Academic journal article Entrepreneurship: Theory and Practice

Feuding Families: When Conflict Does a Family Firm Good

Academic journal article Entrepreneurship: Theory and Practice

Feuding Families: When Conflict Does a Family Firm Good

Article excerpt

Using the conflict theory lens and insights from the family business literature, we develop a theoretical model concerning the effects of task, process, and relationship conflict in family firms. Family firms are characterized by different control structures and generational involvement. Accordingly, we discuss the expected effect control concentration has on task, process, and relationship conflict, and propose that generational involvement affects the importance of task and process conflict to a family firm's performance. Furthermore, our model suggests that relationship conflict moderates the outcomes of task and process conflict. The degree of relationship conflict in family firms is in turn influenced by altruism, which characterizes interactions among family members.

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Family firms are often plagued by substantial conflict. Indeed, the family and business are so entwined in family firms that the potential for discord is greater than in firms with other governance forms (Lee & Rogoff, 1996). This can be explained by psychodynamic effects other businesses do not experience, such as sibling rivalry, children's desire to differentiate themselves from their parents, marital discord, identity conflict, and ownership dispersion among family members (Dyer, Jr., 1986; Dyer, Jr., 1994; Ling, Lubatkin, & Schulze, 2001; Schulze, Lubatkin, & Dino, 2003a; Schultze, Lubatkin, Dino, & Buchholtz, 2001; Schwenk, 1990). Prior research has mainly focused on the dark side of conflict (Beckhard & Dyer, Jr., 1983; Danes, Zuiker, Kean, Arbuthnot, & Kaye, 1999; Dyer, Jr., 1986; Gersick, Davis, Hampton, & Lansberg, 1997; Levinson, 1971) while overlooking its benefits, or the bright side (Harvey & Evans, 1994; Sharma, Chrisman, & Chua, 1997; Tjosvold, 1991; Wall, Jr., Galanes, & Love, 1987). The negative effects of conflict are most often rooted in relationship conflict, whereas the benefits of conflict tend to be the result of task and process conflict (Jehn, 1995; Jehn, 1997b). This distinction among the three types of conflict has never been applied in an interactive way to the family firm literature and may explain why some families are able to successfully work together and run a family business, while others are not. Furthermore, it may illustrate why some family businesses can effectively utilize the talents and opinions of family members involved in the business, while others are laden with animosity that decreases performance.

The dominant presence of the family and the overlapping of control and management activities complicate the understanding of conflict in family firms (Daily & Dollinger, 1992). Unlike in other organizational forms, the effects of conflict on performance cannot be completely understood without taking into account the influence of psychodynamic effects of family relationships in family firms. Thus, family firms represent an excellent phenomenon to apply and further develop conflict theory, and in doing so, to better understand the challenges conflict poses to the family firm.

Researchers have argued that with the entering of each generation and the dispersion of ownership in a family business, the dynamics among family members change (Gersick et al., 1997; Harvey & Evans, 1994; Schulze, Lubatkin, & Dino, 2003b; Sharma, Chrisman & Chua, 1997) and the interactions of family members involved in the business become more complex (Dyer, Jr., 1986). In line with this research we propose that the involvement of different generations in the family firm impacts the importance of task and process conflict on performance and the concentration of control influences the occurrence of task, process, and relationship conflict. Furthermore, we argue that altruism, which is characteristic among family members, influences relationship conflict in family firms and may help to mitigate negative performance effects.

This article contributes to the family firm literature in four ways. …

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