TM1 Flashcards
(6 cards)
What is a family business?
A firm dominantly controlled by a family with the vision to sustain family control across generations
Key Points:
* Combines family and business systems.
* Involves overlap in ownership, management, and family roles.
* Aims for transgenerational continuity.
(TM1, Slide 33)
What are the four dimensions used to distinguish family from non-family firms?
- Family involvement in ownership (≥50% for private firms; ≥20% for public firms).
- Family involvement in management (active participation in top management).
- Generational involvement (control beyond founding generation).
- Family intention to preserve control (transgenerational vision).
(TM1, Slides 7-10)
What are the 5 dimensions of the Family Business Assessment Tool?
- Amount of family control (ownership/management %).
- Complexity of control (number of owners/managers).
- Business setup (single vs. portfolio of firms).
- Philosophy of control (family-first vs. business-first goals).
- Stage of control (generation, succession intentions).
(TM1, Slide 15)
How are family firms classified based on family/business logic?
Types of Family Firms
- Family-first firms: Prioritize family harmony over profits (e.g., nepotism in HR).
- Business-first firms: Professionalized, profit-driven (e.g., non-family CEOs).
- Family business-first firms: Balance family and business goals.
- Immature firms: No dominant logic; small, informal operations.
(TM1, Slides 34-41)
What is socioemotional wealth (SEW)?
not so sure
The non-financial benefits a family derives from controlling a firm (e.g., identity, legacy, emotional ties). that:
- Prioritize family goals over profits (e.g., keeping unprofitable divisions).
- Bias against risky investments (e.g., avoiding R&D).
FIBER Dimensions:
Family control,
Identification with firm,
Binding social ties,
Emotional attachment,
Renewal through dynastic succession.
What are common challenges of a family firm?
Succession planning (only 12% survive to 3rd gen).
Conflict (role overlap, generational gaps).
Resource constraints (limited external capital).
SEW trade-offs (e.g., resisting innovation to preserve tradition).
