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` ` ` A family business is a business in which one or more members of one or more families have a significant ownership interest and significant commitments toward the business¶ overall well-being. . A business actively owned and/or managed by more than one member of the same family or a corporation that is entirely owned by the members of a single family. A business actively owned and/or managed by more than one member of the same family .
` The typical family business goes through four stages in its development: 1. Process-Driven 4. Market-Driven ` ` ` ` . Entrepreneurial 2. Functionally-Specialized 3.
` ` ` ` ` ` ` head of the family takes all decision all members live under one roof share the same kitchen three generations living together (though often two or more brothers live together. or father and son live together or all the descendants of male live together) income and expenditure in a common pool.property held together. a common place of worship all decisions are made by the male head of the family .
` ` the interest of one family member may not be aligned with another family member Example: a family member who is an owner may want to sell the business to maximize their return. . but a family member who is an owner and also a manager may want to keep the company because it represents their career and they want their children to have the opportunity to work in the business.
Lower costs of governance. Social capital. Human capital.Several years ago. . Survivability capital. Patient financial capital. researchers David Sermon and Michael Hit examined the strategies behind successful family businesses. They found that success is tied directly to how well a company manages the five unique resources every family business possesses.
incorporates three broad issues: the extent of ownership and or management. maintain and/or increase intraorganizational family based relatedness.Proposition 1: A business firm may be considered a family business to the extent that its ownership and management are concentrated within a family unit. Proposition 2: A business firm may be considered a family business to the extent that its members strive to achieve. The Litz definition of a family business. the degree of family involvement and the availability of family members for generational transfer. Proposition 3: A business firm may be considered a family business to the extent that its ownership and management are concentrated within a family unit. . therefore. maintain. and to the extent its members strive to achieve. and/or increase intraorganizational family based relatedness.
` It is important to recognize that family business comprised of three separate. but overlapping domains. .
Success for owners is measured in terms of return on investment. however are economic entities where success is measured in terms of productivity and profitability Ownership is based on yet another set of rules. Business. protection of ownership interests and in terms of owners values and philosophy of business. unity and the development of happy individuals with solid and positive self esteem. . Success in family is measured in terms of harmony.Families exist to care for and nurture their members and provide safety and refuge in an impersonal world.
` ` ` ` ` ` ` ` ` ` ` Individuals can manage themselves and relationships with others Family has the ability to resolve conflicts with mutual support and trust Boundaries between work and family are appropriate and respected Knowledge is used wisely and isn't blocked by unresolved relationship problems Communications are open and clear Individuals are flexible and able to use advisors wisely Family has the ability to make decisions and move forward Family is clear about goals and navigates towards the goals Family has good direction and leadership Transitions are managed and marked by rituals and Intergenerational boundaries are appropriate and respected .
` ` ` ` ` ` ` ` ` ` ` ` The family has poor communications skills and is unable to manage conflict There is low trust between family members The goals and values of the family are unclear Family members¶ roles and obligations are unclear The business lacks a sense of direction and does no strategic planning The business lacks sufficient expertise ± the family tries to do it all There is little thought to succession planning There is little collaboration between the family and non-family employees There is not a functioning board of directors There is no one to turn to for advice and help with key problems Family issues spill over into business issues and vice versa and Boundaries between work and family are unclear .