On the Goals of Successful

Family Companies

Renato Tagiuri, John A. Davis

Providing clear goals for a company and communicating them are among
the most powerful means for guiding the behavior of the people in an
organization. In this article, we explore the range of objectives or goals of
family-owned and -managed companies and identify those most commonly
regarded as important by owner-managers. Further, we describe six major
empirical dimensions of goals that we derived by factor-analytic proce-
dures. Finally, we suggest how researchers, managers, and consultants
can use our work to help owner-managers clarify and communicate their
goals.

"Would you tell me, please, which way I ought to go from here?"
[asked Alice of the Cheshire Cat].
"That depends a good deal on where you want to get," said the
Cat.
"I don't much care where—" said Alice.
"Then it doesn't matter which way you go," said the Cat.
Lewis Carroll, Alice's Adventures in Wonderland

Even in Alice's Wonderland, knowing where one wants to go is essential in

deciding how to get there. By specifying its goals and purposes, a firm can
build an efficient structure, motivate and evaluate its employees, assess the
company's performance, and, above all, provide strong leadership. How-
ever, little is known about the goals of family c o m p a n i e s other than that
they have to be profitable to survive.
Organizational theorists and sociologists have long recognized that dis-
covering the actual goals o f an organization is a peculiarly difficult task. As
one organizational theorist notes, "The c o n c e p t o f organizational goals, like
concepts of power, authority, or leadership, has b e e n unusually resistant to

Note: T h e r e s e a r c h reported in this article was funded by the Division o f R e s e a r c h ,

Graduate S c h o o l o f B u s i n e s s Administration, Harvard University.

FAMILY BUSINESS REVIEW, vol. V, no. 1, Spring 1 9 9 2 ©Jossey-Bass Publishers 43

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44 Tagiuri, Davis

precise, unambiguous definition" (Perrow, 1 9 7 0 , p. 1 3 3 ) . Identifying orga-

nizational goals involves sorting through a bewildering number of variables.
For example, executive goals may not be consistent with employee goals; a
c o m p a n y and family may hold different aims; utilitarian goals may conflict
with ideals; even a single, accepted end may involve multiple, sometimes
inconsistent or incongruous means; goals may change over time. Above all,
what one individual or group means by the words used to describe different
goals may bear little resemblance to the meaning that another individual or
group attaches to the same words.
To cut through these difficulties, theorists have offered a variety of
approaches to the study of organizational goals. O n e m e t h o d is simply to
ask those in charge of an organization what they believe to be its primary
goals (Etzioni, 1 9 6 1 ) . Critics of this approach have pointed out that it
assumes that the leaders of an organization have a clear understanding of
their aims; that their stated aims are consistent with less overt, less legiti-
mate goals; and that they match those of other members of the organization
(Silverman, 1 9 7 1 ) .
W h i l e such criticism is undoubtedly valid for many organizations, family
b u s i n e s s e s pose a special case in the theory o f organizations. Owner-
managers o f family businesses usually have a stronger voice in the articu-
lation and implementation of c o m p a n y goals. Not only does the owner-
manager usually hold most of the power in a company, he or she also often
holds a c o m m e n s u r a t e position o f authority within the family. Therefore,
research into the expressed goals of owner-managers of family businesses
seems a good place to begin the study of the goals of family businesses.
Our research was designed to explore the range of goals that owner-man-
agers have for their family companies and to identify the most common ones;
to develop a way of assisting such managers to b e c o m e more aware of their
objectives for their firms; and to present ways of testing whether other
involved constituencies in a family business understand and agree with these
objectives.

Methodology and Subjects

T h e first step o f our inquiry was to obtain a list of company objectives that
we could use as a device for studying company goals. W e wanted to prompt
managers with specific questions rather than rely on their free responses.
W e had an unusually good opportunity to do this in the setting provided
by the Smaller C o m p a n y Management Program (SCMP) at the Harvard
Business School. (SCMP currently is called Owner President Management or
OPM.) T h e c h i e f executives of small, successful family c o m p a n i e s who
attended this program were separated from the stress and hurry of their
normal routines. They had time for careful, private reflection on the pur-
poses that they had for their c o m p a n i e s and then to discuss these in a

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On the Goals of Successful Family Companies 45

classroom setting. W e first asked more than a hundred participants in the

SCMP to describe their goals, purposes, and objectives for their businesses.
From this exercise, we obtained a large number of distinguishable goals.
Here are some examples:

• Make profits now

• Permit the owner(s) to be financially independent
• Have a quality product
• Present a good corporate image
• Provide me with a challenge
• Be my own boss.

From these goals, we constructed a questionnaire, based on the wording of

respondents. W e tested this survey instrument on another group of more
than a hundred program participants; revised it to remove ambiguities and
r e d u n d a n c i e s and add some additional goals; and arrived at the seventy-
four-item questionnaire used in this research (see Appendix A). W e grouped
the items in the questionnaire into five classifications (financial aspects,
owner's responsibilities, human resources, personal considerations, and com-
pany strategies) to make it easier for respondents to think about their goals.
Over a period of four years, we then asked an additional 5 2 4 SCMP par-
ticipants from family-owned c o m p a n i e s to rate the i m p o r t a n c e that they
attached to each company goal in the questionnaire, using a four-point scale:
of the utmost importance, of major importance, of secondary importance,
and unimportant or not applicable.
T h e subjects in our sample are a distinctive group. They manage success-
ful companies, and, in most cases, they are full or majority owners. Only 7
percent of these managers own no stock in their firms, but these are members
of the owning family. T h e sample is nearly all male, 7 8 percent are between
thirty-six and fifty-five years of age, and most are married. T h e average length
of affiliation with their c o m p a n i e s is fourteen years, and 8 6 percent of the
respondents are the c h i e f executive officer. T h e remainder are vice-presi-
dents, most of whom could be called chief operating officers. Nearly 6 0 per-
cent of the subjects are founders.
The companies represented here are relatively small, but they are growing
rapidly, with average annual revenues of $ 1 0 . 7 million and 1 5 2 employees.
Two-thirds of the subjects rate their firm's performance as excellent or good.
Slightly more than half of the c o m p a n i e s are engaged in manufacturing, a
quarter in service industries, and the remainder in wholesale or retail.

Results

Table 1 ranks the company goals that two-thirds or more of the respondents
rated as of the utmost importance or of major importance. It shows that

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46 Tagiuri, Davis

Table 1. Ranking of C o m p a n y G o a l s A c c o r d i n g to
P e r c e n t a g e of R e s p o n d e n t s R a t i n g Goal
"Of U t m o s t I m p o r t a n c e " or "Of Major I m p o r t a n c e "

Percentage of
Respondents Rating Goal

Item (1) (2) (3)

Rank Number Goal Utmost Major Total

1 (1.1) Make profits now 38 54 92

1 (2.9) Achieve excellence in 62 30 92
the company's field
of work
2 (1.2) Make profits later 45 46 91
2 (2.5) Provide a "good" service 57 34 91
to customers
2 (2.6) Have a "quality" service 62 29 91
2 (2.10) Establish and maintain 47 44 91
a particular image for
the company
3 (2.4) Have a quality product 55 35 90
3 (3.5) Provide a good work 27 63 90
atmosphere
4 (2.1) Develop salable, 54 35 89
profitable products
or services
5 (3.3) Provide a source of 27 61 88
personal satisfaction
for those who work
in the company
6 (1.8) Achieve financial growth 45 42 87
and security for the
owner(s)
7 (5.7) Grow by expansion of 27 59 86
existing business
8 (2.7) Be a responsible source 50 34 84
of supply for
customers
8 (2.11) Present a good corporate 36 48 84
image
8 (4.1) Provide me with a 45 39 84
challenge
9 (3.1) Utilize the human 28 55 83
resources now
available within the
company
10 (3.12) Provide people in the 29 53 82
company with
opportunity for
personal growth and
development

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On the Goals of Successful Family Companies 47

Table 1. (continued)
Percentage of
Respondents Rating Goal

Item (1) (2) (3)

Rank Number Goal Utmost Major Total

11 (1.5) Utilize the equity 30 51 81

available in the most
profitable way
12 (5.2) Provide long-range 36 44 80
continuity for the firm
13 (1.3) Produce an adequate 23 56 79
return on assets
employed
13 (2.12) Set high standards o f 34 45 79
morality
13 (5.6) Grow through internal 19 60 79
development
14 (4.13) Be my own boss 42 36 78
15 (3.4) Provide some happiness 19 58 77
for the people who
work in the company
15 (4.4) Permit me to do what 36 41 77
I enjoy and make
money while having
fun
16 (1.13) Achieve financial security 35 41 76
for the owner(s)'
family in the future
16 (3.11) Provide a place o f work 23 53 76
where people can
contribute
16 (5.13) Grow without the 34 42 76
owner(s) losing
financial control of
company
17 (5.3) Build the company into 31 44 75
a larger one
18 (5.12) Build a strong company 34 40 74
that is salable in the
event such a decision
should become
advisable at some
point
19 (1.10) Permit owner(s) to be 34 39 73
financially
independent
19 (5.4) Grow without major risks 26 47 73
to the company's
assets

