The influence of cooperative relations on geographical expansion and diversification strategies in family firms

This study examines the relationship between existing partnerships and geographical expansion and diversification strategies in family firms in the Spanish manufacturing sector. It specifically analyses whether the family nature of a business and its cooperative relations (vertical cooperation with clients and suppliers, horizontal cooperation with competitors, and institutional cooperation with technology centers and universities) influence its geographical expansion and diversification strategies, and whether there are significant differences between family and non-family firms. This paper includes a review of the literature and an empirical study with a sample of 1848 companies of which 824 are family firms. Significant differences were generally found between family and non-family firms, depending on the type of partner selected for cooperation and the relationship between the types of cooperation and the growth strategies developed by them. Research results and policy implications are discussed, and management practices are proposed.     

Strategic reference points in family firms

Family firms are classically seen as risk averse organizations, and this is evident in their generally lower R&D investments compared to non-family firms. Recent research, however, challenges this predominant view and suggests that family firms can embrace higher strategic risk when faced with threats to their family-centered goals. Still, the internal and external conditions that drive variations in the strategic risk taking behaviors of family firms are little known and understood. This article adds to this literature by developing and testing a conceptual model of strategic risk taking that incorporates behavioral theory, family business literature, and the logic of the strategic reference point theory. With recognition that the interplay between family and economic goals determines heterogeneity in strategic actions of family firms, this model suggests that family managers respond differentially to the feedback information regarding internal and external reference points, and consequently identifies key drivers of variation in the R&D investment behavior of family firms. By examining the pattern in R&D investments of 437 Spanish private manufacturing firms from 2000 to 2006, this study shows how strategic inputs, strategic outputs, and external benchmarks produce variations in strategic decisions about R&D investments in family and non-family firms. The findings offer insights into how internal and external reference points are considered in family firms’ decision making, thereby contributing a deeper understanding into the circumstances under which family goals cope or collide with the economic goals of the firm, and how this influences strategic risk decisions in family firms.     

The adaptive strategies of Spanish cotton industry companies, 1939–1970

This article explores the strategies carried out by the Spanish cotton industry, drawing the distinction between dynastic and non-dynastic companies, and the business strategies to preserve the family firm, to keep the control of management in the hands of the founder's family, and to maintain long-term living standards. To achieve this, companies showed a remarkable capacity to adapt to the changing institutional, political and economic context in Spain during the second half of the twentieth century. Finally, we measure the degree of success by looking at profits, profitability and ability of dynastic and non-dynastic companies to survive.     

International briefing 34: training and development in Spain

This article locates training and development in Spain within the country's socio‐economic context. It maps the major changes which have been introduced into the training and development system since the briefing by Escardíbul and Llinas‐Audet published in this journal in 2010. It relates those changes to the ongoing economic crisis which began in 2009 and the growing emphasis on employers’ demands in the design of the training system. Finally, it identifies the challenges presented to Spanish policy‐makers by a number of weaknesses in the current system. The Spanish experience is particularly relevant for countries in which social partner involvement and a significant small and medium‐sized enterprise (SME) presence are important issues in the development of their training system. It is also particularly useful for those countries in Latin America whose training systems have been influenced by the Spanish model.     

Small firms and networks in capital intensive industries: The case of Spanish steel wire manufacturing

This article uses an interdisciplinary approach to gain a better understanding of the organization of the Spanish industry in a long-term perspective. Sociological concepts about networks, and studies about family firms from management and business history literatures, are combined to illuminate the dominance of family ownership in capital intensive industries. Popp, Toms and Wilson's work on the spatialization of resource distribution and resource dependence has been used to understand the dominance of small family firms co-ordinated by networks in the particular case study of the Spanish steel wire manufactures. The article also has important implications for questioning Casson's interpretation about the difficulties dynastic family firms may have in science-wire rod industries.     

As old as history: Family-controlled business groups in transport services: the case of SEUR

This article presents empirical evidence about the contribution of family-controlled business groups as highly efficient alternatives to the large vertically integrated and professionally managed corporation in specific institutional and market environments. This hypothesis is tested with a single case study, SEUR, in the Spanish transport services sector. SEUR is one of the most prominent Spanish courier companies. It was founded during Franco's dictatorship, expanded in democratic times, and imaginatively adapted to the financial challenges of the late globalisation at the end of the twentieth century, while maintaining the traditional values based on personal trust and family ties.     

