Exploring the complexities of family business decision making: How the second generation makes decisions

by Alderson, Keanon J., Ph.D., CAPELLA UNIVERSITY, 2009, 164 pages; 3380450


This exploratory, qualitative, study presents research on a vital but understudied area: the second-generation family business decision making process. With the majority of family firms failing to achieve intergenerational succession, the second generation is crucial to the future success of the family business. The first generation has been well studied. The underlying problem is the lack of specific second-generation research in the area of family business. The family business literature was reviewed, including theories of the family firm. Grounded theory methodology was utilized to uncover new information concerning a relatively unknown subject, second-generation decision making. In-depth personal interviews were conducted with 15 executive-level, second-generation, small family business leaders. Key findings showed the second generation have an awe and reverence for the accomplishments of the first generation, which affects their decision making; they engage in a broad search for knowledge; they utilize a consultative decision making style significantly different from that used by the first and third generations; they consult with multiple stakeholders and a large social network; and they do not have a set decision process. They are rational, deliberate, and more risk-averse in their decision making, which often results in slow decisions. The challenges faced when making business decisions included inadequate information, time pressure, limited resources, and stresses arising from family members as employees. Surprising findings included a low level of familial conflict and little use of intuition. Based on the family business literature and the analysis of the study data, a theoretical model was constructed detailing how second-generation business leaders make business decisions. The study findings and resulting model have beneficial implications for family business owners and members, as well as suppliers and professionals who target family businesses as customers.

AdviserRobert Hockin
Source TypeDissertation
SubjectsManagement; Individual & family studies
Publication Number3380450

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