Academic journal article Journal of Small Business Strategy

Do Family Meetings Really Matter? Their Relationship to Planning and Performance Outcomes in Small Family Businesses

Academic journal article Journal of Small Business Strategy

Do Family Meetings Really Matter? Their Relationship to Planning and Performance Outcomes in Small Family Businesses

Article excerpt

ABSTRACT

This empirical research focused on examining the relationship between family meetings and the characteristics of those family meetings (who participated and issues discussed), planning processes (succession planning, estate planning, family mission and business mission) and performance measures (revenues and number of generations survived). Small family businesses in a midwestern state were surveyed with 241 useable responses. Significant differences were found in the planning processes between businesses that held family meetings and those that did not. No differences were found for the performance measures. Significant relationships between family meetings and both planning processes and performance measures were found when comparing family businesses based on who participated in the family meetings - just holding meetings does not matter, but inclusiveness of those meetings does matter.

Family meetings are ". . .periodic gatherings (that) bring the family together to share goals and decisions, discuss common problems, learn about the business, and preserve family identity, values and traditions" (Aronoff & Ward, 1992, p.3). In the 1992 monograph entitled Family Meetings: How to Build a Stronger Family and a Stronger Business, the authors stated that family gatherings can help build both a stronger family and a stronger business, and that the researcher believed, "... family meetings are one of the two most important steps a business owner can take to ensure the continuity of the family business (p.3)."

In an earlier publication, Ward (1987) also identified three principles that appeared to guide such companies. The three principles were a commitment to the future, the existence of a system of extensive communication, and conscientious planning, The family meeting was viewed as the key vehicle for implementing these principles.

Since the late 1980's, numerous books and articles regarding how to manage family businesses have discussed the significance of family meetings (or their more formal form, the family council) in creating healthy, successful family businesses. Educational programs on how to build family businesses virtually always mention family meetings as a key to success. In fact, family business forums and centers offer specific programs on how to establish successful family meetings.

While there is logic to claiming that family meetings are a key to family business success, there has been little empirical research that demonstrates the value of family meetings or that identifies under what conditions they are valuable.

Only one of me three most comprehensive empirical data gathering surveys (Arthur Anderson & Co., 1995, Arthur Anderson/Mass Mutual, 1997; Mass Mutual Financial Group/Raymond Institute, 2003) in the series entitled the "American Family Business Survey" included questions regarding family meetings. That 1995 study found 32% of family businesses held formal family meetings. Of those that held such meetings, 91.4% reported discussing business, 52% ownership, and 49% non-business topics. Those were the limited findings. Outcomes related to having a family meeting, or mose related to the issues discussed in family meetings, were not examined in the study.

A more limited study by Astrachan and Korendo (1994) found 51% of the family businesses surveyed held regularly-scheduled family meetings limited to family members in the business. Further, the research found that those firms with governance practices that included strategic plans, boards of directors, and family meetings were "...correlated with business longevity over multiple generations" (p. 119), and to a lesser degree, with firm revenues. Family meetings were not broken out as a separate item in the correlations, so it is not possible to determine if any one of these practices, or some combination, are related to longevity.

In a more focused study on the way family meetings impact family business, Habbershon and Astrachan (1997) built a model to show how family meetings develop family unity through the creation of perceived shared beliefs. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.