Chapter 2: Literature Review

2.1 Introduction
Family business is the most common ownership and management pattern in the world (Li, 2022).
The author remarks that 65-80% of businesses worldwide are family-owned or managed. As it is,
Chinese family businesses are at the peak of generational inheritance, opening up discussions on
growth opportunities for family businesses in China (Li, 2022). This chapter basically reviews
the literature on the growth opportunities for family business. It entails the definition of concepts,
different theories, the findings of these studies, and attempts to draw a theoretical foundation for
the research at hand.
2.2 Family Business
2.2.1 Definition of Family Business
Family business is an interesting yet versatile discussion that has attracted a multitude of
research. The model is perhaps the most common type of business ownership across the divide,
particularly on the Asian continent. Most people agree that family business operations vary from
one establishment to another, further complicating the possibility of a consensus on the definition
over the years. Researchers and scholars continue to debate on what to define family business as,
eventually amounting to tones of definitions for the phrase (Hernández-Linares, 2017).
Miller and Rice (1967) argued that business operations mixing up with family behavior is a
common characteristic in family-owned businesses. Zellweger (2017) alludes that family
business revolves around ownership and management, besides family involvement. Another
critical issue in this type of business is succession since ownership trickles down from one
generation to the next. De Massis and Foss (2018) define a family business as a social system
that draws in and links a business, an initiator, a relevant family, family members, and the
relevant non-family members.
Most definitions fail to separate ownership from management in family business. While some
families control the entity ownership, others are inclined towards family management, in some
cases controlling the ownership of the entity (Li, 2022). Agbim (2018) reveals that there are
different types of owners in family business: an individual, two parties (related by blood or
marriage), two parties (unrelated by blood or marriage), small family (nuclear), a small family
with several people (related or married), a small family (nuclear family with unrelated people),
and more than one big family.
As cited by Hao (2019), Chandler (1977) associates family business with the entity’s founder and
their family as they hold majority of the equity, maintain a close relationship with the managers,
and ensure that the decision-making power remains intact, particularly finances, resource
allocation, and efficient recruitment. The study also cites Upton (1993), who defines family
business as an entity whose majority ownership and control is in the hands of a particular family.
Therefore, family business definitions comprise versions of business ownership and
management: family-owned and managed, family-owned but not family-managed, and family-
managed but not owned (Li, 2022). The latter often happens in family businesses in the West.
These businesses usually have entered the stock exchange market, consequently becoming public
entities to some extent.
In essence, most people acknowledge family business as an authentic way of owning and
running businesses.
2.2.2 Culture and Structure in Family Business
There is a rich supply of literature on family business in China, especially over the last few
decades. Family businesses in China form the majority of business ownership and management
since time immemorial. Hao (2019) highlights that most family businesses in China share a
school of thought in that they exercise cordial relationships and hold space for each other rather
than operating competitively within the entity. Essentially, these parties derive their values from
the place of the family in Chinese culture. According to Islam et al. (2022), the core social and
economic unit is the family unit. It is, therefore, treated as a collective capitalistic unit in which
the lines between leisure, traditional work, and house chores are thin to non-existent.
2.3 Opportunities for Growth in Family Business
The prevailing market conditions require family businesses to make critical changes in order to
grow and thrive over the years. Although these businesses are facing managerial and succession
challenges, there are tons of opportunities for growth, some of which are a result of the power
and succession disputes. Unlike the initial business owners and managers whose success entirely
depended on political dividends, the next bundle of family business owners and managers are
likely more educated and exposed as a result of globalization, hence having better global
sensitivity and value creation (De Massis et al., 2016). This generation of leaders is considered
movers and shakers. This crop of leaders understands the place of technology and innovation in
growth besides holding deep and varied perspectives of the modern world. Embracing new
knowledge and technology in propelling family businesses to their full potential is thus an easy
fit compared to the challenge of limited knowledge and exposure their predecessors had.
