Family business

Digital Transformation in Family Businesses

Georg Streicher, Technical University of Munich (Bachelor thesis)
Junior Management Science 8(4), 2023, 865-886

Nowadays, the impact of digital technologies on all businesses is inescapable for their managers and is receiving a great deal of attention in research and businesses. Digitalization as an ongoing process has just begun and will continue to drive many decision-making processes. So far, much research has been done on technical implementations and digital technologies as such, but there is still a lack of research on the decision-making processes around digitalization, especially in small and medium-sized businesses with limited resources, such as the economically important family businesses (FBs) in Germany. These FBs have a massive impact on value creation in Germany and include many global market leaders. Based on eleven interviews with family and non-family member Chief Executive Officers (CEOs) and employees, the thesis shows which drivers and barriers exist in the digitalization process in FBs and how they influence the process. Moreover, their influence on the digitalization of the business model is examined. The results of the thesis provide implications for how FBs can successfully master digitalization and use it to their advantage. Finally, the thesis suggests opportunities for future research in digitalization in FBs and on identified correlations in the cases.

Keywords: Digital transformation; Family business; Digitalization.

Ethical Problems in Family Firms

Elena Kowalik, WHU – Otto Beisheim School of Management (Bachelorarbeit)
Junior Management Science 8(2), 2023, 431-452

Various articles suggest that particular ethical problems occur in family firms, but until now, no attempt has been made to collect and structure available information on them. Based on the systematic review of 110 articles from peer-reviewed academic journals, we show that family firms face a set of unique ethical dilemmas and define those. They can either be family-based or business-based and we uncover the antecedents and outcomes of the processes that family firms employ to solve them. When family firms manage to deal with ethical problems appropriately, they will be rewarded for that in various ways, including improved financial performance and the preservation of potentially all SEW dimensions.

Keywords: Family firms; Business ethics; Socioemotional wealth.

Innovation Performance of Family and Founder Firms: Empirical Evidence from German Listed Companies

Simon Mueller, Goethe-Universität Frankfurt am Main (Masterarbeit)
Junior Management Science 8(2), 2023, 333-357

Based on the agency perspective and the resource-based view of the firm, this study explores the impact of lone founder and family influence on innovation input and innovation output. By separating the lone founder and family effect into ownership, management, and governance influence dimensions, we analyze a panel data set of 165 German listed companies from 2013 through 2017. We first investigate R&D intensity in lone founder and family firms versus other firms by using investments in research and development as a measure for innovation input. Secondly, we apply a negative binomial regression model to analyze R&D productivity within the three types of firms by proxying innovation output with the filed number of granted patents within a certain year. According to the results, we mainly find that founder firms superiorly invest in innovation and strengthen their competitive position in the market through their entrepreneurial orientation. Family firms, on the other hand, might weaken future growth potential as they invest less in R&D and are not able to convert this lower input in superior innovation output.

Keywords: Lone founder firms; Family firms; Innovation performance; R&D intensity; R&D productivity.

Performance of German Family Firms During the Global Financial Crisis

Thilo Wenig, WHU – Otto Beisheim School of Management (Master thesis)
Junior Management Science 6(2), 2021, 237-278

Research on family firm performance has led to inconclusive results which is why scholars called for a differentiated consideration of family firms during exogenous shocks, where costs and benefits of the inherent ownership structure are assumed to be magnified. Following these calls, I use the Global Financial Crisis of 2007 – 2009 as a unique natural experiment where firms have been moved out of their equilibrium while ownership structure maintained constant in the near term. I differentiate between true family firms and lone founder firms and hypothesize that the firm performance of both ownership structures during the Global Financial Crisis is higher than for non-family firms. In a study of 178 firms listed in the German Prime Standard, I found that lone founder ownership was significantly associated with higher firm performance during the GFC, while showing no differences in performance during the period of stable economic conditions prior to the crisis. For true family ownership, in contrast, the results suggest a general tendency of superior performance during the steady-state pre-crisis period, but it could not be established that these firms outperformed other firms during the GFC. Analogously, I found that the presence of a family CEO in true family firms is beneficial for firm performance during stable economic conditions, but the advantageousness seems to vanish in times of severe financial distress.

