Frontiers in European Entrepreneurship Research
Edited by Hans Landström, Hans Crijns, Eddy Laveren and David Smallbone
Chapter 7: Financing and Growth Behaviour of Family Firms: Differences between First- and Next-generation-managed Firms
7. Financing and growth behavior of family ﬁrms: diﬀerences between ﬁrst- and next-generation-managed ﬁrms Vincent Molly, Eddy Laveren and Ann Jorissen INTRODUCTION The interest in family business studies has increased rapidly over the years, leading to a distinctive legitimate ﬁeld of study in organizational research. Up until now, there has been considerable interest in exploring family businesses’ ﬁnancial structure and performance, mainly based on a comparison of family ﬁrms considered as a ‘homogeneous group’ with their nonfamilial counterparts. Recently, however, researchers in family business studies are encouraged to reconsider the deﬁnition of a family ﬁrm, which will no longer start from the idea of an either or scenario but instead from the varying extent and nature of family involvement in a ﬁrm (Astrachan et al., 2002; Sharma, 2002; Tsang, 2002). We try to capture this central idea of a ‘heterogeneity approach’ in family business studies by distinguishing between diﬀerent generations of family ﬁrms, which can make future comparisons with non-family businesses more meaningful. The aim in this chapter is to use ﬁrst-generation family ﬁrms as a reference category for describing the behavior in later generations of family ﬁrms. Several authors agree on the fact that the success of family ﬁrms depends on the eﬀective management of the overlap between the family and the business, as they aim to achieve a combination of both ﬁnancial and nonﬁnancial goals (Sharma, 2004). In this respect, one of the biggest challenges of family ﬁrms lies in the accommodation of...
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