The contribution of familiness to the performance of family businesses

Abstract

While family businesses are known to consistently outperform non-family businesses in financial terms over the long run, family businesses have received comparatively little attention from researchers. In this article an explanation is offered for this superior performance in the form of the concept of "familiness" - the unique contribution that family involvement brings to any business (which is divided into founder capital and family capital). It is explained that family businesses possess no general competitive advantage over non-family businesses. The unique strength of successful family businesses does not lie in their espoused advantages, but in their ability to sustain and adapt, through family capital, the culture created by the founder. An evolutionary conceptual model of the creation and transmission of familiness is provided to explain how this unique strength influences family business performance over the long run.