Abstract
The intention to continue as a family business in the long run is part of what defines such firms. However, this should be treated as a challenge in the relationship between the family and organization instead of an assumption. This research captured data through a survey and addresses the association between four dimensions of socioemotional wealth (SEW) and the management control structure, as well as the impact on a fifth dimension of SEW, which is the intention to maintain the organization for future generations. The main research gap addressed is the lack of studies on the impact of management controls on the expectation that the family business will be maintained for future generations. Such controls are a very important mechanism for preserving the accumulated knowledge for these generations. Our conceptual contribution lies in integrating the SEW approach with the management control model, indicating the impact on the intention to continue as a family business. This work highlights the importance of using an interactive control system as a mechanism to strengthen the propensity for the organization to continue being controlled by the family. Interactive systems involve pure knowledge and depend on the use of business diagnostic mechanisms, which could be hindered by the intensity of the family’s presence, control, and influence.
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Annex 1 Constructs and Items of the Questionnaire
Annex 1 Constructs and Items of the Questionnaire
Construct | Item | Assertion | Source |
|---|---|---|---|
Family control and influence (FCI) | FCI_1 | Most of the company shares are held by the family members (more than 50%) | Berrone et al. (2012) Hernández-Perlines et al. (2019) |
FCI_2 | The family members exert control over strategic decisions | ||
FCI_3 | In the company most executive positions are occupied by family members | ||
FCI_4 | Executives that do not belong to the family are appointed by family members | ||
FCI_5 | The board of directors is predominantly composed of family members (more than 50%) | ||
FCI_6 | Maintaining family control is important for the company | ||
Family identification (FI) | FI_1 | The family members have a strong sense of belonging to this company | Berrone et al. (2012) Hernández-Perlines et al. (2019) |
FI_2 | The family members consider the company’s success as being their own success | ||
FI_3 | The company means a lot to the family members | ||
FI_4 | Being a member of the company helps to define who we are as people (answer from the point of view of how the family members feel) | ||
FI_5 | The family members are proud to say that they are part of the company | ||
FI_6 | Clients frequently associate the company name with the family name, which is attributed to the products and services | ||
Social bonds (FSB) | FSB_1 | The family business is very active in promoting social activities for the community | Berrone et al. (2012) Hernández-Perlines et al. (2019) |
FSB_2 | In the company employees that are not from the family are treated as part of the family | ||
FSB_3 | In the company contractual relationships are based mainly on trust and reciprocity norms | ||
FSB_4 | Constructing strong relationships with other institutions (whether they are other companies, professional associations, government agents etc.) is important for the company | ||
FSB_5 | Contracts with suppliers are based on long term, lasting relationships | ||
Emotional attachment (FEA) | FEA_1 | Emotions and feelings often affect decision making processes in the company | Berrone et al. (2012) Hernández-Perlines et al. (2019) |
FEA_2 | Besides personal contributions to the company, protecting the family members’ well-being is fundamental to us | ||
FEA_3 | In the company the emotional bonds between the family members are strong | ||
FEA_4 | In the company, affective considerations are often as important as economic considerations | ||
FEA_5 | Strong emotional bonds between the family members help to maintain the family’s view of itself positive | ||
FEA_6 | In the company the family members feel close to one another | ||
Renewing family bonds through succession (FRRB) | FRFB_1 | Continuing the family legacy and tradition is an important goal for the company | Berrone et al. (2012) Hernández-Perlines et al. (2019) |
FRFB_2 | The family members are less likely to evaluate their investments based on the short run | ||
FRFB_3 | The family members are not likely to consider selling the company | ||
FRFB_4 | Successfully transferring the business to the next generation is an important goal for the family members | ||
Diagnostic control system (DCS) | DCS_1 | There is formalized strategic planning in the company | Simons (1995) Widener (2007) Frezatti et al. (2017) Da Cruz et al. (2015) |
DCS_2 | There is an annual budget in the company | ||
DCS_3 | The budget is aligned with strategic planning and derives from it | ||
DCS_4 | There is a Balanced Scorecard in the company | ||
DCS_5 | There is a rolling forecast (projections aiming to provide financial results) | ||
DCS_6 | There is a capital budget (plan for investment projects) | ||
DCS_7 | There is budgetary control in the company, with reports presenting forecasted and achieved results and meetings to discuss past results and future actions | ||
DCS_8 | Individual performance detailed in the budgetary control impacts the executive remuneration variable | ||
Interactive control system (ICS) | ICS_1 | Information on innovation is an important element for the most senior level managers | Simons (1995) Widener (2007) Abernethy and Brownell (1999, p. 202) Bisbe et al. (2006) Frezatti et al. (2017) |
ICS_2 | Regular and frequent attention is paid to analyzing and discussing innovation by managers at all levels | ||
ICS_3 | The data generated by the system are interpreted and discussed in meetings between superiors, subordinates, and peers | ||
ICS_4 | There exists a way for catalyzing the continuous challenge and consequent debate on information, assumptions, and plans | ||
ICS_5 | Innovation projects are monitored after implementation | ||
ICS_6 | Information on innovation forms part of internal reports | ||
ICS_7 | Regular and frequent attention is dedicated to analyzing and discussing innovation by managers at all levels | ||
ICS_8 | The data generated by the system are interpreted and discussed in meetings between superiors and subordinates | ||
ICS_9 | The business’ success is highly dependent on the use of technology | ||
ICS_10 | Your business highly depends on the actions of regulatory bodies | ||
ICS_11 | Your business highly depends on value chain movements | ||
ICS_12 | Your business highly depends on movements and rapid responses to the market |
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Frezatti, F., de Souza Bido, D., Mucci, D.M. et al. The Impact of the Management Control System on the Family Business’ Intention to Maintain the Organization for Future Generations. J Knowl Econ 14, 1145–1176 (2023). https://doi.org/10.1007/s13132-022-00918-x
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DOI: https://doi.org/10.1007/s13132-022-00918-x