Culturally-Sensitive Models of Family Business in Anglo Region ±A Compendium using the Globe Paradigm By-Vipin Gupta, Nancy

Levenburg, Lynda L Moore, Jaldeep Mootwani, Thomas V Schwarz Details of Book FSN: 9788131408995 ISBN: 813140899X ISBN-13: 9788131408995 Binding: Hardcover Publishing Year: 2008 Publisher: Icfai University Press Number of Pages: 284 Language: English

Anglo-America is a region in the Americas in which English is a main language, or one which has significant British historical, ethnic, linguistic, and cultural links. Anglo-America is distinct from Latin America, a region of the Americas where Romance languages (namely, Spanish, Portuguese, and variably French) are prevalent. As a noun, Anglo-American can refer to English speaking European American and/or an English Canadian, sometimes shortened to Anglo. This usage originated in the discussion of the history of English-speaking people of the United States and the Spanish-speaking people residing in the western U.S. during the Mexican-American War. This usage generally ignores the distinctions between English Americans, Irish Americans, Swedish Americans, German Americans, and other northern European descent peoples, comprising the majority of Englishspeaking Europeans in the United States and Canada. Anglo-Americans, like other English speakers, are traditionally Protestant with a large Roman Catholic minority. In many spheres, Anglo has come to denote all English speaking people and their descendants, regardless of prior ethnic background, much like Hispanic refers to people of any race but usually mixed race peoples of Native American, European and African origin who come from a Spanish speaking culture in America. Therefore, a person of Chinese descent who adopts the U.S. or Canadian American culture would have English speaking Anglo children (in contrast to Spanish speaking Chinese descent people who would be Hispanic). Anglo-American can refer to all those that came from countries that traditionally spoke English as a main language, as well as all those whose families have become mainstream English speaking people in the United States and Canada. Regardless of their ethnic affiliation in the US, all English speaking North Americans are seen as Anglo abroad. A family business is a business characterized by family involvement. The most visible indicator of family involvement is power exercised by the family on the family business. A family is

considered to be involved in a business if it actively participates in its ownership, management and governance. In other words, family involvement exists when a family exercises the power to appoint the CEO, the management team and the governance board; the power to govern as per the vision of the family; the power to manage as per the vision of the family; the power to manage as per the values and culture of the family; and the power to rely on the unique resources of the family, including reputation, knowledge, uncertainty reduction, and lower transaction costs.

Perceptions about the extent of Succession Planning in Canadian Family Firms: Despite exhortations about the importance of succession planning for the family firms, many believe that the family firms leave succession planning to chance. A study was conducted in Canadian family firms to find the extent of succession planning. The study showed that the family members have different opinions about whether their family firms engaged in succession planning. This study examined two research questions: >>> Whether and to what extent family members in Canadian family businesses believe that their firms engage in succession planning. >>>How the three factors with which the family business succession planning is most concerned- an incumbent¶s willingness to step down(which depends on his confidence in successor), the presence of a competitor successor, and the presence of an active advisory boardmay influence perceptions about the extent to which a family firm engages in succession planning. The results of the research showed that: >>> The incumbent¶s perceptions differ significantly from those of other family members, including successors. The family members and the successor believe that the presence of an active advisory board has a positive influence on the extent of succession planning but not the incumbent. The incumbent believes that the board can help to manage the process only and is not responsible for its initiation. >>>About importance of succession planning, incumbents of the researched firms believe only moderately that the firms engaged in succession planning. On the other hand, other family members in the researched firms moderately believe that they did not. >>> There is strong support for the family business succession literature¶s preoccupation with the propensity of the incumbent to step aside and the presence of a competent successor. Planning the transfer process in Quebec SMEs Quebec is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level. Quebec is Canada's largest province by area.

The transfer of business is not a single event occurring at a precise moment, but rather it is a long process divide into a large number of stages during which the successor is led to increase his or her role in the firm while predecessor is disengaging from the company. The best practices(which maximizes the chances of transfer succeeding) of transfer process include preparing the successor, choosing the successor and the predecessor¶s role after the decision has been taken and the management of the firm turned over to the successor. Based on a survey taken by 115 directors of Quebec companies that have been successfully transferred at once , a research was conducted to determine how well the transfer of management process was planned, and to evaluate the conformity of the respondent¶s behavior with the ³best practices.´ The aspects of planning examined in the research were: >>> Establishment of criteria for the selection of a successor  Existence of selection criteria for a successor.  Making the selection criteria the known.  Written documents outlining a vision of the future for the company. >>> The grooming of successor  Level of education  Experience outside the firm.  Experience within the firm. >>> The phasing out of the incumbent while developing a new role for him or her.  Role foreseen for the predecessor.  Fixed retirement date. The results showed that the activities connected to grooming a successor, establishing selection criteria for a successor and communicating these criteria to the interested parties have been sufficiently wide spread to show that Quebec families conform to the best practices in this respect. Nevertheless, the same observation cannot be made for activities related to disengagement of the predecessor and the support by written documents outlining a vision of the future for the company, making the firm¶s behavior far from dictated by the best practices. Impact of the family and the business on Family Business Stability A research was undertaken to identify strategies for family businesses to implement in order to increase the success of both business and family based on the analysis of the 1997 National Family Business Survey Data, U.S. To achieve this purpose, the Sustainable family Business Model was used. The SFB model implies that family sustainability is a function of both business success and family functionality. In difficult times, family business survives because of the family and not because it is a good idea. The Family businesses have potential for resource exchange between family and business that is not present for other households. The results of the research showed that: >>> The larger, older and more unbalanced the business location and the great the owner effort, the more income will family derive from family business.

