The management of family enterprises is characterized by several distinctive features compared to non-family enterprises. This finding is actually a synthesis of several studies and empirical and theoretical contributions from different perspectives. We'll see some latter of them; especially those related to strategic side of the family enterprise.
This section focuses on the particularities of strategic side of the family enterprise. This description is made through the representation of the objectives of this type of enterprise, its strategic behavior and process of decision making.
II. 1. Objectives of the family enterprise
There is a link between strategic decisions and goals in a family enterprise. These objectives are multiple and complex
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The preservation of control of ownership and management
Capitalist enterprises are based on the separation of control of ownership and management .However, this separation cause’s conflict manifested by agency problems depending on the level of divergence between the objectives of management and those of shareholders.
Contrary to the capitalist enterprise, the family enterprise is favored by the objective of maintaining personal control. This latter is translated into a control system that links the ownership and control. By following this approach, the family enterprise has the tendency to rely on a little formalized control rather than rely on impersonal formal procedures to control the behavior of employee’s control, processes of the enterprise, and its operations (Daily and Dollinger, 1992)
However, even if the goal of maintaining control of the ownership or management of the family enterprise is central to this entity, the development of the latter by preserving the family nature remains a difficult approval to achieve.
Through their approach that linked the internal development of the system of organizational control to the external degree of market orientation, Scase and Goffee (1982) were able to establish a typology (Table 3) that can be used to describe multiple models of development of family
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& Goffee R. (1982), "Female Entrepreneurs: Some Preliminary Research Findings", Service Industries Journal, vol. 3.
Managerial proprietor occupies great importance to opportunities of the market. What makes him act in this manner is that the maximization of profit is his primary objective. It’s the legitimacy coming only from legacy that sometimes requires him to maintain a rather complex organizational structure based on efficiency. For him, the success of the enterprise depends only on his personal competence. It is this selfish behavior which pushed him to act in an isolated way without considering the efforts of other people of the enterprise.
The owner entrepreneur has a market orientation but his enterprise has an underdeveloped control systems. In general, he is the founder respensible of creation and development of the enterprise. He has the orientation to externalize some functions in order to avoid confronting the problems related to the complexity of management structure. In this case employee relationships are defined in terms of salary links and decisions are legitimized by reference to the market. This perception is open in one direction; changing for the Good of the enterprise but not changing the enterprise for the good of
Simpson Seeds has been faced with a very tough situation of planning the transition of the ownership and leadership of their family business on to the third generation of the Simpson family. With a family that has grown to include 25 members of the Simpson Business Family, making a succession plan will be a tedious job in order to please everyone involved. In this transition, the Simpson family would like to maintain interfamily relationships with all family members – not just active (in the business) family members. In the following text, I will discuss how they should proceed with their succession planning to maintain their number one priority, family values, I will discuss who should lead the succession process for the family, and who all
"A family is a small social group of people related by ancestry or affection, who share common values and goals, who may live together in the same dwelling, and who may participate in the bearing and raising of children. They have a physical or emotional connection with each other that is ongoing" (Vissing, 2011) and is the foundation of all societies. They can be formed by a grouping of father-mother-children or even more complicated combination of relatives. In the primary stage of family life in the United States, everyone from every generation lived together in one house. Subsequently, the idea of traditional family evolved and a married couple with children is at present, often called the traditional family. There are many types of families; however, this paper will focus on the traditional family. It will describe how the functionalist perspective, conflict perspective, and the interactionism theory apply to the sociological institution known as a family. It will explain some of the similarities and differences between the sociological theories in regards to families and how they affect the family members.
Introductory, agency theory discusses the relationship in which one party, the principal, delegates work to another, the agent (Eisenhardt, 1989). The core idea behind agency theory is to through contracting align the interest of shareholders (principal) with that of the managers (agents) in order to maximize shareholders value. Thus, the decision-making is being separated from the party who bears the risk; therefore, problems can arise. Firstly, the principal cannot verify whether the agent has behaved appropriately (the agent and principal have partly di...
The four functions of management are planning, organizing, leading and controlling. While these functions are applied to the business world, they are also applied to everyday family and household matters. The accepted labels attached to these kinds of managers are Domestic Engineers. These managers never leave their humble abodes to work for someone else's company, but hold just as important and responsible positions within their own company. These individuals make up a company within themselves and are responsible for making life acceptable for their families and themselves. This paper will attempt to describe how the four functions of management apply to domestic engineers.
