Cosa Nostra

What is it about family firms? While they are ubiquitous in the economy of the US and internationally, only relatively recently have we seen an increase in research attention. In our own research we have examined family firms to try and see what makes them different, and in particular how family firms may be able to maintain an entrepreneurial orientation.

In the the first study, coauthored with Shaker Zahra (University of Minnesota) and Carlo Salvato (Bocconi University), we explored what it is about the cultures of family firms that is supportive of entrepreneurship. We found that a number of aspects of organizational culture were significantly associated with entrepreneurship in family firms and that these aspects of culture were generally more important for family than for non-family firms.
1. External orientation: an emphasis on learning from the external environment was positively associated with entrepreneurship in family firms.
2. Coordination & control - entrepreneurial family firms tend to have a decentralized approach to decision making.
3. Orientation to time - entrepreneurial firms tend to emphasize the long-run when allocating resources.
4. Regardless of family status, entrepreneurial firms are able to balance their emphasis on the individual versus the group. While individuals are an important source of ideas, the integration of the collective organization is essential to the exploitation of new opportunities.

In a second study, my colleagues (Gaylen Chandler, Utah State University and Dawn DeTienne, Colorado State University) and I examined how family firms differ from non family firms in the entrepreneurial processes that they use. We were particularly interested in the ways in which family firms identify opportunities and then the strategic decision making processes they use. We found two interesting differences for family firms.

1. Family firms tend to be less spontaneous and creative than non-family firms in their opportunity identification processes they prefer.
2. Perhaps as a result of the unique social networks surrounding family firms, the entrepreneurial opportunities they do identify tend to be less unique and innovative than those found by non-family firms.
3. When they are exploiting these new entrepreneurial opportunities, family firms tend to use a different decision making style. Non-family firms use a text-book approach to strategic decision making, starting from the goals they want to achieve, and working back towards the resources and capabilities needed to reach those goals. The family firms score less strongly on this approach to decision making. They may prefer the alternative model, where they start from the resources at hand and try to identify goals that may be achievable from this starting point.

Family firms tend to be characterized as more staid and less risk oriented - perhaps because a primary goal is the creation and preservation of family wealth. The decision styles and opportunity identification processes we have observed support this view. Interestingly, these preferences of family firms may inhibit them from being the next Google .

*Update: since this blog was first published last year, we have now begun investigating how family versus non family firms in China may differ, and in particular how this may influence their approach to HR and entrepreneurship. Please come back soon for the new results!

On the way up, or down?

A majority of adults don't know what social networking is, and a growing number of those who do are losing interest according to this survey reported on Mashable.com. So, is this a slowly bursting bubble? Is it a case of people not yet seeing the potential to leverage a technology in a way that has a low investment of time in exchange for positive returns?

There are clearly some folks who are leveraging these technologies to create value. Specialized social networks are springing up to support professional communities such as this one, and this one... Companies, consultants, and even academics are leveraging them.

So, is this 'fad' on the way up or on the way down?

Job Hunting 2.0?

OK This is a great story. Over at the blog 'One Day One Job' Willy Franzen is reporting on a cool experiment. They encouraged new graduates to advertise themselves to employers using Faceook. The results were pretty interesting.

This story reflects an updated version of what we learned in research by Mark Granovetter some 30 years ago: people find jobs from 'weak' ties rather than strong ties. Strong ties are close friends and family, people with whom you have frequent and repeated interactions. These kinds of ties are great for trust and friendship exchanges, however when it comes to finding out about unique opportunities, they are less useful. Why? Because these networks of strong ties are quite 'dense' - everyone has similar, and therefore redundant information. What you need for finding unique information (e.g. job opportunities) is connections to a diverse network. This means weaker connectioned to a broader range of unconnected people.

Facebook, linked-in and other similar social networks are exactly the sort of networks that can provide a broad range of 'weak' ties. What Willy Franzen has demonstrated with this experiment is how we can leverage these technologies to exploit a true fact about job hunting: the strength of weak ties!

Management 2.0?

An interesting post by Richard Denison suggesting that in the so-called 2.0 environment, management must change it's ways. In particular, he notes:

It strikes me, that to be a successful 2.0 manager, you need to:

• know when to sit and watch
• know when to let things run their course and for how long
• know when to intervene (or engage) and how to do that without alienating everyone
• realise that management and control are not the same thing … relinquishing control can be a good management technique … and …
• be humble enough to accept that there may be more than one way to get things done and our way might not suit everyone’s needs.

Well, this is rather interesting. As noted by one commentor, these rules seem to reflect coaching, and also leadership, versus management. After all, in a world where the employee knows more than the 'boss' about customers/processes/opportunities, we have to find ways to support and encourage sharing and cooperation - shotgun weddings don't work here!

What can we learn from web2.0 and social networking? Learning how to build relationships, nurture conversations and grow communities online can also spill over into 'real life' where the manager.as.coach can do a better job of providing resources, feedback, goals and constructive advice, and standing back when necessary.