20Jan 2017

FAMILY ENTREPRENEURIAL BUSINESSES AND NEW VENTURES: FORMATION, CHALLENGES, BEHAVIOR, RELATIONSHIP.

  • Master of science in Entrepreneurship, Tehran University, Iran
Crossref Cited-by Linking logo
  • Abstract
  • Keywords
  • References
  • Cite This Article as
  • Corresponding Author

New ventures are frequently started by entrepreneurial teams rather than lone entrepreneurs. Often, team members have family ties. In this research to study the formation and membership of the team, team challenges, behavior and performance of the team, successors of business and family relationships between members of the team. Combined, they suggest that relationships are more important than skill diversity in determining the effectiveness of both family business and new venture teams


  1. Baron, J.N., Burton, M.D., &Hannan, M.T. (1996). The road taken: Origins and evolution of employment systems in emerging companies. Industrial and Corporate Change, 5, 239–275.
  2. Beckman, C.M., Burton, M.D., & O’Reilly, C. (2007). Early teams: The impact of team demography on VC financing and going public. Journal of Business Venturing, 22, 147–173.
  3. Birley, S. &Stockley, S. (2000). Entrepreneurial teams and venture growth. In D.L. Sexton (Ed.), The Blackwell handbook of entrepreneurship (pp. 287–307). Oxford, U.K.: Blackwell Business.
  4. Brannon, D.L., Wiklund, J., &Haynie, J.M. (2013). The varying effects of family relationships in entrepreneurial teams. Entrepreneurship Theory and Practice, 37(1), 107–132.
  5. Bygrave, W.D. (1993). Theory building in the entrepreneurship paradigm. Journal of Business Venturing, 8, 255–280.
  6. Cohen, S.G. & Bailey, D.E. (1997). What makes teams work: Group effectiveness from the shop floor to the executive suite. Journal of Management, 23, 239–290.
  7. Cooney, T.M. (2005). What is an entrepreneurial team? International Small Business Journal, 23, 226–235.
  8. Cooper, A.C. & Daily, C.M. (1997). Entrepreneurial teams. In D.L. Sexton & R.W. Smilor (Eds.), Entrepreneurship
  9. 2000 (pp. 127–150). Chicago, IL: Upstart.
  10. Cruz, A.D., Howorth, C., & Hamilton, E. (2013 this issue). Interfamily entrepreneurship: The formation and membership of family entrepreneurial teams. Entrepreneurship Theory and Practice, 37(1), 17–46.
  11. Cyert, R.M. & March, J.G. (1963). A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice-Hall.
  12. Dess, G.G., Lumpkin, G.T., & McGee, J.E. (1999). Linking corporate entrepreneurship to strategy, structure, and process: Suggested research directions. Entrepreneurship Theory and Practice, 23(3), 85–102.
  13. Ensley, M.D. & Pearson, A.W. (2005). An exploratory comparison of the behavioral dynamics of top management teams in family and nonfamily new ventures: Cohesion, conflict, potency, and consensus. Entrepreneurship Theory and Practice, 29, 267–284.
  14. Forbes, D.P., Borchert, P.S., Zellmer-Bruhn, M.E., & Sapienza, H. (2006). Entrepreneurial team formation: An exploration of new member addition. Entrepreneurship Theory and Practice, 30, 225–248.
  15. Francis, D.H. &Sandberg,W.R. (2000). Friendship within entrepreneurial teams and its association with team and venture performance. Entrepreneurship Theory and Practice, 25(2), 5–25.
  16. Fren, M.J., Cardinal, L.B., & O’Neill, H.M. (2012). The genesis of strategy in new ventures: Escaping the constraints of founder and team knowledge. Strategic Management Journal, 33, 427–447.
  17. Hambrick, D.C. (1994). Top management groups: A conceptual integration and reconsideration of the “team” label. Research in Organizational Behavior, 16, 171–214.
  18. Hambrick, D.C. (2007). Upper echelons theory: An update. Academy of Management Review, 32, 334–343.
  19. Hambrick, D.C. & Mason, P.A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9, 193–207.
  20. Hmieleski, K.M. & Ensley, M.D. (2007). A contextual examination of new venture performance: Entrepreneur leadership behavior, top management team heterogeneity, and environmental dynamism. Journal ofOrganizational Behavior, 28, 865–889.
