TheEssentialsofaFamilyBusiness

ThetopicIhavechosentodoisaboutfamilybusiness,specificallyonhowtomanage
andgrowafamilybusiness.ThereasonIchosethistopicisbecauseoftherelevanceithasto
myfutureandwiththisassignmentitgivesmetheopportunitytolearnmoreaboutmanaging
thefamilybusinessandlearningaboutthedifferentproblemsthatmayoccurwhenrunninga
familybusiness.EventhoughcurrentlyIamafinancemajorandIaminterestedinacareerin
thebankingsector,itisnotwhereIplanonbeingmywholelife.Iplanonmakingthetransition
awayfromworkingforsomeonetomanagingmyfamilybusiness.Withthisinmind,Ifeellike
thiswouldbeagoodtopicformetolearnaboutanddiscussforthisessay.Someofthespecific
questionsIwanttoenquireaboutiswhatkindofproblemsariseinafamilybusinessthat
wouldntbepresentinapubliccorporation,howdoesgrowingthebusinessdifferwhenit's
privatelyownedanddoesthecompanysdynamicschangewhenitisbeingrunbyafamily.

Someoftheissuesofconflictthatsurroundthetopicoffamilybusinessthatarerelevant
tothespecificquestionsIdiscussedearlieristhehandlingofproblemswithinthebusiness
betweenfamilymembersthatarenotbusinessrelatedbuthaveaneffectontheoverall
business.Ifeellikethisisaveryimportantconflictthatoccursinalmosteveryfamilybusiness,
mostofthetimethemaincauseofthisproblemisinheritanceandwhogetsthemostcontrol
overthecompany.Withthatbeingsaid,thereisnotreallyaquickfixforthisproblembutitcan
beavoided.Althoughiftheconflictdoesgetoutofhandtheremightnotbeawaytofixthe
problemwhichiswhyIfeellikeitisanimportantconflictthathastobediscussedwhentalking
aboutfamilybusinessanditcanbealsoconsideredasanissuethatisunknown.Duetothefact
thatitisverycleartheproblemexistinsomefamilybusinessesbutthesolutionisnotalways
definiteandstraightforward,sincedifferentfamiliesreactdifferentwaysandonesolutionmay
workforonefamilybutnototherfamilies.

Anotherissueofconflictthatmaycomeupisthebestwaytomanagethecompany.As
theirmostlylikelydifferentownersinafamilybusinessandeverybodyhastheirownopinionon
thewaythecompanyshouldberanandthebestdecisiontomakewheneveraproblempersist.
Ineverybusinesstherewillbedecisionsthatarehardtomakeandeverybodywillhavetheir
ownopiniononthebestsolutionfortheproblem.Thiscancreateconflictsbetweenthefamily
membersthathavethesayinwhattodo.Thesolutionforthisisntverystraightforwardeitherin
myopinion,asitisimportantforeverybodytohaveasayinthematterandcomingtoa
conclusionmighttakelongerforsomefamilies.Whileotherfamiliesmightbemoreagreeingand
allowonepersontotakechargeandfigureawaytosolvetheproblemefficientlyandeffectively.

ThescholarlydocumentIhavechosentoincludeiscalledExploringthefamilyeffecton
firmperformance:Theimpactofinternalsocialcapitaldimensionsonfamilyfirmperformance
byYosraManiandLassaadLakhal.ThedocumentintersectswiththetopicIhavechosen
throughansweringoneofthequestionsIhaveaboutrunningafamilybusiness.Thedocument

talksaboutthefamilyinfluenceonthebusiness.Itgoesontocreatetheargumentthatsome
familyfirmsbasedtheirgoalsonthebusinesswhiletheotherbasethefirm'sgoalsbasedonthe
family'sgoals,howthestructureandrelationshipofthefamilyifpositivehasapositive
correlationonthewellbeingofthebusinessfinanciallyandnonfinancially.Theauthorcomesto
thisconclusionbytakingasurveyfrom114Tunisianfamilyfirms.Thestudywasdonebyusing
threecontrolledvariablesthatwerefirmsize,firmageandfamilyownershipwhichshowedno
signsofassociationwithbothfinancialandnonfinancialperformance.

Withthepurposeofthedocumenttoshowtherelationshipbetweenthesocialcapital
theoryandthefirmsperformance.SocialCapitalcanbedefinedastheresourcesavailablein
socialrelationswhichfacilitatecollectiveaction.Insimplertermsitreferstothesocialnetworks
andhowthesenetworksbenefitfromdoingthingswitheachother.Throughexaminingthis
relationshiptheauthordividessocialcapitaltheoryintothreemainsegmentsthathaveaneffect
onthefirm,thestructuraldimension,therelationaldimensionandcognitivedimension.The
structuraldimensionreferstotheinteractionandcommunicationofinformation.Howwellthe
familymembersareabletocommunicatewitheachother.Byhavingstrongrelationswitheach
otherthedocumentcomestotheconclusionthatstrongsocialinteractionsbetweenfamily
membersarecrucialfordevelopingthebusiness.Provingthatcommunicationandrelationships
betweenfamilymembersareakeypartofanysuccessfulfamilybusiness.Therelational
dimensionreferstotheresourcescreatedthroughpersonalrelationshipssuchastrust,norms,
obligationsandidentityamongmembersofafamilybusiness.Throughhavingastrong
relationaldimensionitcreatestrustandcooperationwhichthenleadstostrongidentificationof
thegroup.ThisallowsastrongcommitmentbetweenfamilymembersandwhatIconsidertobe
themostimportantpartofanyfamilybusiness,trust.Trustisneededinanybusinessandisan
importantfactorinthesolutionforoneofmyquestionsIpreviouslybroughtup.Withtrustwithin
thefamily,managingthefamilybusinessbecomeseasier,asthereismutualtrustwithinthe
familythereforetheywillbemoreinsyncwithdecisionandtherewillbelessconflicts.The
cognitivedimensionreferstotheresourcesthatprovidethesharedmeaning,visionand
purposeamongmembersofafamilybusiness.Havingthesamevisionandpurposewithina
familywillcauselessproblems,asallfamilymemberswillbeonthesamepagewhen
consideringdecisionsregardingthebusiness.

Takingthethreesegmentsintoconsiderationthe
studyshowedthatallthreedimensionshaveaneffectonthefirm'sfinancialandnonfinancial
performanceinapositiveway.

Thistexthastoldmethatdifferentfamilyfirmshavedifferentvalues.Somefamilies
valuethebusinessmoreandthefirmsgoalsshapethegoalsofthefamilywhileothersshape
theirgoalsintothefirmandtryandachievetheirgoals.Thedocumentthengoesontostatethat
somefirmsandfamiliesgoalsconvergeandarenotinfluencedbyonegrouporanother.
ThroughthisIfeellikethedocumenttakestheviewpointofalltypesoffamilyfirmsoutthere
andgivesagoodinsightintothetheeffectsofallfamilyfirmsthatbasetheirgoalsondifferent
things.Alsothroughgoodinternalsocialcapital,thestudyprovesthatitleadstobetter
performancefromthefirms.Showingthathavinggoodrelationshipsandcommunication
betweenfamilymembersmakesiteasiertosolveproblemsthatmayariseandleadstoless

conflict.WhichanswersbothofthequestionsIhadproposedinsomerespectbutmostlymy
secondquestiononthedynamicsofrunningafamilybusiness.Bytakingthebasicsofinternal
socialcapitalandusingitasasteppingstonetomovingontobiggerthings,itgivesagood
basisonhowandwhattodoinrunningafamilybusiness.Itgoesontoassumethatallfamily
businessesstrivetogrowandbecomebiggerthroughtheuseofitsfamilyvaluebutitdoesnot
mentionanythingaboutthefamilybusinessgoingpublic.Thereforetheknowledgebasethe
documentassumesofitsaudienceisonethatisplanningonkeepingthebusinesswithinthe
family.

ThroughlearningmoreaboutthistopicsomeoftheoutcomesIcanlooktogainoutofit
islearningpeopleskills.Howtoeffectivelycommunicatewithotherpeoplewhentryingtoget
mypointacrossascommunicationisaveryimportantskilltolearnforwheninschoolworkingin
groupsandfortheoutsideworldwhetheritbewhenmanagingyourowncompanyorworking
forsomeoneelse,communicationwillalwaysbeneeded.AnotheroutcomeIlooktogainfrom
learningaboutthistopicisonhowtoeffectivelyrunafamilybusinessandwaystoovercome
problemsthatmayoccur.Althoughthiswillnotbebeneficialtomeforthissemester,itis
knowledgeicantakeawayandusefortherestofmylifewhenIstartworkingformyfamilies
business.

ReflectiveLetter

Theprocessofwritingthisessaytookawhileforme.AfterIchosetodothetopicof
FamilyBusiness,findingascholarlyessaythattalksaboutthequestionsandaddressesthose
questionswasquiteachallenge.AnotherchallengeIfacedduringthisunitwaswritingthe
essayitself,thisisbecauseitisthefirsttimeIhavehadtowriteanessayinawhileandhaving
towriteitinaprofessionalmannermadeitallthemoreharder.Therevisionpartwasmade
easierwiththecommentsfrommypeersandIamthankfulfortheirhelpfulcomments.Reviewer
#1gavethesuggestionofexpandingoninternalsocialcapitalwhichwasareallygood
commentasreadingitoveritagainIrealizedthatIdidntexplainwhatinternalsocialcapitalwas
tomyreaders.Thishelpedmeimprovemyessayandhelpedmeexpandonwhatinternalsocial
capitalwasandhowitcanaffectthefamilybusiness.Reviewer#2gavemeverygoodfeedback
onthestructureofmyessay,howtheflowoftheessaymadesensetoherwhenshereaditand
howthetoneoftheessaywasveryengaging.ThiswasaveryhelpfulcommentasIwasn'tsure
iftheflowandthetoneoftheessaywaseasilyunderstandablebutatthesametimeappropriate
forthisassignment.ThatcommentgavememoreconfidenceinmywritingandIfeltlikeIhad
themainstructureofmyessaydownanditjustneededacoupleoftweeks.Fromthegeneral
commentsgivenbytheprofessorIlearnedthatIneededtoaddquotesintomyessayandItried
tointegratequotesinthatwouldaddmoredepthtomyessayandnotjusttofulfilthis
requirement.Tyingitalltogether,allthereviewsIgothavehelpedmeimprovemyessayasa
whole.

Bibliography

YosraMani
,
LassaadLakhal
,(2015)"Exploringthefamilyeffectonfirmperformance:Theimpactof
internalsocialcapitaldimensionsonfamilyfirmperformance",InternationalJournalofEntrepreneurialBehavior&
Research,Vol.21Iss:6,pp.898917