Due to the COVID-19 crisis, the transition into subscription mode of the Oxford Research Encyclopedia of Business and Management has been temporarily postponed. Please watch this space for updates as we work toward launching in the near future. Visit About to learn more, meet the editorial board, or learn how to subscribe.

Show Summary Details

Page of

PRINTED FROM the OXFORD RESEARCH ENCYCLOPEDIA, BUSINESS AND MANAGEMENT (oxfordre.com/business). (c) Oxford University Press USA, 2020. All Rights Reserved. Personal use only; commercial use is strictly prohibited (for details see Privacy Policy and Legal Notice).

date: 02 April 2020

Family Business

Summary and Keywords

Family business is a multidisciplinary subject area of critical importance to practitioners. The global volume of family business owners and managers is enormous. The firms are significant components of national economies. Yet they are often underappreciated and have been under-represented in business and economic research. Scholars have the potential for contributing to the survival and prosperity of these firms. The boundaries of the field are ill-defined. Family business scholars are seeking recognition from their colleagues. Opportunities for future research are unlimited.

Keywords: family businesses, firms, enterprises, companies, family business owners, family business managers, succession, governance


In the inaugural issue of Family Business Review, the editors acknowledged that there was no single definition that captured every nuance of the concept of family business (Lansberg, Perrow, & Rogolsky, 1988). The lack of generally accepted definitions is not unusual in the social sciences. Noting the variety of definitions being applied, they found some too restrictive, others too inclusive. They chose not to impose a single definition on authors submitting studies to the journal. Nevertheless, they emphasized that definitions are important, not just to scholars but also to practitioners. If the term “family business” is not defined, how will researchers build on one another’s work and contribute to a knowledge base that has value for business owners and managers?

There are many dilemmas in attempting to define family business:

  • - Must more than one family member work in the business?

  • - Must more than one generation be involved to qualify as a family firm?

  • - If partners cohabit but are not legally related, is their business family-owned?

  • - If the owners of a business are not related, but their children are employed in the company, has it become a family enterprise?

  • - When family members turn over the management of the business to non-family employees, does it cease being a family business?

  • - If a business that was solely owned by a family becomes a publicly traded company, can it still qualify as a family business?

The lack of resolution of these questions places the burden on authors to clarify for readers the criteria they are using in selecting samples for family business studies and describing the applicability of their observations. In one attempt to address the problem, Shanker and Astrachan (1996) proposed a set of definitions ranging from the broad—family members influencing the strategic direction of the company—to the narrow—multiple generations significantly impacting the firm (see also Astrachan & Shanker, 2003). Some of the definitions cited in the literature include:

[F]amily business means a firm’s ownership and policy making are dominated by members of an “emotional kinship group” whether members of that group recognize the fact or not. The focus is on emotional connections not genetic . . .

(Carsrud, 1994, p. 40)

A business firm many be considered a family business to the extent that its ownership and management are concentrated within a family unit, and to the extent its members strive to achieve, maintain, and/or increase intraorganizational family-based relatedness.

(Litz, 1995, p. 78)

The family business is a business governed and/or managed with the intention to shape and/or pursue the vision of the business held by the dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families.

(Chua, Chrisman, & Sharma, 1999, p. 25)

[Family businesses] constitute the whole gamut of enterprises in which an entrepreneur or next-generation CEO and one or more family members significantly influence the firm. They influence it via their managerial or board participation, their ownership control, the strategic preferences of shareholders, and the culture and values family shareholders impart to their enterprise.

(Poza & Daugherty, 2013, p. 5)

Reviewing the literature from 1996 to 2010, De Massis et al. (2012) recorded recurring criteria being used in family business definitions. The most frequently observed criterion was ownership, followed by management, both included in more than 50% of the definitions. Two other criteria occurred in more than 10% of operational definitions for family business studies: directorship and self-identification. Thus, there is both diversity and cohesion in definitions. This suggests that conclusions can be drawn from the conceptual and empirical studies being published, but with some caution expected in generalizing from results.

With that caveat, it is possible to review the literature and ascertain issues that have motivated research, the variables that are frequently identified in studies, the connections of family business research with other disciplines, the methodologies used, the scope of family business studies relative to other disciplines, current debates, and the prospects for future research.

Motivations and Themes of Family Business Research

One of the most remarkable conclusions that can be drawn about the field of family business is how recently it received scholarly attention. In 1997, Litz contended that “the omission of the family firm from past decades of business research results from a longstanding pattern of interaction between business firms, business regulators, academic institutions, and individual academic researchers” (p. 57). There were both obstacles and lack of incentives contributing to this omission. Traditionally, business education was designed to prepare students for careers in large, complex organizations; there were few respected outlets for publishing research studies addressing family business topics; family businesses were often uncooperative regarding providing information to investigators; the body of knowledge lacked theories and models for testing. The first dissertation recognized as being focused on family business subjects was produced in 1953 (Sharma, Hoy, Astrachan, & Koiranen, 2007), but 1988 is often noted as the year in which scholarly research of family businesses became mainstream (Sharma, Melin, & Nordqvist, 2014). The first journal specializing in publishing family business studies, Family Business Review, was launched that year. Increased acknowledgement of the reality of globalization was also a factor. Scholars began accepting the evidence that family firms represented the dominant form of economic enterprise organization in many countries of the world (Astrachan & Shanker, 2003; Poutziouris, Smyrnios, & Klein, 2006; Poza & Daugherty, 2013). That awareness was accompanied by a recognition that there may be distinctions between family and non-family enterprises, and that both students and practitioners need to understand those distinctions in order to apply their education to both organizational forms.

Early themes in family business research stemmed from practice (Sharma et al., 2007). Many of the authors of seminal publications were family business practitioners or consultants. Their works were typically anecdotal, based more on personal experience than scientific scholarship. Sharma et al. (2007) cite Léon and Katie Danco, cofounders of the Center for Family Business in 1962, as bringing attention to family business as a subject for education. Léon Danco’s books (Danco, 1975, 1982; Danco & Jonovic, 1981) introduced numerous issues associated with family firms. The books contained a great deal of normative advice for families who owned and operated businesses. The guidelines in those books were adopted by many consultants. Many followed with their own books (e.g., Bork, 1986; Jaffe, 1991). Eventually, academic scholars began investigating some of the issues that Danco and others addressed in efforts to support or refute their observations.

The themes identified in the years before Family Business Review began publication included succession (both ownership and management), governance, estate planning, interpersonal conflict, and more. Publications by consultants were oriented toward practitioners, identifying problems frequently faced by families in business and proposing actions for solving those problems. These subjects and problems sparked interest among some of the pioneering academic researchers. They sought to document empirically the existence of the problems and probed the actions and behaviors that were associated with overcoming or aggravating the problems.

As scholarly research advanced, there have been occasional reviews of the issues addressed and contributions made (e.g., Matherne, Debicki, Kellermanns, & Chrisman, 2013). In 2012, Family Business Review published a twenty-fifth anniversary issue celebrating the evolution of the field. Sharma, Chrisman, and Gersick (2012) reflected on the topics that had been examined. They acknowledged the original emphasis on succession and pointed out that the topic continues to be the subject of investigations. Emerging topics have included firm performance, professionalization, internationalization, innovation, culture, gender, and ethnicity. Two drivers instigating attention to topics that previously received little attention appear to be conferences and themed special issues of journals.

A number of professional associations have created tracks, interest groups, and divisions specializing in family business research and education. The International Family Enterprise Research Academy has an annual theme, with some examples being locality and internationalization of family business (2017), narratives on family business (2016), and tradition and innovation in family buisness (2015). The Family Enterprise Research Conference also announces themes, such as bridging the gap (2017), founder influence (2016), and sustainability (2015). The Theories of Family Business conferences have encouraged research on agency theory, institutional theory, organizational ecology, stakeholder theory, transaction cost theory, and others, seeking to increase the volume of theory-based research in the field. These conferences often affiliate with journals for special issues on various family business topics. These initiatives have broadened the variety of subjects that are being examined in family business research.

Similarly, journals have initiated and completed numerous special issues on themes within the family business sphere. The Theories of Family Business conference has most frequently affiliated with Entrepreneurship Theory and Practice. Special issues published by the journal have concentrated on challenges in intergenerational wealth transfer (November 2016), governance challenges (November 2015), and socioemotional wealth (March 2015). Organizational Dynamics is believed to be the first journal to dedicate a special issue to family business, published in 1983. Along with the creation of Family Business Review, this special issue is considered to be one of the most influential factors in enticing scholars to take family business seriously as a field of research. Among the many other journals that have published special issues on family business themes are the Journal of Business Venturing (2003), Journal of Business Research (2007), Journal of Management and Organization (2009), Journal of Management Studies (2010), International Small Business Journal (2010), Entrepreneurship & Regional Development (2010), Strategic Entrepreneurship Journal (2011), Business Ethics Quarterly (2011), Small Business Economics (2012), International Journal of Management Practice (2012), Economia Marche Journal of Applied Economics (2012), International Journal of Entrepreneurship and Innovation Management (2013), Case Research Journal (2013), Business History (2013), Management International Review (2014), Journal of Small Business Management (2014), European Journal of Work and Organizational Psychology (2014), European Accounting Review (2014), Management and Organization Review (2015), Journal of Product Innovation Management (2015), European Journal of International Management (2015), California Management Review (2015), Academy of Management Learning and Education (2015), Small Business Economics (2016), Futures: The Journal of Policy, Planning and Futures Studies (2016), Academia Revista Latinoamericana de Administración (2016), Journal of Managerial Issues (2017), and Review of International Business and Strategy (2017). A variety of subjects have been covered by the articles accepted for the special issues. Examples include learning patterns, innovation, governance, regional development, accounting and reporting, organizational behavior, temporal dimensions, social issues, advising, heterogeneity, and value creation.

The global volume of family businesses assures an endless source of questions and problems for researchers. Initially, areas of concentration were heavily affected by practice, particularly seen through the eyes of consultants. The field has evolved and broadened. Associations, conferences, and journals have been influential in revealing topics and providing venues for the exchange of ideas and information. And, as with virtually all disciplines, the motivations for research spring from individual scholars. The nature of the interrelationships among a business, its owners, and its managers crosses into multiple disciplines. Representatives of those disciplines have discovered the importance of family business as an area for productive scholarship. This has expanded the number of themes being investigated.

Variables Driving Research

One of the long-time criticisms of the body of knowledge of family business research is that it is skewed more toward the business than toward the family. Although expertise in family science is increasing both through scholars entering the field and through business researchers giving more attention to family-related variables, balance has yet to be attained (Jennings, Breitkreuz, & James, 2014; Danes, 2014). Nevertheless, studies of families have observed and operationalized numerous variables that have application to the family and business relationship. In fact, perhaps the single most influential representation of the interrelationship of family business enables researchers to visualize innumerable variables that can be studied to add to the body of knowledge. This is the three-circle model, a Venn diagram displaying the overlaps of family, ownership, and management (Tagiuri & Davis, 1982; Tagiuri & Davis, 1992).

Tagiuri and Davis (1992) identify seven different roles at play in the differentiation and interrelation of their circles:

  1. 1. A family member that neither owns nor works in the business

  2. 2. A non-family employee with no ownership

  3. 3. A non-family outside shareholder

  4. 4. A family shareholder not employed in the business

  5. 5. A non-family employee with an ownership position

  6. 6. A family member employee with no ownership

  7. 7. A family owner-manager

Hoy and Verser (1994) undertook to demonstrate the complicated interactions of strategic management variables that could be anticipated within the three-circle system. They looked at leadership, culture, board of directors, life cycles, strategic management processes, and ethics and values. They cautioned that the complications suggested by portraying the interactions of six variables underestimates the true complexity of the family enterprise, noting that adding variables from entrepreneurship and other disciplines increases the demands on owners, managers, and family members, but also suggests research opportunities for scholars.

Gersick, Davis, Hampton, and Lansberg (1997) extended the Tagiuri and Davis (1992) model. They saw the three circles representing a point in time and felt a time factor needed to be added. The additional dimensions enabled researchers to assess how the mechanisms associated with performance and family behavior alter over time and influence performance variably over time, especially during ownership and management transitions.

The Gersick et al. (1997) model has been cited in numerous empirical studies. Some of the variables that were examined stemming from this model include:

  • - Number of family managers, proportion of family ownership, proportion expecting family succession, age of firm, industry, geographic location, number of employees (Chua, Chrisman, & Chang, 2004)

  • - Decision quality, decision commitment, shared vision, social interaction, board monitoring, board counsel, environmental turbulence, family institutions, family size, generation, firm size, past performance (Mustakallio, Autio, & Zahra, 2002)

  • - Firm size, firm age, multiple family ownership, number of family-member employees, exports as percentage of sales, information technology intensity, ownership held by board, CEO tenure, average board tenure, board size, family ownership goal, industry sales growth, balance of voting power (Schulze, Lubatkin, & Dino, 2003)

  • - Sales growth, sales revenue, company age, family ownership, industry growth, capital intensity, multiple family ownership, number of family employees, export sales, ownership goal, IT intensity, dividends, non-family pay incentives, family pay incentives, strategic planning, outside board member, CEO tenure, average board tenure, transfer intensions (Schulze, Lubatkin, Dino, & Buchholtz, 2001)

  • - Number of generations involved in business operations, non-family managers, gender of family members, family involvement in decisions, level of family conflict, succession plans, outside advisors, long-range planning, sophisticated financial management tools, influence of founder, going public, use of debt or equity, age of firm, number of employees, industry, form of ownership (Sonfield & Lussier, 2004)

  • - Entrepreneurship, organizational culture (individual versus group orientation; external versus internal cultural orientation; centralized versus decentralized control; strategic versus financial orientation), strategic controls, company age, company size, liquidity, return on assets (Zahra, Hayton, & Salvato, 2004)

The foregoing examples are not an exhaustive list of studies that have applied the Tagiuri and Davis (1992) and Gersick et al. (1997) models in formulating research questions and specifying variables. They were selected as representative due to their frequency of citation (Astrachan, Pieper, & Jaskiewicz, 2008) and operationalization of variables for empirical analysis. Thus, they are indicative of how some conceptualizations in family business research have fostered variable definition. In turn, these articles stimulated further investigations and the study of additional variables.

Reflecting on the influence of Generation to Generation over the years, Gersick stated that its purpose was to extend the three-circle model though a developmental approach (Hoy, 2012). He felt the three-dimension model introduced in the book had been validated and elaborated by others. And he hoped to see the model transformed by others, particularly through the introduction of societal and economic phenomena. Additionally, Gersick continues to find the model applicable to his continuing research efforts, one example being his work on governance (Gersick & Feliu, 2014).

Additional variables could be compiled and listed in similar or other derivations. As explained at the beginning of this section, the family business body of knowledge is dominated by studies that give primary attention to the business. If we look at the family circle of the three-circle model (Tagiuri & Davis, 1992), we can also find an abundance of variables being examined. Family science, family psychology, and family therapy have all contributed to the literature. Subjects addressed include commitment, control, culture, embeddedness, harmony, influence, involvement, norms, relationships, and ties. The family itself has been defined as a variable (Dyer, 2003).

In an effort to assess outcomes from the diversity within the literature, Sorenson, Yu, Brigham, and Lumpkin (2013) devised a landscape model of family business. They identified seven clusters, one of which, Family Dynamics, gave particular attention to the role of family. Variables that were found to be applicable in the study of family dynamics include capital, conflict, continuity, culture, dysfunction, ethics, identity, influence, satisfaction, social responsibility, sustainability, and more (Rosplock, 2013). While some of these terms are identical to those listed for the business-oriented studies, they may vary as operationalized variables.

In reviewing the variables that have driven research in family business, it is evident that family business studies cannot escape being multidisciplinary. The variables highlighted can be found in strategic management, finance, marketing, human resource management, psychology, sociology, family science, and other bodies of knowledge. In the next section, the impact of other disciplines on family business and vice versa is explored.

Connections with Other Research Streams and Disciplines

Family business is most often associated with entrepreneurship. There is a great deal of attention in the family business literature to the role of the founder in family enterprises. When practitioners and consultants were the sources of much of the knowledge base, authors viewed the first-generation entrepreneurs as the opportunity identifiers and risk takers. That founding generation was encouraged to prepare their children for more professional, administrative leadership roles. The expectation was that they would be taking charge of the entrepreneurial creation of their parents and should be competent to continue the legacy.

Many of the early contributors to family business research had been grounded in entrepreneurship or became active in both streams of research. Entrepreneurship scholars were influenced by breakthrough thinkers and began documenting the practices of successful organizations in maintaining competitiveness and growth through opportunity seeking and exploitation, innovation, and other initiatives that reflected entrepreneurial behavior (Drucker, 1985; Kanter, 1985; Block & Macmillan, 1993; Christensen, 1997). The notion of entrepreneurship extending beyond the active participation of the founder was adopted by family business scholars.

In 2005, a major initiative occurred when Babson College in collaboration with six universities in Europe launched the Successful Transgenerational Entrepreneurship Practices (STEP) consortium (Nordqvist & Zellweger, 2010). The mission of STEP is to produce research for stakeholders of families in family businesses and to form a community of researchers focused on transgenerational entrepreneurship. STEP seeks to provide practitioners with sound principles supported by scholarly research that can be applied to facilitate entrepreneurial practices to enhance the probability of survival of family enterprises, especially through ownership and management transitions.

Hoy and Verser (1994) had proposed linkages between strategic management and family business, but recent emphases on governance and boards of directors are demonstrating multiple relationships. The attention that socioemotional wealth has received by family business scholars suggests strong connections to and opportunities for theory development with strategic management (Berrone, Cruz, Gomez-Mejia, & Larraza-Kintana, 2010; Cennamo, Berrone, Cruz, & Gomez-Mejia, 2012). Some of the strategic management concepts that have been addressed in the family business literature are international strategies, planning, strategic content, strategic orientation, turnaround strategies, investment strategies, and strategic process (Salvato & Corbetta, 2014).

Scholars have found various family-focused disciplines to connect with family business. Fields such as family science, family psychology, and family therapy appear to offer promise for altering the balance of focus from weighing so heavily on the business side. From family science, systems theory may provide insights regarding the impacts relationships with the business may have on family systems (Distelberg & Blow, 2011). Kaye (1996) took the relationship to the extreme with an application of life cycle theory and the argument that the intimate volume of interaction could infect the family like a disease. Social exchange theory was shown to be applicable in a study by Kellermanns and Eddleston (2007) who found complex effects of reciprocity on different types of conflict among family members. Drawing from structural functionalism, Sharma and Manikutty (2005) made use of a typology developed by Todd (1985) and formulated propositions on how family structures affect strategic decisions, specifically for divestments. Bertrand and Schoar (2006) relied on symbolic interactionism for an examination of national differences regarding the perceived importance of family values relative to multiple economic outcomes. Much of the family psychology literature as applied to family business overlaps with family systems theory. For example, Schmitt-Rodermund (2004) investigated the family system, in particular the family lifecycle and parenting effects on the choice by children to take on entrepreneurship. Kaye’s (1996) approach to the health of a family business offers an example of a family therapy study. Scholars with a thorough grasp of family theory literature and practice may have much to offer in future research.

Economic theory underlies much of business research. One of the most frequently applied theories to both entrepreneurship and family business is agency theory. The principal-agent relationship arises in countless business contracts (Ross, 1973), and Jensen and Meckling (1976) authored the seminal article integrating agency theory and the theory of the firm. In family business, agency theory has been frequently given to studies of the owner (principal) and family members (agents) versus non-family managers (agents) (Anderson & Reeb, 2004; Morck & Yeung, 2003). Transaction cost theory (Coase, 1937; Williamson, 1975) has also been determined to fit family businesses, with research questions investigating partner relationships, executive selections, and other governance functions (Gedajlovic & Carney, 2010; Lee, Lim, & Lim, 2003).

Scholars have applied theories and models from many other disciplines to the study of family businesses. Sociology provides network theory, new institutional theory, and evolutionary theory (Dieleman & Sachs, 2008; Martinez & Aldrich, 2011; Parada, Nordqvist, & Gimeno, 2010). Comparable examples of family business studies could be identified stemming from other disciplines: anthropology, history, political science, psychology, and more. In addition to the models and theories of other disciplines, family business research has adapted methodologies that are appropriate for investigating the questions and problems of the field.

Types of Methodology

When consultants and practitioners began bringing attention to family business issues through publications, their reports were generally anecdotal, with data gathered through participation. Academics who attempted to apply greater scientific rigor to data collection and analysis found resistance from business owners who feared disclosure of information to their competitors or revelation of family secrets. Thus, there were constraints in the efforts to design research projects. Additionally, early databases lacked clear specifications of the characteristics of the firms included (Winter, Fitzgerald, Heck, Haynes, & Danes, 1998).

One of the first obstacles in attempting to conduct family business research is the definitional problem. The selection of a sample is determined by the definition of the respondent, yet there is no uniform definition. If samples are not consistent, the ability to replicate and generalize from studies is limited. Various authors have wrestled with this dilemma. Westhead and Howorth (2006) conducted a cluster analysis that resulted in the identification of seven types of privately-held family firms. An alternative approach was devised by Astrachan, Klein, and Smyrnios (2002). They contended that there were no clear lines drawn between what is or is not a family enterprise. They proposed the F-PEC scale, which purports to measure family influence on power, experience, and culture. Scores on the scale indicate to what extent a firm may be classified as a family enterprise. Despite these attempts to provide guidance to research designs, family business empirical studies are characterized by the selection or formulation of definitions that fit the samples being examined.

There are two compilations that tracked the evolution of family business research, giving scholars a perspective of the research streams and designs over time. A Review and Annotated Bibliography of Family Business Studies reported publications from 1971 to 1995 (Sharma, Chrisman, & Chua, 1996). That was followed by Family Business Studies: An Annotated Bibliography, covering the years 1996–2010 (De Massis, Sharma, Chua, & Chrisman, 2012). In the latter bibliography, a majority of 124 empirical studies relied exclusively on secondary data analysis. De Massis, Sharma, Chua, Chrisman, & Kotlar (2012) listed thirty-seven sources of secondary information for North American studies and eighteen for European studies. Examples of North American sources include Arthur Anderson’s Survey of American Family Businesses 1995 and 1997, Canadian Association of Family Enterprises, and Hoover’s Online Database. In Europe, sources include Banque de France—Sesame project, German Trade Register, and Statistics Sweden. The authors also reported secondary sources for empirical studies in Asia, Australia, Chile, Hong Kong, and Taiwan. The methodology for collecting primary data was through surveys. Data were collected by mail, fax, telephone, or interviews. Most surveys were responded to by a single representative of the firm. De Massis et al. (2012) found fourteen articles they described as empirical qualitative research studies. These each used multiple in-depth cases for analysis.

The variance in definitions, wide range of problems and topics, and multidisciplinary nature of the phenomenon demonstrate that there are scope and boundary issues in family business.

Scope and Boundary Conditions

Returning to the three-circle model, Tagiuri and Davis (1992) made an effort to chart the boundaries of family business that resonates with scholars to this day. As Gersick reflected, however, neither the three-circle model nor the extended three-dimensional model encompasses broader environmental variables (Hoy, 2012).