  21. Kamm, J.B. &Nurick, A.J. (1993). The stages of team venture formation: A decision-making model. Entrepreneurship Theory and Practice, 17(2), 17–28.
  22. Kamm, J.B., Shuman, J.C., Seeger, J.A., &Nurick, A.J. (1990). Entrepreneurial teams in new venture creation: A research agenda. Entrepreneurship Theory and Practice, 14(4), 7–17.
  23. Katzenbach, J.R. & Smith, D.K. (1993). The wisdom of teams. New York, NY: First Harper Business.
  24. Kellermanns, F.W. &Eddleston, K.A. (2004). Feuding families: When conflict does a family firm good. Entrepreneurship Theory and Practice, 28, 209–229.
  25. Kellermanns, F.W., Floyd, S., Pearson, A.W., & Spencer, B. (2008). The contingent effect of constructive confrontation on the relationship between shared mental models and decision quality. Journal of Organizational
  26. Behavior, 29, 119–137.
  27. Leung, A., Foo, M.D., &Chaturvedi, S. (2013). Imprinting effects of founding core teams on HR values in new ventures. Entrepreneurship Theory and Practice, 37(1), 87–106.
  28. Lim, J.Y.-K., Busenitz, L.W., & Chidambaram, L. (2013). New venture teams and the quality of business opportunities identified: fault lines between subgroups of founders and investors. Entrepreneurship Theoryand Practice, 37(1), 47–67.
  29. Mathieu, J., Maynard, M.T., Rapp, T., & Gilson, L. (2008). Team effectiveness 1997–2007: Areview of recent advancements and a glimpse into the future. Journal of Management, 34, 410–476.
  30. Pearson, A.W., Carr, J.C., & Shaw, J.C. (2008). Toward a theory of familiness: A social capital perspective. Entrepreneurship Theory and Practice, 32, 949–969.
  31. Ruef, M., Aldrich, H.E., & Carter, N.M. (2003). The structure of founding teams: Homophily, strong ties, and isolation among US entrepreneurs. American Sociological Review, 68, 195–222.
  32. Schjoedt, L. & Kraus, S. (2009). Entrepreneurial teams: Definition and performance factors. Management Research News, 32, 513–524.
  33. Schulze, W.S., Lubatkin, M.H., Dino, R.N., &Buchholtz, A.K. (2001). Agency relationships in family firms:
  34. Theory and evidence. Organizational Science, 12, 99–116.
  35. Sciascia, S., Mazzola, P., & Chirico, F. (2013). Generational involvement in the top management team of family firms: Exploring non-linear effects on entrepreneurial orientation. Entrepreneurship Theory and Practice.
  36. Thatcher, S.M.B. & Patel, P.C. (2012). Group fault lines: A review, integration, and guide to future research. Journal of Management, 38, 969–1009.
  37. Ucbasaran, D., Lockett, A., Wright, M., & Westhead, P. (2003). Entrepreneurial founder teams: Factors associated with member entry and exit. Entrepreneurship Theory and Practice, 28, 107–127.
  38. Wales, W., Monsen, E., &McKelvie, A. (2011). The organizational pervasiveness of entrepreneurial orientation. Entrepreneurship Theory and Practice, 35, 895–923.
  39. West, G.P. (2007). Collective cognition: When entrepreneurial teams, not individuals, make decisions. Entrepreneurship Theory and Practice, 31, 77–102.
  40. Arthur Andersen & Co., S.C. (1995). Research Findings. American Family Business Survey,
  41. Aronoff, C. E. &Astrachan, J. H. (1996). How to make better decisions. Nation’s Business,
  42. 84(1), 39–40.
  43. Benson, B., Crego, E. T., & Drucker, R. H. (1990). Your Family Business: A Success Guide for Growth and Survival. Homewood, IL: Dow-Jones-Irwin.
  44. Blackman, I. L. (1994). Two magic bullets . . . or How to beat the tax collector. National Petroleum News, 86(2), 44.
