Does the Family Business Interaction Factor Represent a Resource or a Cost?

The authors investigate the interaction between families and their businesses and the impact of this interaction on management and governance practices used. Family businesses participating in the family business programs at three U.S. universities completed questionnaires pertaining to family and business culture and practices. The research draws on the agency cost theory, governance, systems theory, and the resource-based view of organizations literature in the consideration of family firm attributes and the relationship between family members, nonfamily managers, and the firm. Chief executive officers generally perceive management practices, succession processes, and family environment more favorably than do either other family members or nonfamily managers. There are no significant differences in perceptions between active and inactive family members on the family scales. The difference in perceptions of the family firm between nonfamily managers and family managers is discussed as a challenge to the full utilization of professional management capabilities by family firms. Finally, owning family unity, the perception of business opportunity, and how positive the relation between firm and family is influences managerial and governance practices and therefore represents a resource for competitive advantage and sustained business performance.