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BivalentAttributes of the Family Firm

Renato Tbgiuri, Jobn Daztis
Abhoughfanifu r,rnen and nanagedfmn! are tle predoninantfi,m of
buiinestorganizatinnin tbe warld adaJ, little syttcnati resetlrchetitt on
tbe'ec1n'qanie'.Thi pdperbuilk aponksigbtsfoand in the e,herginglit
era*re on theseentetyris td up|n our ownabsematknsto?ra?idea ca ce?tualframeaark ta bettxr urulerstandthue compfu arganiztltiot\. We
intr,dwe thecance?t
|fthe Bbelent AttributEs--a niqa,inberentfeature
afan arganizationthat it tbenaru afbothadztantages
t0 exllain thedJnatuts ofthefan'i\ fmL

Most turns in the United Statesare family businesses-organizations where
two or more ertended familv membersinflueoce the direction ofthe business
drough the exerciseof kinship ties, managementroles, or osnership rights.
While most family companiesrre small, some are relatir,ely lrge and ser.eral
are giantsin their respectiveindustries. Tiken together, rhey contribute about
40 percent ofthe grossnational product and over half of ou national employment (BeckhardaJIdDyer, 1983).It is vitr , given t}le prevalenceand importanceof firmily-conEolled organizationsin our society,tlat we understandthe
charactedsticbehevior of tle fanily rnemberswho influence thesefirms.
Most writings on these organizations appear in the businessend trade
press,and generally focus either on a prrticular farnily or on a specific issue,
such asthe sont enuy into tlle company or the rivrlry betweenrelativeswho
work together (Altnran, 197l; Buti els Week,1966, 196?:Loing,197 5; Martin, 1975).As it standstoday, the family businesshasnot been extensivelyre
studyhasbeendone,however,on the
or described.Somes'.stemaoc
social structure ;rad the particular strengths and weaknesses
of family conpa
nies (Barry,1975jDrvis, P and Stern, 1980;Miller and tuce, 1973),on the
psychologyofthe ou.ner-managerpay 1980;Schein,1983;Zaleznik and Kes
deVries, 1975),on nepotism(Crmbreleng,1969;Ewing, 1965;Gffey, 1966),
and on managementsuccessionin these turns (Bsmes end Hershon, 1968;
Beckhardand Dyer, 1983;Davis,S., 1968;Hershon,1975).
This paper builds upon insights found in the abovewritings, md it also

'ragiari, Da1)i


incoryorates obsenations ftom our ongoing study of family firms. In this dis
cussionwe derl only with those frmily-controlled companieswhere two or
more individuals are simuttaneouslymembers of the owning family owners,
and managerc.More specifically,this includes any comprny tlat is a) owner
ship controlled by one family, b) includes at l*st t'arofamily members in its
maragernent, and c) also hasnonfamily employees.For most smaller companies, ownership control meanshrving at le3st a 6fty percent omership, but
for larger companies,it is possibleto om lessthan a majority ofthe sharesand
elect r board of directon that will support the controlling farnily'sgoals.While
the tums discussedhere are a subset of all companieswhich are omershio
controlledby one family.mosrwritjng on familJ bu.ine\ derl\ wiLnL]'ery?e
of situation we are describing.
The grrphic representationofthis setofrelationshipsis displayedin Figure 1.

Figure 1. Overlap ofFenily, Ov'nership,

and Management Groups



Our purpose in this paper is to show that the f:mily compaay hrs
severalunique, inherent zttibttes, ard.emhoftheseke1attributu is a :ourceof
beneftsand di:adtnntagesfor owning families, nonfamily employees,and farnily employees.As aresult of their latent negativeand positive potential, we call
theseinherent fertures Bi lent Attibutes. \Vhen one conside$ that only 30%
of family firms survive to the second generation (Poe, 1980), ard that their
averagelife span is only 24 years (Danco, 1977), the concept of Bivalent Attributes is a reminder that tle successor failure of any family 6rm will depend
on how well these inherent features ,re mrnaEed. Their successtulmanaee-

