Title:
Entrepreneur Performance Towards Family Businesses
Subtitle:
1. Understanding of Entrepreneurship Performances /Approaches
2. Understanding of Family Businesses
Authors:
Samruddhi Ajay Raul.
Abstract:
In recent years, research on the family role and entrepreneurship has increased
noticeably, consolidating itself as a valid and current subject of study. This paper presents
a systematic analysis of academic research, applying bibliometric indicators, and cluster
analysis, which define the state of research about the relationship between family role
and entrepreneurship. For this purpose, using three well-accepted databases among the
research community: Scopus, Web of Science, Business Source, a total of 92 articles were
selected and analyzed, published between 1989 and 2019 (until March).
A cluster analysis shows five main areas of literature development:
(1) cultural dimension and gender issue;
(2) family business and succession;
(3) parental role models and entrepreneurial intentions;
(4) entrepreneurship and self-employment;
(5) family support and women entrepreneurs.
Findings also show how this is a relatively recent field of study, with a multidisciplinary
character.
Introduction:
Family businesses are important, not only from a financial point of view, but also
because provide long-term stability in the labor market because of the responsibility they
show to communities, since they convey values and knowledge. Entrepreneurship is a
determining factor of economic development, social and structural change.
Entrepreneurship not only contributes to the economic and social growth of a nation, but
also stimulates the development of knowledge, technological change, competitiveness
and innovation. In fact, the European community has promoted numerous actions aimed
to improve and develop the entrepreneurial attitude of European citizens toward
Business venture, focusing on aspects that are essential for creating a corporate identity.
However, the levels of entrepreneurial activity in some European countries are still low.
According to the latest international study of Global Entrepreneurship Monitor published
Entrepreneur Performance Towards Family Businesses
in 2018, Europe has the lowest TEA (Total Entrepreneurial Activity) of all regions in all age
studied. This is a concerning result, especially in its current crisis period.
Literature Review:
To many, the phrase “family business” connotes a small or midsized company with a
local focus and a familiar set of problems, such as squabbles over succession. While
plenty of mom-and-pop firms certainly fit that description, it doesn’t reflect the powerful
role that family-controlled enterprises play in the world economy.
Not only do they include sprawling corporations such as Walmart, Samsung, Tata
Group, and Porsche, but they account for more than 30% of all companies with sales in
excess of $1 billion, according to the Boston Consulting Group’s analysis.
Conventional wisdom holds that the unique ownership structure of family businesses
gives them a long-term orientation that traditional public firms often lack. But beyond
that, little is known about exactly what makes family businesses different.
Some studies suggest that, on average, they outperform other businesses over the
long term—but other studies prove the opposite. To settle that question, we and Sophie
Mignon, an associate researcher at the Center for Management and Economic Research
at École Polytechnique, compiled a list of 149 publicly traded, family-controlled
businesses with revenues of more than $1 billion.
They were based in the United States, Canada, France, Spain, Portugal, Italy, and
Mexico. In each business a family owned a significant percentage, though not necessarily
a majority, of the stock, and family members were actively involved both on the board
and in management. We then created a comparison group of companies from the same
countries and sectors, which were similar in size but not family controlled. (We didn’t look
at Asian companies because so many of them are family controlled that it’s difficult to
find a suitable comparison group.)
Then we did a rigorous analysis of the ways in which those two sets of companies
were managed differently and how that affected performance. Our results show that
during good economic times, family-run companies don’t earn as much money as
companies with a more dispersed ownership structure. But when the economy slumps,
family firms far outshine their peers. And when we looked across business cycles from
1997 to 2009, we found that the average long-term financial performance was higher for
family businesses than for nonfamily businesses in every country we examined.
Data Collection:
I am the person who spent approximately 23 years in a small town. In small towns,
people are purchasing goods or taking services from the old family business. But when I
shifted to Mumbai for my further education, the things changed drastically. Because I
can’t trust any new shopkeeper for goods or any new firm for service due to the new
atmosphere or surrounding. One day I thought if all the family business from my cities
switch to the Entrepreneur Approaches and started the branches of their businesses or
services in All over India or in the world then it will really make change. I know for the this
is thing which is easy to say but difficult to implement or apply in reality. So, we surveyed
Entrepreneur Performance Towards Family Businesses
100 family businesses from Nashik District using Google forms composed of the 5
questions as follows:
1. If you have interest in the business then which business you’ll prefer?
2. If you joined a Family Business which is running by your family from three
generations. Then how can you put entrepreneurial approach in that business?