Human capital in the internationalization of family firms

Research concerning the influence of human capital (HC) on internationalization strategies typically highlights skills displayed by business executives. This article is one of the few studies that examines the values, attitudes, and capabilities related to the HC of international companies. Our study attempts to understand the role that HC plays in the international commitment (IC) achieved by family and nonfamily firms and whether the HC of family firms (FFs) can be considered a source of competitive advantage in pursuing an international strategy. Partial Least Squares method is used for analyzing data collected from 270 Spanish firms. Results show HC differs between family and non‐FFs and plays a crucial role in the international strategy of FFs. Specifically, professional experience, training, and educational level, the degree of market and industry knowledge, specific skills to work in international markets, and concern for employees are superior in FFs, resulting in the achievement of higher levels of IC when compared to non‐FFs. The results should encourage managers and/or owners of these companies to exploit and effectively govern specific human resource strengths when they enter and experience growth in other markets.     

Practicing fairness in the family business workplace

One of the main challenges facing family firms is achieving fairness between family and non-family employees in the workplace. Family and non-family employees have the potential to offer unique and distinct contributions to the firm, which makes the achievement of fairness between them messy and complicated. Hence, two interesting questions are worth exploring: Given the complex nature of the family business human capital, how can family firms achieve fairness between family and non-family employees? Why should family business decision makers and advisors promote fair practices in the family business workplace? We first introduce a fair process model as a possible solution for family businesses to achieve fairness between family and non-family employees. Then, based on several examples and studies, we show that family business owners can benefit significantly from promoting fairness in the workplace both in terms of preserving business reputation and in terms of achieving long-term family business survival and success.     

The Global Compact: an analysis of the motivations of adoption in the Spanish context

In the 10 years after the launch of the United Nations Global Compact (GC), there have been very few empirical assessments of the initiative in the academic literature. In this study, drawing from institutional theory and the resource-based view of the firm, we examine motivations of business participants to adopt the GC principles in the Spanish context. Using survey data from Spain – the country reporting the highest volume of business participants in the GC – we find that external institutional forces as well as internal organisational resources shape motivations for adopting GC principles. In particular, we find that early and late adopters are motivated similarly by the perceived opportunity of achieving image gains, while late adopters are motivated more by economic gains than early adopters. We further find that regardless of the extent of internal intangible resources possessed, firms are similarly motivated by economic gains. The results also show that companies with more intangible resources are motivated more by image gains than those with fewer resources. Our findings indicate that contrary to its earlier days, economic gains have emerged as an important motivator for the adopters of the GC principles with image gains still being an important motivator.     

Strategic and Business Planning Practices of Fast Growth Family Firms

Fast-growth family firms were surveyed about their business and strategic planning practices. Of the 65 fast-growth family firms surveyed, the majority prepare written formal plans. The business plans are in sufficient detail to enable the business to tie planning to actual performance and to adjust management compensation accordingly. The majority of the firms regularly share information with employees regarding comparisons between actual company performance results and goals or planned performance. Further, the majority of the firms describe their business strategy as a high quality producer strategy rather than as a low-cost or time-based strategy. Further, when bringing new products to market, these fast-growth family firms adopt a first mover or early follower strategy. Implications of these findings for growth-oriented family firms are presented.     

Participation in industrial training programs

Two questions suggested by the recent literature on the matching of workers and firms are examined. The first relates to differences in the proportion of workers that participate in industrial training programs in large and small firms. The second relates to the characteristics of workers who participate in such programs. The major finding of this study is that workers in large firms are more likely to participate in industrial training programs than similar workers in small firms; the large-small firm training program participation rate differential is less, however, among low productivity workers than among high productivity workers. Additionaly, workers with vocational training received outside of a work setting are just as likely to find employment in small firms as in large ones.This research was supported by the Office of Advocacy, U.S. Small Business Administration under SBA award number 8487-AER-84. The findings and conclusions are the sole responsibility of the author.     

