An assessment of harmonious family relationships in small and medium-sized family businesses

Abstract

Family businesses are fast becoming the dominant form of business enterprise in both developing and developed economies. Family businesses are also being recognised as a potential driver of economic growth and wealth creation in the world. Family businesses in particular, have been making a positive contribution towards the South African economy for the last 300 years. Definitions based on the components of family involvement such as management, ownership, governance, and succession, are easy to operationalise. Unfortunately, they cannot distinguish between two firms with the same level of family involvement when one considers itself a family business and the other does not. Therefore, there is a need to develop a definition that captures the essence of the family business and, as such, may be used to distinguish the family business, in theory, research, and practice. The primary objective of this study was to empirically explore and evaluate the determinants of harmonious family relationships and family businesses in small and medium-sized family businesses. The empirical study was conducted by means of a field study using a structured questionnaire. The reliability of the questionnaire was determined by calculating the Cronbach alpha coefficient of the constructs. The purpose of the literature review was to align the determinants of family harmony in family businesses according to a structured questionnaire developed by Prof. Elmarie Venter (NMMU), Dr. Shelly Farrington (Van Eeden) (NMMU) and Dr. Stephan van der Merwe (NWU). Data from 109 respondents linked to 27 family businesses were collected and analysed. The results indicate that a significant proportion of the variation in harmonious family relationships was explained by communication and how to manage and avoid conflict, through drawing up family constitutions as well as family forums. A possible total of 54 family businesses were identified and a total of 252 questionnaires (161 active members and 91 inactive members) were handed out to family businesses restricted to Gauteng, Free State and the North West province areas.