What is good for your family firm is good for you!

PhotoWhat is good for your family firm is good for you, but the other way around is not true,” said Sheikh Sultan Al Qassemi in the Guest Lecture Series hosted by Prof. Rodrigo Basco. “Family is about emotions and how to manage them for continuity.”

In the interactive session, titled “The Experience from Two Generations,” Sheikh Sultan Sooud Al-Qassemi and his nephew, Sheikh Saud Majid Al Qassimi, emphasized the importance of emotional intelligence and strategic dialogue when communicating with family members in a professional arena.

Drawing on their own experiences, the guest lecturers explained the importance for new-generation family business members to listen and to learn but to not directly confront the generation in charge. Finding alternative solutions to convince family members to implement family and/or business changes is the best way to strategically manage family businesses in the Arab world. The lesson they transmitted was “adapt your strategies to the cultural context of the Arab world. Respect tradition without confrontation, but look for opportunities to introduce changes necessary to keep your family united and the business working.” “The key to cohesion and efficiency,” Sheikh Sultan Sooud Al-Qassemi said, “is understanding the essence of those you’re working with.”

Saud Al Qassemi spoke about the uncertainty he experienced after graduating from university. He had assumed that he would be included within his family business after merely a few months of training. “I was wrong,” he said with a laugh. “When I asked my uncle if I could join, he simply said no.” Instead, Saud Al Qassimi spent the next couple years learning and gaining experience working in numerous banks in the United Arab Emirates and Singapore. It was only after having spent a considerable amount of time abroad that he joined his family’s business.

However, his experience, extensive as it might have seemed, was not enough to prepare him for working alongside his family. “I found out that working in a bank is a completely different experience,” he said. “Working in a family business is something else entirely. I don’t think it’s something you can actually prepare for.”

Photo 3Sheikh Sultan Sooud Al-Qassemi and Sheikh Saud Majid Al Qassimi’s session is one of the initiatives headed by Dr. Rodrigo Basco, Chairholder of the Sheikh Saoud bin Khalid bin Khalid Al Qassimi Chair in Family Business, aiming to disseminate new knowledge to the student community and to further develop the future leaders of family businesses in the UAE, GCC, and MENA regions.

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Contextualizing Family Firms in the Arab World

 

Logo Rodrigo fondo transparente1st International Academic Conference

7th and 8th March 2018

 Call for papers:  “Contextualizing Family Firms in the Arab World”

Arab family firms cannot be fully understood without considering the context in which families and firms exist. While contexts determine organizational behavior (Johns, 2006), the footprints of family firms recursively manifest themselves in regional socio-economic contexts (Basco, 2015). Therefore, to fully understand the Arab family firm phenomenon, scholars must go beyond its boundaries by recognizing and exploring the multiple embeddedness of family firms in general. We must consider the micro-context of the family, the meso-context of the industry, and the macro-context of the country/region, all of which are characterized by paradoxes of conflict and peace, stability and instability, certainty and uncertainty, and modernity and tradition (Basco, 2017).

In the Arab World, socio-economic activities have traditionally been embedded in kinship relationships in Bedouin, rural, and urban societies. Families are the dominant institutions through which individuals transmit their culture, legacy, religion, expectations, and traditions and interact in society (Barakat, 1993) by creating their own identity. In this context, Arab families act as a filter absorbing changes caused by contemporary economies, social and economic globalization forces, societal conflicts, political transformations, the influence of the recent colonial past, and cultural pressures from Western and Eastern cultures.

Even though the family business field has gained external legitimacy (Chrisman, Chua, & Steier, 2003; Perez Rodriguez & Basco, 2011), the lack of an overall family business theory is mainly due to the shortage of studies integrating contextual dimensions. A theory of family firms “must explain and predict not only the interaction between family and business systems at the individual and family firm levels but also the interaction between family firms and the environment at the aggregate level” (Basco, 2015, p. 260). In this sense, contextualizing the family firm in the Arab World could help clarify firm familiness (Gomez-Mejia, Cruz, Berrone, & De Castro, 2011; Habbershon & Williams, 1999), which focuses on the effect family has on firm behavior and performance, and regional familiness (Stough, Welter, Block, Wennberg, & Basco, 2015), which focuses on the family firm’s effect on regional development.