Keywords: Family firm; ownership; governance; performance; crisis.

The M&A Behavior of Family Firms

Jinhao Shu, WHU – Otto Beisheim School of Management (Bachelor thesis)
Junior Management Science 6(4), 2021, 673-699

The present study aims to identify the driving acquisition goals of family firms’ acquisitions and analyse the role of innovation
in these acquisitions. Therefore, the study deploys a qualitative approach investigating 15 German family firms to derive
patterns within the qualitative data. As a result, the study proposes 14 propositions, which mainly suggest a co-existence of
multiple goals in acquisitions. Similarly, the propositions argue that the goals related to the categories of expansion, market
competitiveness and innovation are decisively driving the acquisitions undertaken by family firms. The study further proposes
that the acquisition of innovation is a critical key to the success of family firms and a means to an end for achieving other
related goals such as the survival of family firms. Beyond getting a broader understanding of the acquisitions made by family
firms, the study shows further avenues for research in the field of family firms’ M&A activities.

Keywords: Family Firm; Innovation; Mergers & Acquisitions; Drivers of Mergers & Acquisitions; Acquisitions Motives; Acquisition Goals; Innovation in Mergers & Acquisitions.

The Impact of Management, Family and Employee Ownership Concentration on Firm Performance

Michael Amroudi, Technical University of Munich (Bachelor thesis)
Junior Management Science 6(1), 2021, 81-99

This thesis investigates the relation between ownership structure and firm performance using a sample of 2,120 publicly traded European companies. The question of whether this relation should be positive or negative has been the subject of a wide-ranging discussion and was addressed by many researchers. Of particular interest have been management, family, and employee owners. Nevertheless, there is no consensus in the literature, and empirical studies on European companies are scarce. Utilising data from the European Federation of Employee Share Ownership (EFES) and the Bureau Van Dijk Orbis database, this relation is analysed using multiple linear regression with continuous and categorical predictors. The results show that firms having a management owner concentration up to strategic levels report a significantly higher Tobin’s Q than firms having a no or no significant management concentration. The same effect holds true for family owners and employee owners. Measuring the ownership structure as the fraction of shares of the largest shareholder does not yield a significant effect and highlights the value of management, family, and employee owners.

Keywords: Ownership concentration; family ownership; management ownership; employee ownership; firm performance.

Erfolgsrelevante Kompetenzen von Führungskräften in Change-Management-Prozessen in Familienunternehmen

Lena Hinkelmann, WHU – Otto Beisheim School of Management (Bachelor thesis)
Junior Management Science 5(2), 2020, 176-196

Viele Organisationen und Unternehmen befinden sich derzeit in einem radikalen Wandel – insbesondere ausgelöst durch die digitale Transformation und die zunehmende Internationalisierung. Für das Gelingen der Change-Management-Prozesse sind maßgeblich Führungskräfte verantwortlich, wodurch deren Kompetenzen für erfolgreiches Transformationsmanagement verstärkt in den Fokus der Forschung rücken. Diese Fähigkeiten werden im Rahmen der folgenden Publikation mithilfe eines qualitativen, auf semi-strukturierten Leitfadeninterviews basierenden Ansatz erforscht. Als Fazit sind zwei zentrale Erkenntnisse hervorzuheben: Erstens wurden zehn erfolgsrelevante Fähigkeiten einer Führungskraft im Change von Familienunternehmen identifiziert, welche sich in drei Metaebenen – die mitarbeiter-, persönlichkeits- und die ressourcenorientierten Kompetenzen – unterteilen lassen. Zweitens kam die Arbeit zu dem Ergebnis, dass die erfolgsrelevanten Change-Kompetenzen einer Führungskraft im Familienunternehmen stark vom Kontext – insbesondere von der Mitarbeiteranzahl, dem Reifegrad der Mitarbeitenden und dem Fortschritt im Change – abhängen.

