Academic journal article Entrepreneurship: Theory and Practice

Securing the Future of the Family Enterprise: A Model of Offspring Intentions to Join the Business

Academic journal article Entrepreneurship: Theory and Practice

Securing the Future of the Family Enterprise: A Model of Offspring Intentions to Join the Business

Article excerpt

Family businesses are important contributors to national and local economies throughout the world (de Jordy, 1991; Dunlop, 1993; Lank, Owens, Martinez, & Riedel, 1994; Rosenblatt, de Mils, Anderson, & Johnson, 1985; Thomassen, 1992). For example, in the U.S., single families control or operate more than 90% of the 15 million companies and represent 175 of Fortune 500 firms (Rosenblatt et al, 1985). It is estimated that these family firms account for the majority of all jobs nationwide and generate approximately 40% of the U.S. gross national product. In Canada, family-owned firms are estimated to constitute 80% of all Canadian businesses and generate $150 billion in sales (Dunlop, 1993; de Jordy, 1991). And, in Europe and Australia, more than 70% of businesses are family-owned or controlled (Thomassen, 1992; Lank et al., 1994).

Family businesses also contribute to the quality of life in their communities by supporting various cultural and social welfare institutions. For example, Riordan (1988) and Madore (1993) suggest that family firms usually are more concerned than publicly held firms about the welfare of their communities. And Christensen (1963) notes that family domination in a small family enterprise is often combined with a deep sense of personal responsibility by family members for the employees and for the community; therefore, the owners feel the need to keep the firm successful for the sake of not only the family but also the employees of the firm and the community at large.

Although family firms are important contributors to the prosperity of many communities, their average life-span is a mere 24 years; often ending when the founder either passes away or needs to retire from managing the firm (Alcorn, 1982). In turn, only 30% of the family firms survive into the second generation (Birley, 1991; Madore, 1993), 10% into the third, and 3% into the fourth (Lank et al., 1994; Marotte, 1993).

Birley (1991) found that few owner-managers plan their replacement with a new leader to ensure the long-term survival of their firms. Further, a study conducted by Mass Mutual shows that only 21% of firm owners who want to pass their firm on have written succession plans and only 54% of them have chosen a successor (Family Business, 1993).

Business owners may be too busy running and controlling their firms to plan their exit from them (Poe, 1980). Or, they may fear that losing control of the business by retiring will lead to a "demotion" from their central role in the family (Lansberg, 1991). Nevertheless, most of these owners want to transfer ownership and management control of their firms to their children (Family Business, 1993; Rosenblatt et al., 1990). But by the time they get around to "thinking about succession, their heirs may no longer be interested or competent in continuing the company" (Danco, 1982, p. 143).

In fact, the reasons that would lead heirs into the family business remain largely unexplored. Even though the inability of business owners to relinquish control of their firms has been studied extensively (Aronoff & Ward, 1992; Kerr, 1993; Marshack, 1993; Rosenblatt et al., 1985; Seymour, 1993; Welsch, 1993; Whiteseide, 1993), little research has been conducted on their offspring and the issues that affect their involvement in their parents' firm (Birley, 1991; Dumas, 1992; Handler, 1989; Rosenblatt et al., 1985).

Therefore, the present study has been one of the first to explore the factors that influence the intentions of these heirs to seek employment or a leadership role in the family business. According to Ajzen and Fishbein (1980), behavioral intentions, being the direct antecedents to behavior (Madden, Scholder, & Ajzen, 1992), are measures of the likelihood that a person will engage in a given behavior. Such likelihood depends on the beliefs an individual holds or from the normative expectations of important others in the individual's environment regarding a specific behavior. …

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