The influence of family firms on the sustainability of nascent enterprises

Scholes, Louise, Hu, Raymond Xiaoti, Hughes, Mat, Hughes, Paul and You, Yi (2018) The influence of family firms on the sustainability of nascent enterprises. 14th EIASM Workshop on Family Firm Management Research, , Larnaca, Cyprus. 17 - 19 May 2018.

Abstract

We examine the influence of family and family businesses on the sustainability of startup/nascent enterprises set up by family members. Family firms can expand by setting up new enterprises so that their offspring or siblings can start their own business. This has many advantages for the established and for the new firms. For the established firms funds provided for the start-up can be ring-fenced so the established firm can grow with reduced risk. It also provides family firms with a means of training the younger generation before they take over the whole family business. Sustainability for the start-up can come from the provision of additional resources that they often lack such as additional funding, access to a network of stakeholders such as a skilled workforce, customers, suppliers, and management expertise. However, there may be some disadvantage for the fledgling firm with this arrangement if there is conflict in the decision-making process between a dominant family firm founder and the new CEO of the fledgling business. This raises interesting questions about how decision-making in the startup/nascent firm will be affected by the family firm and how this in turn affects its sustainability in the longer term.

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Contributors

Author: Raymond Xiaoti Hu

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