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48 Tagiuri, Davis

Table 1. (continued)

Percentage of
Respondents Rating Goal
Item (1) (2) (3)
Rank Number Goal Utmost Major Total
20 (5.15) Be a "significant" factor 28 42 70
in the industry
21 (4.9) Have a meaningful role 27 41 68
in life for myself
21 (5.1) Perpetuate the business 30 38 68
22 (1.15) Offer long-term financial 14 53 67
security for company
employees
23 (5.5) Grow through new 21 45 66
products

what most top managers want for their c o m p a n i e s are profits; high-quality
products and services for their customers; a good work environment for
their employees; a n d challenge, growth, a n d i n d e p e n d e n c e for t h e m -
selves—in roughly that order. As might b e e x p e c t e d , two of the top seven
goals refer to profits. T h e other five, perhaps surprisingly, c o n c e r n excel-
l e n c e and quality:

• Achieve excellence in the company's field of work

• Provide a "good" service to customers
• Have a "quality" service
• Establish and maintain a particular image for the c o m p a n y
• Have a quality product.

U.S. firms often are criticized for having lost interest in quality. That is
certainly not true of this group (most of whose members are from the
United States), if we believe their responses. T h e Utmost Importance ratings
given to items 1.1, 1.2, and 2.9 suggest that more o f these managers place
greater importance on achieving e x c e l l e n c e in the company's field o f work
than on either making profits now or making profits later. Perhaps the very
success of these c o m p a n i e s has allowed their managers to work toward
wider goals, such as excellence.
This emphasis on quality may reflect the personal attitude of these
managers who are so strongly identified with their firms. It may also reflect
the strategic positioning of these c o m p a n i e s in their respective industries.
A small c o m p a n y usually c a n n o t c o m p e t e on the basis of scale e c o n o m i e s
a n d instead searches for a n i c h e from which it can obtain customer loyalty
by emphasizing reliability and quality.

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On the Goals of Successful Family Companies 49

In addition to rating the importance of each goal for their company, the
respondents were asked to double-check the objective that they regarded as
the single most important one. T h e s e are the items c h o s e n most often:

• Achieve financial growth and security for the owner(s) ( 1 . 8 ; 7.8 percent)
• Achieve excellence in the company's field o f work ( 2 . 9 ; 5.3 percent)
• Make profits now ( 1 . 1 ; 5.2 percent)
• Permit me to do what I enjoy and make money while having fun ( 4 . 4 ; 4.5
percent)
• Build a strong company that is salable in the event such a decision
should b e c o m e advisable at some point ( 5 . 1 2 ; 3.8 percent).

Interestingly, no single item received more than 8 percent of the vote,

and more than 13 percent o f the respondents did not decide on o n e single
most important purpose. Reflected in these data and later confirmed by
our discussions with the respondents is that these individuals want their
firms to accomplish many things simultaneously, and they are hard-pressed
to identify one goal as the most important. Multiple goals may be largely
due to the diverse desires of top managers. As we noted earlier, some
organization theorists (Cyert and March, 1 9 6 3 ; Richards, 1 9 7 8 ) argue that
an organization's multiple goals stem in part from the interaction o f coali-
tions or groups within the company. In family companies, in addition to
coalitions internal to the organization, the owner-manager, who is simul-
taneously a member o f the management, o f ownership, and of the owning
family (see Figure 1), has to c o n t e n d with the desires o f each party.

Figure 1. T h e Three-Circle Model of F a m i l y Business

Ownership

© Tagiuri and Davis, 1982

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50 Tagiuri, Davis

W e believe that making c o m p a n y goals explicit and communicating

them to all owners, managers, other employees, and family members is
important and desirable. However, many owner-managers of family c o m -
panies are reluctant, for various reasons, to express their objectives for
their companies. Some owner-managers feel that articulating company objec-
tives may create problems for their firms. W h e n goals are clearly stated,
they argue, new information and events may be rationalized to fit these
goals, thereby causing tunnel vision and lost opportunities. Further, c o m -
mitment to specific goals may reduce the possibility o f responding rapidly
to mistakes or altered situations. Moreover, explicitness about goals may lay
the owner-manager o p e n to criticism and blame for errors. Finally, some
owner-managers say that such explicitness can mobilize conflicts that might
otherwise remain dormant.
Beyond these objections, many of the owner-managers whom we have
studied say that their resistance to making goals clear stems from the fact
that they have several objectives and find it difficult to integrate these into
a coherent statement of c o m p a n y goals.
T h e c o m p a n y goals that most respondents rated as least important are
also o f interest. More than two-thirds of the subjects rated these four items
as unimportant:

• Have the company be a vehicle for the expression of my religious beliefs

(4.5; 7 9 percent)
• Give me an escape from a bad h o m e situation ( 4 . 6 ; 9 3 percent)
• Give me something to do, a j o b , a place to go every day (4.7; 6 7 percent)
• Maintain the company as it is (as to size, business, and so o n ) ( 5 . 9 ; 7 0
percent).

