Micro-family-owned business : transitory survival mechanism or long term wealth creator?

Principal Topic: Entrepreneurship is key to employment, innovation and growth (Acs & Mueller, 2008), and as such, has been the subject of tremendous research in both the economic and management literatures since Solow (1957), Schumpeter (1934, 1943), and Penrose (1959). The presence of entrepreneurs in the economy is a key factor in the success or failure of countries to grow (Audretsch and Thurik, 2001; Dejardin, 2001). Further studies focus on the conditions of existence of entrepreneurship, influential factors invoked are historical, cultural, social, institutional, or purely economic (North, 1997; Thurik 1996 & 1999). Of particular interest, beyond the reasons behind the existence of entrepreneurship, are entrepreneurial survival and good ''performance'' factors. Using cross-country firm data analysis, La Porta & Schleifer (2008) confirm that informal micro-businesses provide on average half of all economic activity in developing countries. They find that these are utterly unproductive compared to formal firms, and conclude that the informal sector serves as a social security net ''keep[ing] millions of people alive, but disappearing over time'' (abstract). Robison (1986), Hill (1996, 1997) posit that the Indonesian government under Suharto always pointed to the lack of indigenous entrepreneurship , thereby motivating the nationalisation of all industries. Furthermore, the same literature also points to the fact that small businesses were mostly left out of development programmes because they were supposed less productive and having less productivity potential than larger ones. Vial (2008) challenges this view and shows that small firms represent about 70% of firms, 12% of total output, but contribute to 25% of total factor productivity growth on average over the period 1975-94 in the industrial sector (Table 10, p.316). ---------- Methodology/Key Propositions: A review of the empirical literature points at several under-researched questions. Firstly, we assess whether there is, evidence of small family-business entrepreneurship in Indonesia. Secondly, we examine and present the characteristics of these enterprises, along with the size of the sector, and its dynamics. Thirdly, we study whether these enterprises underperform compared to the larger scale industrial sector, as it is suggested in the literature. We reconsider performance measurements for micro-family owned businesses. We suggest that, beside productivity measures, performance could be appraised by both the survival probability of the firm, and by the amount of household assets formation. We compare micro-family-owned and larger industrial firms' survival probabilities after the 1997 crisis, their capital productivity, then compare household assets of families involved in business with those who do not. Finally, we examine human and social capital as moderators of enterprises' performance. In particular, we assess whether a higher level of education and community participation have an effect on the likelihood of running a family business, and whether it has an impact on households' assets level. We use the IFLS database compiled and published by RAND Corporation. The data is a rich community, households, and individuals panel dataset in four waves: 1993, 1997, 2000, 2007. We now focus on the waves 1997 and 2000 in order to investigate entrepreneurship behaviours in turbulent times, i.e. the 1997 Asian crisis. We use aggregate individual data, and focus on households data in order to study micro-family-owned businesses. IFLS data covers roughly 7,600 households in 1997 and over 10,000 households in 2000, with about 95% of 1997 households re-interviewed in 2000. Households were interviewed in 13 of the 27 provinces as defined before 2001. Those 13 provinces were targeted because accounting for 83% of the population. A full description of the data is provided in Frankenberg and Thomas (2000), and Strauss et alii (2004). We deflate all monetary values in Rupiah with the World Development Indicators Consumer Price Index base 100 in 2000. ---------- Results and Implications: We find that in Indonesia, entrepreneurship is widespread and two thirds of households hold one or several family businesses. In rural areas, in 2000, 75% of households run one or several businesses. The proportion of households holding both a farm and a non farm business is higher in rural areas, underlining the reliance of rural households on self-employment, especially after the crisis. Those businesses come in various sizes from very small to larger ones. The median business production value represents less than the annual national minimum wage. Figures show that at least 75% of farm businesses produce less than the annual minimum wage, with non farm businesses being more numerous to produce the minimum wage. However, this is only one part of the story, as production is not the only ''output'' or effect of the business. We show that the survival rate of those businesses ranks between 70 and 82% after the 1997 crisis, which contrasts with the 67% survival rate for the formal industrial sector (Ter Wengel & Rodriguez, 2006). Micro Family Owned Businesses might be relatively small in terms of production, they also provide stability in times of crisis. For those businesses that provide business assets figures, we show that capital productivity is fairly high, with rates that are ten times higher for non farm businesses. Results show that households running a business have larger family assets, and households are better off in urban areas. We run a panel logit model in order to test the effect of human and social capital on the existence of businesses among households. We find that non farm businesses are more likely to appear in households with higher human and social capital situated in urban areas. Farm businesses are more likely to appear in lower human capital and rural contexts, while still being supported by community participation. The estimation of our panel data model confirm that households are more likely to have higher family assets if situated in urban area, the higher the education level, the larger the assets, and running a business increase the likelihood of having larger assets. This is especially true for non farm businesses that have a clearly larger and more significant effect on assets than farm businesses. Finally, social capital in the form of community participation also has a positive effect on assets. Those results confirm the existence of a strong entrepreneurship culture among Indonesian households. Investigating survival rates also shows that those businesses are quite stable, even in the face of a violent crisis such as the 1997 one, and as a result, can provide a safety net. Finally, considering household assets - the returns of business to the household, rather than profit or productivity - the returns of business to itself, shows that households running a business are better off. While we demonstrate that uman and social capital are key to business existence, survival and performance, those results open avenues for further research regarding the factors that could hamper growth of those businesses in terms of output and employment.

