The Importance Of A Family Business

For the purpose of this paper, we follow Chua, Chrisman, and Sharma (1999, p. 25) in defining a family business as “a business governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families.” This definition clearly distinguishes family ownership from family management and/or governance. Therefore, a family having a controlling ownership in a firm may choose not to be in management, but through its ownership and governance, may exercise influence on the management in strategic decisions.

Family businesses are prevalent in our

The effects of the family component have an array of implications on the management and specifically on the ownership of the business and thus must be explicitly comprehended to enable success and continuity of the family owned business. Managing the family component effectively will be an added advantage to the family businesses because it will utilize the unique benefits provided by the family component and it may be a source of competitive advantage.

According Barnley (1991) In order to use a resource and achieve a competitive advantage three conditions have to be met.

1. The resource has to be valuable-this is the ability of the resource to enhance the advantage or minimise the disadvantage of a business compared to its competitors.

2. The transaction costs must not exceed the expected benefit. This is relevant by using any resources which were mentioned

The management and ownership of the family businesses have an impact on employee performance. The Trump family is a story of success when it comes to succession planning. Donald trump inherited the father’s estate and elevated it to the pinnacle of success it is today. This shows that although succession is a challenge there are people who have successfully combated it and succeeded. In retrospect while the majority of business owners would like to see their business transferred to the next generation it is estimated that 70 percent will not survive into the second generation and 90 percent will not make it to the 3rd generation. (Family firm institute www.ffi.org) .This study provides statistics which indicate that there are no effective successions plans being conveyed by the owners of the business to the business. Succession plans have an impact on the continuity of family owned business and as a result also impact the Employees who are part and parcel of the business. The aim of this research is to know how exactly how the family component and succession planning impacts and contributes to the employee performance in family owned