Understanding the family business : exploring the differences between family and nonfamily businesses

164 Pages·2018·4.517 MB·English

by  Keanon J. Alderson

THE BUSINESS Understanding the Family A Entrepreneurship and Small
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Curriculum-oriented, born- Second Edition
digital books for advanced
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leaders who translate real-
This outstanding book provides you with a detailed look at Understanding the
world business experience
family businesses, the most prevalent form of business in
into course readings and
the world. Whether you are a business student, or a m ember
reference materials for Family Business
of a family who owns a business, you will d efinitely benefit
students expecting to tackle
from this book, which leads with an introduction to the
management and leadership
challenges during their unique nature of family businesses. Exploring the Differences
professional careers. Inside, the author explores the many differences
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The Digital Libraries are a Keanon Alderson is a professor of management at the Y
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comprehensive, cost-effective Robert K. Jabs School of Business at California Baptist U
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treatments of important PhD in organization and management. Professor Alderson E
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business issues to every conducts research in the areas of family business including S
student and faculty member. corporate governance and generational differences. He
teaches a popular family business management course.
Alderson was also a second-generation member of his
family business for 17 years and he is a founder and
For further information, a
co-preneur with his wife in their family business.
free trial, or to order, contact: 
[email protected] Entrepreneurship and Small
www.businessexpertpress.com/librarians Business Management Collection
Scott Shane, Editor
ISBN: 978-1-63157-573-0
Understanding the
Family Business

Understanding the
Family Business
Exploring the Differences Between
Family and Nonfamily Businesses
Second Edition
Keanon J. Alderson, MBA, PhD
Understanding the Family Business: Exploring the Differences Between
Family and Nonfamily Businesses, Second Edition
Copyright © Business Expert Press, LLC, 2018.
All rights reserved. No part of this publication may be reproduced, stored
in a retrieval system, or transmitted in any form or by any means—elec-
tronic, mechanical, photocopy, recording, or any other except for brief
quotations, not to exceed 400 words, without the prior permission of the
publisher.
First published in 2011 by
Business Expert Press, LLC
222 East 46th Street, New York, NY 10017
www.businessexpertpress.com
ISBN-13: 978-1-63157-573-0 (paperback)
ISBN-13: 978-1-63157-574-7 (e-book)
Business Expert Press Entrepreneurship and Small Business Management
Collection
Collection ISSN: 1946-5653 (print)
Collection ISSN: 1946-5661 (electronic)
Cover and interior design by Exeter Premedia Services Private Ltd.,
Chennai, India
Second edition: 2018
10 9 8 7 6 5 4 3 2 1
Printed in the United States of America.
As always, to Sandy, and to my family
Abstract
The purpose of this book is to provide readers with an introductory over-
view of family business, the most prevalent form of business in the world.
The differences between family and nonfamily businesses are emphasized
in this book. This book has several key audiences and can be used as a
supplemental text for university undergraduate or graduate level courses
such as small business management, introduction to business, entrepre-
neurship, or family studies. Members of family businesses will benefit
from the book as an introduction to the unique nature of family busi-
nesses. Professional advisors to family firms, such as accountants, attor-
neys, bankers, insurance providers, and financial services professionals,
may develop a better understanding of their clients. Suppliers to family
businesses will gain insight to this important business customer. Much of
the literature on family business is from the United States; an attempt has
been made to present relevant international information as well.
Chapter 1 defines and provides an overview of family business.
Chapter 2 explores the many differences between a family- owned business
and a nonfamily-o wned business. Chapter 3 explores the major family
business theories. Chapter 4 discusses how family firms make business
decisions. Chapter 5 explores the significant issues prevalent in a family
firm. Chapter 6 explores the most problematic issue in family firms: suc-
cession or the transfer of ownership to the next generation. Chapter 7
focuses on effective family business governance and use of advisors and
boards. Chapter 8 explores key success tips for long-lasting family firms.
Chapter 9 discusses trends and further research in family business.
Keywords
Family business, family-o wned enterprise, family management, entre-
preneur, entrepreneurship, entrepreneurial management, small business
ownership, succession, intergenerational succession, conflict, siblings
Contents
List of Illustrations ....................................... ix
Foreword .............................................. xi
Preface .............................................. xiii
Introduction ...........................................1
Chapter 1 An Overview of the Family Business ...............5
Chapter 2 Differences Between Family and Nonfamily Firms ....15
Chapter 3 Family Business Theories .......................37
Chapter 4 Family Business Decision Making ................43
Chapter 5 Family Business Issues and Generational Differences ...51
Chapter 6 Succession ..................................61
Chapter 7 Governance, Advisors, and Boards ................77
Chapter 8 Success Tips for Family Business Owners,
Employers, and Professionals ....................87
Chapter 9 Trends in Family Business and Future Research ......97
Conclusion. . .........................................107
Appendix A: Selected Further Reading ........................109
Appendix B: Family Business Resources .......................113
Appendix C: Glossary ....................................115
Appendix D: Family Business Checklist .......................119
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121
References ............................................127
Index ...............................................137

List of Illustrations
Tables
I.1 World’s Largest Family Firms and Percentage of Family
Control 3
1.1. Country and Prevalence of Family Business Around
the World 9
1.2. Well- Known Family Businesses Around the World 12
7.1. Family Business Corporate Governance Vehicles 82
Figures
2.1. Genogram for ABC Machine Tool Co. Smith Family 35
3.1. Generational succession of family firms 38
3.2. The three- circle model 39
4.1. A model of second-g eneration family business
decision making 47
4.2. Family business rationality continuum 49
6.1. Shareholder complexity diagram 71
8.1. Family business decision complexity chart 93