Key Interpersonal Relationships of Next-Generation Family Members in Family Firms

Abstract

Family firms of all sizes play an important role in our society. They account for 50 percent of the nation's gross national product, as well as half of the nation's work force (Beckhard and Dyer 1983; Dyer 1986; Lansberg, Perrow, and Rogalsky 1988; Rosenblatt, Mik, Anderson, and Johnson 1985). Many of those employed are next-generation family members, also known as potential heirs; however, only limited research exists concerning the personal experience of these individuals within the family firm. While succession process are complex -- and involve many factors at the individual, relational, and organizational level of analysis (Handler 1989)--this article focuses on two interpersonal relationships which are central to the next-generation family member's They are the intergenerational relationship between current and next generation). Both relationships are critical because of their impact on succession processes and future strategic plans for the firm. Key themes related to each type of relationship emerged from the qualitative analysis of data from personal interviews conducted with 32 next-generation family members from 32 organizations. BACKGROUND Critical to the next-generation family member's experience of succession is the quality of his or her relationship with the firm's founder (first generation leader) or owner (second, third, fourth, or fifth generation leader). While theorists have suggested this relationship is important to the succession process (Lansberg 1986, Patrick 1985, Stempler 1988), there has been minimal investigation of its nature and evolution. For example, Patrick (1985) researched individual's perceptions of satisfaction and their working relationships with their fathers. Her findings suggest that is entirely possible to find working in the family business with father as boss to be a satisfying experience. On the other hand, Davis's study, which was limited to the relative life stages of father and son, indicated that the relationship was relatively harmonious when the father was age 50-59 and the son was age 23-32; but it was relatively problematic when the father was age 60-69 and the son was 34-40. Using quantitative analysis, weak support was obtained for the hypothesis that a problematic relationship between father and son would exist when the father was 41-45 and the son was 17-22 (Davis 1982). The intragenerational relationship between siblings (or other members of the same generation) also has received little attention. Stories on interpersonal conflict are reported in the popular press.(1) However, no established theory successfully describes sibling behavior in family firms. Friedman (1989) attempted to apply conflict management theories to siblings in family firms. He suggests that rivalry is common among siblings, and the important question is how to manage it in the family firm. In addition, family business consultants have made suggestions for minimizing conflict. For example, one well-known specialist indicates that: In successful family businesses, both siblings and the parent-owner work to make sibling rivalry positive rather than negative in effect. They use such techniques as (1) determining a general and well-publicized philosophy to govern salaries and promotions, (2) assigning siblings separate positions within the company, and (3) developing a code of conduct that will govern siblings' behavior among themselves (Ward 1987). Following a discussion of methodology, the two key interpersonal relationships and their impact on succession will be considered in detail. METHODOLOGY Given that few systematic studies of succession in family firms have been done from the perspective of the next-generation family member, this research was designed to be exploratory, descriptive, and theory-generating. An intensive study of 32 next-generation family members from 32 organizations was conducted. …

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