The Family Business Group Phenomenon by Marita Rautiainen & Peter Rosa & Timo Pihkala & Maria José Parada & Allan Discua Cruz

Author:Marita Rautiainen & Peter Rosa & Timo Pihkala & Maria José Parada & Allan Discua Cruz
Language: eng
Format: epub
ISBN: 9783319985428
Publisher: Springer International Publishing

8.6 Accepting the Complexity of the Family Business Group

The basic challenge in problem solving is defining the problem first. We opine that once researchers and decision-makers start conceptualizing a family business group as a complex adaptive system, they will realize that rather than negate the complex nature of the system (by trying to simplify it), they should start by embracing the complexity (Das and Mukherjee 2006). Considering complex adaptive systems theory as a framework for family business group research, we find that the three sets of interlinked interests (those of owners, family members and managers), responding to evolving business landscape in order to find an appropriate fit, give rise to a constantly changing pattern of ownership and group structure. We have traced this shifting pattern formation and evolution in the presented case, running over 140 years. By giving in-depth attention to a particular ten-year slice of this history (from 2000 to 2010), it was seen that all attempts to simplify the business group came to naught, as the system can only be understood through a lens of complexity. Thus, simplifying some subsystem of the business group may lead to complexity in other subsystems.

We contend that, through the complex adaptive systems framework, the highly interdependent development processes of a family business group can be approached and new models of long-lasting family businesses can be developed. Patterns can be evinced over a longer duration, as can the constituent’s schemas. This understanding can help in creating appropriate feedback loops, as well as helping in the co-evolution of all constituents in such a way that the system reaches a relatively stable state. Our research indicates that another round of restructuring was done in 2010 when the group was divided into two different structures: the public corporation and the private holding company (see Fig. 8.2). In this process, the companies were transferred between the two groups based on their synergies and the family’s own interests, as well as being based on maintaining family control and ownership. In this sense, the case highlights the most typical characteristics of a family business, as the logics guiding the development of the group are not solely based on economic issues but also include the interests of the family and its members. These measures may be decisive for keeping the family members interested in the business and even maintain the entrepreneurial drive within the group. In this case, at this size and managed by hired non-family CEOs, the family members’ participation in the daily operations and initiating new ventures is likely to be lowered dramatically (Chua et al. 2011). Instead, it seems that each of the family members is already guided by his or her own interests and separate entrepreneurial ventures that he or she is willing to associate with the family business group, making it thus more complicated.

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