THE BEST OF BOTH WORLDS: ENTREPRENEURIAL FAMILIES AS VIRTUAL ORGANISATIONS
Alistair R. Anderson, Sarah L. Jack, and Sarah Drakopoulou Dodd
Principal Topic
Whilst the literature recognises the importance of entrepreneurial family businesses, little attention has been directed towards understanding the dynamics of such businesses. Conventional accounts seem to be unduly restrictive, considering family businesses as only those owned and operated by two or more family members and where “ownership and policymaking are dominated by members of an emotional kinship group.” Thus, family businesses are presented as a tightly bounded entity, restricted to those businesses directly involving family members. Our data suggested that standard definitions failed to capture the range of familial involvement in the entrepreneurial process and that there appears to be something going on that challenges traditional perspectives of the family business. Our family businesses seemed to be about the family in the business, reflecting an emphasis on family participation beyond those formally employed.
Method
We conducted a quantitative study of randomly selected respondents from two hundred and sixteen entrepreneurs in the North East of Scotland. Our telephone survey realised fifty usable responses. We then applied a qualitative methodology to conduct a series of 19 extended in-depth interviews to generate a fuller, richer appreciation of the dynamics of the family in business by exploring the role of family in the entrepreneurial process. We wanted to know how, if, and in what ways entrepreneurs capitalised on resources embedded in the family as an organisational form.
Results and Implications
The research demonstrates that the entrepreneurs made extensive use of family members in the running of the business at three levels: strategic development, operational level and tacit knowledge sharing. This participation extended beyond the conventional definitional boundaries of the firm. Family members, who were not formally part of the firm, made substantial contributions. Moreover, in some instances, the family was the focus of the firm, in others the firm was a reflection of the family. Whilst decision-making remains in the hands of the entrepreneur, there are distinct advantages in the extended family involvement. Family support is offered unconditionally and free of charge, but remains uncomplicated by employer-employee dichotomies. Furthermore, kin-based relationships outside the limited view of the family business are not confused or diluted by the role conflict that is often found between family members within the business. A specific benefit seems to be the heterogeneity of information, skills and resources that are available, specifically because family members are engaged in activities outwith the entrepreneur’s business. We propose that it may be helpful to consider such family firms as virtual organisations. Such a conceptual framework allows us to conceive and appreciate the advantages of virtuality; it explains the flexibility and efficiency noted. It may increase our awareness of the boundary spanning activity that seems to be inherent in the entrepreneurial family. Although this poses a challenge to the conventional view, it does provide a tentative explanatory framework which incorporates, 1) the utility of the family network in supporting the entrepreneur; and 2) how trust, embedded in blood ties, enables effective interaction.
CONTACT: Alistair Anderson, Centre for Entrepreneurship, Univ. of Aberdeen, Edward Wright Building, Dunbar St., Aberdeen, UK AB24 3QY; (T) +1224273445; (F) +1224273843; a.r.anderson@abdn.ac.uk
2002 Babson College. All Rights Reserved. Last Updated March 2003.