The aim of this conference is to advance previous efforts to contextualize the family firm phenomenon in different institutional and cultural environments (e.g., Gupta, Levenburg, Moore, Motwani, & Schwarz, 2008), particularly in the Arab World (e.g., Bizri, 2016; Fahed-Sreih & Djoundourian, 2006; Welsh & Raven, 2006).

We invite submissions to the conference titled “Conceptualizing Family Firms in the Arab World.” The purpose of the conference is to gather researchers who are investigating the family firm phenomenon in the Arab World. We expect that contextualizing family firms in the Arab World will shed new light on the nuances of family firms in terms of their phenomenological perspectives and theoretical development.

Submission Guidelines and deadline

We encourage scholars, especially PhD students and young researchers, whose research focuses directly or indirectly on family businesses in the Arab World to submit their works in progress at different stages. Abstract submission should be one document with a cover page (title, author’s name, affiliation, email) and a two-page abstract (topic of research, theories, method, results, contributions)

Abstract submission should be sent electronically to rbasco@aus.edu

Deadline Abstract by 30/11/2017

Authors Notification by 31/12/2017

Final papers (final submission) by 31/01/2018

 

Conference Highlights

Travel Research Grants

The Sheikh Saoud bin Khalid bin Khalid Al-Qassimi Chair in Family Business offers six scholarships for PhD students from the Arab World to travel to and attend the conference. Potential candidates who would like to apply for a travel/accommodation grant should send their application letter and CV with their abstract submission by 30/11/2017.

Career Academy

We have designed a special event for PhD students and young scholars called the Career Academy Workshop to discuss the challenges of developing an academic career in the Arab World. Topics will include matters related to earning a PhD, building an academic career, publishing research, and building local and international networks.

Special Issue

In collaboration with Journal Family Business Strategy, papers presented at the conference will be eligible for a special topic section, “Contextualizing Family Firms in the Arab World.”

Registration

There is no registration fee.

Tentative Program 

Academic Conference: 7th of March, 2018 – Keynote speakers – Plenary sessions

Business Family Conference: 8th of March, 2018 – Keynote speakers and panel sessions

Venue

American University of Sharjah, Sharjah, United Arab Emirates

Organizers

Rodrigo Basco (American University of Sharjah), Alreem Al Ammari (American University of Sharjah), and Farida El Agamy (Tharawat Family Business Forum)

 

 Aus logo (colour)                                                             JFBS

  TFBF Logo - original - 2017                                Sheraa

References

Barakat, H. (1993). The Arab World. Society, culture, and state. Berkeley, California: University of California Press.

Basco, R. (2015). Family business and regional development-A theoretical model of regional familiness. Journal of Family Business Strategy, 6(4), 259–271.

Basco, R. (2017). The multiple embeddedness of family firms in Arab World. In S. Basly, P.-L. Saunier, & A. Marouane (Eds.), Family Businesses in the Arab World – Governance, Strategy, and Financing (p. forthcoming).

Bizri, R. (2016). Succession in the family business: drivers and pathways. International Journal of Entrepreneurial Behavior & Research, 22(1), 133–154.

Chrisman, J. J., Chua, J. H., & Steier, L. P. (2003). An introduction to theories of family business. Journal of Business Venturing, 18(4), 441–448.

Fahed-Sreih, J., & Djoundourian, S. (2006). Determinants of longevity and success in Lebanese family businesses: An exploratory study. Family Business Review, 19(3), 225–234.

Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The Bind that Ties: Socioemotional Wealth Preservation in Family Firms. Academy of Management Annals, 5(1), 653–707.

Gupta, V., Levenburg, N., Moore, L., Motwani, J., & Schwarz, T. V. (2008). Culturally-sensitive models of family business in Germanic Europe. Hyderabad, India: ICFA University Press.

Habbershon, T. G., & Williams, M. L. (1999). A Resource-Based Framework for Assessing the Strategic Advantages of Family Firms. Family Business Review, 12(1), 1–25.

Johns, G. (2006). The Essential Impact of Context on Organizational Behavior. Academy of Management Review, 31(2), 386–408.

Perez Rodriguez, M. J., & Basco, R. (2011). The cognitive legitimacy of the family business field. Family Business Review, 24(4).