Keywords: Change Management; Familienunternehmen; Leadership; Change Management Kompetenzen; Transformationsprozesse.

Recruiting Generation Y for the Backbone of Economy: Organizational Attractiveness of Small, Family Owned, and Rural Firms

Johannes Caprano, Technical University of Munich (Master thesis)
Junior Management Science 4(4), 2019, 493-523

Despite their outstanding economic importance, small, family owned, and rural firms find it hard to attract talent. Upon initial contact with recruiting organizations, job seekers use any of their observable characteristics, such as size, ownership, or location to infer attributes of the employment offering. Based on this assessment, they may feel attracted to an organization and develop intentions to pursue the employment opportunity. Following behavioral psychology, the consistency between organizational attractiveness and job pursuit intentions is affected by the amount of job seekers’ direct experience with the firm type. For small, family owned, and rural firms, direct experience may be lower due to their relative anonymousness. The strength and direction of inferences made based on organizational characteristics as well as metacognitive assessments were tested using a vignette experiment. A sample of 200 Generation Y students and professionals rated fictitious firms based on their size, ownership, and location. The results show support of the indirect influence of these organizational characteristics on job pursuit intentions, mediated by employment attributes and organizational attractiveness. Family ownership led to positive evaluations while small size and rural location had a negative impact on job pursuit intentions. Another important contribution of this study is a validated two-stage implementation of firm location as a predictor of organizational attractiveness.

Keywords: Organizational attractiveness; family firm; SME; rural firm; hidden champion.

Economic- and Non-Economic Goals of Family Firms

Markus Probst, WHU — Otto Beisheim School of Management (Bachelor thesis)
Junior Management Science 3(4), 2018, 30-47

Motivated by a lack in the current literature, this thesis reviews academic research on the economic and noneconomic goals of family firms. Heretofore, no detailed overview of different goals embedded in the goal setting-, outcome-, and alignment process has been provided. Using a systematic literature search and review process, I identify 117 relevant studies in the fields of management, economics, and affiliated domains between 1963 and 2018. Beyond a more detailed overview of the current state of research, I outline goal setting, outcomes, alignment, and four different family firm goal classes. Lastly, I show avenues for future research in the family firm–goal field.

Keywords: Family firms, economic goals, non-economic goals, socioemotional wealth

When Family Businesses Sell

Christopher Khoury, WHU – Otto Beisheim School of Management (Bachelor thesis)
Junior Management Science 3(2), 2018, 151-169

Family businesses favor the transition of ownership taking place within the family. However, the internal succession often fails, leading families to sell their businesses. Thus, in this thesis I aim to investigate the reasons of families for selling their businesses. I compare the perspectives of family owners and their potential successors to reveal their motives for selling the business to an external buyer. I put forward the proposition that the feasibility of a sale option is dependent on the potential sale scenario and the possible survival of the business to increase the sale inclination. My research is based on eight individual interviews with family owners and the next generation. Provided that those family businesses do not have specific internal succession thoughts, I exposed six different scenarios that have a positive or negative inclination towards selling the family business. Once the family owner or the next generation has established a sale intention a sale process is triggered. In my thesis I explore the sale terms that influence the negotiations during the sale process. My findings indicate that the survival of the firm has certain significance in the sale process. Families carefully examine the buyer, the acquisition price, and the anticipated durability in order to decide whether they complete a deal or discontinue the sale process with the particular buyer. With the discontinuance of the sale process, the intention to sell is still present, and the businesses reenter the sale process.

Keywords: Family Business, Mergers and Acquisitions, Management Buy-out/in, Succession, Sales Process