Family members’ emotional attachment limits family firm growth

lums-1.jpg

Differing levels of family member involvement in senior roles directly affect family businesses’ pursuit of growth strategies.

While non-active family members as major shareholders and non-family members on boards and in top management teams will push for profit and encourage growth through their entrepreneurial drive, there is less risk-taking from active family members. This is especially true when there are multiple generations of the same family involved in senior roles.

New research led by Lancaster University Management School’s Centre for Family Business shows family-related considerations often trump a desire to grow and expand among firms with a greater presence of family members in management.

The study, involving the University of Bergamo and the CYFE, in Italy, is published in European Management Review. It takes in 587 multi-generational family companies from 35 countries around the world who took part in the STEP (Successful Transgenerational Entrepreneurship Practices) survey.

Growth strategies can threaten the family need for liquidity and control over the business, meaning some firms deliberately limit their growth, while others see it as a way of dealing with multiple challenges and helping them pursue a wealthy company.

Family members tend to be more conservative when it comes to business decisions, seeking stability and security for the family and being more loss averse, sticking with past strategies and established routines. This generally encourages inertia and hampers the potential for growth, but the new research looks at the different roles family members can play in senior positions as owners or managers, rather than treating them in a uniform fashion.

“Family involvement in the top management team is particularly important in determining a firm’s growth, due to the critical role of top managers in strategic planning and execution,” said co-author Dr Giovanna Campopiano, of Lancaster University.

“A higher family involvement of family members as owners sees a reduction in that desire to grow the company, as they placed other factors as higher priorities and were more risk-averse when it came to change and expansion.”

“Contrarily, we found that the presence of non-family members as shareholders and passive family members – who do not have an active role in operations – as majority shareholders both increase entrepreneurial orientation of companies, and thus encourage growth. Non-family members and passive family members are less concerned with emotional ties to the company and instead favour financial reward. They provide a level of objectivity not seen among family members and appointing such people to boards would guarantee financial motives drive strategic decisions.”

She added: “When there are multiple generations of the same family involved in management, the older generation pushes the younger generation to defend their values, with financial decisions secondary. There is a confining legacy which limits the pursuit of growth in favour of other factors tied to the connections between family and business."

Enjoyed this? Read more from Lancaster University Management School

Latest news

1

Construction begins on new Civil Service office building in Talbot Gateway Alan McBride Muse Will Town Defence Infrastructure Organisation Jennifer Chard Defence Business Services Cllr Lynn Williams Blackpool Council Garry Bowker Vinci

Construction begins on new Civil Service office building in Talbot Gateway

20 May 2025

2

Skiddle raises over £750,000 for charities Skiddle cheque presentation to Alder Hey Hospital

Skiddle raises over £750,000 for charities

20 May 2025

3

Former Victorian Hotel approved for residential conversion The site

Former Victorian Hotel approved for residential conversion

19 May 2025

4

REVOLUTION PARK: Work starts on Darwen’s new home of advanced manufacturing Oliver Webber, Tracy Clavell-Bate and Tim Webber from Barnfield Group with Cllr Phil Riley, second from right, Leader of Blackburn with Darwen Council

REVOLUTION PARK: Work starts on Darwen’s new home of advanced manufacturing

19 May 2025

5

Two Cuckoo Gins named winners in The Gin Guide Awards 2025 Mark Long

Two Cuckoo Gins named winners in The Gin Guide Awards 2025

19 May 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200pxtrident 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

The Business Network Central & East Lancashire
LBV Hub Networking
22 May 2025 - 22 May 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Preston Freelancer Meet-Up: May
Freelancer Meet-Up May.png.png
LBV Hub Networking
22 May 2025 - 22 May 2025

Preston Freelancer Meet-Up: May

society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Amber River True Bearing quarterly investment seminar
LBV Hub Seminars
22 May 2025 - 22 May 2025

Amber River True Bearing quarterly investment seminar

Cottons Hotel & Spa , Knutsford, WA16 0SU

16:00 - 18:00

Liverpool Business Expo 2025
https---cdn.evbuc.com-images-881365363-4862066883-1-original.20241023-085714.jpeg.jpg
LBV Hub Awards
23 May 2025 - 23 May 2025

Liverpool Business Expo 2025

Aintree Racecourse , Liverpool , L9 5AS

09:00 - 15:00

Advantage: AI – A Workshop for Business Leaders – May 29
Artboard 15.png.png
LBV Hub Seminars
29 May 2025 - 29 May 2025

Advantage: AI – A Workshop for Business Leaders – May 29

Door4 Office, Burnley Wharf, Manchester Road, Burnley, BB11 1JG

09:00 - 11:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin