GROWTH STRATEGIES IN FAMILY FIRMS: A CROSS-CULTURAL ANALYSIS OF ORGANIZATIONS IN THE UNITED STATES, FINLAND, AND SWEDEN
Patrick
Kreiser, The University of Alabama
Jari Ojala, The University of Jyvaskyla, Finland
Anders Melander, Jonkoping International Business School
Juha-Antti Lamberg, The University of Jyvaskyla, Finland
Principal Topic
The extant literature posits that entrepreneurial organizations exist primarily with short-term profit goals in mind, and can be conceptualized as possessing three main organizational characteristics: innovation, risk-taking, and proactiveness (Covin & Slevin, 1989; Miller & Friesen, 1982). A competing view of the firm is based on the premise that long-term survival, not financial performance, should be utilized to ultimately judge the success of an organization (de Geus, 1997; Brenneman, Keys, & Fulmer, 1998). Such ‘living companies’ typically share four attributes in common with one another: financial conservatism, sensitivity to the world around them, awareness of their identity, and tolerance of new ideas. The primary purpose of this paper was to systematically analyze whether family firms typically adopt growth strategies more commonly associated with entrepreneurial organizations or living companies.
Method
We traced the historical and strategic development of five family firms in the paper and pulp industry over the last one hundred years. The companies that were included in this in-depth case study were: Gulf States Paper (United States), Ahlstrom (Finland), Schauman (Finland), SCA (Sweden), and MoDo (Sweden). An analysis of the companies’ enacted strategies, utilizing the game theory approach developed by Nasi, Sajasalo, & Sierila (1998), was used as the centerpiece for this analysis.
Results and Implications
The results of this study suggest that family firms typically adopt conservative growth strategies associated with ‘living companies.’ During their formative years, family firms often implement financially conservative strategies in an effort to conserve their limited resources. Such firms also place an emphasis on maintaining tight control of the strategic decision-making process within the family unit. However, increasing environmental pressures often force family firms to embrace a more entrepreneurial posture. Over time, these firms tend to make riskier investments and often undergo a transition from family management to professional management. These findings provide important insights into the manner in which growth strategies are formulated and implemented by family firms in a variety of cultures.
CONTACT: Patrick Kreiser, Box 870225, The University of Alabama, Tuscaloosa, AL 35487-0225; (T) 205-462-0602; (F) 205-348-6695; kreis001@bama.ua.edu
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