Although these objectives are in fact important for a few respondents in

our sample, the majority gave them low ratings. T h e low ratings on item 5.9
(Maintain the company as it is) is consistent with the desire for c o m p a n y
growth highlighted by item 5 . 1 2 . T h e other low ratings suggest that the
majority of the subjects do not use their c o m p a n i e s as an escape device
and that they are not interested in maintaining the status quo.

Typology of Goals

In order to identify broader and more reliable categories o f goals, the

seventy-four company objectives in the questionnaire were gathered into
groups o f items by means o f factor analysis. T h e s e categories allow us to
paint a simpler and clearer picture of the owner-managers' goals for their
companies. Employing the minimum residual method, we derived original
factors, rotated them with varimax criteria to produce orthogonal dimen-
sions, and then normalized. W e carried out three factor analyses to four,

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On the Goals of Successful Family Companies 51

six, and eight factors, respectively. This paper reports the results of the six-
factor analysis. This is only one possible way o f distinguishing among goals
that owner-managers have for their companies. Any set of things or events
can be classified with different degrees of precision. In our view, the six-
factor analysis permitted enough discrimination among categories o f goals
and was more parsimonious than the eight-factor analysis.
Eight o f the eleven items in Factor One (see Table 2 ) refer to quality of
work life goals. That family-owned and managed c o m p a n i e s tend to b e
good places to work has b e e n reported in the literature (Hartman and
Pearlstein, 1 9 8 7 ) . T h e fact that these items are endorsed of utmost or great
importance by at least three-quarters of the r e s p o n d e n t s suggests that the
owner-managers of family c o m p a n i e s place a high priority upon creating a
good place in w h i c h to work. Items 3.9 (Provide a place o f work where
people can be themselves) and 3 . 1 0 (Help people find a meaning in life by
working in the c o m p a n y ) received low ratings. In contrast, participants

Table 2 . I t e m s Loading on F a c t o r O n e
(Relative Contribution to E x p l a i n e d Variance = 3 0 . 5 % )

Have a company where employees can be happy and productive; a company whose
image and commitment to excellence in its field makes its employees proud.

Percentage Rating
Factor Item Item oj "Utmost"
Loading Number Goal or "Major" Importance

(.69) 3.3 Provide a source of personal 88

satisfaction for those who work
in the company
(.69) 3.11 Provide a place of work where people 76
can contribute
(.69) 3.12 Provide people in the company with 82
opportunity for personal growth
and development
(.63) 3.5 Provide a good work atmosphere 90
(.62) 3.4 Provide some happiness for the 77
people who work in the company
(.58) 3.9 Provide a place of work where people 50
can be themselves
(.58) 3.13 Provide a vehicle for creative talents 60
(.56) 2.9 Achieve excellence in the company's 92
field of work
(.55) 3.10 Help people find a meaning in life 38
by working in the company
(.53) 2.10 Establish and maintain a particular 91
image for the company
(.50) 3.1 Utilize the human resources now 83
available within the company

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52 Tagiuri, Davis

gave a high rating to item 3.4 (Provide some h a p p i n e s s to people who

work in the company). T h e exact wording of goals appears to be an impor-
tant factor in the making of c h o i c e s about them, and it should therefore b e
carefully considered in discussions about goals.
Factor Two (Table 3 ) represents the objective of providing the owner(s)
with financial security and benefits immediately (items 1.12, 1.9, 1.11) or
in the future ( 1 . 8 , 1.10, 1.13). T h e future orientation, which is expressed by
goals 1.10 (Permit owner[s] to b e financially i n d e p e n d e n t ) , 1.13 (Achieve
financial security for the owner's family, and 1.8 (Achieve financial growth
and security for the owner[s]), confirms the c o m m o n observation that,
c o m p a r e d to publicly owned firms, family-owned and managed c o m p a n i e s
have a longer-term perspective and are less c o n c e r n e d with immediate
profitability. Item 1.11 (Achieve a financial structure that offers the owner,
before taxes, such personal benefits as cars, vacations, and entertainment)
was rated as of major importance by only 3 8 percent. Sixty percent of the
respondents saw item 1.9 (Provide the owner[s] with some personal afflu-
e n c e ) as being of major importance. W h e n this affluence is described as
being destined for such materialistic items as cars, vacations, and enter-
tainment, w h i c h fits a c o m m o n stereotype o f a successful family c o m p a n y
owner's life-style, owner-managers may b e reluctant to c h o o s e it. Founders
may have a more disciplined view of the use of c o m p a n y resources than
do subsequent generations of family managers, but our data do not allow
us to address this interesting issue.

Table 3 . I t e m s L o a d i n g on F a c t o r T w o
(Relative C o n t r i b u t i o n to E x p l a i n e d Variance = 2 0 . 7 % )

Provide the owner(s) w ith financial security and benefits.

Percentage Rating
Factor Item Item of "Utmost"
Loading Number Goal or "Major" Importance

(.71) 1.10 Permit owner(s) to be financially 73

independent
(.71) 1.12 Achieve financial security for the 53
owner(s)' family now
(.67) 1.9 Provide the owner(s) with some 60
personal affluence
(.64) 1.13 Achieve financial security for the 76
owner(s)' family in the future
(.63) 1.8 Achieve financial growth and security 87
for the owner(s)
(.63) 1.11 Achieve a financial structure that 38
offers the owner(s), before taxes,
such personal benefits as cars,
vacations, and entertainment

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On the Goals of Successful Family Companies 53

Factor Three (Table 4 ) represents the objective of developing new and qual-
ity products. It is possible that more managers in these companies are con-
cerned with being responsible than with being innovative, given the higher
proportion of subjects who regard it as important to be a responsible source
of supply for customers (item 2.7) and to have a quality product (item 2.4)
and the lower proportion of subjects who regard it as important to achieve
financial strength sufficient to permit more R & D and more new product devel-
opment (item 5.14); develop, produce, and market proprietary products (item
2.2); and develop, produce, and market custom products (item 2.3).
Factor Four (Table 5 ) reflects the desire to have the c o m p a n y b e a
m e a n s to personal growth, social advancement, and autonomy. Notice that
the items loading on Factor Four that are given great importance by more
than two-thirds of the subjects—provide me with a challenge (item 4 . 1 ; 8 4
percent); have a meaningful role in life for myself ( 4 . 9 ; 6 9 percent); and
permit me to do what I enjoy and make money while having fun ( 4 . 4 ; 7 7
percent)—all have to do with personal growth and challenge, whereas the
items that reflect social aspirations—develop a power base for myself ( 4 . 8 ;
2 2 p e r c e n t ) and achieve a higher social status for myself ( 4 . 1 0 ; 2 0 per-
c e n t ) — a r e viewed as less important.
Factor Five (Table 6 ) refers to the goals of having the c o m p a n y b e a
good corporate citizen by contributing to the community in a number of
ways. T h e items in Table 5 c h e c k e d as important by a majority o f respon-
dents—produce an adequate return on assets employed ( 1 . 3 ; 7 9 percent)
and set high standards o f morality ( 2 . 1 2 ; 7 9 percent)—reflect the dual
orientation o f these subjects to b e responsible to c o m p a n y owners and to
the community, as often cited in the literature (Longenecker, McKinney,
and Moore, 1 9 8 9 ; "CEO Profile . . . ," 1 9 8 6 ) .

Table 4 . I t e m s L o a d i n g on F a c t o r T h r e e
(Relative Contribution to E x p l a i n e d Variance = 1 4 . 0 % )

Develop new and quality products.

Percentage Rating
Factor Item Item of "Utmost"
Loading Number Goal or "Major" Importance
(.69) 55 Grow through new products 66
(53) 5.14 Achieve financial strength sufficient to 53
permit more R & D and more new
product development
(52) 2.2 Develop, produce, and market 47
proprietary products
(.47) 2.3 Develop, produce, and market custom products 33
(.46) 2.7 Be a responsible source of supply for 84
customers
(.41) 2.4 Have a quality product 90

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54 Tagiuri, Davis

Table 5 . I t e m s L o a d i n g o n F a c t o r F o u r
( R e l a t i v e C o n t r i b u t i o n to E x p l a i n e d V a r i a n c e = 1 3 . 1 % )

Have the company be a means of my personal growth, social advancement, and

autonomy.

