Academic journal article Entrepreneurship: Theory and Practice

Entrepreneurship and Family Business: Exploring the Connections

Academic journal article Entrepreneurship: Theory and Practice

Entrepreneurship and Family Business: Exploring the Connections

Article excerpt

From the early writings of Joseph Schumpeter until the present day, much of the research on entrepreneurship has focused on answering two questions: Who is an entrepreneur? and What does an entrepreneur need to do to start a successful business? Little theorizing and research has been conducted to explore what happens to entrepreneurs after they build a successful enterprise. Indeed, the assumption seems to be that once a new enterprise is viable the entrepreneur's subsequent career path ceases to be of interest since it may not focus on traditional entrepreneurial activities.

Family business researchers, on the other hand, have largely been interested in what happens to entrepreneurs near the end of their working lives. The problem of succession - transferring leadership and ownership to the next generation of family members - has captivated most of the research interest. The reason for such interest can be attributed to the fact that succession is indeed a very troublesome problem for entrepreneurs, and there are numerous, high-profile cases such as the Ford and DuPont families where the succession problem deeply affected the business and the family. Moreover, because of the difficulty in resolving the succession dilemma, founders have been more willing to ask for outside help in the form of either research or consulting on the succession question. Thus, entry into the world of family business has often occurred as the entrepreneur contemplates retirement.

The result of what could be characterized as two parallel streams of theory and practice is a lack of integrated theory that would help us to better understand the complex and changing relationships between entrepreneurs and their families over time. In this article we will attempt to tie these two streams of research together to show how entrepreneurs and their families are inextricably linked together and how we might develop theory and research to further explore these linkages.


If we take the perspective that we should study the dynamics of an entrepreneur's career from entry to exit, then there are several points along the career path where the entrepreneur's family membership and family relationships can affect the course of the career (Dyer, 1992). We have identified four "career nexuses" that reflect points in time where family and entrepreneurial dynamics intersect. These are:

(1) Early experiences in the entrepreneur's family of origin; (2) Family involvement in the entrepreneur's start-up activities; (3) Employment of family members in the entrepreneurial firm; and (4) The involvement of family members in ownership and management succession.

We will now discuss each of these in turn.

The Entrepreneur's Family of Origin

Some of the seminal work on the entrepreneurial personality has indicated the important role that the entrepreneur's family plays in the development of certain entrepreneurial personality characteristics. Collins and Moore (1964) noted that the childhoods of the entrepreneurs they studied were filled with poverty, insecurity, and neglect. Often the father was absent from the home. Kets de Vries interprets such data from a psychoanalytic perspective and suggests that such a childhood creates an individual who is "often inconsistent and confused about his motives, desires, and wishes, a person under a lot of stress who often upsets us by his seemingly 'irrational,' impulsive activities" (Kets de Vries, 1977, p. 35, 36). Such a childhood creates needs for control in entrepreneurs and a desire to create and control their own businesses in order to overcome what might be considered a hostile and threatening world. This personality type also affects the way in which the entrepreneurial firm functions, influencing decision making, employee reactions, and succession planning. Bird (1989) presents a summary of the dynamics of this psychoanalytic perspective in Table 1. …

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