The Palgrave Handbook of Managing Family Business Groups

insights: First, family business portfolios due to family's close connection to the business engage in the resource management process that is to re-direct the resources back to the business portfolio while exiting subsequent businesses to restructure the business portfolio. Second, while exiting the subsequent businesses, family business portfolios provide the opportunity for the next generation of family owners start businesses to follow their passion. Finally, the resource management process triggers the business renewal of the family business portfolios providing opportunities to meet both internal (family) and external (market) demands.

·      Chapter 2.2 contributes to the FBG literature by shedding light from a qualitative perspective the decisions and process behind FBG development based on corporate strategies. Chapter also contributes to the internationalization literature in family firms by expanding current knowledge about family business internationalization decisions and processes and the role of governance mechanisms in decision making and implementation. By using a single case study, the chapter features a Spanish Family Firm that has internationalized its activities and has diversified its portfolio of businesses.·      Chapter 2.3 presents an exploratory study which provides a profile of FBGs in Spain and map their corporate strategies in terms of: i) their starting business, product diversification strategy (related or unrelated) and industries in which they are more prevalent, ii) their degree of international diversification and their geographical footprint, and iii) the degree of control on their investee companies. The study follows a two-step procedure starting with the SABI database analysis to identify FBGs in Spain and obtain most of the information on their corporate strategies as well as use Amadeus and Orbis databases to complement the information on their international investee companies. Using statistical analysis, the study focuses on whether there are significant differences among FBGs according to their age, size, and ownership (public and privately-held).



·      Chapter 2.4 presents an ambidexterity perspective on Family Business Groups (FBGs), emphasizing the distinctive strategic behavior of families in business. The chapter conceptualizes ambidexterity as a strategy for business portfolio development and family continuity by effectively managing the tensions between exploitation and exploration. This chapter provides a thorough analysis of the ambidexterity literature applied to the context of family firms, as well as the intricate relationship between the decisions and routines that enable the exploitation and exploration of opportunities in FBGs, given the interdependencies between the family and the business dimensions.

·      Chapter 2.5 propose Business Groups (BGs) may represent an adaptive organizational form that co-evolve with national institutions in a manner that reinforces their capability building in both market and nonmarket aspects. The chapter seeks answers to three questions: (1) Beyond "paragon or parasite", are there any more nuanced understanding between BG and the embedded institutions? (2) What contributes to BG's superior competitive advantages during the era of market transitions? (3) Consider why BGs persist and remain resilient even in the context of developed economies? By considering the moderation role of institutions, chapter augment the missing institutions perspective that




the value of market and nonmarket capability would be enhanced or constrained by the growth of institutions, in both developing and developed economies. This approach complements current literature and provide a richer and balance understanding of the nature of the internalization of markets within BGs.

III. INNOVATION STRATEGIES IN FBGS

3.1 Parallel Innovation Strategies in Family Business Groups: Resource Intangibility and Internal Development (Conceptual, Naveed Akhter and Marita Rautiainen)

3.2 Internal capital market and innovative performance: family versus non-family business groups. (Quantitative, Donato Iacobucci and Valentina Giannini)

3.3 Open Innovation and Family Business Groups: Knowledge Flow Perspective. (Qualitative, Suvi Konsti-Laakso and Tuomo Uotila)

3.4 Innovation Sourcing as a Strategy in Family Business Groups. (Qualitative, Marita Rautiainen, Naveed Akhter, Timo Pihkala) 3.5 Innovation in family business groups. (Qualitative, Sinha Sabyasachi) 




The main argument of the part III:

Family business innovation has been found to form a paradox - that is, family businesses seem to invest less in innovation activities, but they seem to get more out of innovation than non-family firms. Earlier research has been studying the origins and consequences of the paradox yet missing the perspective of family business groups. In this section, we take a closer look at the FBGs innovation practices. Due to the diversified business structures, family business groups are likely to conduct different innovation strategies than most family businesses. For example, FBGs have been found to operate parallel innovation strategies in distinct sections of the business group (Rautiainen et al. forthcoming). Furthermore, due to the need to utilize innovation opportunities, FBGs may operate open innovation practices within the FBG as well as with external partners. Finally, even if FBGs are assumed to be in better resource position, little is known about FBGs use of internal funding for innovation. Altogether, the FBGs´ use of internal innovation processes, innovation sourcing, joint ventures, and the like, are largely unstudied.