  45. Carlson, D. K., &Nager, R. W. (1993). Equity compensation for key employees. Family Business Advisor. (January).
  46. Cohn, M. (1992). Passing the Torch: Succession, Retirement, and Estate Planning in the Family-Owned Business. New York: McGraw-Hill.
  47. Danco, L. A. (1994). Why few firms outlive their founder. Tire Business, 8.
  48. Donnelley, R. G. (1964). The family business. Harvard Business Review, 42(4), 10–11.
  49. Dyer, W. Gibb, Jr. (1988). Culture and continuity in family firms. Family Business Review, 1(1), 37–50.
  50. Family Business Advisor. (1994). Thinking about dividend policies. Family Business Advisor,
  51. 3(3), 1.
  52. Flamholtz, E. G. (1986). How to Make the Transition From a Entrepreneurship to a Professionally Managed Firm. San Francisco: Jossey-Bass.
  53. Gallo, M. A., & Point, C. G. (1994). Internationalizing family firms. Family Business Advisor, 3(4), 1.
  54. Greenwald, Matthew and Associates (1995). Research Findings. MassMutual Life Insurance Company,
  55. Hamel, L. H., Jr. (1994). The first generation. Family Business Report, (November), 7.
  56. Jaffe, D. (1990). Working with the Ones You Love. Berkeley, CA: Conari Press.
  57. Lansberg, I. (1988). The succession conspiracy. Family Business Review, 1(2), 119–143.
  58. Maslow, A. H. (1954) Motivation and Personality. New York: Harper.
  59. Mintzberg, H. & Waters, J. A. (1990). Tracking strategy in an entrepreneurial firm. Family Business Review, 3(3), 285–313.
  60. Mintzberg, H. (1994). The Rise and Fall of Strategic Planning. New York: The Free Press.
  61. Murdoch, M., & Murdoch, C. M. (1991). A legal perspective on shareholder relationships in family businesses: The scope of fiduciary duties. Family Business Review, 4(3), 287–301.
  62. Nelson, R. (1994). Creating an energized workplace. Leader to Leader, 5 (Summer), 34–39.
  63. Nelton, S. (1996). Team playing is on the rise. Nation’s Business, 84(6), 53–55. Stoy Hayward & Associates (1989). Staying the course: Survival characteristics of the family owned business. Report conducted by the Graduate Students of the London School of Business, 22–23.
  64. Tanner, F. L. F. (1994). Do you have an effective compensation plan for you key employees? Family Business Forum Quarterly, 7(3), 8.
  65. Tennenbaum, B. H., & Trien, J. W. (1992). How to woo your banker?Family Business Magazine, (Summer), 31–36.
  66. Ward, J. L. 1987. Keeping the family business healthy: How to plan for continuing growth, profitability, and family leadership. San Francisco: Jossey-Bass.
  67. Ward, J. L., &Aronoff, C. E. (1992). Sibling partnerships. Nation’s Business, 80(1), 52–53.
  68. Ancona, D.G., & Caldwell, D.C. (1992). Demography and design: predictors of new product team performance. Organization Science, 3 321–341.
  69. Auh, S., &Menguc, B. (2005). Top management team diversity and innovativeness: The moderating role of interfunctional coordination. Industrial Marketing Management, 34, 249–261.
  70. Bantel, K.A., & Jackson, S.E. (1989). Top management and innovations in banking: does the composition of the top team make a difference? Strategic Management Journal, Summer Special Issue, 10, 107–124.
  71. Beckman, C.M. (2006). The influence of founding team company affiliations on firm behavior. Academy of Management Journal, 49 (4), 741–758.
  72. Beckman, C.M., Burton, M.D., &O'Reilly, C. (2007). Early teams: The impact of team demography on VC financing and going public. Journal of Business Venturing, 22(2), 147– 173.
  73. Boeker, W. (1997a). Executive migration and strategic change: the effect of top manager movement on product market entry. Administrative Science Quarterly, 42, 231–236.
  74. Boeker, W. (1997b). Strategic change: the influence of managerial characteristics and organizational growth. Academy of Management Journal, 40, 152–170.