Percentage Rating
Factor Item Item of "Utmost"
Loading Number Goal or "Major" Importance

(.68) 4.2 Have a vehicle through which to 53

prove myself
(.61) 4.3 Create a continuing opportunity for 63
my own psychological growth
(.54) 4.1 Provide me with a challenge 84
(.51) 4.9 Have a meaningful role in life for 69
myself
(.46) 4.8 Develop a power base for myself 22
(.45) 4.10 Achieve a higher social status for 20
myself
(.44) 4.4 Permit me to do what I enjoy and 77
make money while having fun
(.40) 4.12 Have control over my time 61

Table 6 . I t e m s L o a d i n g o n F a c t o r Five
( R e l a t i v e C o n t r i b u t i o n to E x p l a i n e d V a r i a n c e = 1 1 . 0 % )

Have the company be a good corporate citizen.

Percentage Rating
Factor Item Item of "Utmost"
Loading Number Goal or "Major" Importance

(.73) 2.16 Make a contribution to the 41

community
(.71) 2.17 Be a good influence on the 43
community
(.53) 2.15 Provide jobs for people in the 26
community
(.34) 2.13 Have the company be a leader in a 39
more socially responsible business
and management ideology
(.32) 1.3 Produce an adequate return on assets 79
employed
(.30) 2.12 Set high standards of morality 79

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On the Goals of Successful Family Companies 55

Factor Six (Table 7 ) refers primarily to the goal of having a c o m p a n y

that offers j o b security at all levels of the hierarchy. Respondents to our
questionnaire tended to group the objective expressed by item 5.3 (Build
the c o m p a n y into a larger o n e ) with items dealing with j o b security. T h i s
may reflect the judgment that, in the minds o f subjects, security is contin-
gent on growth. T h i s association is b o r n e out by statistics compiled by the
Small Business Administration, w h i c h show that growing c o m p a n i e s have
a far lower percentage rate of failure than nongrowing firms (U.S. Small
Business Administration, 1 9 8 9 ) .

Implications and Conclusions

The research reported here has highlighted the goals that owner-managers of
successful family companies have for their firms. A factor analysis of the 7 4
specific goals identified reduces them to six groups of independent objectives:

• Have a c o m p a n y where employees c a n be h a p p y and productive, a c o m -

pany whose image and c o m m i t m e n t to e x c e l l e n c e in its field makes its
employees proud
• Provide the owner(s) with financial security and benefits
• Develop new and quality products
• Have the c o m p a n y b e a m e a n s o f personal growth, social advancement,
and autonomy

Table 7. I t e m s L o a d i n g on F a c t o r Six
(Relative Contribution to E x p l a i n e d Variance = 1 0 . 6 % )

Have a company that offers j o b security.

Percentage Rating
Item of "Utmost"
Factor Item or "Major"
Loading Number Goal Importance
(.56) 3.6 Provide j o b security for blue-collar 43
workers
(.55) 3.8 Provide j o b security for management 63
who are not members of the family
(.53) 3.7 Provide j o b security for white-collar 58
employees
(.43) 3.2 Make room for persons who have 30
been with the company for a long
time
(.39) 5.3 Build the company into a larger one 75
(.36) 3.10 Help people find a meaning in life 38
by working in the company
(.33) 2.15 Provide jobs for people in the 26
community

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56 Tagiuri, Davis

• Have the company be a good corporate citizen

• Have a c o m p a n y that offers j o b security.

W h a t can be done with these results?

Research. First, the questionnaire itself offers a list of company objec-
tives that can be used in further research if the investigator remembers that
most of our subjects were from successful family firms. Our list of goals may
have to be revised or supplemented for application to less successful family-
owned and managed companies. Our questionnaire can also b e used to
make comparative studies of the goals of family firms (such as cross-
cultural comparisons between family and nonfamily c o m p a n i e s ) and to
explore the diverse perspectives of different generations and of the indi-
viduals who inhabit the seven different areas defined by the overlapping
three circles in Figure 1, to mention just a few of the possible research
applications (Lansberg, 1 9 8 9 ) .
T h e goals and objectives that owner-managers have for their companies
reflect some of their wants, desires, and needs. T h e data thus present a
provocative partial portrait of the motivations of respondents—a portrait
that deserves further study.
Management. Managers c a n use the questionnaire to clarify for them-
selves the objectives that they have for their firms. Such a checklist can
serve to make them conscious of goals that they have not explicitly formu-
lated, perhaps because they were too busy, perhaps because they were too
personally involved in the company to separate their personal goals from
c o m p a n y goals. O n c e manager-owners b e c o m e fully aware o f the various
goals that they hold, they can more easily assign them priorities and then
decide w h i c h are congruent with the decisions, strategies, and actions that
they have already taken. O n the basis of these steps, they can then deter-
m i n e w h i c h objectives they wish to continue to implement, w h i c h new
ones they wish to incorporate, and which they wish to modify or discard.
After completing the questionnaire, some subjects found it useful to use the
items they rated as most important as the basis for drafting a statement of
mission. Two such statements follow:

T h e goals of my company are to create e c o n o m i c value in the things we

do, while working harmoniously together; to contribute to society; and
to b e financially rewarded for offering good values and high quality.