·      Chapter 3.1 is drawing on resource intangibility (e.g., knowledgebase, goodwill etc.), this chapter builds theory and presents a model on the innovation process of family business groups. Chapter argues that the influence of family's resource intangibility (internal development) contributes to the parallel innovative processes in family business groups as compared to the external development. To understand innovation in family firms, the need




of understanding the process of innovation is inevitable, especially in business groups where firms innovate better than their unaffiliated counterparts.

·        Chapter 3.2 investigates which internal factors influence the innovative performance in business groups. Specifically, it focuses on the role of internal capital market and the ownership structure. For the latter aspect the study compares the performance of family and non-family business groups. The study uses R&D and patents belonging to the headquarters and affiliated firms as proxies for the innovative performance. The empirical part of the paper refers to European business groups. Data are taken from the Amadeus database. Using information from the annual reports of companies, it is possible to analyse the equity 'policy', i.e. the issue of new shares and the dividend distribution. The Amadeus database provides also information on the ownership structure of heads and affiliates.

·        Chapter 3.3 aims at discussing innovation in family business groups in the framework of open innovation. This chapter asks how open innovation takes place in a family business group? The chapter will include a thorough literature review on open innovation and innovation in family business groups. The study seeks to analyze how innovation travels through a family business group, so it attempts to take innovation (i.e technology development project) as a level of analysis. Empirical part will include multiple qualitative in-depth case studies. For family business group research, this chapter will increase the body of knowledge on open innovation practices in family business groups. Moreover, the study will shed light on the benefits of the group affiliation, group formation and lay grounds on further studies on the topic. For innovation research, the study highlights the innovation research´s need to consider group -and ownership perspective instead of single firm perspective.

·        Chapter 3.4 showcases family business groups innovation sourcing methods as well as their internal and external innovation strategies. The objective of the present exploratory study is to examine and understand family business groups innovation strategies, the variance related to these innovation strategies and new evidence about the role of the family guiding the innovation strategy. This study compares different family business groups and the way they develop innovations inside the group and identify the relationships between innovation and operation i.e. internal innovations, company acquisitions or joint ventures, R&D investments to technologies or markets, and second, examine the factors determining the make and/or buy decisions pertaining to innovation. The major focus of the analysis is on the sourcing decisions of innovation. Study findings suggest taking a step forward in developing a more complete view of the innovation in family businesses and especially family business groups.

·        Chapter 3.5 seeks to find an answer to the question of the role of family business groups in facilitating innovation. Study also looks at the innovation process in family business groups. Innovation is a multistage process defined in terms of innovation input, activity stage and innovation output stage. To understand innovation in family firms, innovation process of family business groups needs to be understood. The ability of family business




groups to leverage innovative and entrepreneurial potential across affiliated firms and the process of allocating resource to innovative prospects.




            MANAGEMENT AND GOVERNANCE

4.1       Governing ownership in FBG. (Qualitative, Tuuli Ikäheimonen, Sanjay Goel and Marita Rautiainen)

4.2       Family Business Groups: Perspectives on Strategy, Innovation and Growth. (Qualitative, Neus Feliu and Fernanda Jaramillo)

4.4       Notes on Interrelationship of Governance and Strategy in Family Business Groups. (Conceptual, Sanjay Goel, Tuuli Ikäheimonen and Marita Rautiainen)

4.5       Intergenerational Flourishing: Sharing knowledge from generation to generation in Mexican Family Business Groups. (Qualitative, Fernando Sandoval-Arzaga, Maria F. Fonseca, and Maria José Parada)

The main argument of the part IV:

Governance and management in family businesses is said to be idiosyncratic and different from non-family firms due to the added complexity that emerges from the overlap between family and business systems, and the multiple overlapping roles that family members assume within these two systems. Family business groups have an additional layer of complexity due to the various coexisting businesses and ownership networks. While research in family business governance has increasingly drawn attention from academics and practitioners, little is known about governance and management within family business groups. Some of the important aspects to take into consideration include the evolution of governance structures within FBGs. For instance, how FBGs professionalize their different business units, how the process of knowledge sharing/transfer within the family business group unfolds, how FBGs develop their family governance to deal with the family issues and how they keep the family involved/attached to the family business. Finally, the ownership-related complexities are likely to affect the strategic behavior of FBGs - thus we stress the importance to understand the ownership strategies directing FBG development

·      Chapter 4.1 presents the role of governance in sustaining and promoting transgenerational entrepreneurship and growth in family-owned conglomerates in the context of Latin America. The study will focus on distilling the commonalities that exist in the capabilities of the governance bodies that drive decision- making at the family-owned conglomerates, as the dominant organization in the Latin America's private sector. This study will delve into the particularities of the family business groups in this geographical area, as we believe




that the social and economic context in which these organizations dwell influence how they are structured, governed, and how they develop. This multi-case study research will shed-light to Latin American family-owned conglomerates and the role of intergenerational entrepreneurship. It also presents governance practices in family-owned conglomerates and family venture capital/entrepreneurial funds.

·      Chapter 4.2 will present a case of Finnish family business group in its fifth generation. In the case, the business family has invested time and effort to build a comprehensive system for governing the individual, family and business level ownership. The purpose of the case is to open up the policies, practices and methods the family use for governing the ownership and offer a viewpoint for requirements and possibilities the well-developed ownership governing system offers for the family and the business in family business group context. This chapter contribute to both the family business group literature by highlighting the need for conscious government of the ownership as a source of business success and family harmony and to family business literature by providing additional knowledge about the relationship between the owning family and businesses, that is, about family governance side, as most of the studies concentrate on the business governance side of the phenomenon.

·      Chapter 4.3 develop arguments that link the concepts of goal incongruence among family owners and goal incongruence between the family and non-family investors. This study demonstrate how FBGs should be treated as different kind of organizations and evaluating them from a purely financial perspective may undervalue them. The practical insights from this line of thinking may lead to productive strategies to develop and construct FBGs that minimize relationship conflicts and business risk exposure among different types of owners and maximize the achievement of family goals and longevity of family business by preserving its idiosyncratic sources of competitive advantage.·      Chapter 4.4 examines interrelationship of governance and strategy in family business groups. When business families bring in different goals in the family business group an important aspect of governance is resolving goal incongruence among different owners. The degree to which governance matches the family will determine the kind of corporate level strategy the FBG ultimately displays, and the degree of success it has in the execution and management of the resultant corporate level strategy. Chapter plan to develop arguments that link the concepts of first-order goal incongruence and second-order goal incongruence demonstrating on how FBGs should be treated as different kind of organizations and evaluating them from a purely financial perspective may undervalue them.



·      Chapter 4.5 presents an exploratory research based on a qualitative case study methodology. The study identifies three relevant Mexican FBGs, which are examples of intergenerational flourishing. The chapter presents a cross-case analysis of the FBGs, covering at least 3 generations, different industries, and different complexities of business and family. This chapter complements previous knowledge about knowledge sharing among generations in FBGs. At a practical level, it has important implications for business owners and for educators and consultants. For business owners, this work could help family business leaders and owners to understand the mechanisms and develop strategic decisions that are necessary to share and integrate knowledge across generations. For educators and consultants this work contributes to developing insights and robust frameworks to understand and help business families to achieve the intergenerational flourishing trough sharing knowledge in FBGs.

V.        FAMILY BUSINESS GROUPS ECONOMIC IMPACT AND SUSTAINABILITY

5.1 Portfolio entrepreneurship as a growth strategy of family business groups. (Quantitative, Jari Huovinen and Krista Elo-Pärssinen)

5.2 Family Business Groups and Sustainable Development Goals: Alignment or Misalignment in Global and Local Contexts. (Conceptual, Marcela Ramirez-Pasillas, Ulla A. Saari, and Hans Lundberg)

5.3 Diaspora family business groups at the Cyprus-UK contextual nexus: A historical account, cases, and future research agenda. (Qualitative, Elias Hadjielias and Eva Karayianni)

5.4 Sense-making and sense-giving in the evolution of FBGs. (Conceptual, Sanjay Goel, Marita Rautiainen)

5.5 Family Business Group Development and Identity Developing: Understanding The Blind Spots. (Qualitative, Marta Widz and Maria José Parada)

The main argument of the part V:

Depending on their contexts, FBGs face very different pressures and expectations regarding their operations and performance. Different political, social and environmental conditions change economic and financial environments where family business groups operate. The development of FBGs may be guided by e.g. internal strategies and managerial practices, cultural heritages, the availability of capital and skilled labor. This part of the book highlights new avenues for FBG research including sustainability challenges and cultural alignment.