3. If you have family business and you noticed that your daughter or Daughter-inlaw has more capability and potential to raise the standard of your business than
your son. In this case, would you like to train the person who is more capable or
your son?
4. Do you think Entrepreneurial Approaches change the overall standards of your
family business?
5. Do you think Families are less supportive for entrepreneurial Approaches
towards family business?
Data Analysis:
1. If you have interest in the business then which business you’ll prefer?
The participants of this survey who are interested in business 58.3% participants want to
family business and 41.7% want to start new business ventures.
Entrepreneur Performance Towards Family Businesses
2. If you joined a Family Business which is running by your family from three
generations. Then how can you put entrepreneurial approach in that business?
The Entrepreneurial approaches recorded by participants are stating that 62.5%
wanted to revive their business by launching new product or upgrade themselves
by new technology and 20.8% wanted to renovate their shop as an entrepreneurial
approach. Remaining 16.7% includes by Giving franchises, hiring a famous as a
brand ambassador, by asset liability balance or all the options they want to
implement depends on conditions and current requirements for growth of the
business.
3. If you have family business and you noticed that your daughter or Daughter-inlaw has more capability and potential to raise the standard of your business than
your son. In this case, would you like to train the person who is more capable or
your son?
As, already mentioned in the abstract cultural dimension and gender issue and family
support and women entrepreneurs’ area most important issues in family businesses.
Even it is visible in the above chart 29.2% participants want to give power of the business
Entrepreneur Performance Towards Family Businesses
to their son even if he doesn’t have caliber to handle the business but 70.8% participants
want to give power of business to their daughter or Daughter-in-law as she is more
capable according to the question I asked.
4. Do you think Entrepreneurial Approaches change the overall standards of your
family business?
As we can see through the pie-chart 95.8% participants are thinking entrepreneurial
approaches change the overall standards of your family business but only 4.2% are not
agree with this statement.
5. Do you think Families are less supportive for entrepreneurial Approaches
towards family business?
As the pie-chart stated that 66.7% of the participants are thinking families are less
supportive towards entrepreneurial approaches towards family business but 33.3% are
thinking families aren’t less supportive.
Entrepreneur Performance Towards Family Businesses
Conclusion:
• The participants of this survey who are interested in business 58.3% participants
want to family business and 41.7% want to start new business ventures. So, in this
case we can say people are more interested towards the family business more
than new startups.
• The Entrepreneurial approaches recorded by participants are stating that 62.5%
wanted to revive their business by launching new product or upgrade themselves
by new technology and 20.8% wanted to renovate their shop as an entrepreneurial
approach. Remaining 16.7% includes by Giving franchises, hiring a famous as a
brand ambassador, by asset liability balance or all the options they want to
implement depends on conditions and current requirements for growth of the
business. By this we can say people interested in using new technology or
launching new products to grow their business than less interested in giving
franchise or hiring a famous face as brand ambassador.
• It is visible in the above chart 29.2% participants want to give power of the
business to their son even if he doesn’t have caliber to handle the business but
70.8% participants want to give power of business to their daughter or Daughterin-law as she is more capable according to the question I asked. By the reference
of this data, we can say people are still gender issues or less supportive towards
women entrepreneurs.
• As we can see 95.8% participants are thinking entrepreneurial approaches change
the overall standards of your family business but only 4.2% are not agree with this
statement. The entrepreneurial approaches really increase the standards of your
business according to the most of the participants.
• As we can see that 66.7% of the participants are thinking families are less
supportive towards entrepreneurial approaches towards family business but
33.3% are thinking families aren’t less supportive.
References:
• https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6967397/#:~:text=Family%20busi
nesses%20are%20important%2C%20not,they%20convey%20values%20and%20k
nowledge.
• https://hbr.org/2012/11/what-you-can-learn-from-family-business