T h e major purposes of my company are to provide my family and me

with enough e c o n o m i c security to protect us against most financial
adversities and to gain me esteem and respect in my community.

O n c e a manager has clarified his or her goals for the company, those
goals can be shared with the firm's other managers, owners, and interested

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On the Goals oj Successful Family Companies 57

family members. Eventually, these parties may arrive at objectives that are
understood and shared and that thus b e c o m e the basis for planning and
acting within the company. W i t h the questionnaire, the top manager can
survey managers and employees and c h e c k how well he or she has c o m -
municated the c o m p a n y objectives to key constituencies.
W e have also used the questionnaire on company objectives to e x a m i n e
the agreement among managers, partners, or relatives as to where the
c o m p a n y should go. After completing the questionnaire by themselves, the
individuals concerned compare their responses, clarify the inevitable seman-
tic problems of interpretation of individual items, and finally discuss dif-
ferences of opinion, with the possibility of achieving agreement about the
c o m p a n y ' s mission. Finally, the questionnaire c a n b e used to monitor
changes in c o m p a n y goals by using it periodically as a basis for discussion
and formulation of new c o m p a n y objectives.
Consulting. Consultants can use the questionnaire in several ways. For
example, it can b e used to investigate and identify the objectives of a
family c o m p a n y client by giving the questionnaire directly to key family
and nonfamily members o f management and by using the questionnaire or
the six factors as an interview guide.
A consultant can use the results obtained from the client to identify areas
of agreement and disagreement in the goals held by key individuals and to
use these areas of agreement and disagreement to discuss the congruence
among objectives; weigh the usefulness of these objectives for the particular
firm; and discover, by making the differences and agreements clear, the best
ways of communicating their objectives to other constituencies.
T h e six goal categories derived in this study as factors can be used in
the same manner as just mentioned for the questionnaire. T h e disadvantage
of using goal categories is that o n e cannot be as specific and detailed
about intended goals as with the full questionnaire. However, the broad
groupings of objectives might b e more useful in determining w h i c h types
of purposes a manager wishes to emphasize most for the firm and in
considering the implications of this strategy.

A p p e n d i x A. F u n c t i o n s of the C o m p a n y

In your opinion, what should your c o m p a n y do? Please c h e c k the space

provided to the right of e a c h item.

Importance
Unimportant
Function, Objective, Goal, of of or Not
Purpose, Outcome Utmost Secondary Applicable

1.1 Make profits now

1.2 Make profits later

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58 Tagiuri, Davis

A p p e n d i x A. (continued)

Importance

Unimportant
Function, Objective, Goal, of oj or Not
Purpose, Outcome Utmost Secondary Applicable

1.3 Produce an adequate return

on assets employed
1.4 Produce the best possible
return for stockholders
1.5 Utilize the equity available
in the most profitable way
1.6 Provide a tax shelter
1.7 Generate funds to put
together a tax shelter
1.8 Achieve financial growth and
security for the owner(s)
1.9 Provide the owner(s) with
some personal affluence
1.10 Permit owners to be
financially independent
1.11 Achieve a financial structure
that offers the owner(s),
before taxes, such personal
benefits as cars, vacations,
and entertainment
1.12 Achieve financial security
for the owner(s)' family now
1.13 Achieve financial security
for the owner(s)' family in
the future
1.14 Offer immediate economic
benefits
1.15 Offer long-term financial
security for the company

2.1 Develop salable, profitable

products or services
2.2 Develop, produce, and
market proprietary products
2.3 Develop, produce, and
market custom products
2.4 Have a quality product
2.5 Provide a "good" service to
customers
2.6 Have a "quality" service
2.7 Be a responsible source of
supply for customers
2.8 Be a capable, efficient market
for suppliers

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On the Goals of Successful Family Companies 59

A p p e n d i x A. (continued)

Importance

Unimportant
Function, Objective, Goal, of of or Not
Purpose, Outcome Utmost Secondary Applicable

2.9 Achieve excellence in the

company's field of work
2.10 Establish and maintain a
particular image for the
company
2.11 Present a good corporate
image
2.12 Set high standards of
morality
2.13 Have the company be a
leader in a more socially
responsible business and
management ideology
2.14 Provide j o b s for members
of the family
2.15 Provide j o b s for people in
the community
2.16 Make a contribution to the
community
2.17 Be a good influence on the
community