An understanding of the complexities of family-owned and -operated businesses blurs the lines that distinguish this field from other disciplines. Some efforts to capture what studying family businesses should entail simultaneously add structure and research potential while also fragmenting boundaries. One is the landscape approach taken by Sorenson et al. (2013). The authors actually draw a map on a four-quadrant matrix clustering the family business subjects that the broad body of knowledge contains. On one axis, they use time—short-term versus long-term. On the other axis is business versus family. Within the short-term business quadrant are a cluster on performance and a cluster depicting social and economic impact. The social and economic impact cluster extends slightly into the long-term quadrant. The long-term business quadrant contains the strategy cluster, which consists of such topics as survival and growth, financial structure, and internationalization. It extends slightly into the short-term quadrant. Family dynamics falls within the short-term family quadrant. The family business roles cluster has three topics within that quadrant: attitude toward family business—family members; attitude toward family business—non-family members; and attitude toward family business—CEO. The roles cluster also has three topics in the long-term family quadrant: family involvement in business; role of spouse/copreneur; and role of female family members. Succession topics are all within the long-term family quadrant. The final cluster is governance. There are governance topics arising in all four quadrants. The Sorenson et al. (2013) landscape visualizes boundaries within the discipline. It would be reasonable for scholars from other fields to conclude that their work penetrates the clusters and may contribute to the knowledge base of family business.

A second effort that may blur boundaries has been labeled portfolio entrepreneurship, business families, enterprising families, family business groups, habitual entrepreneurship, and other terms. The stereotype is that “family business” is restricted to a single family owning a single business. In fact, individuals who are bound together through blood, marriage, or some other form of relationship may collaborate in any number of ownership and management arrangements. A family may own a holding company that could control a string of enterprises through various equity positions. Business-owning families may support family members in launching new ventures that are or become independent of the primary company. Support can be manifested through debt or equity investment; market entry assistance; in-kind support through equipment, space or time, and effort; or many other ways. The recognition of these phenomena complicates the standard prescriptions for family business behavior, such as ownership and management transitions, governance, or estate planning. Additional information is available from numerous sources, such as Almeida and Wolfenzon (2006); Carney and Gedajlovic (2002); Chang (2006); Habbershon and Pistrui (2002); Huovinen and Tihula (2008); and Jennings, Eddleston, Jennings, and Sarathy (2015).

Once again, the absence of consistent terminology blurs lines. Mixed samples, variable operationalizations, and variance in theories and models all contribute to mixed results in research findings, leading inevitably to controversies and debates.

Controversies and Debates

One of the most controversial issues among family business scholars involves the recognition of the field as a legitimate discipline of study. Family business scholars frequently feel the need to specify the impact of family-owned firms on national economies in the introductions of their articles, indicating the need for educators and practitioners to take the results of studies seriously. There is also some debate regarding the quality and rigor of research design and execution in the literature relative to more mature disciplines.

A review of the formative years of family business research and the publications of practitioners and consultants suggests that family businesses were perplexed with problems and conflicts. Many of the writings were produced to offer business owners advice on how to overcome those problems. The assumption appeared to be that family-owned businesses were not professionally managed, that family decisions and goals were not necessarily in line with profitability and growth for companies, and that conflict among family members spilled over into the company, leading to dysfunctions. Furthermore, the word “nepotism” consistently crept in negatively. Of course, there have been many scholars and practitioners who have extolled the virtues and value of family businesses, but a study published in 2005 represented a major breakthrough in the comparative role of family enterprises.

Miller and Le Breton-Miller (2005) conducted research leading to Managing for the Long Run as a result of their observations of how corporations considered to be well managed would stumble and even collapse. They were curious as to why those companies failed to maintain the success they had previously enjoyed. They gathered information on businesses that had survived for decades, overcoming obstacles and outperforming competitors. They discovered that such firms were disproportionally family-controlled. From analyzing matched samples of firms, they identified four priorities of successful firms. Those firms were characterized by their commitment to 1) continuity, pursuing the dream; 2) community, uniting the tribe; 3) connection, being good neighbors; and 4) command, acting and adapting with freedom. John Ward, author of Keeping the Family Business Healthy, one of the most cited books on the subject of family business, expressed the view that the Millers’ “book marked the point at which the family business literature moved beyond best practices and began proposing that there were competitive advantages that nonfamily firms could learn from” (Hoy, 2012). It is not difficult, however, to find articles that fall explicitly on one side or the other in discussing the competence and professionalism of family firms relative to nonfamily businesses.

Debates over definitions persist. Some authors identify limitations of other definitions when proposing definitions that apply to the samples they are studying. Debates sometimes arise based on the theories and models that may be applied to research questions. Agency theory and stewardship theory are often cited as frameworks that lead to contradictory observations and conclusions (Chrisman, Chua, Kellermanns, & Chang, 2007; Madison, Holt, Kellermanns, & Ranft, 2016; Miller & Le Breton-Miller, 2006).

Family business scholars have demonstrated a propensity for controversy and debate. This observation may reflect the youth of the field. Perceptions of researchers suggest that the desire to fill the vast number of gaps in the body of knowledge preempts wishes to debate conclusions of studies that are still exploratory. This is a field in which significant questions outnumber controversial conclusions.

Research Questions and Directions

There is an expectation by academic journal editors and reviewers that articles prepared for publication will not only satisfy a purpose and arrive at conclusions regarding significant questions, but will also propose directions for further research. Thus, a review of family business research can uncover a great many questions that have promise in helping to understand family businesses and their critical issues for both education and practice. A few examples can be cited from articles and books that contain serious reviews of the literature.

The annotated bibliography prepared by Sharma et al. (1996) identified and categorized subjects that held promise for further research. They placed definitional issues first on their list. As indicated in the controversies and debates section, these issues remain unresolved. They identified multiple strategic management issues: goals and objectives; strategy formulation and content; strategy implementation and design; strategic evaluation, control, and performance; general management and ownership issues; and organizational evolution and change. Family influence was another category: family involvement in the business, uniqueness of the family business, and types of family business. Other categories were ethnicity, professional advice, and methodological issues. A follow-up to determine what progress has been made on these various streams could prove valuable.

In the Epilogue to the Handbook of Research on Family Business, Zahra, Klein, and Astrachan (2006) proposed what they labeled “three promising research directions” for theory building. They recommended:

  1. 1. Developing firsthand familiarity with family-firm challenges.

  2. 2. Selective theory importation.

  3. 3. Family-firm theory construction: uniting the individual, institution, and context.

They urged research to determine factors that enhance the prospects for success of family businesses and reduce the likelihood of failure.