De Massis et al. (2022) define the next generation of family business leaders as business savvy,
well-educated, socially connected, and have better access to business financing. The study also
insists that this crop of leaders is tasked with increasing global connectivity and increasing
opportunities for better and more sustainable businesses. However, we must understand that
these leaders live in a dynamic world in which everything is constantly changing. Besides, there
is a need for professionalism in business, and as such, they must recognize that social capital is
not enough for business growth and success.
In general, the current business environment is rapidly changing yet provides a bountiful of
opportunities for growth and development. Thus, Family businesses must commit to creating
value rather than merely creating wealth, as has been the case over the years. With good business
practices and strong family ethics and values, family business in China is poised to grow and
develop into a powerhouse, reinventing themselves into the movers and shakers of the business
world.
Companies question their capacity to hold through the uncertainties the market experiences. The
need for businesses to transform to remain afloat in the face of technological advancement is
imminent. Zapata-Cantu et al. (2023) highlight that family businesses are proving more potent
and versatile compared to non-family entities. These businesses have demonstrated unmatched
flexibility and agility as they easily adapt to changing business conditions owing to their close-
knit nature. The business models are better placed for faster decision-making processes and
response to market needs.
According To Roberts et al. (2021), Asian digital technology is very potent, creating room for the
growth of businesses in all sectors. For instance, those venturing into the Café and bar industry
have the space to develop and expand their business processes and reinvent their products
besides improving the consumer experience.
According to Zapata-Cantu et al. (2023), family businesses play a key role in the post-pandemic
global economy. These businesses significantly impact employment and internalization,
substantially affecting the Gross Domestic Product (GDP). As cited by the authors, Firfiray and
Gomez-Mejia (2021) highlight that family businesses account for 70-90% of the global GDP and
50-80% of the employment opportunities in most countries.
Family businesses' growth and longevity depend entirely on the entrepreneurial and managerial
capabilities of those in charge of the entities and their capacity to develop functional business
models that efficiently spot and maximize growth opportunities the surrounding presents.
Although family businesses are growth-oriented and are expected to expand over time, the
current business environment presents unending challenges, forcing family business entities to
focus on leveraging family history and tradition and surviving through uncertainties rather than
chasing growth.
2.3.1 Growth through Technology and Innovation
Since the need for flexibility and agility is imminent, it is necessary that family businesses
develop strategies that enhance adaptability and boost their knowledge and resources. For family
businesses, this move entails obtaining a deeper understanding of the external business
environment and a strong knowledge of the entity’s strengths (De Massis et al., 2022). Family
firms have shown the capacity to morph through the current market conditions and adapt as
swiftly as their non-family counterparts, allowing them to respond steadily to emerging market
needs and consumer desires and preferences.
With technology at their disposal, businesses are better positioned to conduct extensive market
research, allowing them to match or, better yet, outdo their competitors. De Massis et al. (2016)
state that unlike in the past when family businesses could depend on tangible assets, for instance,
property, to create an edge over competitors, the current business world requires that all
businesses invest in knowledge assets to survive and thrive. In this light, the leader is tasked with
sharing vital aspects of organizational knowledge and culture, transmitting the values to the next
generation of owners and managers through mentorship and training. Pizzurno and Alberti
(2013) state that passing such knowledge shapes the organizational culture besides enhancing the
firm's capacity to pursue growth opportunities and value creation. With strategies like long-term
orientation and commitment to frugal innovation, family businesses can utilize the available
resources to tap into technology and boost their competitive advantage.
The creation of dynamic capabilities is essential for any business to survive in the current
business environment, and family firms are not an exception. Hitt et al. (2021) highlight that
businesses are less risk-averse amidst the prevailing uncertainties. The study states that family
businesses may require robust resource management, especially in the post-pandemic era, where
they face complex challenges. Yuan (2019) reveals the need to build agility and flexibility
through effective strategic planning and implementation, which calls for fluidity and approaches
that foster innovation and growth. Technology and innovation are thus central to growth in post-
pandemic economies.