Macro‐institutional conditions in Ghana and the challenges to HRM program development and implementation

Multinational enterprises (MNEs) originating from advanced economies with operations in less developed host countries need to have a good understanding of the macro‐institutional conditions of the host country. Given HRM practices are context‐specific and embedded within the institutional and cultural settings of the host country, an exploratory qualitative study approach was employed to ascertain the host country's institutional dimensions (drivers) likely to undermine HRM program implementation in large local companies and in MNEs. Data were drawn from key stakeholder participants, including HR managers from MNE subsidiaries, domestic firms, and officials from key stakeholder institutions. The evidence points to six (6) dimensions of a less‐developed host country's macro institutions that undermine firms' HRM advancement. These include the regulatory system, education and training arrangement, labor market conditions, cultural barriers, political actors' intrusion, and economic uncertainty. The implications thereof are discussed.     

Strategic Goals and Practices of Innovative Family Businesses

A profile of 231 Washington state family businesses is presented. This article focuses on the business strategies of these firms, analyzing the relationship between strategy, performance, and business practices. Firms categorized as Prospector firms reported more gains in their current market position than all other strategic types. These firms were more likely to value an effective management and employee team and to develop new quality products and services and career development plans for non-family employees. Implications for family businesses are discussed.     

International briefing 9: Training and development in the United Arab Emirates

This article explores the training and development strategies and practices of large business organisations in the United Arab Emirates (UAE). The survey reveals that Emirati companies are very aware of best training and development practice as implemented in their foreign counterparts, and that they generally adopt similar methods and strategies. The article considers the influence of national culture, religion, government policies, education and the economic environment upon the training and development strategies and practices of companies in the UAE. It is argued that despite the negative effects of a dwindling oil sector, the UAE's companies are well placed to maintain their current regional success and that they will soon be playing an increasingly important role in international trade, thus significantly contributing to the continuing economic growth of the country.     

Strategy implementation for the 2030 agenda: Insights from Brazilian companies

While firms' engagement with Corporate Social Responsibility has been associated with positive performance impacts, little is known about the incorporation of the United Nations 2030 Agenda into business practices. Precisely, although the literature suggests that firms are pursuing the Sustainable Development Goals (SDGs), there are limited insights on their strategy to implement them in the context of developing countries. To address this gap, we conducted a comprehensive large-scale investigation of 2030 Agenda adoption by Brazilian companies. Accordingly, the analysis of our multicase study reveals (1) variations on the business opportunities brought by the SDGs depending on the firm position in the value chain, (2) which SDGs and target stakeholders are addressed through corporate policies and practices, (3) the different ways firms embrace the SDGs to pursue ambidexterity. Our findings clarify how firms in the developing countries interpret the institutional pressures and assemble their internal resources to respond to the SDGs challenges. Boundary conditions and policy implications are further discussed.     

Corporate Social Responsibility in Challenging and Non-enabling Institutional Contexts: Do Institutional Voids matter?

The extant literature on comparative Corporate Social Responsibility (CSR) often assumes functioning and enabling institutional arrangements, such as strong government, market and civil society, as a necessary condition for responsible business practices. Setting aside this dominant assumption and drawing insights from a case study of Fidelity Bank, Nigeria, we explore why and how firms still pursue and enact responsible business practices in what could be described as challenging and non-enabling institutional contexts for CSR. Our findings suggest that responsible business practices in such contexts are often anchored on some CSR adaptive mechanisms. These mechanisms uniquely complement themselves and inform CSR strategies. The CSR adaptive mechanisms and strategies, in combination and in complementarity, then act as an institutional buffer (i.e. ‘institutional immunity’), which enables firms to successfully engage in responsible practices irrespective of their weak institutional settings. We leverage this understanding to contribute to CSR in developing economies, often characterised by challenging and non-enabling institutional contexts. The research, policy and practice implications are also discussed.     

Who rides the tide of regionalization: Examining the effect of the China-ASEAN Free Trade Area on the exports of Chinese firms

This study draws on the institutional economics and the resource-based view to examine the impact of regional institutional changes on firm exports. Specifically, we utilize the establishment of the China-ASEAN Free Trade Area as our research context. Our difference-in-difference analysis of a four-year panel of 700 Chinese listed firms lends support to our arguments that (1) regional institutional changes aimed at increasing economic incentives for intraregional business exchanges will stimulate firm exports in the regional market and that (2) private firms, more technologically competent firms, and firms with richer regional exporting experience are affected more strongly by this institutional influence.     

Institutional lending to knowledge-based businesses

Knowledge-based businesses (KBBs) are vital to economic development and revitalization in many regions, especially in areas that have experienced a decline in traditional industries. While much attention has been devoted to various aspects of traditional small firm financing, there is a paucity of empirical research to explain how new knowledge-based firms are externally financed. The current study researches institutional strategies, structures and risk assessment practices of chartered banks and government agencies in a peripheral region of Canada. It examines the extent to which these institutions have modified traditional lending approaches and practices to meet the needs of knowledge-based firms. The study explores the existence of institutional lending cultures through an empirical investigation of risk assessment practices employed by account managers.Two business proposals, one for a knowledge-based firm and one for a more traditional firm, were presented to account managers in chartered banks and government agencies for initial review and subsequent due diligence and risk assessment. Verbal protocols and interview data obtained at three stages of the due diligence process were analyzed using standard multivariate techniques and consensus analysis (CA). CA, a tool developed to measure cultural agreement in cognitive anthropology, was employed to assess the level of agreement among lenders with respect to risk assessment.Overall, the study findings confirm that specialized strategies, structures and processes for lending to KBBs are only partially developed, are still evolving and are considerably diverse in both the banking and government sectors. Furthermore, the level of agreement among lenders develops during the course of the due diligence process. Results confirm consensus and the existence of a lending culture sensitive to the needs of KBBs among a select but important subgroup, knowledge-based lending specialists. The paper discusses the implications of these findings for researchers, entrepreneurs in search of capital and policy makers seeking to develop new business opportunities for regional economic development.     

Contrasting the Behavioural Business Ethics Approach and the Institutional Economic Approach to Business Ethics: Insights From the Study of Quaker Employers

The article suggests that in a modern context, where value pluralism is a prevailing and possibly, even ethically desirable interaction condition, institutional economics provides a more viable business ethics than behavioural business ethics, such as Kantianism or religious ethics. The article explains how the institutional economic approach to business ethics analyses morality with regard to an interaction process, and favours non-behavioural, situational intervention with incentive structures and with capital exchange. The article argues that this approach may have to be prioritised over behavioural business ethics, which tends to analyse morality at the level of the individual and favours behavioural intervention with the individual’s value, norm and belief system, e.g. through ethical pedagogy, communicative techniques, etc. Quaker ethics is taken as an example of behavioural ethics. The article concludes that through the conceptual grounding of behavioural ethics in the economic approach, theoretical and practical limitations of behavioural ethics, as encountered in a modern context, can be relaxed. Probably only then can behavioural ethics still contribute to raising moral standards in interactions amongst the members (stakeholders) of a single firm, and equally, amongst (the stakeholders of) different firms. Dr. Sigmund Wagner-Tsukamoto is researcher in business ethics, organisational economics and economic issues that concern the Old Testament. He is placed at the School of Management of the University of Leicester, UK. He holds two doctorates, one in social studies from the University of Oxford, UK, and one in economic studies from the Catholic University of Eichstaett, Germany. He has widely published on green consumerism and institutional economic issues that concern organization theory, business ethics theory and an economic interpretation of the Old Testament. His publications include the books Understanding Green Consumer Behaviour (Routledge, 2003) and Human Nature and Organization Theory (Edward Elgar, 2003).     

The Family Firm in Industrial Capitalism: International Perspectives on Hypotheses and History

This comparative analysis of the international literature on family firms takes A.D. Chandler's concept of ‘personal capitalism’, presented in Scale and Scope, as the theoretical frame of reference. The article focuses principally on Britain, particularly the thesis that large family firms were probably major contributors to national economic decline during the first half of the twentieth century. However, comparisons drawn between the characteristics and role of family firms in the United States, Germany and Japan suggest that it is not possible to describe them in a way which transcends either chronological or geographical boundaries. Comparisons of the behaviour and performance of family firms and managerial enterprises suggest that, contrary to Chandler's view, as a concept the family firm offers a limited understanding of the differential industrial performance of competing national economies before World War II. National and corporate cultural differences are seen to have been more important influences on business behaviour than contrasting organisational structures.