Stough, R., Welter, F., Block, J., Wennberg, K., & Basco, R. (2015). Family business and regional science: “Bridging the gap.” Journal of Family Business Strategy, 6(4), 208–218.

Welsh, D. H. B., & Raven, P. (2006). Family business in the Middle East: An exploratory study of retail management in Kuwait and Lebanon. Family Business Review, 19(1), 29–48.

“What if corruption is a matter of being or not being for family firms”

By Rodrigo Basco and Ramsha S. Khan

This is an interview with Dr. Thomas Bassetti of University of Padua (Italy). Dr. Bassetti published an article in the Journal of Family Business Strategy in collaboration with Dr. Dal Maso Lorenzo and Dr. Lattanzi Nicola entitled: “Family Businesses in Eastern European Countries: How Informal Payments affect Exports”

What has inspired you to write about the topic of corruption and family businesses in Thomasthe Eastern European Countries?

In May 2008, I read an article published by The Economist talking about corruption in Eastern Europe. The title of the article was “Talking of virtue, counting the spoons”. The central point of the article was that the EU enlargement process has generated temptingly puddles of public money to steal. According to the journalist, a more effective approach to fight corruption is the simplification of the public administration. Public administration should be simplified to the point where bribes are either unnecessary or extremely evident.

As an economist, I immediately thought that corruption can be represented as a market characterized by two different sides: the demand side and the supply side. The Business Environment and Enterprise Performance Survey (BEEPS) gave us the opportunity to investigate this hypothesis. In particular, we were interested in exploring under which conditions a firm may be interested in bribing public officials. Usually, bribes are devoted to buying a competitive input or to facilitate an administrative process. In this second case, even a competitive firm may be interested in bribing a civil servant. In particular, a risk-averse firm facing institutional inefficiencies may decide to bribe a public official just to overcome these inefficiencies that threaten its own survival. In this sense, bribes act as an insurance against institutional inefficiencies.

What are the main results of the article published in the Special Issue?

First, when we examine the relationship between corruption and export, it is important to take into account the reasons why firms bribe public officials. Second, in contrast to non-family firms, family firms are particularly sensitive to corruption. Finally, informal payments aiming to facilitate business operations tend to support export-oriented family firms.

What is the theoretical application of your research? What are the future lines of research of this topic?

The main theoretical implication of our research is that risk-aversion plays a role in the willingness to use informal economy channels. So, if family firms are more risk averse than non family firms, the former may be more involved than the latter in informal activities just because of their risk attitude.

Although we provided robust evidence on the causal relationship between the family firms’ demand for bribery and exports in Eastern European economies, given the nature of the dataset, we were not able to distinguish among different compelling explanations for our evidence.  Therefore, a first strand of literature should explore the mechanisms behind our findings. Similarly, a second strand of literature should investigate whether our findings apply only to Eastern European countries or not. In this second case, there could be a minimum level of institutional inefficiencies below which risk-averse firms have no incentive to bribe public officials.

What is the practical application of your research for policy-makers?

Our article has some important implications in terms of anti-bribery policies. According to our results, policy-makers should distinguish informal payments into pure corruption payments (i.e., payments devoted to acquire an additional competitive input) and facilitation payments (i.e., payments devoted to accelerate inefficient administrative procedures). If informal payments are devoted to facilitate business’ operations, before fighting these deplorable practices, policymakers should remove those market and institutional inefficiencies that hamper business operations. This is why facilitation payments are tolerated also in the U.S. In addition, since family firms are the most common form of business entity, this policy intervention may boost family firms’ export, favoring economic growth and development.

Entrepreneurship, Migration and Family in Peripheral Contexts – Avenues for Growth and Internationalisation

IMAGENCall For Papers

International Journal of Entrepreneurship and Small Business

 

Guest Editors
Maria Elo
University of Turku, Finland

Susanne Sandberg
Linnaeus University, Sweden

Per Servais
University of Southern, Denmark

Allan Discua Cruz
Lancaster University Management School, UK

Rodrigo Basco
Sheikh Saoud bin Khalid bin Khalid Al-Qassimi Chair in Family BusinessAmerican University of Sharjah, UAE

Description
The International Journal of Entrepreneurship and Small Business (IJESB) has recently published several articles about migrant entrepreneurship and internationalisation. The purpose of this special issue is to continue and extend this academic dialogue about entrepreneurship, migration and family in peripheral contexts as dimensions that can influence new business creation, internationalisation and socio-economic development. Peripheral contexts often create pressures to internationalise and to find alternative entrepreneurial strategies and resources. This special issue aims to foster further understanding of these topics, which are of increasing relevance around the world.