3.1 Utilize the human resources

now available within the
company
3.2 Make room for persons who
have been with the company
for a long time
3.3 Provide a source of personal
satisfaction for those who
work in the company
3.4 Provide some happiness for
the people who work in the
company
3.5 Provide a good work
atmosphere
3.6 Provide j o b security for blue-
collar workers
3.7 Provide j o b security for
white-collar workers
3.8 Provide j o b security for
managers who are not
members of the family

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60 Tagiuri, Davis

A p p e n d i x A. (continued)

Importance

Unimportant
Function, Objective, Goal, of of or Not
Purpose, Outcome Utmost Secondary Applicable

3.9 Provide a place of work where

people can be themselves
3.10 Help people find a meaning
in life by working in the
company
3.11 Provide a place of work where
people can contribute
3.12 Provide people in the company
with opportunities for per-
sonal growth and development
3.13 Provide a vehicle for creative
talents

4.1 Provide me with a challenge

4.2 Have a vehicle through which
to prove myself
4.3 Create a continuing
opportunity for my own
psychological growth
4.4 Permit me to do what I enjoy
and make money while
having fun
4.5 Have the company be a
vehicle for the expression of
my religious beliefs
4.6 Give me an escape from a
bad home situation
4.7 Give me something to do,
a j o b , a place to go every day
4.8 Develop a power base for
myself
4.9 Have a meaningful role in
life for myself
4.10 Achieve a higher social status
for myself
4.11 Achieve flexibility in the time
I put into management work
(for example, three-day week)
4.12 Allow me to have control over
my time
4.13 Allow me to be my own boss

5.1 Perpetuate the business

5.2 Provide for long-range
continuity in the firm

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On the Goals of Successful Family Companies 61

A p p e n d i x A. (continued)

Importance

Unimportant
Function, Objective, Goal, of of or Not
Purpose, Outcome Utmost Secondary Applicable

5.3 Build the company into a

larger one
5.4 Grow without major risks
to the company's assets
5.5 Grow with new products
5.6 Grow through internal
development
5.7 Grow by expansion of
existing business
5.8 Grow by acquisition
5.9 Maintain the company as
it is (size, business, and so
on)
5.10 Keep the company a closely
held family business
5.11 Sell the company for a
reasonable sum
5.12 Build a strong company that
is salable in the event such
a decision should become
advisable at some point
5.13 Grow without the owner(s)
losing financial control of
the company
5.14 Achieve financial strength
sufficient to permit more
R & D and more new product
development
5.15 Be a significant factor in the
industry
5.16 Build a stronger management
to continue the organization
for the benefit of spouse and
family

Now, go over the items you have c h e c k e d as "of the utmost importance" and double-
c h e c k the one item that is most important of all. Thank you.

© 1987 Renato Tagiuri

References

"CEO Profile: Investing in Community Pays Off." Small Business Report, 1986, 11 (2), 6 1 - 6 4 .
Cyert, R. M., and March, J . G. A Behavioral Theory of the Firm. Englewood Cliffs, N.J.: Prentice
Hall, 1963.

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62 Tagiuri, Davis

Etzioni, A. (ed.). Complex Organizations: A Sociological Reader. New York: Holt, 1961.
Hartman, C , and Pearlstein, S. "The Joy of Working." Inc., 1987, 9 (12), 6 1 - 7 1 .
Lansberg, I. "Why Conflict in Family Firms Is Inevitable: The Players Have Different Positions
and Goals." Business Week Newsletter for Family Business, 1989, 1 (4).
Longenecker, J . G., McKinney, J . A., and Moore, C. W. "Do Smaller Firms Have Higher
Ethics?" Business and Society Review, 1989, 71, 1 9 - 2 1 .
Perrow, C. Organizational Analysis: A Sociological View. Pacific Grove, Calif.: Brooks/Cole,
1970.
Richards, M. D. Organizational Goal Structures. St. Paul: West, 1978.
Silverman, D. The Theory of Organizations: A Sociological Framework. New York: Basic Books,
1971.
U.S. Small Business Administration. The State of Small Business: A Report to the President.
Washington, D.C.: U.S. Government Printing Office, 1989.

John A. Davis is president of the Owner Managed Business Institute (OMBI), an executive
education and research center in Santa Barbara, California.

Renato Tagiuri is professor emeritus, Graduate School of Business Administration, Har-

vard University, and a faculty associate at OMBl.

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