In the twenty-fifth anniversary issue of Family Business Review, Litz, Pearson, and Litchfield (2012) reviewed the publications of family business scholars whose work had appeared in the journal during the previous five years, then added authors recognized as experts through service on journal editorial boards and other qualifications. From their review, they concluded that the greatest opportunities would be provided by diversifying the field, improving research methods, engaging in more nuanced exploration of complex issues, and improving the scholarly reputation of the field.

An exhaustive list of significant questions is not feasible. Family business is an exciting, dynamic field with huge potential for researchers to contribute to the growing body of knowledge and to add value to practitioners. There is a need for replicable studies of high quality to advance the field.

Further Reading

Bird, B., Welsch, H., Astrachan, J. H., and Pistrui, D. (2002). Family business research: The evolution of an academic field. Family Business Review, 15(4), 337–350.Find this resource:

Heck, R. K. Z., Hoy, F., Poutziouris, P. Z., & Steier, L. P. (2008). Emerging paths of family entrepreneurship research. Journal of Small Business Management, 43(3), 317–330.Find this resource:

Hoy, F., & Laffranchini, G. (2014). Managing family business. Oxford Bibliographies.Find this resource:

Hoy, F., & Sharma, P. (2010). Entrepreneurial family firms. Boston: Prentice Hall.Find this resource:

Kellermanns, F. W., & Hoy, F. (2017). The Routledge companion to family business. New York: Routledge.Find this resource:

Nordqvist, M., Melin, L., Waldkirch, M., & Kumeto, G. (2015). Theoretical perspectives on family business. Cheltenham, U.K.: Edward Elgar.Find this resource:

Phan, P. H. C., & Butler, J. E. (2008). Theoretical developments and future research in family business. Charlotte, NC: Information Age.Find this resource:

Salvato, C., & Aldrich, H. E. (2012). “That’s interesting!” in family business research. Family Business Review, 25(2), 125–135.Find this resource:

Sharma, P. (2004): An overview of the field of family business studies: Current status and directions for the future. Family Business Review, 17(1), 1–36.Find this resource:

Smyrnios, K. X., Poutziouris, P. Z., & Goel, S. (2013). Handbook of research on family business (2d ed.). Cheltenham, U.K.: Edward Elgar.Find this resource:

Wortman, M. S., Jr. (1994). Theoretical foundations for family-business: A conceptual and research-based paradigm. Family Business Review, 7(1), 3–27.Find this resource:


Almeida, H., & Wolfenzon, D. (2006). A theory of pyramidal ownership and family business groups. Journal of Finance, 61(6), 2637–2680.Find this resource:

Anderson, R. C., & Reeb, D. M. (2004). Founding-family ownership and firm performance: Evidence from the S&P 500. Journal of Finance, 58(3), 1301–1328.Find this resource:

Astrachan, J. H., Klein, S. B., & Smyrnios, K. X. (2002). The F-PEC Scale of family influence: A proposal for solving the family business definition problem. Family Business Review, 15(1), 45–58.Find this resource:

Astrachan, J. H., Pieper, T. M., & Jaskiewicz, P. (2008). Introduction. In J. H. Astrachan, T. M. Pieper, & P. Jaskiewicz (Eds.), Family business (pp. xiii–xix). Cheltenham, U.K.: Edward Elgar.Find this resource:

Astrachan, J. H., & Shanker, M. C. (2003). Family businesses’ contribution to the U.S. economy: A closer look. Family Business Review, 16(3), 211–219.Find this resource:

Berrone, P., Cruz, C., Gomez-Mejia, L., & Larraza-Kintana, M. (2010). Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less?. Administrative Science Quarterly, 55, 82–113.Find this resource:

Bertrand, M., & Schoar, A. (2006). The role of family in family firms. Journal of Economic Perspectives, 20(2), 73–96.Find this resource:

Block, Z., & Macmillan, I. C. (1993). Corporate venturing: Creating new businesses within the firm. Boston: Harvard Business School Press.Find this resource:

Bork, D. (1986). Family business, risky business: How to make it work. Aspen, CO: Amacom Institute for Family Business.Find this resource:

Carney, M., & Gedajlovic, E. (2002). The co-evolution of institutional environments and organizational strategies: The rise of family business groups in the ASEAN region. Organization Studies, 23(1), 1–29.Find this resource:

Carsrud, A. (1994). Meanderings of a resurrected psychologist or, lessons learned in creating a family business program. Entrepreneurship Theory and Practice, 19(1), 39–48.Find this resource:

Cennamo, C., Berrone, P., Cruz, C., & Gomez-Mejia, L. R. (2012). Socioemotional wealth and proactive stakeholder engagement: Why family-controlled firms care more about their stakeholders. Entrepreneurship Theory and Practice, 36(6), 1153–1173.Find this resource:

Chang, S.-J. (2006). Business groups in East Asia. Asia Pacific Journal of Management, 23(2), 407–417.Find this resource:

Chrisman, J. J., Chua, J. H., Kellermanns, F. W., & Chang, E. P. C. (2007). Are family managers agents or stewards? An exploratory study in privately held firms. Journal of Business Research, 60(10), 1030–1038.Find this resource:

Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Boston: Harvard Business Review Press.Find this resource:

Chua, J. H., Chrisman, J. J., & Chang, E. P. C. (2004). Are family firms born or made? An exploratory investigation. Family Business Review, 17(1), 37–54.Find this resource:

Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining the family business by behavior. Entrepreneurship Theory and Practice, 23(4), 19–39.Find this resource:

Coase, R. H. (1937). The nature of the firm. Economia, 4(16), 386–405.Find this resource:

Danco, L. A. (1975). Beyond survival: A business owner’s guide for success. Reston, VA: Reston.Find this resource:

Danco, L. A. (1982). Inside the family business. Cleveland, OH: Center for Family Business University Press.Find this resource:

Danco, L. A., & Jonovic, D. J. (1981). Outside directors in the family owned business. Cleveland, OH: Center for Family Business University Press.Find this resource:

Danes, S. M. (2014). The future of family business research through the family scientist’s lens. In L. Melin, M. Nordqvist, & P. Sharma (Eds.), The SAGE handbook of family business (pp. 611–619). Los Angeles: SAGE.Find this resource:

De Massis, A., Sharma, P., Chua, J. H., & Chrisman, J. J. (2012). Family business studies: An annotated bibliography. Cheltenham, U.K.: Edward Elgar.Find this resource:

De Massis, A., Sharma, P., Chua, J. H., & Chrisman, J. J., with J. Kotlar. (2012). State of the art of family business research. In A. De Massis, P. Sharma, J. H. Chua, & J. J. Chrisman (Eds.), Family business studies: An annotated bibliography (pp. 10–46). Cheltenham, U.K.: Edward Elgar.Find this resource:

De Massis, A., Sharma, P., Chua, J. H., & Chrisman, J. J., with J. Kotlar. (2012). Trends in family business empirical research. In A. De Massis, P. Sharma, J. H. Chua, & J. J. Chrisman (Eds.), Family business studies: An annotated bibliography (pp. 47–53). Cheltenham, U.K.: Edward Elgar.Find this resource:

Dieleman, M., & Sachs, W. M. (2008). Coevolution of institutions and corporations in emerging economies: How the Salim Group morphed into an institution of Suharto’s crony regime. Journal of Management Studies, 45(7), 1274–1300.Find this resource:

Distelberg, B., & Blow, A. (2011). Variations in family systems boundaries. Family Business Review, 24(1), 229–246.Find this resource:

Drucker, P. F. (1985). Innovation and entrepreneurship: Practices and principles. Oxford: Butterworth-Heinemann.Find this resource:

Dyer, W. G. (2003). The family: The missing variable in organizational research. Entrepreneurship Theory and Practice, 27(4), 401–416.Find this resource:

Gedajlovic, E., & Carney, M. (2010). Markets, hierarchies, and families: Toward a transactions cost theory of the family firm. Entrepreneurship Theory and Practice, 34(6), 1145–1172.Find this resource:

Gersick, K. A., Davis, J. A., Hampton, M. M., & Lansberg, I. (1997). Generation to generation: Life cycles of the family business. Boston: Harvard Business Press.Find this resource:

Gersick, K. A., & Feliu, N. (2014). Governing the family enterprise: Practices, performance and research, in L. Melin, M. Nordqvist, & P. Sharma (Eds.), The SAGE handbook of family business (pp. 196–225). Los Angeles: SAGE.Find this resource:

Habbershon, T. G., & Pistrui, J. (2002). Enterprising families domain: Family-influenced ownership groups in pursuit of transgenerational wealth. Family Business Review, 15(3), 223–237.Find this resource:

Hoy, F. (2012). Book review. Family Business Review, 25(1), 117–120.Find this resource:

Hoy, F., & Verser, T. (1994). Emerging business, emerging field: Entrepreneurship and the family firm. Entrepreneurship Theory and Practice, 19(1), 9–23.Find this resource:

Huovinen, J., & Tihula, S. (2008). Entrepreneurial learning in the context of portfolio entrepreneurship. International Journal of Entrepreneurial Behaviour & Research, 14(3), 152–171.Find this resource:

Jaffe, D. T. (1991). Working with the ones you love: Strategies for a successful family business. Berkeley, CA: Conari Press.Find this resource:

Jennings, J. E., Breitkreuz, R. S., & James, A. E. (2014). Theories from family science: A review and roadmap for family business research. In L. Melin, M. Nordqvist, & P. Sharma (Eds.), The SAGE handbook of family business (pp. 25–46). Los Angeles: SAGE.Find this resource:

Jennings, J. E., Eddleston, K. A., Jennings, P. D., & Sarathy, R. (2015). Firms within families: Enterprising in diverse country contexts. Cheltenham, U.K.: Edward Elgar.Find this resource:

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.Find this resource:

Kanter, R. M. (1985). The change masters. New York: The Free Press.Find this resource:

Kaye, K. (1996). When the family business is a sickness. Family Business Review, 9(4), 347–368.Find this resource:

Kellermanns, F., & Eddleston, K. (2007). A family perspective on when conflict benefits family firm performance. Journal of Business Research, 60(10), 1048–1057.Find this resource:

Lansberg, I., Perrow, E. L., & Rogolsky, S. (1988). Family business as an emerging field. Family Business Review, 1(1), 1–8.Find this resource:

Lee, K., Lim, G., & Lim, W. S. (2003). Family business succession: Appropriation risk and choice of successor. Academy of Management Review, 28(4), 657–666.Find this resource:

Litz, R. A. (1995). The family business: Toward definitional clarity. Family Business Review, 8(2), 71–81.Find this resource:

Litz, R. A. (1997). The family firm’s exclusion from business school research: Explaining the void; Addressing the opportunity. Entrepreneurship Theory and Practice, 21(3), 55–71.Find this resource:

Litz, R. A., Pearson, A. W., & Litchfield, S. (2012). Charting the future of family business research: Perspectives from the field. Family Business Review, 25(1), 16–32.Find this resource:

Madison, K., Holt, D. T., Kellermanns, F. W., & Ranft, A. L. (2016). Viewing family firm behavior and governance through the lens of agency and stewardship theories. Family Business Review, 29(1), 65–93.Find this resource:

Martinez, M. A., & Aldrich, H. E. (2011). Networking strategies for entrepreneurs: Balancing cohesion and diversity. International Journal of Entrepreneurial Behavior and Research, 17(1), 7–38.Find this resource:

Matherne, C. F., III, Debicki, B. J., Kellermanns, F. W., & Chrisman, J. J. (2013). Family business research in the new millennium: An assessment of individual and institutional productivity, 2001–2009. In K. X. Smyrnios, P. Z. Poutziouris, & S. Goel (Eds.), Handbook of research on family business (2d ed., pp. 17–39). Cheltenham, U.K.: Edward Elgar.Find this resource:

Miller, D., & Le Breton-Miller, I. (2005). Managing for the long run: Lessons in competitive advantage from great family businesses. Boston: Harvard Business School Press.Find this resource:

Miller, D., & Le Breton-Miller, I. (2006). Family governance and firm performance: Agency, stewardship, and capabilities. Family Business Review, 19(1), 73–87.Find this resource:

Morck, R., & Yeung, B. (2003). Agency problems in large family business groups. Entrepreneurship Theory and Practice, 27(4), 367–383.Find this resource:

Mustakallio, M., Autio, E., & Zahra, S. A. (2002). Relational and contractual governance in family firms: Effects on strategic decision making. Family Business Review, 15(3), 205–222.Find this resource:

Nordqvist, M., & Zellweger, T. (2010). Transgenerational entrepreneurship: Exploring growth and performance in family firms across generations. Cheltenham, U.K.: Edward Elgar.Find this resource:

Parada, M. J., Nordqvist, M., & Gimeno, A. (2010). Institutionalizing the family business: The role of professional associations in fostering a change of values. Family Business Review, 23(4), 355–372.Find this resource:

Poutziouris, P. Z., Smyrnios, K. X., & Klein, S. B. (2006). Introduction: The business of researching family enterprises. In P. Z. Poutziouris, K. X. Smyrnios, & S. B. Klein (Eds.), Handbook of research on family business (pp. 1–8). Cheltenham, U.K.: Edward Elgar.Find this resource:

Poza, E. J., & Daugherty, M. S. (2013). Family business (3d ed.). Mason, OH: Cengage.Find this resource:

Rosplock, K. (2013). Family dynamics in the family business. in R. L. Sorenson, A. Yu, K. H. Brigham, & G. T. Lumpkin (Eds.), The landscape of family business (pp. 143–166). Cheltenham, U.K.: Edward Elgar.Find this resource:

Ross, S. A. (1973). The economic theory of agency: The principal’s problem. American Economic Review, 63(2), 134–139.Find this resource:

Salvato, C., & Corbetta, G. (2014). Strategic content and process in family business. In L. Melin, M. Nordqvist, & P. Sharma (Eds.), The SAGE handbook of family business (pp. 295–320). Los Angeles: SAGE.Find this resource:

Schmitt-Rodermund, E. (2004). Pathways to successful entrepreneurship: Parenting, personality, early entrepreneurial competence, and interests. Journal of Vocational Behavior, 65, 498–518.Find this resource:

Schulze, W. S., Lubatkin, M. H., & Dino, R. N. (2003). Exploring the agency consequences of ownership dispersion among the directors of private family firms. Academy of Management Journal, 46(2), 179–194.Find this resource:

Schulze, W. S., Lubatkin, M. H., Dino, R. N., & Buchholtz, A. K. (2001). Agency relationships in family firms: Theory and evidence. Organization Science, 12(2), 99–116.Find this resource:

Shanker, M. C., & Astrachan, J. H. (1996). Myths and realities: Family businesses’ contribution to the U.S. economy – A framework for assessing family business statistics. Family Business Review, 9(2), 107–123.Find this resource:

Sharma, P., Chrisman, J. J., & Chua, J. H. (1996). A review and annotated bibliography of family business studies. Norwell, MA: Kluwer Academic.Find this resource:

Sharma, P., Chrisman, J. J., & Gersick, K. E. (2012). 25 years of Family Business Review: Reflections on the past and perspectives for the future. Family Business Review, 25(1), 5–15.Find this resource:

Sharma, P., Hoy, F., Astrachan, J. H., & Koiranen, M. (2007). The practice-driven evolution of family business education. Journal of Business Research, 60, 1012–1021.Find this resource:

Sharma, P., & Manikutty, S. (2005). Strategic divestments in family firms: Role of family structure and community culture. Entrepreneurship Theory and Practice, 29(3), 293–311.Find this resource:

Sharma, P., Melin, L., & Nordqvist, M. (2014). Introduction: Scope, evolution and future of family business studies. In L. Melin, M. Nordqvist, & P. Sharma (Eds.), The SAGE handbook of family business (pp. 1–22). Los Angeles: SAGE.Find this resource:

Sonfield, M. C., & Lussier, R. N. (2004). First-, second-, and third-generation family firms: A comparison. Family Business Review, 17(3), 189–202.Find this resource:

Sorenson, R. L., Yu, A., Brigham, K. H., & Lumpkin, G. T. (2013). The landscape of family business. Cheltenham, U.K.: Edward Elgar.Find this resource:

Tagiuri, R., & Davis, J. A. (1982). Bivalent attributes of the family firm. Working Paper. Cambridge, MA: Harvard Business School.Find this resource:

Tagiuri, R., & Davis, J. A. (1992). On the goals of successful family companies. Family Business Review, 5(1), 43–62.Find this resource:

Todd, E. (1985). The explanation of ideology, family structures and social systems. Oxford: Basil Blackwell.Find this resource:

Westhead, P., & Howorth, C. (2006). Identification of different types of private family firms. In P. Z. Poutziouris, K. X. Smyrnios, & S. Klein (Eds.), Handbook of research on family business (pp. 180–195). Cheltenham, U.K.: Edward Elgar.Find this resource:

Williamson, O. E. (1975). Markets and hierarchies: Some elementary considerations. American Economic Review, 63(2), 316–325.Find this resource:

Winter, M., Fitzgerald, M. A., Heck, R. K. Z., Haynes, G. W., & Danes, S. M. (1998). Revisiting the study of family businesses: Methodological challenges, dilemmas, and alternative approaches. Family Business Review, 11(3), 239–252.Find this resource:

Zahra, S. A., Hayton, J. C., & Salvato, C. (2004). Entrepreneurship in family vs. non-family firms: A resource-based analysis of the effect of organizational culture. Entrepreneurship Theory and Practice, 17(4), 363–381.Find this resource:

Zahra, S. A., Klein, S. B., & Astrachan, J. H. (2006). Epilogue: theory building and the survival of family firms – three promising research directions. In P. Z. Poutziouris, K. X. Smyrnios, & S. Klein (Eds.), Handbook of research on family business (pp. 180–195). Cheltenham, U.K.: Edward Elgar.Find this resource: