SUMMARY
The Transgenerational Family Effect on New Business Strategy: A Theoretical and Empirical Investigation with International Comparisons
David Pistrui, DePaul University, Chicago, IL, USA
Patrick J. Murphy, DePaul University, Chicago, IL, USA
Principal Topic
The family plays an important role in socio-economic value creation and transgenerational wealth perpetuation (Habbershon & J. Pistrui, 2002). Families provide capital, employees, and advisors during start-up. As an are of research, family business offers unique questions outside the boundaries of standard entrepreneurship research (Bird, Welsch, Astrachan & Pistrui, 2002). This study addresses two primary research questions: (1) What is the direct impact of family in the new venture development process? and (2) What is the indirect role of transgenerational family traditions as drivers of venture mission, strategy, and activity?
Method
Drawing from the PSED dataset, a sample of 414 entrepreneurial ventures was identified. The sample was dichotomized into family and non-family new business ventures (NBV). The research methodology employed a non-parametric analysis strategy to avoid violations of parametric analysis assumptions (Robinson & Hofer, 1997). This supports the use of categorical variables, such as those in the PSED data while eliminating issues of misapplied statistical methods that have been noted in past research as a particular concern for entrepreneurship studies (Robinson, 1997). Thus, we directly recoded study variables from continuous scales to dichotomous categories.
Results and Implications
We executed frequency analyses and indexed relations among variables via c2 measures of association. Results suggest that family mission (independent of whether family members are on the start up team) and family member presence (independent of whether the firm adopts a family-based strategy) contribute directly to entrepreneurial venture strategy. Results show that non-family member firms with family missions implement strong revenue-based strategies, while having family members on the start-up team implement mission-based strategies.
This research contributes to advancing the understanding of relationships between entrepreneurship, family business, and transgenerational wealth creation. Specifically, these include the effects of (a) family versus non-family member participation on start-up teams, and (b) the influences of family traditions on new NVB strategy and creation. The research also yields insights into how family forces shape entrepreneurial vision, NBV strategy, mission, and growth intentions.
CONTACT: David Pistrui: Chicago, IL, 60604, United States; (T) 312-362-8113; dpistrui@depaul.edu