  75. Chirico F., Sirmon D., Sciascia S., & Mazzola P. (2011). Resource orchestration in family firms: Investigating how entrepreneurial orientation, generational involvement and participative strategy affect performance. Strategic Entrepreneurship Journal, 5(4), 307-326.
  76. Chrisman, J. J., Chua, J. H., &Steier, L. P. (2011). Resilience of family firms: An introduction. Entrepreneurship Theory and Practice, 35, 1107–1119.
  77. Cruz, C., &Nordqvist, M. (2012). Entrepreneurial orientation in family firms: A generational perspective. Small Business Economics 38(1), 33-49.
  78. Ensley, M. D., & Pearson, A. W. (2005). An exploratory comparison of the behavioral dynamics of top management teams in family and nonfamily new ventures: Cohesion, conflict, potency, and consensus. Entrepreneurship Theory & Practice, 29, 267-284.
  79. Finkelstein, S., &Hambrick, D. C. (1990). Top management team tenure and organizational outcomes: The moderating role of managerial discretion. Administrative Science Quarterly, 35, 484–503.
  80. Gomez-Mejia, L.R., Haynes, K.T., Nunez-Nickel, M., Jacobson, K.J.L., &Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly 52, 106–137.
  81. Grant, R. (1996). Prospering in dynamically competitive environments: organizational capability as knowledge integration. Organization Science, 7(4), 375-387.
  82. Hambrick, D.C., Cho, S.T., & Chen, M.J. (1996). The influence of TMT heterogeneity on firm’s competitive moves. Administrative Science Quarterly, 41, 659–684.
  83. Hambrick, D.C., & Mason, P.A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–207.
  84. Jehn, K.A. (1995). A multimethod examination of the benefits and detriments of intragroup conflict. Administrative Science Quarterly, 40, 256–282.
  85. Jehn, K.A. (1997). A qualitative analysis of conflict types and dimensions in organizational groups. Administrative Science Quarterly, 42, 530–557.
  86. Jehn, K.A., Northcraft, G.B., & Neale, M.A. (1999). Why differences make difference: a field study of diversity, conflict, and performance in workgroups. Administrative Science Quarterly, 44, 741–763.
  87. Jones, C.D., Makri, M., & Gomez-Mejia, L.R. (2008). Affiliate directors and perceived risk bearing in publicly traded, family-controlled firms: The case of diversification. Entrepreneurship Theory and Practice, 32(6), 1007-1026.
  88. Kellermanns, F. W., &Eddleston, K. (2004). Feuding families: When conflict does a family firm good. Entrepreneurship Theory and Practice, 28(3), 209-228.
  89. Kellermanns, F.W., &Eddleston, K.A. (2006) corporate entrepreneurship in family firms: A Family perspective. Entrepreneurship Theory and Practice, 30(6), 809-830.
  90. Kellermanns, F.W., Eddleston, K.A, Barnett, T., & Pearson, A. (2008). An exploratory study of family member characteristics and involvement: Effects on entrepreneurial behavior in family firms. Family Business Review, 21(1), 1-14.
  91. Knight, D., Pearce, C.L., Smith, K.G., Olian, J.D., Sims, H.P., Smith, K.A., & Flood, P. (1999). Top management team diversity, group process, and strategic consensus. Strategic Management Journal, 20(5), 445–465.
  92. La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. The Journal of Finance, 54(2), 471–517.
  93. Ling, Y., &Kellermanns, F.W. (2010). The effects of family firm specific diversity: The moderating role of information exchange frequency. Journal of Management Studies,47, 332–344.
  94. Michie, S., Dooley, R.S., &Fryxell, G.E. (2006). Unified diversity in top-level teams: Enhancing collaboration and quality in strategic decision making. International Journal of Organizational Analysis,14, 130–149.
  95. Miller, C.C., Burke, L.M., & Glick, W.H. (1998). Cognitive diversity among upper-echelon executives: implications for strategic decision process. Strategic Management Journal, 19(1), 39–58.
  96. Milliken, F.J., & Martins, L.L. (1996). Searching for common threads: Understanding the multiple effects of diversity in organizational groups. Academy of Management Review, 21, 402-433.