As cited by Zapata-Cantu (2023), Su and Dapit (2021) highlight family businesses can combine
their knowledge base with available technological tools, including the internet and social media,
to generate new assets and create value. The article emphasizes the centrality of knowledge
creation and sharing in transgenerational growth and success, reinforcing its importance in the
growth of family firms. With technological advancement, family businesses can share and
improve the knowledge and value they have created over the years, significantly building a
competitive edge over their non-family counterparts.
2.3.2 Growth through Diversity and Inclusion
Although some characteristics of family business may work against the aspect of diversity and
inclusion, the latter is essential for competitiveness and growth in the current business
environment. Snellman (2016) highlights that the law requires big organizations to tailor the
workforce to satisfy labor legislation requirements. Diversity research is thus core to the growth
of companies, without the exception of family firms. As cited by Snellman (2016), Nordqvist et
al. (2015) bring out the centrality of diversity management in family businesses, especially
considering their place in the global economy as well as national economies.
Diversity and inclusion are particularly central to branding and, consequently, growth in family
business. In the current competitive business environment, businesses must work towards
creating a brand that reflects the diversity of consumers, making diversity and inclusion
imperative (Astrachan et al., 2018). The essence of branding in business has seen family business
scholars delve into the subject, exploring strategies to improve family business branding. With
multiple points of view in play, Astrachan (2018) admits to the complexity of diversity and
inclusion and its intersection with family business branding.
Diversity is critical in family business owing to the uniqueness of these firms as family members
are majorly involved, hence the overlap between family and business, which subsequently affects
decision-making and goal setting in these firms. Unfortunately, there is limited research on
diversity management in family business, leaving critical concerns unaddressed.
2.3.3 Corporate Social Responsibility
Since the line between family members and business is thin, separating family from non-family
executives is even harder in family business. Stock et al. (2023) highlight that the family
controlling ownership often takes charge of organizational decision-making, including business
operations, organizational culture, and organizational behavior. According to Rivo-López et al.
(2021), most family owners insist on maintaining an impressive societal perception besides great
financial performance. As a result, family firms revere corporate social responsibility as they
integrate environmental and societal concerns in their business planning and running.
In an extensive literature review on corporate social responsibility in family business, Stock et al.
(2023) analyze the CSR activities of different family firms alongside their motives and
outcomes. For starters, the analysis establishes that the integration of family resources in family
business increases the likelihood of these firms participating in CSR activities. Rivo-López et al.
(2021) highlight that family firms can utilize corporate social responsibility as a strategic tool to
confer a competitive edge in business. Understanding the concept of CSR in family business
requires deep insight into the intersection between family and business in these firms and how
the overlap impacts the outcomes of CSR.
Since most research on CSR is fixated on non-family business, the need for further research on
the subject is apparent. Miller and Le Breton-Miller (2007), cited by Stock et al. (2023), propose
that family business scholars channel tremendous efforts toward understanding corporate social
responsibility from a family business perspective.
2.4 Characteristics of Markets for Café Business
Markets refer to a particular place where consumers meet businesses, leading up to the exchange
of commodities. Suhud et al. (2019) argue that café markets are crucial exchange points for
domestic and international tourism. The study highlights that service improvement could go a
long way in boosting sales and consequently improving business performance. The rise of
modern markets has introduced tremendous changes in the café and bar industry, inferring the
need for extensive market research for growth.
Café businesses traditionally comprise brick-and-mortar stores where customers walk in, order
food and drinks, and make payments using cash or credit/debit cards. With the changing business
environment, these businesses must transform to match consumer needs and optimize
performance. For instance, the rise of the COVID-19 pandemic saw most customers unable to
walk into stores and order food, necessitating the integration of e-commerce and food and drink
delivery (Kim et al., 2021). It has since become impossible to go back to the brick-and-mortar
business model in the post-pandemic era, forcing businesses to implement technological changes
to enable transformation, boost sales, and improve performance and customer satisfaction.
