Do Family and Businesses Cultures Clash in the Same?

There are different definitions of a family business depending on different geographical locations and according to different scholars. In this essay I will be siding with the family business definition from the European Commission, which adhere to three main criteria. These are that firstly, the decision-making rights of the business are in the possession of the person who originally established the business. Secondly, that the majority of the decision making rights are direct or indirect. Thirdly, that one representative of the family or kin is formally involved in the governance of the business. However, this definition is fairly specific so therefore I will be defining the family business as: one or more family members in the business that is owned and or managed by that family. There are many different aspects to the family and business cultures within the SME, so therefore it seems highly appropriate that the scope of this essay is narrowed down. The essay will specifically be focusing on how family embeddedness has both positive and negative implications for the cultures within the SME and how the socio-historical contexts of the family and business are changing and how therefore both of these factors can cause family and business cultures to clash.

Jack and Anderson (2002) describe embeddedness as “the nature, depth and extent of an individual’s ties to the environment” (Jack and Anderson 2002:468). Family embeddedness seems to be a central theme of entrepreneurship, particularly when discussing family business. Several scholars including Aldrich and Cliffe (2003) have discussed “the family embeddedness perspective” and have highlighted the inextricable link between the both family and businesses cultures in the SME. It is specifically mentioned that, “family and business dynamics are highly interrelated” (Aldrich and Cliffe 2003:574). This being the case, it seems rather likely that at some point business cultures will clash with family cultures and vice versa. Moreover this inextricable link or family embeddedness will have both positive and negative implications for family and business cultures within SMEs.

Embeddedness and especially social embeddedness is an important factor in entrepreneurship and consequently family business (Jack and Anderson 2002). It is predominantly important because it helps in the identification of resources and helps access support when needed (Jack and Anderson 2002). For instance Indie Wilson-Fish (2013) explained how “At first it took at good three years to say ‘this is business’ and ‘ this is home.’” Wilson-Fish (2013) revealed that this was not a hindrance because initially all effort had to be placed into the business as it was a start up thus the inextricable link provided a focus. However Wilson-Fish (2013) expressed that now that the business is established the inextricable link can encroach on family life and that this is a challenge. This view reflects