Business Research 595

(Research Proposal: Impact of family ownership on the performance of SMEs in Afghanistan )

Name: Sayed Anis Sadat

Registration# 45421

Lecturer: Dr. Linus

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Background of the proposed study:
Afghanistan's economy is a combination of formal and informal businesses in which informal
business creates around 80-90 percentage of the business in Afghanistan (SIPRI-2015). The
formal private sector only has a contribution of 10 to 20 percentage in the country's official GPD
(SIPRI-2015). The Majority part of the private sector of Afghanistan is family-based ownership
enterprises. They follow up their traditional business approach, which is very useful in the
development of their businesses in the long-term (Afghanistan's National export strategy 2018-
2022). According to Poz (2013), Family-owned business structure is one of the most common
global structures, which creates between 80% to 98% of business structures in the world. It isn't
easy to distinguish between family-owned businesses and other businesses in the operation and
objective (Muska Hanify, Omar Al Serhan, Sarath W.S.B. Dasanayaka, Kimberley Catherine
Gleason-2019).

There are many definitions for the family business that one of the definitions is from Chua,
Chrisman, and Sharma (1999). They define it as, “The family business is a business governed
and managed to shape and pursue the vision of the business held by a dominant coalition
controlled by members of the same family or a small number of families in a manner that is
potentially sustainable across generations of the family or families”.

The vital role of ownership of the firms has in the development of them in the domestic markets
and international markets (trading) interested us in looking at this variable deeply and observing
their role in the performance and development of SMEs. Besides, the lack of professional
research and study regarding the influence of family-ownership structure in firms in Afghanistan
encouraged doing comprehensive research in this regard. Therefore, this study's main purpose is
to see the relationship between family-ownership and the SMEs' performance in Afghanistan,
which has a positive or negative impact on these entities' performance.

Statement of the problem

What is the impact of family-ownership on the SMEs' performance in Afghanistan?

Purpose of the study or purpose of the statement

Based on the problem, therefore, the main purpose of this study is to investigate the family
ownership relationship with the SMEs performance in the content of Afghanistan.

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Research questions of the proposed study
• Does family ownership play a significant role on SMEs development in Afghanistan?
• Is there any significant variance explain by Family ownership on the SME performance
in Afghanistan?
• Is there a relationship between family business ownership and SME Management
approach?
• Is there a relationship between family business ownership and SME innovation?

Research Objectives
 To investigate the effects of family business ownership on the SMES performance in
Afghanistan.
 To measure the relationship between family ownership and the SMEs performance in
Afghanistan.
 To investigate the effect of family business ownership on the SMES management
performance.
 To measure the effect of family business ownership on the SMEs finance
performance.
 To investigate the effects of family business ownership on the SMES innovation
performance.

Significance of the study

The academic significance of this study is based on below essential factors. First, the result of
this study will enrich and increase the literature resource for family-owned businesses and
consolidate the literature in this regard. The number of studies regarding companies' family
owned structure is very less, and there is a requirement of more studies in this regard, according
to the different business environments. Consideration of varieties includes culture, social, and
traditional factors on the performance of family-owned businesses. Secondly, the number of
studies that considered family ownership in Small and medium-sized enterprises is very less.
Most of the studies found the variable on the big businesses and large entities that required
concentrating on this requirement for SMEs.

Furthermore, this study will provide the more information about the family-owned in traditional
environment and culture which mostly the businesses are based on the conventional approach,

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and mostly they rely on family relationships as a strong bridge to build businesses relationship,
instead of non-family firms which are based on the modern and more official business
relationships. Finally, this research helps to enrich the information about the role of ownership
on SMEs' performance. It shows how ownership can help SMEs to improve performance or fail
in development in the market.

First, this study will help to have an in-depth analysis of the role of family business ownership
on the performance of SMEs in Afghanistan. Currently, there is none of the studies or
professional research in this regard.

Secondly, such a study will enrich the resource of information for building strategies in the
future in this regard to help the SMEs to have better performance and preventing from the
problems, which this study can find them as a result of this research.

Thirdly, this research will help us better understand the structure of ownership in the SMEs'
businesses of Afghanistan. Fourth, it could be a useful resource for finding the main reason for
failing businesses' special SMEs in the country, mostly relying on the family business structure.

Finally, it is required to have an in-depth analysis of the country's family ownership structure
because more than 80% of businesses in the country are family businesses, which is necessary to
have a better understanding of such ownership structure.