>>>Whenever there is shortage of cash in the business, the family income can be transferred to the business. >>>During hectic periods, the owner reallocates time from sleep to the business rather than reallocating from the family to the business and also hires temporary help rather than asking out friends or relatives. >>> Opposite to the owner¶s perception, the businesses are more successful if they employ more family members. >>>Success depends on how family manages overlap between family and business rather than simply on family or business resources. Regional Determinants of family Firm Incidence in the US. A family firm¶s existence as well as its scale and scope, are likely to be influenced by the characteristics of its external environment. Based on a sample of 6100 firms in the US, the external conditions were analyzed that allow family firms to flourish. The external factors analyzed were: >>> Economic Development of the region >>> Culture >>> Industry Mix The research has made the following contributions: >>> The answer to the question where family firms flourish? >>> It has presented evidence that external factors do affect the incidence of family firms Research Results: Family Firms and Economic Development: The conditions of low income and low demand favor firms that can operate at lower costs. As family business have their own wealth, they can keep cost low and thus have advantages in region with scarce capital and low availability of labour. Family Firms and Culture: The cultural diversity has a significant negative effect on the incidence of family firms, as the homogeneity and stability are necessary for family firms to fully exploit the social capital available to them. Also, with diversity in the region , the need /value of family related social capital decreases thus, giving rise to more professionally managed, nonfamily firms which may be at a disadvantage in environments where familiarity is an essential for doing business. Family Firms and Industry mix: There is a negative relationship between the family firms and the retail sector but none with manufacturing and service.

Australia¶s Dennis Family Corporation professionalizes This chapter of the book details how the Australian Dennis Family has been able to professionalize their family business while still retaining their family values and realizing the founder¶s vision. Details: Bert Dennis and his wife Dawn Dennis, the owners of the Dennis Property Ltd. had four children Adele, Grant , Natalie and Marshall. The couple had groomed their offspring into competent business individuals and was confident that they would be successful if they carry out independent businesses. But they also felt that it would be great if they combine their strengths and build a sustainable family business for the current and future generations. The couple asked their four adult offspring whether they would prefer to amalgamate their associated businesses with the parent company or whether the assets of existing company to be liquidated and divided equally between them. The decision was taken to amalgamate the farming, land, development and consulting businesses and also to professionalize the complete business. So, a single entity was established through which each of the family member had equal ownership and a with the assistance of consultants and by benchmarking themselves against other family successful businesses, the family also introduced a professional corporate governance to their second generation family business. Some of the actions are: >Appointing External board members following a nation-wide search >Forming a number of sub-committees, work groups and project control groups across the organization. >Giving the non family CEO , day to day responsibility and autonomy, etc. The remuneration of the family was also formalized, which was not at all biased and was completely based on the positions held and the kind of tasks performed by the family members. Thus, professionalizing a family business involves a multitude of challenges that can be broken down into a learning framework. in this case, the family had to commit to learn a great deal about their family business. Although the four siblings had learnt to do business, they had to learn the family business. Also, the whole family had to learn to give up some control to professional management. Organizational Life Cycle Stage and Controls in Australian Family Firms. Despite their numerical and economic significance to Australia, family businesses have not been extensively researched. In this chapter, the organizational transitions of these firms in terms of their dominant controls has been assessed. The purpose is to ascertain and understand the management and control practices of Australian family owned firms. The organization progresses through four stages: >>> Stage 1 -Entrepreneurial Stage : Features- 


Lots of ideas Little planning Prime mover has power Marshalling of ideas Entrepreneurial activities

>>>Stage 2 - Collectivity Stage: Features      Informal Communication and Structure Sense of Collectivity Long hours spent Sense of mission Innovation continues High commitment

>>> Stage 3-Formalization and Control Stage      Formalization of rules Stable structure Emphasis on efficiency and maintenance Conservatism Institutionalized procedures

>>> Stage 4-Elaboration of Structure Stage     Decentralization Domain expansion Adaptation renewal

Forms of Organizational Control: Control refers to the attempts by managers or other stakeholders within an organization to influence the behavior and activities of company personnel to achieve desired outcomes. The controls defined by William Ouchi, namely Market, Bureaucratic, and Clan controls have been used to identify distinctive patterns that define periods of organizational passage. The research showed that clan controls are used firstly by stage 2 firms followed by stage 3 and then stage 4 firms. Bureaucratic controls are the dominant control mechanism of the stage 3 firms and are used in decreasing intensity by stage 4 and stage 2 firms. Market Based Controls are mainly used by the stage 4 firms with some adoption by stage 3 firms followed by the stage 2 firms. Conclusion-Family businesses are the dominant form of business organization throughout the world. Given the many cultures and regions that exist, growing empirical evidence suggests ³one size does not fit all.´ Be it any part of the world .This book is intended to be a useful resource for scholars, students, practitioners, and policy makers as it has original contributions from scholars all over the world.

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