Factors Influencing Family Business

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Factors influencing the sustainability of Family Business 1.1 Overview This chapter covers the background of study, which is the factors influencing the sustainability of the family business like small medium-sized enterprise in Malacca. The family businesses are the important part of the business which it contributes so much of strategic planning and succession planning to business. In meanwhile, the explanation is provided in the justification of the study and the scope of this research is also identified. Lastly, we also defined some element which contributes to sustainability of family business. 1.2 Background of Research The family business is defined as the majority of the decision of the commercial organization is making or influencing…show more content…
In the period of time, the leader settled some crucial problem in their owned business for example, they spent a number of years to build up the business which have fixed supply chain and distribution. It gives a convenient for their heirs when they are handling the business (M. Morris, R. Williams, D. Nel et al. 2012). Some family business is created and owned by several numbers of family members with the same objective. Therefore, the capital is stuck together which commit the huge funds that almost impossible achieve by non-family firm business. With this fund, the family business preponderance in the market includes advertisements, labor, and technology and leads the business more effectively. Most of non family firms focus their goals and hits it in a short period of years but the family business is planning their strategy and decision-making in periods of years in long term benefits. Besides, family members working in family business are voluntarily contributing their personal capital to family business if there is an economic depression to maintain operation of business in long term…show more content…
Dyer (1988) investigated “culture and continuity” in family firms, and the need for firm founders to understand the effects of a firm’s culture and that culture can either constrain or facilitate successful family succession. Fiegener and Prince (1994) compared successor planning and development in family and non family firms, and found that family firms favor more personal relationship-oriented forms of successor development, while non-family firms utilize more formal and task-oriented methods. Building on these and other studies of succession in family firms, Stavrou (1998) developed a conceptual model to explain how next-generation family members are chosen for successor management positions. This model involves four factors which define the context for succession: family, business, personal and market. In still other studies, Royer et al. (2008) developed a contingency model of succession involving the factor of preferred successors. DeMassis et al. (2008) have recently investigated factors that hinder family business succession. Stavrou et al. (2005) have focused on the relationship between leadership personality and succession. And with still another focus, Yan and Sorenson (2006) examined family business succession from the perspective of Confucian

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