Bioalmt Attributes oftlre F tmiu Firm


ment will also affect the well being of the frmily and the family's relationship
with employees
andwith the greatercommuniry
We propose a theory here which will conceptually account for many
important behavioral characteristics of the family company, and which will
incorporate and build upon previous descriptive and conceptual work done
on frmilv businesses.
Hence. our maior contribution in tlis work is a conThe Bivrlent Amibutes of the family company are the unique, inherent
featuresof thesefirms and are the sourceof advantagesand disadvantagesof
this q'pe of organiation. Bivalent Attributes derive direcdy fom the overlap
of family, ownership and managementmemberships.Figue I displays this
overlap. It shows,for example,that father and son are both members ofthe
samefamily, are both membersofthe owning group, and are both membersof
the managernentgroup. The overlap ofthese membership groups generates
the rnany distinguishing features of family companies.In what follows, we
describethe most important Bivalent Attributes of dre family firm and discuss
their hiralent quatities.


Becauseof their overlapping nenberships, farnily members working in the

family firm can have three simultaneousroles: as relatives, as ownex, and as
managers.As family membersthey are concemed primarily with dle welfare
and the unity of the family; as owners they are interested in return on investment and in the viability ofthe firm; asmanagers,they worL towrrd the firmt
operational effectiveness.
obligationsto the family, company,ald shateholders, and to erch other ;rsrelrtives, managers,and owners, can serve to bond
them loyally to eachother and to the business.The loyalry can involve standing behind one another's decisions,making person:l contributions for each
othea the farnily, ard tne tum. lt can reducestruggling for power in the compant give rise to great cooperation and trust, and crerte a synpathetic understanding of one another's shortcomings, along witn pride in one anotherb
When one or more relativeshave simultaneousroles (e.g., owner-fatherFesidenD decision-making can become centralized. In tum, the efficiency,
efectiveness, and prir?cy of the decision-mrLing processare incrersed. Becauseof the immediate avdlability of omership, busiress, and family information, decision-makerscan quickly and discretely act in the best interest of
both the businessand the family. When the goalsofthe family, rnanagemenq
,nd o$arership g"oups are compatible, family managerscm act decisively
making the fum a formidable competitor.
While decision-makingcan be especiallyefficient in firmily tums and loy-


mgiari, Dari

alty high and cooperation abundant,there caa also be negativeoutcomesthat

flow from simultaneousroles. In general, norms about behavior in business
and norms about behavior within farnilies are opposed.Families traditionally
seekinternal uity and try to repressor deny rivalry amongmemben, whereas
often strive for r healthy level ofintemal competition. In this ftamework of double-norrns,either competitivenesswidin the firm, or family unig
may be srcrificed to protect the company or the family. Even in the best of
caseswe find the owner-manager-relativeperiodically suffering frorn the auiew that results ftom whrt we call "norm contusion."
Becauseof simultaneousroles, family considerationscan easilyinrude on
businessdecisions,and vise ve$lt. Frmilr o"nership, and businessissuescan
get mixed up; businessdiscussionsmry be transformed into highly charged
arguments about family issues,whiie family decisionsmay be made on the
bmis of company needs.Consequendy companiescan suffer from a lack of
marketplaceobjectiviq' and poor profit discipline, and families from a feeling
that relatives are sacrifrcedfor the good of the firm.
Becruseofthe overlap in social systems,relatives can retreat into whatever roles give thern the greatestpower in conflict situations. Ar o\l'rler-firther-president canretreat into his role asfather, and seat his son-subordinate
Iike a child, for exarnple,to maintain his position or power. The movement in
and out ofroles canobsctre the reasonsunderlying disagreementand prolong
and inhibit the resolution of conflicts. Nonrelrtives doing businesstogether
are lessable to retreat into nonbusinessroles and more likelv to handle busine* decisionsobiecti\elv.
Complicating the siturtion frrther is the possibility thrt family members,
regardlessoftheir positions in the fanily or business,mry eachconsidertnernselvesasspokespersonsfor the business.When this is compoundedby rivalry
that is canied from the family setting into the businessit can lead to conflicting orders being given to the company family memberstrying to undermine
eachother's authority in the companll and a generallack of clarity about responsibilities.
Shared Identity
Relativeswho work together share a serse of identiq'. Wldle dlis Bivdent
Attribute may seem obvious, it js neve.thelessa meaningtul ,nd important
influence on relatives' behaviorboth on and otr tle iob. Sinceworl and familv
domainsare intertwined in family firms a result ofthe overlap eachaction
of every employee-relativecanies both businessand frmily mearing.
The family name, for example,is an identity for family membersand has
a meaning to people inside and outside the family Family ties define a bond
and rules of behavior for relatives. Outsiders come to associatecenain traits
with the family and expectto seethat behavior.Ifone or more family members
are toud, unruly, bossy,the whole family may be suspectedofhaving potential

