Strategic Planning in Family Business: A Powerful Developmental Tool for the Next Generation

Abstract

This article addresses the issue of training next‐generation family members once they have joined the management team in their family firm. The qualitative analysis of strategic planning processes of 18 Italian family firms shows that involving next‐generation family members in the planning process benefits their developmental process. The findings indicate that this involvement provides the next generation with crucial tacit business knowledge and skills, facilitating interpersonal work relationships between incumbents and next‐generation leaders and building credibility and legitimacy for the next generation. The comparative analysis of the cases allowed us to identify the five variables that seem to combine in explaining much of the observed differences in the amount and composition of benefits experienced in the 18 firms. Our findings extend current understanding of two understudied topics in family business: the postentry‐phase training of the next generation and strategic management in family firms.

Tweaking the entrepreneurial orientation–performance relationship in family firms: the effect of control mechanisms and family-related goals

“…One way to control and still provide space for creative innovation goes back to the 'stage-gate model' by Cooper (1990) that allows managers to innovate freely and only be controlled when switching to new 'gates'. To guide Autonomy, we follow the recommendations of prior family business research (Lane et al 2006) that suggest to guide Autonomy in family firms through explicit, written guidelines (Mazzola et al 2008). In addition, our findings indicate that adherence to family-related, often non-financial goals can lead to an unhealthy level of Risk-Taking.…”

International Strategy Configurations of the World’s Top Family Firms

“…Harris et al (1994) found little difference in family firms' strategic management processes with regard to internationalising, as compared with non-family firms. However, family firms which do use formal strategic planning appear to benefit developmentally (Mazzola/Marchisio/Astrachan 2008) and to internationalise more actively (Rienda et al 2005). 7 Ding et al (2008) also found that Chinese family firms performed significantly better than state-owned companies on five financial ratios between 1999 and 2004.…”

The promise of the strategy as practice perspective for family business strategy research

“…In all cases the educational mode is important, where planning is used to teach managers/board members/family owners a systematic way to think about and work with strategy, and as a training practice for the next generation (Mazzola et al, 2008). In our cases, strategic planning definitely played such a role for the young owner-manager taking over BW after his father's sudden death.…”

“…A main theme in literature on strategic planning in family firms is that owner-family values and interests are incorporated into the planning (Carlock & Ward, 2001;Mazzola et al, 2008;Ward, 1988). This may have several implications.…”

“…Craig and Moores (2005) suggest a modified balanced scorecard, where a 'familiness' dimension complements the traditional financial, internal, customer, innovation and learning dimensions. Mazzola et al (2008) view strategic planning as an important training tool for the inclusion of the next generation of family members in the business and Carlock and Ward (2001) argue for a 'parallel planning process' where the strategic plan for the business is complemented with a family plan. Why the family is committed to staying in the business, how the family sees itself and the firm in the future, how the family will build or sustain strong relations, solve conflicts and work in harmony, and what the steps are to reach the family's personal and professional goals for each year are four key issues in the family plan.…”