Peripheral contexts are often disadvantageous, e.g. being constrained by the shortage of customers, the lack of physical and human resources, the higher cost of imported raw materials, obstacles in terms of logistics and the scarcity of international networks (e.g. Dana, 1996; Freiling, 2008; Sandberg, 2013). In addition, many peripheries face severe problems of brain drain as urbanisation and migration absorbs the young potential elsewhere. Furthermore, novel challenges arrive as the crisis-driven migration wave reaches these areas and creates a need to integrate newcomers into the local economies and societies (e.g. Heikkila et al. 2015). However, to understand the challenges of business development in peripheral contexts, it is necessary to explore three main interconnected elements: entrepreneurship, migration, and family.

Entrepreneurship -understood in a broad sense (such as at societal, organisational and/or individual levels)- represents an important element of economic growth and development (e.g, Dana, 2011) because it refers to the mobilisation of physical, human and social resources for detecting, creating and developing opportunities (Ardichvili, Cardozo & Ray, 2003; Muzychenko, 2008) and taking risks (Knight, 1921; Zahra, 2005). In this sense, entrepreneurship means the ability of a society, existing firms or individuals to create new or expand existing economic activities, often internationally (Acs, Dana & Jones, 2003; Moen & Servais, 2002) and under difficult conditions (Hitt, Ireland, Sirmon & Trahms, 2011). Therefore, entrepreneurship in peripheral contexts can be better understood by linking two additional phenomena: migration and family.

The context of periphery in which entrepreneurs and firms dwell may affect the birth, development, growth and mortality of a firm. Beyond the traditional overlooked importance of a single entrepreneur, the entrepreneurial teams and families in business go about creating more than one business over time (Discua Cruz, Howorth & Hamilton, 2013), often responding to migration processes and changing institutional conditions (Fernandez Perez & Lluch, 2016). Moreover, contextual, seasonal or other value creation limitations may not allow a classic ongoing single figure in entrepreneurial activity (Rosa et al., 2014). The result of such dynamics is often embedded in the formation of entrepreneurial enclaves in peripheral areas (Johannisson et al., 2007) with greater effect on regional development.

Migration is a challenge and opportunity shaping peripheral entrepreneurship and development (e.g. Kalantaridis, 2010; de Lange, 2013). Migration is a cross-action element that may accelerate the economic and social development of a peripheral context (Dana, 1991; de Lange, 2013; Riddle, 2008). International migration may not only reduce the impact of brain drain by attracting new human resources serving as valuable input for existing firms, but could also be considered as a potential entrepreneurial resource and change agent (Riddle & Brinkerhoff, 2011). For instance, migrants and their access to diaspora networks provide multiple positive effects on venturing and international business (e.g. Elo, 2015; Sandberg & Jansson, 2014).

Furthermore, local families -because of their embeddedness in a region and their function as source and recipient of social traditions, culture and values- may also perform as an important entrepreneurial function (e.g., Basco, 2015). In particular, local socio-cultural embeddedness and family networks may assist the survival of new firms (Littunen, 2000). Therefore, both indigenous and migrant people may ¡V independently or in combination ¡V be the source of entrepreneurial activities accelerating the economic dynamism of peripheries through the creation of new and more global firms or the expansion/internationalisation of existing firms (cf. Madsen & Servais, 1997; Riddle, Hrivnak & Nielsen, 2010; Elo et al., 2015).

We welcome qualitative as well as quantitative and mixed methodologies, as long as they are well grounded in the literature. Please refer to the following articles:
• Dana, L.P. & Dumez, H. (2015) ¡§Qualitative Research Revisited: Epistemology of a Comprehensive Approach,¡¨ International Journal of Entrepreneurship & Small Business 26 (2), October 2015, pp. 154-170.
• Dana, L.P. & Dana, T.E. (2005) ¡§Expanding the Scope of Methodologies Used in Entrepreneurship Research,¡¨ International Journal of Entrepreneurship & Small Business 2 (1), 2005, pp. 79-88.