Organizational Change "The effectiveness of organizational change is greatest when a firm’s strategy is consistent with environmental conditions and there is internal consistency." (D A Nadler, 2003:204) The only thing that is constant in this world is change and this is widely acknowledged by many in the world, may it be a corporation or a social forum or a governmental body. What comes in this world has to experience change in the light of environmental elements and pressures and influences, internal or external. The study of organizational behavior gives that environmental factors are the political, legal, economic, demographic, technological, social and societal. While these are the external environmental factors that are and cannot be counted among the controllable factors for an organization, they do in fact influence organizational structure, policies and strategies. In turn, the internal environment of the organization, that is very much controlled by the management of the organization and comprises of the top to bottom managerial levels, the staff, the employees, the board of directors, the owners etc. this internal environment, is to a great extent the result of external environmental factors, the change of which results in the direct impact on the internal environment of the organization. As such in lieu of external environmental factors; change agents with in the organization tend to accept the change in their external factors and tries to bring about a compatible change within the internal environment of the organization. The effectiveness of the change that is being brought about with in the organization as a result of the changing external environmental forces is best when, as described by Nadler, the internal facto...
This research has asked us to look into three different styles of management and find real life examples of companies or individuals who have or are currently using such styles of management. To begin we will take a look into the use of an autocratic style of management versus a participative. In this portion we will look into Leona Helmsley and her chain of hotels. Once this potion is completed, our next section will be looking into a centralized style of management versus a decentralized style. In this section of the research, we will be looking into Apple Inc and how they have built an empire with a centralized style of managing philosophy. Finally, in the final section of the research we will be taking a look at how Google has created an informal environment in which employees have direct access to executives and have the ability to share thoughts and ideas that are taken serious and to the heart.
The article also discussed the two positions on agency theory one that argued that agency theory is revolutionary and a strong foundation, while the other position argued that the theory doesn’t address a clear problem. The key idea of agency theory is that principal and agent relationships should reflect efficient organization of information and risk bearing cost. Agency theory analysis is conducted by the contract between the principal and the agent. The principal is the individual who typically the person who delegates the task and the agent is the individual who is given the task by the principal. Agency theory assumes that the humans involved in the contract have a self-interest, bounded rationality and different levels of risk aversion. The theory also assumes that there is a goal conflict among participants in agency theory, where the principal and the agent aren’t on the same page which effects efficiency and effectiveness. The article also highlights five recommendations for using agency theory in organizational
Transaction Cost or Agency theory is just one of many alternatives organizations have available as a way to control employees. The findings in this comparison of external and internal labor sources suggest that when a company is unsure of what their employee is doing, it is cheaper to use surveillance as a control tactic. If a company has general product that is not complicated, it may be more advantageous to outsource since control would not be as necessary. Many companies may use a combination of both internal and externalized labor, since risks may vary according to what is sold. If given the choice most of us would pick the internal labor side, because it is secure, dependable and predictable. Organizations must way the risks with control to decide the best way a job will get done with the minimal amount of employee control.
In order for any company to succeed there are a lot of things that require to be done. Looking at McDonalds’s, you will realize that the management has put a lot efforts to ensure that the company has incorporated managerial economics in its operation. This is one of the reasons why the company has attained great success that most other companies have not been able to. There are different topics within a company that can determine how managerial economics is incorporated in a company. Spear Company limited is a company that deals with production of clothes and it has been operation since 1990. The company has borrowed a lot of its managerial issues from McDonalds’s. To bring this issues well let us look at how the company
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The aim of this essay is to discuss nature of managerial work. In this paper I will compare commonly accepted views about managerial work from a literature and discuss different views on this topic. A manager can be defined as someone whose role in an organisation involves planning, organising, coordinating, commanding and controlling. Management is the act of carrying out the five roles stated above and has been there since the world was formed. From the biblical point of view when God formed the earth he put man in charge of the earth and everything in it. Today managers are seen everywhere i.e., at home where the father is manager of family security and mother manager of family nourishment and in the community where there are business organisations
Business involved by two or more members of the family and is owned within the family is the simplest way to define family business. In this type of business the positions in the company is filled according the family blood. The founder of the business is usually the skull of the company, the rest of the positions are taken place by the family member which are usually higher positions where else other positions are filled by non family members.
Classical management theories which are based on the contributions made by scholars like Henri Fayol, Fredrick Taylor and Max Weber, are often viewed as highly structured, hierarchical, emphasis on strict division of labour and centralisation of power (Miller, 2012),. Although these theories have taken inspiration from post industrial revolution, and were mostly prevalent in the early twentieth century, we can still see trace...
Since the company is busy in the downsizing, it seems that effective internal controls are not in place and therefore it is recommended that there should be written policy regarding the implementation of internal controls by the employees. This trend should be set by the management from top to bottom so that every employee must be aware of its role.
A family business refers to a company where the voting majority is in the hands of the controlling family; including the founder who intend to pass the business on to their descendants (IFC, 2013). Just like all other companies, family businesses are strategically planned and are also innovative thus they have the capacity to accomplish internal growth and stability. A family business can be successful through innovation. Innovation is a group of elaborated connected procedures of search and unearthing, carrying out tests, simulation and implementation, expansion, and promotion of new services and goods (Hisrich, 2013). This paper explores entrepreneurship and family business in the international perspective.