The Complexity of the Family Business

Although there is much discussion and media coverage about family businesses, there appears to be little consensus on the definition of what exactly constitutes a family business. Generally, there is agreement that a family business can be loosely described as one in which family members have ownership or management of the organisation, but experts also agree that family firms cannot be regarded as an homogeneous entity. Traditional definitions tend to be fragmented, each concentrating on a combination of components of a family’s involvement in the family business: ownership, succession, management, and governance. These definitions do not provide clear insight into why these components are relevant, and why family involvement leads to behaviours that differ from nonfamily firms. According to some experts, the most important issue to be addressed in order to develop a theory of the family firm, is how and why family businesses behave and perform differently from a nonfamily firm. Researchers do agree that family businesses are distinct from a nonfamily businesses, although exactly how remains partly unanswered. This chapter outlines the various interpretations of the term ‘family business’, and focuses on aspects of family culture that play an important role in determining the success of a family firm.