Academic journal article Journal of Business and Entrepreneurship

Application of the Small Business Typology of Strategic Intent to Small Family Business Ventures

Academic journal article Journal of Business and Entrepreneurship

Application of the Small Business Typology of Strategic Intent to Small Family Business Ventures

Article excerpt

ABSTRACT

This paper applies a research framework previously suggested for general small business firms to the field of small family business ventures. A framework supported by numerous researchers is the identification of strategic groups (e.g.. Chrisman, Hofer, & Boulton, 1988; Miles & Snow, 1978; Porter, 1980; Porter, 1985). A strategic grouping framework, the Small Business Typology of Strategic Intent, is introduced and applied to small family businesses. Applying the strategic intent continuum identifies four broad categorical groupings of small family business entities that can be identified and isolated for testing. Rather than grouping all family business ventures together, or separating them solely based on size, use of the strategic intent continuum provides an alternative method for creating more homogeneous samples of study.

INTRODUCTION

Family business is one of the most popular areas of interest in today's business world. Academicians and business people recognize that family business is much more than just "mom and pop." The Institute for Family Owned Business reports that over 95% of all businesses in the United States are family-owned (Poza, 2007). According to Chua, Chrisman, and Steier (2003), they account for 40-60% of the U.S. gross national product and generate half of the wages paid in this country.

Despite the impact of this segment on our economy, there is still difficulty in clearly understanding its makeup. This is not to say family business has not been defined. Litz (1995) provided a definition that many have adopted:

...a business firm may be considered a family business to the extent that its ownership and management are concentrated within a family unit, and to the extent its members strive to achieve and/or maintain intra-organizational familybased relatedness (p. 100).

From this definition, a family business does not necessarily have to be a small business. In fact, family businesses make up about 35% of the companies listed on the Standard and Poor (S&P) or the Fortune 500 Index (Anderson & Reeb, 2003). But the majority of current family businesses (even those that are now classified as large firms) either began as small businesses or are still classified in that manner. The focus of this article is on the small family business sector.

Research of these small family business firms appears to be experiencing some of the same difficulties that entrepreneurship research has encountered. For many years, definitional problems involving entrepreneurship have plagued progress toward achieving a meaningful understanding of the phenomena. Some have focused on defining the characteristics of an entrepreneur (e.g., Garland & Garland, 1997; Garland, Garland, & Ensley, 2001) while others have argued that identifying the characteristics of the entrepreneur was unnecessary and it should be accepted that anyone that self-ventured was an entrepreneur (Gartner, 1988). Still others have focused on defining the entrepreneurial activity of the firm (e.g., Jackson & Gaulden, 2001; Jackson & Vaughan, 2005; Jackson, Watts, & Wright, 1993).

The purpose of this article is to offer a framework of study allowing a more focused approach to the exploration of this very important segment of our economy-the small family business. Use of this framework is intended to avoid the methodological inconsistencies present in entrepreneurial research. The continuum of entrepreneurial business types proposed by Jackson et al. (1993) and refined by Jackson & Vaughan (2005) is applied to small family business firms. This is done by first providing an overview of the research on small family businesses and the definitional controversy within the entrepreneurship literature. Jackson's continuum, Small Business Typology of Strategic Intent, is then provided and applied to the small family business venture. Last, implications and discussion are provided. …

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