The impact of family business professionalization on financial performance: a multidimensional approach

Abstract

PurposeThis study aims to broaden the multidimensional conceptualization of family business professionalization, and to investigate how professionalization influences the financial performance of family firms, in the context of private family firms.Design/methodology/approachTaking a quantitative research approach, the study empirically examines the effect of professionalization on family firm performance, using a sample of 111 privately held Turkish family firms. The hypotheses were tested using regression analysis and the independent samples t-test.FindingsThe results indicate that the professionalization of family businesses has a positive effect on their financial performance, and the professionalization of employees is the prominent dimension of professionalization in this effect.Research limitations/implicationsThis study advances the understanding of how professionalization influences family firm performance by providing additional empirical evidence regarding the positive influence of multifaceted family business professionalization on financial performance.Practical implicationsThe professionalization framework depicted in this study helps owners, managers, or consultants of family businesses assess the professionalization level of their firm and understand the performance effects of each of the family business professionalization dimensions on financial performance. It can also serve as a roadmap for family firms to professionalize and achieve better performance.Originality/valueUnlike previous studies, this study incorporates employees, organizational culture and work environment, often neglected in the family business literature, into the multidimensional family business professionalization construct, thus extending previous research. The study contributes to a deeper understanding of the relationship between family businesses professionalization and firm performance.

A knowledge-based perspective on the professionalization of SMEs: a systematic literature review and future research directions

“…Similarly, scholars (Lin and Hu, 2007) have suggested paring the option between professional or family governance with shareholders’ weaker or higher controls positive influences organizational performance. Others have proposed a link between the professionalization of organizational workforce through training and an increase in organizational performance (Pauli, 2020; Polat and Benligiray, 2022). In family firms, scholars (Razzak et al , 2021) have suggested that professionalization strengthens the relationships between family commitment and organizational performance.…”

“…An additional attribute emerged inductively from the analysis of articles. It relates to the fact that professionalization has been considered complex (Costa et al , 2021; Chau and Wong, 2021; Polat, 2020; Howorth et al , 2016), multidimensional (Dekker et al , 2013; Dekker et al , 2015; Stewart and Hitt, 2012; Polat and Benligiray, 2022), not permanently acquired (Hall and Nordqvist, 2008), context-specific (Chau and Wong, 2021) and processual (Hall and Nordqvist, 2008). Scholars have proposed an alternative view to the traditional view of professionalization linked to the introduction of professional governance, arguing that such an introduction is a static and simplistic view of professionalization that discounts the complexity of the phenomenon.…”

“…Organizational conditions. Organizational values include norms, goals, meanings (Hall and Nordqvist, 2008) and culturewhere culture is proposed to relate to shared professional values, mutual respect, trust, cooperation and effective communication (Polat, 2020; see also Costa et al, 2021;Cherchem, 2017;Polat and Benligiray, 2022). Such organizational values are thought to be crucial while pursuing professionalization of SMEs.…”

Supplier Selection in Family Small and Medium Enterprises

“…Jayaram et al (2014) placed emphasis on professional management following Stewart and Hitt (2012), who argued that family businesses should have a degree of professionalism just like non-family firms. Succeeding empirical findings in the literature suggest that the professionalization of family businesses including increased non-family involvement, investing in human resource information systems, and decentralization of structure (Dekker et al, 2015) and standardization (Tan, 2021) has a positive effect on firm performance (Dekker et al, 2015;Costa et al, 2022;Polat & Benligiray, 2022).…”

Managerialization, professionalization and firm performance in family business: A Systems Thinking perspective

“…Professional managers are assumed to be 'expert' in managerial issues and to know what is 'good' for the company. The presence of professional managers within the firm may favour formal training, formalized structures and the adoption of managerial tools (Polat & Benligiray, 2022).…”