·      Chapter 5.1 seeks to find out what are the incidence of portfolio entrepreneurship and the prevalence of prior acquisition experience among family and non-family entrepreneurs. This study explores the growth of the businesses after the acquisitions made by family and non-family firms. This study is using quantitative approach with the sample comprised of a total of 5 500 SMEs in Finland. The results suggest that the portfolio entrepreneurship is a common growth strategy among family businesses and many family entrepreneurs are seeking growth by buying new companies instead of expanding the original family firm.




This raises a question to debate, if family entrepreneurs are currently underestimated in statistics in which the focus is on the growth of the individual firms instead of the total activities of the entrepreneurs.·      Chapter 5.2 develops a conceptual framework that examines the role and importance of SDGs for defining the global corporate sustainability strategy of the family business group. The study also considers the local corporate sustainability strategy of FBG subsidiaries in different countries. In this framework, the study considers the importance of centrality and autonomy of the business group and its subsidiaries when defining the corporate sustainability strategy as well as the national and firm institutional influences in this regard. This study relies on literature from corporate sustainability, family business groups, and portfolio entrepreneurship. The study relies on case illustrations of Nordic family business groups that have subsidiaries in developing countries. The cases show the variety of approaches when establishing the global corporate sustainability strategy of the family business group and the local corporate sustainability strategy of its subsidiaries for diversifying the group. The chapter presents the challenges and opportunities for advancing the implementation of SDGs.



·      Chapter 5.3 provides an historical account of the establishment and development of family business groups by Cypriot entrepreneurs moving to the UK. The study draws on specific cases of Cypriot Diaspora FBGs to shed light on family influences (in the form of norms, values, and ties), which were important to their development. Drawing on existing documents on Cypriot UK diaspora, the paper uses document analysis (press releases, newspaper articles, company documents, published work etc).

·      Chapter 5.4 questions the assumptions that analysis and planning precede FBG development. This chapter develops arguments that evolution of an FBG occurs at least in part via retrospective sense-making and sense-giving, in which the family and especially the family leader constructs an organizing and connecting narrative for the structure of an FBG at a point of time. Sensemaking taps into the historical, social, and cultural context of business families - a variety of communication genre (including verbal and non-verbal communication that itself is deeply embedded social and cultural practices and norms), a continuous effort to link the constructed past to the future, and a process to create imperatively a shared meaning. This chapter illustrates this aspect of FBG development via detailed abstractions from case studies.

·      Chapter 5.5 suggests that business families that are highly attached to their legacy identity may not be able to realize the need to adapt their identity to reflect their current portfolio of businesses. This chapter presents a single case study to explore how the family business group evolves over time, and how does the multigenerational family business change or not their identity accordingly. Chapter builds on bright spots on emotionally overlooked business units, allowing business families to navigate away from the leading into pursuing ill strategies and unnecessary family conflicts. Findings show that as the portfolio grows, the core business might end up diluted as new businesses grow and become the major source of income for the group.

VI. CONCLUSIONS

6.1 The Future of the field of Family Business Group Studies (Editors)



This section provides an overview of the current state of knowledge about the effect of family business groups on different topics. In this section, several avenues for expansion of the family business group further research are presented. The goal is to provide new and meaningful avenues for further research by presenting the main results of studies that have analyzed the development of family business groups. An interpretation of these results draws some conclusions for policy and define important questions for further research. On a more general note, it is clear that more informative longitudinal data sets at the business group level are needed in order to find conclusive answers. In this respect the research community needs to find new ways to collect these data and make them available for family business group research. There will be listed avenues for further research on governance, strategy, innovation and economic impact issues.