Components of identity and the family firm : An exploratory study of influences on the micro-process of strategy and firm level outcomes

Abstract: Problem: There is a significant lack of research within the family business area which focuses on the micro-processes of strategy. Johnson, Melin and Whittington (2003) stated that while the field of strategy has traditionally concentrated on the macro-level of organizations, it needs now to attend to much more micro-level phenomenon. Furthermore, there is a general lack of research within the family business area in regards to strategy processes due to "the family business definition dilemma" (Lumpkin, Martin & Vaughn, 2008, p. 127). This dilemma is suggested to be lessened by a better understanding of the impact of the individuals on the strategic process. Purpose: This thesis examines influences on the micro-processes of strategy formation in the family firm in order to contribute to the family business research area. The specific influences that are in focus we labeled as 'components of identity'. These components of identity focus on the 'who' of the micro-process. Components of identity include identity, psychological ownership and attachment. Main research question: How and why do the components of identity influence the micro-process of strategy in a family firm? Method: This is an exploratory study which is based on a qualitative study of 14 individuals in six family-owned companies in the Småland area of Sweden. Semi-structured interviews were carried out with both family members and non-family members in an attempt to create case studies and contribute inductively. The case studies are presented in a storytelling format and were then used as a starting point for our analysis. Each case was analyzed from the perspective of the different components of identity as well as studying the influence that the dyadic relationship has on the family members. The names of the companies and the people involved have been changed in order to protect their privacy since this topic is personal in nature. Main findings: Gaining a better understanding within our area of study has allowed us to make some conclusions about the "how and why" of micro-processes of strategy in the family firm. One of the main findings, which makes a vast difference in this area of research, is the fact that the power-base within each company must be identified in order to enable a correct understanding of the micro-processes within the firm. Further, our results show that history, both in terms of historical decisions regarding the family business as well as the individual's past, play a significant role on strategy formation today. Moreover, the circumstances and emotions surrounding the individuals' entry into the family business impacts not only on succession process but also the direction of the firm, risk taking behaviour and asset retention. We were also able to make some conclusions with regards to family business strategy process. As well as provide a starting point for further research into the micro-process and the family business definition, we provide a basis for a possible new direction of governance research.