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Dr. Frank Hoy

Dr. Frank Hoy

Professor of Foisie Business School, Beswick and Director of Collaborative for Entrepreneurship & Innovation, Worcester Polytechnic Institute

Frank Hoy is the inaugural Paul R. Beswick Professor of Innovation & Entrepreneurship in Worcester Polytechnic Institute’s School of Business. Formerly, he served as dean of the College of Business Administration at the University of Texas at El Paso, held the Carl R. Zwerner Professorship in Family Business at Georgia State University, and was state director of the Georgia Small Business Development Center while on the faculty of the University of Georgia.

Topic: Why are people ignoring Family Business?

Do you think that question is an exaggeration? Family businesses outnumber non-family businesses in most national economies. How much attention do they really get in business education? How many universities offer programs, or even a course? Do many educators believe the myth that you should not go into business with family members? Do they think that family businesses are dysfunctional? What about studies that suggest that family businesses outperform and outlive non-family businesses? Could it be that family businesses have lessons for non-family firms? Let’s think about what we can teach our students and what we still have to learn.

ICSB Family Business Essay

There is no universally accepted definition of family business. Nevertheless, I provide one of the most cited ones here to provide a context for this essay:

The family business is a business governed and/or managed with the intention to shape and/or pursue the vision of the business held by the 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.

Chua, J.H., J.J. Chrisman, and P. Sharma (1999). ‘Defining the family business by behavior’. Entrepreneurship Theory and Practice, 23(4): 19-39.

Family business is a multi-disciplinary subject. To fully appreciate the dynamics of family firms, one must look beyond business disciplines and into anthropology, family studies, psychology, sociology, and more. The effort to do so is of great importance given the volume of family owned and operated businesses worldwide. For some national economies, family enterprises represent the most significant components. Yet they have gone unappreciated, under represented, and even ignored in business and economic education and research. Scholars have the potential for contributing to the survival and prosperity of these firms.

In many universities, family business has yet to be recognized as a legitimate discipline of study. When studies of family businesses are published, authors frequently specify the impact of family-owned firms on national economies in their introductions, indicating the need for educators and practitioners to take the results of studies seriously. There is also some debate regarding the quality and rigor of research design and execution in the literature relative to more mature disciplines.

In the formative years of family business research and the publications of practitioners and consultants, the focus was predominantly on problems and conflicts. There were implicit and explicit assumptions that family-owned businesses were not professionally managed. The word ‘nepotism’ appeared in its negative connotation. In 2005, there was something of a turn of events with the publication documenting family enterprises in a more favorable light.

Danny Miller and Isabelle Le Breton-Miller reported the results of their research in Managing for the Long Run: Lessons in Competitive Advantage from Great Family Businesses (Boston, MA: Harvard Business School Press). They analyzed businesses that had survived for decades, overcoming obstacles and outperforming competitors. It turned out that such firms were disproportionally family controlled. They labeled four priorities of the successful firms as commitment to 1) continuity, pursuing the dream; 2) community, uniting the tribe; 3) connection, being good neighbors; and 4) command, acting and adapting with freedom. Suddenly, there was an awareness that family businesses not only create value, but also that they could be models for managing nonfamily firms.

In the body of knowledge that has now accumulated in the family business literature, there is much that universities can offer to students and practitioners to increase the probability of success of a family in business. And there are great opportunities for researchers to learn more.