Technological advancement brought communication technology, which further complicated
business operations and leadership. Nugraha (2017) states that the emergence of social media
platforms has increased competition in business, except for the café and bar industry. For
businesses to maximize their growth in the current business environment, the use of social media
for marketing and communication is vital. Grizane and Jurgelane (2017) discuss the centrality of
social media in modern business growth. The study highlights that social media platforms allow
businesses to create an online presence and communicate with customers, enhancing customer
satisfaction.
Another characteristic of café markets lies in the behavioral changes in consumer patterns. Over
the years, researchers have revealed that consumer behavior is as constant as change, implying
the need to understand the driving factors to foster growth.
2.5 Customer Perceptions of Family Business Café and Bar Business
Most businesses, including family businesses, struggle to offer and maintain high-quality
customer service. Namin (2016) argues that no business can stay afloat without ensuring
customer satisfaction, a key part of consumer perception. The study reveals that organizational
performance is dependent on a firm’s capacity to create unique value through high product
quality and customer service. Like the author, the current study explores the place of customer
perception in business growth, with reference to the café and bar family business.
The available research on consumer perceptions of family business revolves around business
images and perceptions from a consumer point of view. Jaufenthaler (2023) argues that since
perceptions vary from one consumer to another, brands must be intentional about creating
favorable brand associations across the divide. The article highlights that the marketing team is
tasked with creating, reinforcing, or mitigating particular perceptions of the brand, achieved by
tapping into brand ambassadorship, where famous people become the ‘face’ of the business.
Arsić et al. (2019) highlight the importance of the family business owner in customer
relationsIntensive market research can go a long way in informing family firms on customer
perceptions and perhaps the need for strategic changes towards creating positive customer
perceptions of the business.
As highlighted earlier, corporate social responsibility is a critical part of consumer perception.
Smith et al. (2018) argue that CSR sits at the core of customer perception, restating the need for
family business to invest in environmental and societal conservation.
Depending on the strategies employed, customer perceptions are not necessarily capital-
intensive. Jaufenthaler (2023) reveals that only a small portion of family businesses ascribe to
status promotion as a branding strategy. As the family business terrain keeps changing, creating
and maintaining particular customer perceptions is increasingly difficult. Note that negative
customer perceptions may damage not only the business but also the long-standing family unit,
making the subject a sensitive aspect of family business operation.
2.6 Summary
Conclusions
Family businesses form a significant portion of businesses worldwide, contributing to the
national and global GDP across the board. These businesses are unique from non-family business
units as they often have access to vast resources accumulated over the years besides tapping from
the closely-knit family system. Family businesses take different shapes since they could be
family-owned, family-managed, or both. The business ownership and/or management pattern
confers family businesses a competitive edge over non-family units as the former enjoy a host of
resources besides the family unit being a central part of the social and economic system. We have
established that the next generation of family business owners/managers are better placed to
propel these entities to the next level considering they are better educated, more exposed due to
globalization, and admit to the importance of technology and innovation in business growth. The
dynamic nature of the café and bar industry sets the pace for robust leadership, technology and
innovation, diversity and inclusion, and corporate social responsibility in actualizing business
growth.
Limitations
The current study opens our eyes to various aspects of growth opportunities for family
businesses, providing a chance to contribute to the body of research available on the subject.
There are, however, several limitations that call for research in the future:
 The data analysis on Chinese family businesses is lacking, making it hard to obtain
deeper insights into the growth opportunities for family firms in China.
 The limited knowledge of diversity management in family business is also an obstacle to
understanding growth opportunities for family business.
 There is very limited research on restaurant adaptation and financial performance in the
post-pandemic era, posing challenges in understanding the factors that affect café
businesses regarding financial performance and sustainability following the pandemic.
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