Managing the family business

Managing the family business is a timely and thought provoking book that should encourage greater debate about where family businesses are going and what issues are paramount. The editors have made a consious attempt to invite and encourage academic and industry practitioners to contribute chapters.

1977 survey of minority-owned business enterprises /

MB77-1. Minority-owned businesses, Black -- MB77-2. Minority-owned businesses, Spanish origin -- MB77-3. Minority-owned businesses, Asian Americans, American Indians, and others -- MB77-4. Minority-owned businesses, summary.

1987 economic censuses. Survey of minority-owned business enterprises.

"MB87-1."

Unpacking the opportunities for change within a family owned manufacturing sme : a design led innovation case study

This thesis explored how an Australian, family owned, manufacturing firm responded to a design led innovation approach as conducted by the action researcher. Specifically, it investigated the barriers and opportunities that arose within the firm when trying to affect change to drive innovation. In doing so, key opportunities were identified that could help the firm to integrate a design led approach and remain competitive within an increasingly accessible global marketplace.

Rabb Family/Stop & Shop collection, 1912-1989.

The Rabinovitz/Rabb family arrived in Boston from Russia in the 1890s. Around 1914 they founded Economy Grocery Stores, which became Stop & Shop in 1946. In addition to building their grocery company into a successful business, the family is known for its philanthropy and active involvement in the Jewish community. The collection contains materials relating to the Rabb family and to the business operations of Stop & Shop until 1989. The materials in this collection include historical sketches, newspaper clippings, press releases, correspondence, memoranda, minutes, reports, advertisements, certificates, speeches, interviews, films, and photographs.

As empresas familiares e os desafios do profissional de relações públicas

The enterprises are in the midst of a competitive and open market, in which, rapidly, new enterprises are created, international competitors are installed on the local market and products and services are invented or improved to ensure quality, sophistication and low cost. In this scenario, the familial enterprises seek survival through new information and strategies to solve existing conflicts and overcome the challenges of the globalized market. However, resistance to change is a factor common to more traditional familial enterprise culture, therefore, modify solid structures, built over many years, reflects insecurity, fragility and threats facing the different. This project aims to analyze the brazilian familial enterprise, in particular the enterprise Móveis Zacarias, as its historical trajectory, representativeness, economic importance, concept, structure, culture and problems that are peculiar, for example, problems with succession, management, professionalism and communication. In addition to demonstrating the importance of Public Relations professional in mediating conflicts in family businesses. In addition to demonstrating the importance of PR, that when using any of the communication tools, can mediate and facilitate the relationship between members of the family business, and maintain both systems, leading to cooperation between business and family through preventive actions

El Branding a les empreses familiars turístiques: El cas del Grup Mas de Torrent

El projecte estudia la influència de la família en el procés de creació d’una marca cooperativa (branding) d’una empresa familiar turística, així com en l’activitat empresarial que desenvolupa. Aquest es centra en el Grup Mas de Torrent

Empresa familiar: de la botiga a la multinacional

Les empreses familiars formen el teixit empresarial més important del nostre país. NO hi ha un perfil únic per definir-les, perquè n'hi ha de grans i de petites, n'hi ha que treballen en un àmbit local i també hi ha grans multinacionals. Amb tot, comparteixen diversos aspectes que són els que, a la fi, els donen carta d'identitat

‘Salida honrosa al negocio familiar’: la metodología del caso aplicada al derecho de la empresa

