A historical investigation of the strategic process within family firms

Abstract

PurposeThe primary purpose of this paper was to perform an in‐depth analysis of the strategic process that occurs within family firms.Design/methodology/approachThis study analyzed the historical development of the growth strategies of four family firms in the US, Finland, and Sweden.FindingsThe results of this study suggest that family firms typically adopt conservative strategies in the early part of their life cycle. During their formative years, family firms often implement financially conservative strategies and place an emphasis on maintaining tight control of the strategic decision‐making process within the family unit. However, the competitive pressures experienced by family firms over time often force these companies to embrace a more entrepreneurial posture during the latter stages of their life cycle.Research limitations/implicationsThe stage in the company life cycle plays an important role in determining the strategic behavior of family firms. Future research aimed at replicating the results of this study may help shed further light on the strategic process that occurs within family firms.Practical implicationsAlthough the firms examined in this study were from various cultures, their strategic development over time was very similar. This tentatively suggests that the evolution of the strategic process that occurs within family firms may be generalizable across cultures.Originality/valueOur findings indicate that there may be an important distinction between family firms and entrepreneurial organizations. That is, all family firms are not necessarily entrepreneurial, especially early on in their company life cycle.

Management and its history: the worthy endeavour of the scribe

“…As a microcosm of the broader historical movement, it is perhaps not surprising to discover that the stage in the company life cycle plays an important role in determining the strategic behaviour of family firms. From another perspective, the findings of Kreiser, et al (2006) indicate that there may be important distinctions between family firms and other entrepreneurial organizations.…”

Chinese Private Enterprises’ Management Innovation

“…9, No. 4;2013 private businesses have such problems. Some private enterprises' employees behave against the enterprises' regulations and will be discovered only when such behavior is causing serious consequences.…”

“…Birdthistle and Fleming (2005) investigate the creation of a learning organization within the framework of family SMEs and conclude that small and medium-sized family firms display some of the characteristics of a learning organization. In relation to the development of growth strategy, Kreiser et al (2006) suggest that family firms typically apply conservative strategies in the very beginning and often maintain tight control of the strategic decision-making process within the family unit. Rather, researches into family business have noted the strategic advantages of being embedded within family relations.…”

“…9, No. 4;2013 the manager, either he is the descent or not, and let the unsuitable descents be shareholders. "Most suitable" means he is best at manage an enterprise.…”

“…9, No. 4;2013 owners give different treatments to the workers according to relationships, too. Those who are close to the owners will get better pay.…”