10 Flashcards
What is the definition of a family business according to the Institute for SME Research (IfM)?
The definition of a family business according to the Institute for SME Research (IfM) is: “in which the ownership and management rights are united in the person of the entrepreneur or the entrepreneur’s family”.
What are some examples of well-known large companies that are also family businesses?
Some examples of well-known large companies that are also family businesses are: Robert Bosch GmbH, Aldi Einkauf GmbH & Co. oHG.
What is the key distinction between owner- or family-run businesses and family-controlled companies?
The key distinction is that in owner- or family-run businesses, the owning family is directly involved in managing the company, whereas in family-controlled companies, the family is not directly involved in management but still has a significant influence on the business.
How does the IfM classify family-owned companies in terms of ownership and management involvement?
The IfM classifies family-owned companies as all companies in which up to two natural persons or members of their families hold at least 50% of the shares and these natural persons are members of the management.
What is the main difference between SMEs and family businesses?
The main difference is that family businesses can be larger than SMEs, employing more than 500 people or generating annual sales of more than 50 million euros. Additionally, technology start-ups are often SMEs but may not be family-owned.
What additional criterion does Zellweger’s definition of a family business include compared to the IfM definition?
Zellweger’s definition includes the criterion that a family business has the “vision to potentially sustain family control across generations,” emphasizing the intention for future family involvement.
What are the four criteria that the European Commission uses to define family businesses?
The four criteria that the European Commission uses to define family businesses are:
In the F-PEC model, what are the three dimensions that represent the influence of the family in a family business?
The majority of decision-making rights are in the possession of the natural person(s) who established the firm, or in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the possession of their spouses, parents, child, or children’s direct heirs.
What does the “power dimension” in the F-PEC model indicate?
The majority of decision-making rights are indirect or direct
What does the “experience dimension” in the F-PEC model refer to?
At least one representative of the family or kin is formally involved in the governance of the firm
What does the “cultural dimension” in the F-PEC model describe?
Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or their families or descendants possess 25% of the decision-making rights mandated by their share capital
In the F-PEC model, the three dimensions that represent the influence of the family in a family business are: power dimension, experience dimension, cultural dimension
The “power dimension” indicates the extent of ownership, management control, and influence in management bodies (e.g., board of directors) by the family
The “experience dimension” refers to the number of generations in which the company has alreaady been under family control
What are the five dimensions of family influence that can be differentiated based on the F-PEC model?
The five dimensions of family influence are: inclusion of family control in ownership, management, and leadership functions, complexity of family control, set-up of the business activities, philosophy and goals of the family owners, levels of control in the family history of the company
What is the purpose of circular models in understanding family businesses?
The purpose of circular models is to map the underlying logic in family businesses, helping to understand roles, connections, personal expectations, and problem analysis, and recognize the context in which argumentation, communication, and decision-making take place
What are the two systems that meet in the two-circle model, and what values do they represent?
The two systems that meet in the two-circle model are: the traditional, emotional/irrational, long-term, and non-material, values-oriented family system and the corporate system (which stands for renewal, rationality, meritocracy, short-termism, and financial values)
What does the three-circle model consider, and what does it highlight?
The three-circle model considers: family, ownership, and management. It highlights the role-related complexity faced by individuals in family businesses