BiltalentAttributes oftbe Famib Fi'm


for the same behavior. The same could also be true for Eood. constructive
behrvior.One relrti\ e! behaviorcanirfluencethe reouraci-on
oi orhersin $e
frmil, ,nd the repuririonoFthebu.ine* aswell.
Both on the job and otr, the farnily polices the behavior ofits membersto
irsure that they are acting in an acceptablemamer toward ftiends ofthe fanily, customers, suppliers, and ernployees.This concem with image arrd the
consequentpolicing may do much to increaseawarenessof family standrrds
and a mission around which relatives can rally ard find a reason for mutual
Yet such policing may be stifling to somefamily memben. Even very creative expressionmay be discouragedif it doesnot fit the family mold. Family
membersmay feel that they are being watchedin and out of the companyand
resent their lacL of ieedom. At the same time, family memben who try to
maintain the family image rnay be angeredby relativeswho do not.
The pressureto rct in ways that enhancethe reputation of the business
crn offset the influence of the frmily in the managementofthe company and
restore someobjecovity to decision-making.Still, that reputation may add to
the pressureto conform to roles more tighdy prescribedthan ordinary execu
tive roles, and foster resennnent toward family and busitressauthority.
A Lifelong

Comraon History

The behrvior of blood relativesworLing together is influenced, in part, by the

fict that they Jivedwith one another all the life of one of them. Out of this
comrnon history emergesa considerableamount of shared experience,even
tnough eachfarnily memberhashis or her ovn recollectionsof that erperience.
From their time together, relatives learn a great deal about each other's
strengths and weaknesses.They can use this knowledge, lvhen worLing together, for constmctive or destructivepurposes.They can try to draw on one
another'sstrengths andwork to complementone anotherl weaknesses
or they
calr point out their relative'srealnsses to undermine his or her standing in
the firm.
The relationship'shistory includes a mixture of happy and disappointing
experiencesandthesedo much to shapethe pdr's e-rpectations
ing together.A saong foundationfor the rel*ionship (wherethe two h:.le leamed
both how to support and how to be in conftict with one another) canmeanthat
the two will endure considerableadvenity and remain loyal to one another.
Early disappoinnnents,in corEast, crn reduce Eust betweenth relativesrnd
complicatework interections. One frmily member, for example,might avoid
certrin wolk situationswith a relstive for fear of being let down again.
Becausethe relationship betweentwo blood relativesbeginsin the flrmi\,
when one or both are infants, the two practice for many yearscertain wa6 of
behavingaround eachother. Many of the irnpressionsthat the two haveof one
another re unconscious,vell-established, and difficult to chmee. When the


Tagi i, Da|)b

hvo begin to work together it is easyfor them to locL into their old mutual,
reciplocal wrls. Each acts $ a cue to the other to resume their respective
roles. If the history of the relationship is positive alrd constructive, the ease
and speedwith which the rnutual patterns come into operution is an adlantage,an economy.But ifthe relationship hasbeen difEcult, the rapid lochng is
a disadvantageout ofwhich it seemsdif6cult to escipe.


and Corirsior.