En la presente comunicación pretendo narrar la experiencia y conclusiones que he obtenido tras implantar la metodología del caso en la asignatura Practicum de la Licenciatura en Derecho de la UPV/EHU. La actividad se ha realizado en el marco del programa Eragin de la UPV/EHU, destinado a formar a su profesorado en el uso de metodologías activas. Tanto la redacción del caso con su nota de enseñanza y la implantación del mismo, ha sido supervisado por el Centro Internacional de Casos de la Universidad de Monterrey y expertos de la UPV/EHU. He utilizado un caso real (aunque disfrazado) de una empresa familiar de la industria chocolatera que recibe una oferta de compra de una multinacional

The importance of succession planning in family-owned Small and Medium Enterprises in Portugal

This work project addresses the importance of succession planning in family-owned Small and Medium Enterprises (SMEs). This is directly related with Human Resources Management (HRM) given that there is an HRM long term vision in order for the succession to be planned on time and benefit the companies. This study focused on SMEs since these are the entities that have a minor focus on HRM practices. A total of 22 in-depth interviews were conducted and analyzed. Selected SMEs owners/managers and successors/antecessors were interviewed with the purpose of acquiring more insight on the level of succession planning, using a qualitative methodology from which the process of succession was derived. This study unveils that the first step in this process is related to the definition of criteria to be a good successor, followed by the choice of possible successors, being the children the natural successors, but also considering other potential ones, and finally some considerations on the future of these companies.

Micro-family-owned businesses in hostile environment : future engine for growth?

Using panel data from the four waves of the Indonesia Family Life Survey in 1993, 1997, 2000 and 2007 we investigate the prerequisite for and contribution of micro-family-businesses to economic development. We find that family-owned firms are on average fairly profitable compared with the industrial sector profit standard. Failure rates between 1997 and 2000 are very low (about 10%), while the industrial sector experimented a massive shakeout of about 33% in the wake of the 1997 crisis (Ter Wengel & Rodriguez, 2006), with an increase in the number of family-businesses between the two years of observation. This paper contributes to the economics of entrepreneurship studies by continuing the discussion of entrepreneurship in hostile business environments (Baumol, 1990; Sobel, 2008).

Unpacking the opportunities for change within a family owned manufacturing SME : a design led innovation case study

The following paper presents insights found during an ongoing industry engagement with a family-owned manufacturing SME in Australia. The initial findings presented as a case study look at the opportunities available to the firm engaging in a design led approach to innovation. Over the period of one year, the first author’s immersion within the firm seeks to unpack the cultural, strategic, product opportunities and challenges when adopting design led innovation. This can provide a better understanding of how a firm can more effectively assess their value proposition in the market and what factors of the business are imperative in stimulating competitive difference. The core insight identified from this paper is that design led innovation cannot be seen and treated as a discrete event, nor a series of steps or stages; rather the whole business model needs to be in focus to achieve holistic, sustainable innovation. Initial insights were found through qualitative interviews with internal employees including: overcoming silos; moving from reactive to proactive design; empowerment; vision for growth and the framing of innovation.

From production to purpose : using design led innovation to Build Strategic Potential in a Family-Owned SME

There is an evident need to develop the strategic capabilities of companies from within, to ensure competitive competence in a time where strategy is a necessity. This paper is based on the first 4 months of a longitudinal embedded case study of a family-owned Australian small to medium enterprise, in their journey towards design integration. The first author was embedded as a ‘Design Innovation Catalyst’ to collaborate on overcoming early barriers of strategic development, using design led innovation. Action research methodology, semi-structured interviews with seven out of eight employees and a reflective journal revealed the absence of a shared vision, conflicting drivers and a focus on operational efficiency rather than strategy. Through the Catalyst’s facilitation, a company vision, general awareness, practice and knowledge in strategic development have emerged as the first steps to generating strategic design competence within the firm.

Shifting from production to purpose : facilitating design-led change in a small family-owned enterprise

This research was embedded as a Design-led Innovation catalyst within a family-owned small business, to explore the application of a design program to achieve organizational change. Based on the findings two new models for increasing design integration within an organisation were proposed, establishing a range of pre-requisites needed for a firm to progress. Struggling firms may leverage their use of design and strategy by embedding a catalyst in a new cross-disciplinary role providing the necessary internal assistance. The study demonstrated that even non-design or strategy-inclined family-owned SMEs could benefit from embarking on a design-led journey to boost their competitive preparedness.