Infoskripsi arrow Reference arrow Resource arrow Reference: Family Business Definition
Reference: Family Business Definition





Many family businesses do not survive three generations (Widyasmoro, 2008). Business failure is mostly due to continuous internal conflicts by the family members seeking to acquire the utmost power in the succession of executives in the business. Conflicts arise in family businesses when the time comes for the business to pass from one generation to the next in the process of inheritance.  According to the Family Firm Institute and research done for the Family Business Review (Hall, 2008) only 30% of all family-owned businesses survive a transition into the second generation, while only 12% survive into the third and  only 3% transition to the fourth generation and beyond.  There is an idiom in Indonesia for family business that "the first generation is the founder, the second generation is the developer and the third generation is the destroyer". 

Tracey (2001: 3-4) stated that : A business is a family business if its owners think it is and want it to be. This might sound simplistic, but it is not. Most Australian businesses are family-owned, but only a small percentage of them see themselves primarily of such. Most define themselves in term of what they do; retail, farming, manufacturing or whatever, that’s why he described  the  family business in terms of:
  • It is big. In 1997 a survey by Monash University found that about 75% of Australian business could be classified as family-owned. The total value was about $1.2 trillion, which was then about three times that of the companies listed on the Australian Stock Exchange. Family business is by far the largest sector in our economy; the biggest employer, the biggest tax-payer, the biggest exporter and the biggest contributor to gross domestic product.
  • It is diverse. Some of our largest public and private corporations are family business (consider Rupert Murdoch, Kerry Packer and Richard Pratt) and so are some of the smallest (consider your local milk bar). Most manufacturers, most retailers and most farms in Australia are family businesses.
  • It is profitable. Research in Australia and overseas (Lindsay and Craig, 2000) confirms that family-owned businesses (including publicly-listed companies that are dominated by a family group) are more profitable than others. The reason is not hard to find: they are dealing with their money, their future and their dream.  
In the last few years, numerous definitions of the family business have been proposed, most of which focus on a series of factors such as ownership, control, management and the desire for intergenerational continuity or culture. Researchers generally agree that family involvement in the business is what makes the family business different (Miller & Rice, 1967). Bernard, (1975: 42) also defines a family business, as being controlled by the members of a single family, specifically in practice, Most researchers interpret family involvement as ownership and management (Handler, 1989). Churchill and Hatten (1987) prefer to add to this the existence of a family successor. Moreover (Carsrud, 1994: 40) clarify the family business is closely-held  ownership of the firm and where policy making is dominated by members of an "emotional kinship group".
Having reviewed over 250 papers in the family business literature, Chua, Chrisman and Sharma (1999) explain that  based on the components of family involvement - management, ownership, governance, and succession - the definition of family business are easy to put into operation. Unfortunately, they cannot distinguish between two firms with the same level of family involvement when one considers itself a family business and the other does not. Therefore, there is a need to develop a definition that captures the essence of the family business and, as such, may be used to distinguish the family business, in theory, research, and practice, from the non-family business.
That's why defining a family business by its components does not capture its essence, which consists of the vision held for the firm by a family or a small group of families and the intention of the dominant condition to shape and pursue this vision, potentially across generations of the same family or small group of families.
Consequently, some researcher propose a definition for  family business based on these two points. They believe that this definition captures the essence of the family business and incorporates all of the popular variations of family involvement as components that make the essence possible. Its focus on the family firm's intention to pursue a vision suggests a research direction that has not been actively pursued in the literature. I agree with their definition. So the definition of family business is unit entity which is operate by family or group of family who is held vision and intention of dominant condition to form and to achieve that vision.