Subject Coverage
Some examples of relevant themes and research questions that might be considered include, but are not limited to, the following:
• How do context and place influence entrepreneurship and a firm¡¦s development, also internationally? For example, demanding business environments and locations, such as peripheral, emerging and remote areas, Arctic and Nordic business environments, rural countryside locations, islands and small island states-realities, and limitations of small nation states.
• How can context enable and foster entrepreneurial business and strategies through institutional frameworks, support systems and paths for developing entrepreneurship?
• How does the type and form of entrepreneurial activity influence venture survival and growth? For example, can non-ideal business context and non-mainstream businesses, such as seasonal business, niche markets, unusual life-style ventures, socio-cultural ventures, social entrepreneurship, diaspora entrepreneurship, transnational multi-actor partnerships and other portfolio entrepreneurship-solutions generate new strategies?
• How does in- and out-migration influence the entrepreneurial landscape?
• What is the role of embeddedness in local, glocal and global networks for entrepreneurship and expansion? How can multi-ethnic and international embeddedness enhance entrepreneurship and growth?
• What kind of business models, coping strategies and best practices, or failures and success stories, can be identified for internationalisation and growth, high psychic distances, logistical and virtual business solutions?
• Who are the people -the entrepreneurs and families- behind entrepreneurship? Why do entrepreneurs choose to do business in a peripheral context? Comparisons and analysis of types of entrepreneurs and their backgrounds, such as historical, local, virtual, minority, migrant, multigenerational diasporans, transnational and cosmopolitan diaspora.
• What kind of roles do family and the ethno-cultural setting have and how do they influence entrepreneurial businesses? How are family, business strategy and business development across countries managed for growth and prosperity?
Notes for Prospective Authors Submitted papers should not have been previously published nor be currently under consideration for publication elsewhere. (N.B. Conference papers may only be submitted if the paper has been completely re-written and if appropriate written permissions have been obtained from any copyright holders of the original paper). All papers are refereed through a peer review process. All papers must be submitted online. Please read our Submitting articles page.

Important Dates
Submission of manuscripts: 30 June, 2016
Notification to authors: 31 August, 2016
Final versions due: 31 October, 2016