  97. Naldi, L., Nordqvist, M., Sjöberg, K., &Wiklund, J. (2007). Entrepreneurial orientation, risk taking, and performance in family firms. Family Business Review, 20 (1), 33-48.
  98. Nonaka, J. (1994). A dynamic theory of organizational knowledge creation. Organization Science,1, 14–37.
  99. Postrel, S. (2002). Islands of shared knowledge: Specialization and mutual understanding in problem-solving teams. Organization Science, 13, 303–320.
  100. Salvato, C. (2004). Predictors of entrepreneurship in family firms. Journal of Private Equity, 7(3), 68-76
  101. Sharma, P., &Salvato, C. (2011). Commentary: exploiting and exploring new opportunities over life cycle stages of family firms. Entrepreneurship Theory and Practice, 35, 1199–1205
  102. Short, J.C., Payne, G.T., Brigham, K.H., Lumpkin, G.T., &Broberg, C. (2009). Family firms and entrepreneurial orientation: A comparative analysis of the S&P 500. Family Business Review, 22(1), 9-24
  103. Simons, T., Pelled, L. H., & Smith, K. A. (1999). Making use of difference: Diversity, debate, and decision comprehensiveness in top management teams. Academy of Management Journal, 42, 662–673
  104. Talke, K., Salomo, S., &Rost, K. (2010). How top management team diversity affects innovativeness and performance via the strategic choice to focus on innovation fields. Research Policy, 39, 907-918
  105. Talke, K., Salomo, S., &Kock, A. (2011). Top Management Team diversity and strategic innovation orientation: The relationship and consequences for innovativeness and performance. Journal of Product Innovation Management, 28, 819–832
  106. Wiersema, M.F., &Bantel, K. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35, 91–1
  107. Zahra, S.A. (2005). Entrepreneurial risk taking in family firms. Family Business Review,18,23–40
  108. Anderson, A., Jack, S., &Drakopoulou-Dodd, S. (2005). The role of family members in entrepreneuria
  109. networks: Beyond the boundaries of the family firm. Family Business Review, 18(2), 135–154
  110. .Anderson, A.R. & Miller, C.J. (2003). “Class matters”: Human and social capital in the entrepreneuria
  111. Journal of Socio-Economics, 32(1), 17–36.
  112. Beckman, C.M. (2006). The influence of founding team company affiliations on firm behavior. Academy of Management Journal, 49(4), 741–758.
  113. Carter, S. & Ram, M. (2003). Reassessing portfolio entrepreneurship. Small Business Economics, 21(4), 371–380.
  114. Casson, M. &Giusta, M.D. (2007). Entrepreneurship and social capital: Analyzing the impact of social
  115. networks on entrepreneurial activity from a rational action perspective. International Small Business Journal, 25(3), 220–244.
  116. Cooney, T.M. (2005). Editorial: What is an entrepreneurial team? International Small Business Journal, 23(3), 226–235.
  117. Davis, J.H., Schoorman, F.D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.
  118. Discua Cruz, A. (2010). Collective perspectives in portfolio entrepreneurship: A study of family business groups in Honduras. EDAMBA Journal, Thesis competition, 8, 91–105.
  119. Eddleston, K.A., Chrisman, J.J., Steier, L.P., & Chua, J.H. (2010). Governance and trust in family firms: An introduction. Entrepreneurship Theory and Practice, 34(6), 1043–1056.
  120. Forbes, D.P., Borchert, P.S., Zellmer-Bruhn, M.E., & Sapienza, H. (2006). Entrepreneurial team formation: An exploration of new member addition. Entrepreneurship Theory and Practice, 20(2), 225– 248.
  121. Francis, D.H. &Sandberg,W.R. (2000). Friendship within entrepreneurial teams and its association with team and venture performance. Entrepreneurship Theory and Practice, 25(2), 5–25.
  122. Hellerstedt, K. (2009). The composition of new venture teams: Its dynamics and consequences. JIBS Dissertation Series 056, Jonkoping: Jonkoping International Business School.
  123. Höhmann, H.-H. & Welter, F. (2005). Trust and entrepreneurship: A West-East perspective. Cheltenham, U.K.: Edward Elgar.