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 literature review.
Beuren, Politelo, and Martins (2015) conducted research on the influence of family ownership on
company performance in the content of Brazil. The problem statement of this study is to see how
family ownership affects company performance in Brazil. The main purpose of this research is to
study the relationship between family ownership and the performance of Brazilian companies
registered on BM&FBovespa. It also offers an evaluation with the results of Shyu’s (2011)
survey conducted in Taiwanese companies. In this research, descriptive research with a
quantitative approach was conducted through desk research. The research results show that
family-owned companies have poorer performance compared with non-family-owned
companies. They specify a positive relationship between family participation (ownership) and
the performance of the company. They also expose that family-owned companies' performance is
maximized when family involvement reaches 60 and 70 percent. It is recommended to increase
the sample to get a more comprehensive picture of Brazilian family-owned companies' reality in
future research. The repetition of this study in other countries is also recommended to contribute
to the consolidation of literature on family-owned companies.

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Research Gap / problem area

The main research gap for this study is the lack of professional research and research regarding
family-owned businesses in Afghanistan, in which there is no professional Article regarding the
family-owned businesses in Afghanistan. Besides, there is no policy or procedure with the
ministry of commerce regarding family ownership of companies in the country, especially for
SMEs, which creates a big part of the country’s economy. This research can motivate them to
work and produce such necessary policies in this regard. Furthermore, generally, several studies
recommend researching family ownership in different countries to increase the literature
resource in this regard. Therefore, it is required to do this research in Afghanistan's content to
have the right understanding of this topic in the country's business environment.

Theoretical or conceptual framework

Impact of
Management
approach

Access to
professional service

Sustainability
performance
Family Ownership
SMEs performance

Managerial
interpersonal
competencies

Innovation

Ownership monitoring
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Hypotheses of the study
 What is extent of family management style impact on the performance of SMEs in
Afghanistan.
 Access to professional service of family member positively impact on the performance of
the SMEs in Afghanistan
 The performance of SMEs is greatly related to the Sustainability of owner’s performance
 Innovative Family member increase the performance of SMEs in Afghanistan
 High ownership monitoring increase the likelihood of SME success in Afghanistan

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 Proposed Method

Research Approach
The research approach for this research is deductive because this proposed study is testing an
existing theory in the context of Afghanistan, which already exists. The investigation is based on
a hypothesis that required observation and confirmation of the observation result. In this regard,
this proposed study will start from general to a specific point and result in the content of
Afghanistan.

Unit of analysis
The issue is about Analysis of Family Ownership Influence on SMEs performance of
Afghanistan so its sector-level analysis but a unit of study on Family ownership challenges in
SMEs of Afghanistan will be based on individual-level judgments, perception, and experience.
The individual-level analysis done by questionnaire from a different level member of these
businesses to have their point of view from a different perspective.

Population and sample of the study

According to the ministry of finance, the population of SME is around 8000 SMEs active in
Afghanistan currently, and they are providing a financial statement to the ministry of finance.
The sample size for the population of 8000 with a confidence level of 95% and a confidence
interval of 5% will be 367 samples.

Sampling method of the study

The probability sampling method will be used in this research to make the result more
generalized. The simple random sampling approach will be used to select the sample from the
population to provide an equal chance to all the population. Besides, it is quantitative research in
which probability sampling is a suitable choice for it. Furthermore, this method gives us the
chance to apply a specific method or procedure for the sampling and collect the proper data for
our research, making the basis of a better conclusion and report.

Instrumentation and operationalization of the study

For measuring these qualitative variables in this quantitative research. This proposed study will
be used from interval scales because this measurement scale helps us convert the qualitative data
to quantitative or numeric data to analyze it. Besides, it gives us a chance to magnitude the
ranking for the variables.

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Data collection procedure
The primary quantitative data will be used for this research because there is no significant
secondary data in Afghanistan's content regarding this topic to provide sufficient resources for
the required data.

Reliability and validity of the study

The internal consistency method will be used for the reliability by using the inter-item
consistency approach to ensure that the answers provided how much they are reliable in terms of
accuracy and correctness. This proposed study will use from Cronbach Alpha for analysis of
reliability in the SPSS software. The construct validity will be used for validity by using a
convergent approach to ensure the measurement tools have the required validity for the research.

Data analysis methods: Which methods you will use for analysis purpose.
To test the study's hypotheses, the researcher will use the histogram method and test normality
method to determine the normality or non-normality of the data. If the data is normal, the
proposed study will apply from the below parametric test to analyze our data. This proposed
study will use Pearson correlation analysis to check the relationship between variables, and the
test of significance will be two-tailed. This proposed study will use multiple regression to see the
effect of the independent variable on the dependent variable on SME performance and
independent sample T-test. If the data is not normal, the proposed study will apply a
nonparametric test to analyze the data. The proposed study will use from Spearman correlation
analysis to check the relationship between variables, and the test of significance will be two-
tailed. It will apply from the Mann-Whitney U Test to check the relationship between variables.

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 References

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