References
Acs, Z., Dana, L. P., & Jones, M. V. (2003). Toward new horizons: the internationalisation of entrepreneurship. Journal of International Entrepreneurship, 1(1), 5-12.
Ardichvili, A., Cardozo, R., & Ray, S. (2003). A theory of entrepreneurial opportunity identification and development. Journal of Business venturing, 18(1), 105-123.
Basco, R. (2015). Family business and regional development -theoretical model of regional familiness. Journal of Family Business Strategy, 6(4), 259-271.
Dana, L. P. (1991) Bring In More Entrepreneurs, Policy Options 12(9), November, pp. 18-19.
Dana, L. P. (1996). Self-employment in the Canadian sub-Arctic: an exploratory study, Canadian Journal of Administrative Sciences 13 (1), 65-77.
Dana, L. P. (2011). World Encyclopedia of Entrepreneurship, Cheltenham, United Kingdom: Edward Elgar.
Discua Cruz, A., Howorth, C., & Hamilton, E. (2013). Intrafamily entrepreneurship: The formation and membership of family entrepreneurial teams. Entrepreneurship Theory and Practice, 37(1), 17-46.
de Lange, D. E. (2013). Embedded diasporas: Shaping the geopolitical landscape. Journal of International Management, 19(1), 14-25.
Elo, Maria (2015) Diaspora networks in international business: A review on an emerging stream of research, in Larimo, J. Nummela, N. & Mainela, T. (eds.), Handbook on International Alliance and Network Research, Edward Elgar, Cheltenham, UK, 13-41
Elo, M., Harima, A., & Freiling, J. (2015). To Try or Not to Try? A Story of Diaspora Entrepreneurship. The Future of Global Organizing (Progress in International Business Research, Volume 10) Emerald Group Publishing Limited, 10, 283-293.
Fernandez Perez, P & Lluch, A (2016, forthcoming), Evolution of Family Business: Continuity and change in Latin America and Spain, Edward Elgar, Cheltenham, UK, Northampton, MA, USA
Freiling, J. (2008). Institutional designs in international transactions-an evolutionary economics perspective. Available at SSRN 1093271.
Heikkila, E., Kostiainen, A., Leinonen, J. & Soderling, I. (2015) Participation, Integration and Recognition, Changing Pathways to Immigrant Incorporation, Turku, 2015, Institute of Migration
Hitt, M. A., Ireland, R. D., Sirmon, D. G., & Trahms, C. A. (2011). Strategic entrepreneurship: creating value for individuals, organizations, and society. The Academy of Management Perspectives, 25(2), 57-75.
Johannisson, B., Caffarena, L. C., Discua Cruz, A. F., Epure, M., Hormiga, E., Kapelko, M., Murdock, K., Nanka-Bruce, D., Olejarova, M., Sanchez Lopez, A., Sekki, A.,Stoian, M., Totterman, H., & Bisignano, A. (2007), Interstanding the industrial district: contrasting conceptual images as a road to insight, Entrepreneurship & Regional Development, 19(6), 527 – 554.
Kalantaridis, C. (2010). In-migration, entrepreneurship and rural¡Vurban interdependencies: The case of East Cleveland, North East England. Journal of Rural Studies, 26(4), 418-427.
Knight, Frank H. (1921), Risk, Uncertainty and Profit, Boston, Massachusetts: Houghton Mifflin.
Littunen, H. (2000). Networks and local environmental characteristics in the survival of new firms. Small Business Economics, 15(1), 59-71.
Madsen, T. K., & Servais, P. (1997). The internationalization of born globals: an evolutionary process?. International Business Review, 6(6), 561-583.
Moen, O. & Servais, P. (2002). Born global or gradual global? Examining the export behavior of small and medium-sized enterprises. Journal of international marketing, 10(3), 49-72.
Muzychenko, O. (2008). Cross-cultural entrepreneurial competence in identifying international business opportunities. European Management Journal, 26(6), 366-377.
Riddle, L. (2008). Diasporas: Exploring their development potential. ESR Review, 10(2), 28.
Riddle, L., & Brinkerhoff, J. (2011). Diaspora entrepreneurs as institutional change agents: The case of Thamel. com. International Business Review, 20(6), 670-680.
Riddle, L., Hrivnak, G. A., & Nielsen, T. M. (2010). Transnational diaspora entrepreneurship in emerging markets: Bridging institutional divides. Journal of International Management, 16(4), 398-411.
Rosa, P., Howorth, C., & Discua Cruz, A. (2014). Habitual and portfolio entrepreneurship and the family in business. In Melin, L., Nordqvist, M. & Sharma, P. The SAGE Handbook of Family Business. London: Sage. 364-382
Sandberg, S. (2013). Emerging market entry node pattern and experiential knowledge of small and medium-sized enterprises. International Marketing Review, 30(2), 106-129.
Sandberg, S. & Jansson, H. (2014) Collective internationalization processes – A new take off route of private small and medium sized enterprises from China. Journal of Asian Business Studies 8(1): 29-42.
Zahra, S. A. (2005). Entrepreneurial risk taking in family firms. Family Business Review, 18(1), 23-40.

Special Issue – “Family Business and Regional Development”

2

Journal of Family Business Strategy – Volume 6, Issue 4

 

Editorial

Abstract. The purpose of this special issue is to stimulate research on the interaction between the fields of family business and regional science. Despite their overlapping themes and the high relevance of family firms for many regions, the two academic fields have emerged independently from each other, and little exchange exists. We discuss not only the role family firms play within the region in order to enhance our understanding of the ways family firms may (or may not) contribute to regional economic development but also the effect of socio-spatial and institutional context on firm behavior and performance. The set of empirical and theoretical articles included in this special issue represents an important early step bridging insights between the two fields.

