transfer are key aspects to the continuity of the family business.

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