Antecedents of conflict in family firms: An empirical study

Michael Wayne Wakefield, University of Nebraska - Lincoln

Abstract

It is widely acknowledged that family firms are structured differently than publicly-owned businesses. The opportunity is great for conflict to emerge from a variety of sources, including (1) carry-over relationships between family members and family employees, (2) the competing interests of family members (especially as the business is held in the family for a number of generations), and (3) strife over how to employ scarce resources. In the family business literature, conflict is a common theoretical construct in family business literature that is assumed to have both antecedents and a link to organizational performance, but neither has been empirically tested. This study is designed to examine the antecedents of family business conflict. Upper Echelons Theory and Coalitions Theory are employed as a lens through which family businesses may be analyzed. Upper Echelon Theory states that organizations are a reflection of their upper management through the decisions that they make. It is argued that family business is a reflection of the family members who make decisions, so it is important to consider the factors that affect the decisions that are made as well as the decisions themselves. Family business conflict is a critical factor that can alter decisions and decision making, and is the focus of this study as the dependent variable. Four categories are theoretically salient in determining the level of family business conflict: (1) the family dynamic; (2) incumbent/succession issues; (3) resource scarcity; and, (4) non-family influences. A total of fourteen variables are grouped into these four categories. A split sample technique was used to create a full multiple regression model which was then tested on the unselected observations. The variables were entered into the model with their conceptually grouped blocks. The only block which did not significantly alter the model was the block of non-family influences. The model predicted the scores for the calibration sample with only minor shrinkage. The model was reduced to parsimonious predictors using the same technique, with similar results. Follow-up analyses tested all of the variables with the full sample to determine if different types of conflict in the family business could be associated with different sources. The conflict variables identified in the follow-up analysis are conflict over money, managerial roles, strategic vision, and ownership. Results confirmed that there are distinctly different sets of variables that are related to different types of conflict. Overall, the results indicate that social interaction of family members is the single variable most significantly related to family business conflict. As hypothesized, conflict is greatest when family members' interactions are independent as opposed to close. Ages of the incumbent is found to be inversely related to various types of business conflict. Resource scarcity is a source of conflict in family business, and reliance on family funds is a stronger predictor of conflict than is reliance upon bank funding. An unexpected finding is that the use of consultants/counselors are positively and significantly correlated to conflict. This may represent a lag effect between the use of counselors and the conflict levels that cannot be detected through multiple regression. The results suggest that understanding the antecedents of conflict as a research topic in family business has the potential to improve our understanding of the causes and cures of family business conflict, perhaps as a mediating link to performance.

Subject Area

Management|Business community|Families & family life|Personal relationships|Sociology

Recommended Citation

Wakefield, Michael Wayne, "Antecedents of conflict in family firms: An empirical study" (1995). ETD collection for University of Nebraska-Lincoln. AAI9604443.
https://digitalcommons.unl.edu/dissertations/AAI9604443

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