As r result of the combination of benefitsand constraintsthat relativespresent

to one inother droughout the history of their relationship, family members
hold concunent and powertul positive and negative feelings for eacL other.
Thac is, they have ambivalent feelings toward one another
Given the potential for greater love and greater hate among family mem
bers, it is not surprising that emotions between relatives o{ten surface more
easilythaa betweennonrelated individuals. Becauseofthe emotional content
oftheir bond, relativesvorking together may turd it dimcult to interpret one
mother's actions and words objectively. Instead, communications often rre
interpreted in terms of their merning in a family context and they can elicit
the sameresoonsethev did at an earlier time in life.
Not all emotions'between relatives are expressedopenly. Indeed, there
are generally strict psychological prohibitions against open conflict among
family members.Once emotion (ove or hate) rises nom the unconsciousto
the family member must decidewhether to expressor suppress
the feeling.
On the positive side, the eraressionoflove can generateunusual motivation, cement ]o].alries, and increasetrust among relatives. The prohibition
aginst public conflict calr be a norm among family memben that can elirninate embarrassingconflict siturtioff. This, in turn, canput family membersat
eesein public situetions which can aid \york relationships.
Powertul feelings of hate rnd rcsentment and the rccompanlng senseof
gtilt can gready complicate work relationships. The denial of negative feelings canresult in the suppressionofdiscussioru about quite natur:l differences
of opinion, and lead to covert elpressions of hostility such as ondemining
eachothert con6dence,rvithholding emotional support, avoiding one another
(panicularly around sensitivefamily issues),arrdissuing contlicting orders to
the org:nization. The expressionofa relative'sneg:tive feeJingstoward a family member can damagethe work and family relationship and gready disrupt

The Priwte

Language ofRelatives

An interesting feature of the vork interections among family membersis dre

relatives'private langtage. Over tle manyyearsofshared er,?eriencesbetween

Br"almt AttributEsoffie Famib Finh


relativesspecialwords, phrases,expressions,and body movementsevolvethat

haveagreedupon mernings.Prirate languages,"family languages,"allow family
menbers to comunicate more efEciendy than is generally possible among
nonrelatives,evenamong closeftiends. This carrpermit relativesto exchange
more information with grerter pdvacy and arrive at decisionsmore rapidly
than cantwo nonrelatives,
Nererdreles..rjecs of d'i\ privarehnguagecan lrigger sensiri\e. pain
ful reections thxt crn distort communication. A prite langrage cnn keep
nonfamily people uninformed a.rldcan also be a weapon in an ongoing family
struggle. It is an interesting paradox thrt in even the most embatded family
compeny,there is often strong adherenceto eventhe most paintul family lan
Mutual Avareness and Privacy
Family members have an especiallyLeen awarenessof each othert circum
stances:what pressuresthey are under, vhat makesthem happy or angry,how
they are feeling physically,and so on. This awarenessis createdthrough three
channels.First, there is the explicit communication among family members.
This can be grerter for relaovesthan for noffelatives since relativesmry see
erch other more often in many tlpes of businessand social settings. Second,
family members have a private.lan$age which aids this aqarenessof each
other. Third, firmily members share relatives who rnay passon information
fiom one relative to rnother.
Increasedawarenesscan improve communication bet$en relatives ,nd
help to temper businessdecisionswith an understanding oftheir imptications
for farnily members.It can give relatives insights on how to support one anBut increasedawrrenesscan lead somefamily membersto feel trapped or
overwatched.Since family memben who work together have relatively litde
time apart and sincetley havea heightenedawarenessof eachother, they may
feel asif they are "living in a fishbowl." The "fishbowl" is often hidden from
the world's view, but theserelativesmay feel very erposedto one another.The
combination of heightenedawarenessa.rldemotional intensity mry addup to r
feeling that personalprivacy is not arailablein a family companysystem.Moreover, becauseof this feature, farnily members often are rulnerable to the at-

Meaning of the Family Company

Depending on the generation oftle companyand length ofthe family's association with it, the organization takeson panicular meanhgs for membersof
the orning fmily. The 6rm (especiallya first generstion conpany) is q?ically regarded rs a part of the far ly and relativesoften can have strong feel-


mgitui, D/x)is

ings about it. To a founder-father it o{ten representsa wife, mistress,or child.

For a son (especiallyifhe grew up with the firm), the companyis the father's
creation or mistressand the son becomesits guardian,sibling, or suitor. Later
generationscan also feel strong personalizedattrchments to the organization
but this seemsto occnr more inftequendy.
It hasbeen our observationthat in a family systemwhere there is adequate
security and abundantnurturance the frmily companywill not be perceivedas
a tlreatening riral or irterloper. However, in a family where there is a prevailing struggle for sectrity and a perceivedhck of emotional resources,the family turn rnaybe perceivedasa displrcing family member who takesawaystatus
rnd resourcesfrorn real familv mernbers.
The meaning of the cornpanyfor r fmily member and the cotesponding
rttachment to it are important influenceson work relatiorships betrveenrela
tives. Father aad son can becomefierce rivals for the possessionofthh nurtur
ing s1nn1ml.A fqLrndercan fight to maintain control over the company and
seemto love the firm more than he loves his son. When strons athchments
abourorgr zadonconnolcanbecome
charged emotional confiontations.
Conversely,ifrelatives are strongly attachedto the organization, they can
be united in their goals for it and in their willingress to contribute to the
business.Ultirnately, tnis s1'rnbolismcan deine r senseof mission for the organization that nonfamily companiesrarely match.
For managersin family comptnies, or for those vho interact with such compalries,it is crucial to recognize, asthis conceptualnote haspointed out, that
the s'me arganiz,ianal.feanru of thesefm: acnantfar bathtbeir nrengthsand
their ueaknesses.
Thus 1t\s necessaryto recognize the potential for positive ,nd
negativeconsequencesin eachofthese featuresvhich we have calledBivalent
Attributes. SeeTirble I for a sumrnaryoftlese characteristics.It is not possible
for rnanagementto eliminate the presenceofthe Bivalent Attributes-they derive direcdy ftom the defining overlap of membenhip groups.The challenge
in theseoryanizations is to managethe inherent Bivalent Amibutes to mrximize dreir positive, and minimize their negtive consequences.

Biuknt Attrihii!


ofthe tu ,'ib Firn

Table 1. Bivalent Attributes of ttre Fainily Fifm

Nlmr @ntusior rd Nie9.

Fmny bsines md omeship
is$es c.n gt mired up. Lek ol



d compmy

ovemtched. Resmment tos.ld

Heisntmed 6ni& ud onpmy

loy,l$ A sbng seE ofhi$ion.
Morc objdi@ hlsine$ decjsions.

Fmily nenheG cm point our

re.hrsses. Edt d;.ppoinF
nenb cin reducetut in sorh

Ret ives u dsv mt drtives'

3dengths ud mnplement tnen
A ssong foud.tion

Lrck of objectMty in coImsieuon. Re*nrnent dd B!i]! dl

mnpli.rE worh ind,ctioB.
Corefr hGtiliq cm rppe{.


Inrclvenent md

Cm tigger se$,ti reac!@s

tht cd dsbt c@ud.rtion
md ..coungr mnditias ior


Mtrtud Awmnes md ?rivlcy

Fie(e riralries c.n dmtop

E4e$i.n of pn.itie feel4s

.Eres loy.rty dd pronots



vith gmer

Ihprored conounjcrion dd
busines decisios tl]r srppofr
n\e buine$, owne6, md fmily.
d dslop
a stong senseofnhsion fo!

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Renat,Tagiuri i PnfeisarEmeritusin tbe Grad ete Scha,l|fBuiine's Atubinntatk at Hamaftl. U h)ewit)r.]ohn Dn4 DBA, is Praidnt af the Oaner Managed
B srne$btstituk. SantaBarbara.CA.