Knowledge that Transforms

Organizational culture is an important strategic resource that family firms can use to gain a competitive advantage. Drawing upon the resource–based view (RBV) of the firm, this study examines the association between four dimensions of organizational culture in family vs. non–family businesses and entrepreneurship. Using data from 536 U.S. manufacturing companies, the results show a nonlinear association between the cultural dimension of individualism and entrepreneurship. Further, there are positive linear relationships between entrepreneurship and an external orientation, an organizational cultural orientation toward decentralization, and a long– versus short–term orientation. With the exception of an external orientation, each of these dimensions is significantly more influential upon entrepreneurship in family firms when compared with non–family firms.

Using the conflict theory lens and insights from the family business literature, we develop a theoretical model concerning the effects of task, process, and relationship conflict in family firms. Family firms are characterized by different control structures and generational involvement. Accordingly, we discuss the expected effect control concentration has on task, process, and relationship conflict, and propose that generational involvement affects the importance of task and process conflict to a family firm's performance. Furthermore, our model suggests that relationship conflict moderates the outcomes of task and process conflict. The degree of relationship conflict in family firms is in turn influenced by altruism, which characterizes interactions among family members.

Family involvement in a business has the potential to both increase and decrease financial performance due to agency costs. In this article we discuss the different nature of agency costs in family firms and specify the combination of conditions necessary to determine the relative levels of agency costs in family and non–family firms through the impacts of agency cost control mechanisms on performance. We also present exploratory results based on a study of 1,141 small privately held U.S. family and non–family firms that suggest the overall agency problem in family firms could be less serious than that in non–family firms.

Given that less than 10% of family owned businesses (FOBs) survive into the third generation, the issue of top executive succession has received a good deal of attention. Unfortunately, the literature on the topic is fragmented, as it deals with different parts of the elephant. This synthetic effort tries to put together the pieces to (1) derive a more encompassing model of what it takes for a succession to succeed, (2) determine the trends, consensus findings, as well as the gaps in our conceptual and empirical knowledge, and (3) suggest areas for further research.

Economics has identified three types of capital as the drivers of economic growth—physical capital, human capital, and knowledge capital. This article introduces the concept of entrepreneurship capital and suggests that it is also an important factor shaping the economic performance of an economy. We define entrepreneurship capital as those factors influencing and shaping an economy's milieu of agents in such a way as to be conducive to the creation of new firms. The hypothesis that entrepreneurship capital is positively linked to economic growth is then tested by examining the relationship between several different measures of entrepreneurship capital and regional economic performance, measured as per–capita income for Germany. The empirical evidence suggests that there is indeed a positive link between entrepreneurship capital and regional economic performance. These results suggest a new direction for public policy that focuses on instruments to enhance entrepreneurship capital.