  124. Howorth, C. & Ali, Z.A. (2001). Family business succession in Portugal: An examination of case studies in the furniture industry. Family Business Review, 14(3), 231–244.
  125. Howorth, C. & Moro, A. (2006). Trust within entrepreneur bank relationships: Insights from Italy. Entrepreneurship Theory and Practice, 30(4), 495–517.
  126. Hoy, F. &Verser, T.G. (1994). Emerging business, emerging field: Entrepreneurship and the family firm. Entrepreneurship Theory and Practice, 19(1), 9–23.
  127. Iacobucci, D. & Rosa, P. (2010). The growth of business groups by habitual entrepreneurs: The role of entrepreneurial teams. Entrepreneurship Theory and Practice, 34(2), 351–377.
  128. Kamm, J.B. &Nurick, A.J. (1993). The stages of team venture formation: A decision-making model. Entrepreneurship Theory and Practice, 17(2), 17–27.
  129. Kolvereid, L. &Bullvag, E. (1993). Novices versus experienced founders: An exploratory investigation. In S.
  130. Birley, I. MacMillan, & S. Subramony (Eds.), Entrepreneurship research: Global perspectives (pp. 275–285). Amsterdam, the Netherlands: Elsevier.
  131. Lewicki, R.J. & Bunker, B. (1996). Developing and maintaining trust in work relationships. In R.K.T. Tyler (Ed.), Trust in organizations (pp. 114–139). Newbury Park, CA: Sage.
  132. MacMillan, I. (1986). To really learn about entrepreneurship, let’s study habitual entrepreneurship. Journal of Business Venturing, 1, 241–243.
  133. Mayer, R.C., Davis, J.H., &Schoorman, F.D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3), 709–734.
  134. Nordqvist, M. & Zellweger, T. (2010). Transgenerational entrepreneurship. Cheltenham, U.K.: Edward Elgar.
  135. Pearson, A.W., Carr, J.C., & Shaw, J.C. (2008). Toward a theory of familiness: A social capital perspective. Entrepreneurship Theory and Practice, 32(6), 949–969.
  136. Rosa, P. (1998). Entrepreneurial processes of business cluster formation and growth by “habitual” entrepreneurs. Entrepreneurship Theory and Practice, 22(4), 43–61.
  137. Ruef, M., Aldrich, H., & Carter, N. (2003). The structure of founding teams: Homophily, strong ties, and isolation among U.S. entrepreneurs. American Sociological Review, 68(2), 195–222.
  138. Schulze, W., Lubatkin, M., & Dino, R. (2003). Exploring the agency consequences of ownership dispersion among the directors of private family firms. Administrative Science Quarterly, 46(2), 179–194.
  139. Schulze, W.S. &Gedajlovic, E.R. (2010). Whither family business? Journal of Management Studies, 47(2), 191–204.
  140. Ucbasaran, D., Lockett, A., Wright, M., & Westhead, P. (2003). Entrepreneurial founder teams: Factors associated with member entry and exit. Entrepreneurship Theory and Practice, 28(2), 107–127.
  141. Westhead, P. &Howorth, C. (2007). “Types” of private family firms: An exploratory conceptual and empirical analysis. Entrepreneurship and Regional Development, 19(5), 405–431.
  142. Westhead, P. & Wright, M. (1998). Novice, portfolio and serial founders: Are they different? Journal of Business Venturing, 13(3), 173–204.
  143. Wright, M. &Vanaelst, I. (2009). Introduction. In M. Wright & I. Vanaelst (Eds.), Entrepreneurial teams and new business creation (Vol. 13, pp. iix–xli). Cheltenham, U.K.: Edward Elgar.  

[Mohsen Babaei, Reza Abedi and Masoud Safizadeh (2017); FAMILY ENTREPRENEURIAL BUSINESSES AND NEW VENTURES: FORMATION, CHALLENGES, BEHAVIOR, RELATIONSHIP. Int. J. of Adv. Res. 5 (Jan). 29-47] (ISSN 2320-5407). www.journalijar.com


Reza Abedi


DOI:


Article DOI: 10.21474/IJAR01/2717      
DOI URL: http://dx.doi.org/10.21474/IJAR01/2717