Financial Characteristics of Family Businesses and Financial Aspects of Succession

Family businesses are special in many respects. By examining their financial characteristics one can come to unique conclusions/results. This paper explores the general characteristics of the financial behaviour of family businesses, presents the main findings of the INSIST project’s company case studies concerning financing issues and strategies, and intends to identify the financial characteristics of company succession. The whole existence of family businesses is characterized by a duality of the family and business dimensions and this remains the case in their financial affairs. The financial decisions in family businesses (especially SMEs) are affected by aspects involving a duality of goals rather than exclusively profitability, the simultaneous presence of family and business financial needs, and the preferential handling of family needs at the expense of business needs (although it has to be said that there is evidence of family investments being postponed for the sake of business, too. Family businesses, beyond their actual effectiveness, are guided by individual goals like securing living standards, ensuring workplaces for family members, stability of operation, preservation of the company’s good reputation, and keeping the company’s size at a level that the immediate family can control and manage. The INSIST project’s company case studies revealed some interesting traits of family business finances like the importance of financial support from the founder’s family during the establishment of the company, the use of bootstrapping techniques, the financial characteristics of succession, and the role of family members in financial management.

What Determines the Innovativeness of Polish Family Firms? Empirical Results and Theoretical Puzzles

This article will review and synthesize the existing research on the innovativeness of Polish family firms in order to separate universal factors that influence the degree of innovativeness of firms from the factors which distinctively influence the innovativeness of family firms. To better assess the innovation propensity of family firms the author will work out the typology by combining the variety of innovations with particular features of family firms and the industrial context. A more nuanced approach will help to understand why the academic literature is inconclusive with regards to the question of whether family firms are anti-innovative (as some authors claim), pro-innovative or ambivalent with regard to innovations. In particular it will be argued that when assessing family firms’ innovativeness special attention needs to be paid to the impact of the management of intergenerational change on the propensity to innovate, as this process relates to the capacity for investments into innovativeness and the time horizon of the owner’s decisions.