The purpose of this study is to investigate what is the factor that affects the longevity of family-owned businesses. The research result shows that there are 2 main factors that affect the longevity of family-owned businesses, which are the family factor and the business factor. The subject of the research is the understanding of the factors that influence the longevity of family-owned businesses and the understanding of the benefits and profits from the long-term success of family-owned businesses.
Company A was first established in 1981 and is a family company with the foundations of the plastics industry.
Aims and Objectives
Research Question
How to Explore
LITERATURE REVIEW
- Overview of Family Business
- Main Factors Affected Longevity of Family Business
- Effective Corporate Governance
- Strategic Plan Development and Communication
- Successful Succession Planning
- Family Meeting
- Non-Family Member Within Top Management
- Firm Values and Employee-Orientation
- Conclusion
- Information Graphic
To become a successful and sustainable business, a family business must have a long-term strategic plan and discuss investment opportunities. Furthermore, according to Astrachan and Habbershon (1997), a successful and sustainable family business must have good and clear communication within the company. Strategic commitment to a family business: Feel wanted and welcome when you join or are part of running the family business.
A large family that has a family business to support each member of the family usually has a family meeting in council form. Family gatherings are the most important activity that leads to a successful family business as it helps reduce conflict within the family and creates peace and harmony among the family members. The corporate governance of family businesses can be influenced by the adoption of managers, shareholders and owners.
A family business that incorporates this, according to (Kula and Tatoglu, 2006), suggested that having strong firm values within a family business helps to turn normal employees into loyal employees. Finally, it is clear that "FAMILY" is the key factor that affects the longevity of every family business, because a family is one of the components of management and ownership of the firm. If the owner of a family business can manage the family and business management well, whether it is a family business in any industries, it can be a long-term operating business that can be passed down from generation to generation forever.
RESEARCH METHODOLOGY
- Methodological Outlook
- Research Approach
- Data Collection and Interview Method
- List of Interviewees
- List of Opened-Ended Question
- Data Analysis Strategy
- Conclusion to The Methodology
Do you think family is the main factor influencing the longevity of a family business? As a manager of a family business, do you think a family meeting is an important thing that can help to understand the business and benefits of each member, create harmony and good relations within the family member. What do you think about the communication within your company, do you think it is good enough or does it need to be improved?
The interview results were compiled and explored for common themes and interview responses related to the research questions and research objective. The interview process will also be analyzed using qualitative data analysis procedures as a qualitative research method in the form of an interview was used. The procedure within this research will be a thematic analysis process by which the process refers to the compilation of the interview responses that are raw data.
As stated by Braun and Clarke (2006, p. 2), thematic analysis is essentially the process of identifying patterns or themes in qualitative data. Therefore, models and themes should be adapted and identify related keywords derived from the answers to the research questions in order to determine the factors that influence the longevity of family and managed businesses. The main topics that are created act as keywords and will be used to help provide reference for determining search query results.
FINDING
Introduction to Finding
Results of The Study: Thematic Analysis and Coding
- Succession Process Success Factors
- Employee-Oriented Firm
- Family-Controlled Executive Decision Making
- Non-Family Member Within Management Level
- Long-Term Strategic Plan
- Separate Family and Business Out of Each Other
- Maintain Good Relationship Within Family
Interviewees from the second generation of Company A explained that “I gave my children the best education and let them grow up in the society that has good and quality people around and the important thing is that I should be a role model for them . I work hard to support every member in my family" (Person 1). Another interviewee from the third generation of company A explained that “I saw that my parents worked hard since I was young and now I want to do my family business to help my parents not have to work hard anymore and can enjoy their life in retirement” (Person 3). On the part of the successor, the interviewee from the third generation of Company B stated that "I have a very deep connection with my family business, because when I was young, my father always brought me to the market to buy the ingredients and he brought me . in our restaurant.
Another interviewee from the third generation of Company A stated: “I have a very deep bond with my family business because when I was young I played with my sister in the factory and I have everything today because this company supports me. The mother of Company B explained: “We never put heavy pressure on our children, but we provide the best for them and let them grow up freely. The third generation of Company B stated: “I realized that I was a successor to the family business when I had to select the faculty to study at the university.
Another interviewee said: "The important thing about doing business is not only about MONEY, but also about PEOPLE. One interviewee said that "We listen and accept employees' opinions and their ideas, but family members should make the important decisions or announce the company's policy. The interviewees from company B explained that “We have 4 main company strategies which are differentiation, trendy, unlimited knowledge and good team.
This theme is one that the author came up with from the interviewees of company B, as the eldest sister stated: “We have to separate family and work from each other. Another interviewee from the second generation explained that "we usually have family trips almost 3-4 times a year, since my children were still small, to develop relationships in our family."
Conclusion to The Findings
We have dinner together almost every evening, so we can discuss work and share our stories at that table which makes us understand each other and reduce conflicts between us” (Person 3). In the same way, the mother said that "As we are a family, we also fight and have conflicts, but in the end we have to ask for forgiveness and forgive each other. From the interview data, it appears that Company A strives to develop strong relationships, understanding and harmony among family members, which can lead to good performance of the family business.
Regarding the differences between these 2 families, the first difference is found in Company A where the parents still have more power in decision making and management of the business than the third generation as their children are still young and have less experience. The third difference is that Company B has more professional management and offers more of a formal work environment than Company A does. People in Company B mentioned that they want to put their company in the stock market and now they are preparing their company to achieve that goal.
They have no formal meetings and simply discuss the issues together among the family members.
CONCLUSION AND RECOMMENDATION
Conclusion to The Study
Nevertheless, the literature suggests several factors, including other participants in family members and firms. He suggested that all executive decision-making in the company, such as company policies, rules and regulations, should be made only by family members. On the other hand, the literature suggests that for the long-term performance of a family business, a firm should have effective corporate governance, i.e., multiple non-family executive boards to help keep the firm on track. guide and maintain professionalism within the company.
It suggested that hiring non-family members is good for the company to be more productive and can motivate these people to generate new ideas because family members cannot take responsibility for all management positions in the organization. The literature suggested that the family business should have non-family members at the top management level (the top executives, for example, executive officer, general manager, and executive director), because the business can function more professionally than those controlled only by the founder and non- family members may have more specific knowledge that can help the company run or expand their business more smoothly. To do this, family members should not let conflicts over matters, both work issues and employment conditions, destroy family relationships, and family relationships should not affect the growth of the business.
This factor is not mentioned in the literature, but the literature said that if a family business wants to have effective business management, the family members should clearly define the difference between family relationship and business relationship. In addition, understanding the benefits of each family member is one of the things that can help reduce the conflicts in the family. This factor is similar to family meetings indicated in the literature, that is, the activity that makes each family member understand each other and create harmony in the family.
Recommendations for Longevity of Family-Owned Enterprises
Key Recommendation 4: Family-owned enterprises should set the company's vision and purpose for employees and have a well-organized and long-term strategic plan, which can help everyone in the company work in the same direction and reduce conflicts within the company . Moreover, they must keep updating the action plans of each strategy according to the situations inside and outside the company. Family members should find the opportunity to have some activity that can create strong relationships and harmony within the family to maintain good relations.
Another important thing to maintain good family relations for a family that owns a business is to separate the business from the family, don't let work or business conflicts destroy family relationships, and don't let family relationships affect the development of the business.
