A Study of Conflicts Management in Family Business

Introduction:

Conflicts in the family business is the most common problem in any society, culture, country in the world. The main reason of conflict is the lack of training and lack of governance of family business which should be adopted by entrepreneur. Often the conflicts arise in the family business at the time of entrance of new generation in the business and there are so many examples in our country too, after the entrance of new generation, conflicts started and finally the business divided in parts, Gul Ahmed Textile, Fateh Textile, Chase up Stores, Fresco Sweets are the common examples in our country. Family Businesses have their own worth in the present era in the world. After the global financial crises in the world in 2007-2008, there are so many organizations either financial sectors or some huge consumer buying stores, rely too much to those organizations which are strong and joined like family joined business.

So many family businesses are present in our country and these businesses have too much importance in the economy of our country and they are supporters for other business like small and medium size businesses and so many people are dependent on these huge family businesses in many forms, we can say, employment is the main form and millions of people get employment from these businesses. As its common point that the stability and continuity of family businesses is more than others and the level of confidence and trust is increased due to this stability, also the level of commitments is also increased amongst different parties. The primary fact is that, millions of business units that are registered in our country, of which the majority is the small and medium size business and owned and managed by families and they are known as family business. Most often, family businesses run by their three, four, five generations and they are continued from generation to generation, we can say they have a huge background of more than one generation or hundreds of years. And due to the family business everything like any dispute or any other matter is resolved within the family, as everyone compromises at the end because of the joined family business. In 1990, Derux’s finding shows that from entrepreneurship perspective, family business is the great platform for the new generation to enter into business and try to find out the different business strategies and also they can have a learning phase in the presence of senior family members and other management members who are already with their business. There is a research that almost 65% to 80% business owned by different businessmen are the family business. Mckinsey said, the family owned business which are owned by the members of the family and run by the outsiders are managed better as compared to the eldest family members of the business family.

However, in 2012, studies of Corbetta and Salvato shows that conflicts in the family business are dangerous and a speed breaker for the growth of the firm and it also damage or make short the life of the organization as well. Personal relationship between the family members also plays important role in this regard, one of the reason is to give more importance to some members of the family and ignoring others, can create an unhealthy environment in the family business. But, despite of these fact that Sorenson, Kellermanns and Eddleston, in different times between 1999 and 2007, found and described that presence of these conflicts are still in under research, except few studies, argue that further confirmed by the most comprehensive analysis on the whole field of family business which states that “although conflict is a core area of concern, we know surprisingly little about it and even less about conflict management in family businesses”. This research trying to make a bibliometric investigation and systematic literature reviews of conflict in the family business and trying to find out the possible links among them and the agenda of this paper is to identify issues and research gaps that should be explored by researchers to reach a more mature literature on conflict management in family businesses. Thus, we propose a bibliometric study that covers the years from 2000 to 2015.

The Evolution of Family Business:

As family business is one of the most important sources of capital in any form. Either it is in the form of human capital, physical capital, social capital or financial capital. Although it has been critically examine by many researchers by from ancient times to modern world and from agriculture era to industrialization, family business are considered as most effective way of doing business despite of the fact that its criticizes on many grounds and its was practically found as well. While in some countries like Mexico, family business encompasses 100 percent of all the firms working in the country, while Sweden firms make up 50 percent of their business as family business. Although in developed countries like USA and UK the percentage of family business is comparatively low because of the research in this field is industry based research and thus creates a long legacy of segment and disjoint in the field of research.

Family Business Definition:

While taken into consideration the concept of family business, it may incorporate in the form of small firm or a shop even or it may be in the form of large Multinational Corporation. Thus the range of the business varies from small scale to large scale business depends upon the financial, human and physical capacity and capital available to the family persons. (Alcorn, 1982; Beckhard & Dyer, 1983a, 1983b; Danco, 1980; Stern, 1986) examine that family business is considered as one of the most well-known and prevalent and widespread or pervasive form of the enterprise in the economic and social structure of the economy. The criteria used to define the family by (Shanker and Astrachan (1996)) are based on the following grounds or include following parts:

• Percentage of ownership
• Control of voting in the organization
• Strategic decisions power in the organization
• Multi generations involvement
• Family members management must be active

Winter et al. (1998) defined family business as a business that is owned and managed by one or more family members. These same researchers used the concept of a family household, which was defined as a group of people related by blood, marriage, or adoption, who share a common dwelling unit and participated in the ownership of a business.

Literature Review:

The conflict theories applied in the field of management and organizational behaviour are largely used to determine the conflict in the family business as well as the literature of family business is also based on these theories. The consequences or an conclusion of the conflict in the family business is the slightest studied stage in the conflict in the family business as determine by (Bergmann and Volkema (1994)). (Harvey & Evans, 1994; Levinson, 1971; Kaye, 1991) are of the view that there are few data based studies in family business conflicts but there is wide range of case descriptions and theoretical articles are available in this regard.

Research on task and relationship conflict is extensive and positive and detrimental effects of each conflict in the organizational set up has been studied, Pinkley (1990) studied conflict on a multidimensional scaling, and uncovered a task- versus relationship dimension of conflict, Jehn (1992), in a, multidimensional scaling study of group conflict, found that members distinguish between task-focused and relationship- focused conflicts, and these two types of conflict differentially affect work group outcomes. Empirical research shows a negative association between relationship conflict, productivity, and satisfaction in groups (Evan, 1965; Gladstein, 1984; Wall & Nolan, 1986). It interferes with task-related effort and decreases goodwill, mutual understanding between the members of the group (Deutsch, 1969). Chronic relationship conflict can have serious detrimental effects on group functioning. To date, there has been no evidence of positive effects of relationship conflict on either performance or Satisfaction (Coser, 1956; Jehn, 1997).

Literature on conflict has elaborated that task conflict can improve decision-making outcomes and group productivity by increasing decision quality through constructive criticism and moderate levels of task conflicts are constructive, since they stimulate discussion of ideas that help groups perform better (Cosier & Ross, 1977; Jehn, 1995; Amason, 1996). However, very high levels of task conflict may interfere with task completion, and also it is possible that taskrelated conflicts may transform into relationship conflicts (Jehn,1995). McGrath’s (1984) Study indicates that conflict theory and research has primarily focused on disagreements about ends, but conflict can just as easily occur about means, even when ends (For Example, goals) are shared as they are in the most organizational groups. The “means versus ends” difference provides an important framework in conflict literature to examine various types of conflict that can occur in organizational groups (Tyler et al., 1996).

Process conflict has largely been neglected in studies of conflict except the studies done by Kabanoff (1991) and Jehn (1997), Process conflict is defined as the conflict about how task accomplishment should proceed in the work unit, who is responsible for what, and how things should be delegated. It includes disagreements about assignments of duties or resources, i.e. about the means to accomplish specific tasks (Jehn 1997). Process conflict is similar to past organizational constructs such as distributive conflicts (Kaanoff,1991 ). At higher levels, it is detrimental to performance. Relationship conflicts Focus on interpersonal relationships, task conflicts focus on the content and the goals of the work, and process conflicts focus on how the work gets done. Process and relationship conflicts are detrimental to satisfaction and performance, while moderate to high levels of task conflict are positively related to group performance. This Suggests that group performance is seriously affected by the type of conflict members are facing (Jehn,1997).