Understanding Entrepreneurial Family Businesses in Uncertain Environments

Understanding Entrepreneurial Family Businesses in Uncertain Environments

Opportunities and Resources in Latin America

Edited by Mattias Nordqvist, Giuseppe Marzano, Esteban R. Brenes, Gonzalo Jiménez and Maria Fonseca-Paredes

Understanding Entrepreneurial Family Businesses in Uncertain Environments, the third volume in the STEP series, is uniquely centered on familial entrepreneurial activity in Latin America. The contributions, based on empirical evidence and an overall theoretical framework, focus on practical learning in addition to the advancement of scholarly knowledge.

Chapter 8: The Role of Tacit Knowledge in the Identification of Entrepreneurial Opportunities: A Study of Family-controlled Businesses

Ana Cristina González León, Gustavo González Couture and Luis Díaz Matajira

Subjects: business and management, entrepreneurship, family business


8. The role of tacit knowledge in the identification of entrepreneurial opportunities: a study of familycontrolled businesses Ana Cristina González León, Gustavo González Couture and Luis Díaz Matajira INTRODUCTION A commonly asked question in the family-controlled businesses (FCB) literature is why some family businesses manage to survive and continue from one generation to the next while others do not. Studies and surveys in FCB have shown that only 50 per cent survive from the first generation to the second and only 30 per cent from the second to the third (Ward, 2004). As Lester and Cannella (2006: 757) state: ‘Indeed, the persistence of family companies seems to challenge the notion of market competitiveness, as FCB face challenges comparable to all other firms and often must additionally deal with costly intra-family issues.’ Thus, determining the characteristics that differentiate FCB that survive from those that don’t has been a lingering research concern. Some evidence has shown that the presence of family conflict, the next generation’s non-involvement, the lack of knowledge transfer, the excessive use of power by the founder and the absence of a plan for succession, to name only a few, are among the reasons why FCB do not survive. In general, the involvement of the family in FCB has been viewed as negative (Habbershon et al., 2003). However, other contributors to the literature, while not denying these criticisms, emphasize certain positive resources and capabilities present in FCB management that contribute to wealth-generation over time (Miller and...

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