 

Articles

Abstract. This article investigates the effect of corruption on the export share of family firms in Eastern European countries. Using the Business Environment and Enterprise Performance Survey and panel data methods, we find that, in contrast to non-family firms, family firms are rather sensitive to corruption. In particular, the export share of family firms is positively associated with informal payments that aim to facilitate business operations. There are at least three compelling explanations for these results. First, if family firms are more risk averse than non-family firms, informal payments may represent additional export risk insurance. Second, informal payments may help family firms compensate for the lack of managerial capabilities to export. Finally, when institutional inefficiencies obstruct business, corruption may be a tool for family firms to protect their socioemotional wealth.

Abstract. Family firms and industrial districts represent the pillars of the Italian manufacturing industry. Yet, the interplay between corporate ownership and the districtual organization of the industry has been basically overlooked. This paper reports preliminary evidence on the joint contribution of family firms and industrial districts to the competitive performance of Italian manufacturing firms. Descriptive and econometric analysis shows a positive effect of family ownership on firm profitability, as measured by the industry-adjusted Return on Sale (ROS), whereas the advantage of being located in an industrial district is less evident. Empirical evidence shows that the comparative advantages of family ownership change along the firm size distribution and according to the nature and relevance of the external (districtual) economies. Specifically, the performance impact of the interaction between the “district effect” and the “family effect” changes significantly across firm size classes: while these two effects operate as a substitute in smaller sized classes, they are complements in medium-sized firms. In particular, medium-sized firms (100–250 employees) are the best at leveraging the benefits of districtual organization, but only in the case of family ownership.

Abstract. This paper studies the effects of family governance and ownership on firm employment growth, extending existing knowledge by including in the analysis the regional context in which firms are located. We create a regional taxonomy to capture the urban–rural dimension and combine this with the corporate governance structure of the firm. Our results show that, being a family firm per se does not influence employment growth. However, when corporate governance structure and regional context are combined, the urban–rural context influences family firm and nonfamily firm employment growth differently, with family firms exhibiting greater employment growth, compared with nonfamily firms, in rural areas.

Abstract. A key issue for regional development studies is to determine the exogenous and endogenous factors and the processes that occur within the territory and favor sustainable regional growth and development. Despite theoretical and empirical advances in understanding the mechanisms behind regional development, one dimension has been neglected: family business. To address this gap, I aim to link the family business and regional development literatures by developing a theoretical model that attempts to serve as a framework for interpreting the potential role that family firms play in regional development. The model is based on the concept of regional familiness, suggesting that the embeddedness of family businesses in regional productive structures affects regional factors, regional processes, and regional proximity dimensions and thus alters external economies of agglomeration and regional externalities. Theoretical and practical implications are discussed.

Regional familiness for policy-makers

This is the third piece in a three-part series on family business and regional development. Read part one: “in search of the missing link” and part two “Regional Familiness – The missing link

Part 3: What can policy-makers and family owner-manager do for regional development?

By Rodrigo Basco, Ph.D.

We are arriving at our last stop in this trip arguing that it is not thewordle 2 number of family firms within the geographical space which makes them important, but the quality of their behaviour. The economic participation of family firms can be seen through aggregate numbers such as contribution to GDP or participation on employment rate, but these numbers are just the consequences of what is happening within the region.

Nevertheless, do we know how family firm behaviour affects regional economic development?

To answer this question, in the previous post, I sustained that family firms may alter soft issues such as proximity (physical, cognitive, social, organizational and institutional proximity) that enable regional processes to boost or to hinder economic and social development.

And! So what?

This new lens, regional familiness perspective, to approach the understanding and analysing of family firm and regional development could have two main stakeholders as recipients. First, for policy-makers who are interested in promoting regional policy for economic growth and development and, second, for family firms themselves which are interested in their own image within the geographical space.

Policy-makers are strongly convinced that they can intervene in economic and social spheres to reduce regional inequality. Policies at the local, regional, national, or supranational level have targeted phenomena such as entrepreneurship, innovation, and internationalization among others without considering the composition of firms within their local productive structures. Familiness characteristics have been omitted from the analysis for tailoring regional policies. Without knowing who receives support and how they interact within the environment, there is an increase in the likelihood that political interventions may fail. Family and non-family firms react differently to political incentives because family firms have different underlying motivations, goals, and aspirations affecting their decision making.

But supporting family firms is not about reducing taxes as a consequence of lobby actions of huge family firms and wealthy families as the main European political policy is doing to favour family businesses. Policy-makers, by doing their job, have to recognize the family business role in the economic and social environment to tailor policies to increase the positive side of family businesses while reducing the negative ones. What regions and family businesses need in Bavaria, Andalucía, Central America and Bangalore is completely different and it is not related to reducing taxes. For instance, Can the long tradition of family firms recover the economic dynamic of North Rhine-Westphalia (Germany) beyond the coal and steel industry and the complacency of having hidden champions? Can the new generation of family members in the North Rhine-Westphalia region maintain the leadership of their firms as their fathers and mothers have been able to do so far? Are members or wealthy family firms agents of innovation or just mere wealth managers of their fortune?

On the other hand, family members cannot avoid their link between family name and firm as an identity footprint that requires caring for the family business image. It is not the philanthropic actions which make family firms socially responsible, but how family firms economically and socially interact with other actors within geographic places to leverage regional processes such as social interactions, learning processes, and information exchange. By doing this, family firms contribute to the improvement of the economic and social conditions favouring positive externalities such as innovation, entrepreneurship, efficiency and internationalization. Therefore, the best family firms can do for sustaining regional development is playing their linking role among family, market, and society. When one of these links is broken, family firms lose their intrinsic sense as it happened in some Latino American countries where family businesses extend their network into the political arena with the intention to sustain monopolies avoiding free market, competence, and innovation.

There is no magic recipe for owner-managers and policy-makers to tell them what to do to foster economic growth and development, but we start knowing that we have to be aware of who family firms are, what they are doing in our close environment, and how they are interacting with other players and institutions. Family firms are not the next miracle for economic growth but they have been and they will continue to be part of our economic and social life.

In the eyes of the incumbent

By Rodrigo Basco, Ph.D.

Fugure“To whom do I select?”– Gustav said showing almost a frustrated face. It seems that the question had been moving around since we started our conversation. I knew I can’t respond to this question. “What are your real intentions?” – I asked him trying to cover the silence that evidently troubled Gustav.

Family business succession is loaded by economic and emotional symbols. Even though it is usually thought that family business succession is linked to a small group of family members, this is not a rule at all. At least not at the moment when the incumbent starts thinking about the potential successor, his or her intention could be to select a family or a non-family member. That is, even when there are active family members working in the firm as a potential successor, the intention could be to pass the management succession to a non-family member. Therefore, I wonder what factors affect the intention decision of selecting a family or non-family member as the future CEO previous to the final decision.

Intention means ‘a determination to act in a certain way’. Intention is an important dimension because it precedes the action and, of course, conditions the future course of actions.

After studying more than 500 Spanish firms to better know what factors affect the CEO intention to select a family or non-family member as future successor, I arrived to the following conclusions:

  • Those CEOs that perceive aspects such as age, blood tie, gender, and ownership as valuable show higher intention to select a family member than a non-family member as the future CEO.
  • Those CEOs that perceive aspects such as management capabilities and business experience as valuable show higher intention to select a non-family member than a family member as the future CEO.
  • However, the intention to select a non-family member as the future CEO is altered by the number of family members working in the firm. That is, while the number of family members increases, the intention of the incumbent to select a non-family member decreases even when the incumbent considers management capabilities and experiences as valuable.
  • Those CEOs that perceive aspects such as entrepreneurial attitudes (aggressiveness, proactiveness, risk-taking and so forth) as valuable show higher intention to select a non-family member than a family member as the future CEO.
  • However, the intention to select a non-family member as the future CEO is altered by the firm past economic situation. That is, while the economic situation moves from a bad to a good position, the intention of the incumbent to select a non-family member decreases and the intention to select a family member increases. That happens even when the incumbent considers entrepreneurial attitudes for the future CEO as valuable.

Business logic and family logic are in constant collision. The intentions of CEOs swing between obligations imposed by family logic and by business logic. That is, between the obligations regarding taking care of family members and the obligations regarding being competitive and efficient. Intentions change based on the context. What is good for the family is not necessarily good for the firm. However, just sometimes, what is good for the family is good for the firm as well.

But who knows what will be good in the near future, today’s intentions are blind precursors of actions influenced by the environment. That is, intentions are shaped by perceptions.

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