Family as an institution: The influence of institutional forces in transgenerational family businesses

The purpose of this paper is to analyze entrepreneurship in the context of the second, third and fourth generations of family businesses, considering the family as an institution and mapping the reasons and influences to institutional forces across generations.

Three focus groups conducted for the study revealed that each generation has dealt differently with issues related to institutional forces, such as legitimacy, business professionalization and succession.

The perpetuation and transmission of entrepreneurial behavior has been greatly influenced by the family and this is especially clear when it is seen as an institution that unites and binds its members, while guiding or restricting the choices available to these agents through limits imposed on them. The family exerts a strong institutional influence across generations, both defining boundaries and creating opportunities for its members. Regardless of the generation of family business, the family founders and their successors’ responses are modeled by institutional forces.

The main limitation is concentration of focus on a specific context, Brazilian family businesses. Therefore, the results are limited to this case. With regard to the methodological approach, the authors employed cross-sectional data collection, making it difficult or even impossible to make a historical analysis of the facts that are limited to the present perceptions of the interviewees. It should also be considered, from the institutional perspective, that the authors only analyze the family as an institution, leaving out of the context other institutions and institutional dimensions such as the political and industrial, for example.

This study helps to explain entrepreneurship in the context of the second, thirrd, and fourth generation of family businesses, considering family as an institution, mapping the motivations and influences of institutional forces across generations. The relevance of family as an institution as drivers of family businesses, as demonstrated in this study, can contribute to decision making and succession of family businesses. Equally, the results can contribute to avoidance of the possible pitfalls of transgenerational changes and facilitate better management of problems such as legitimacy caused by a lack of norms and procedures or transfer of tacit knowledge.

There have been few attempts to understand the dynamics of the family business as an institution that also consider transgenerational changes. Rather, family business has been analyzed separately from institutions. Institutions are rarely taken into account in studies of family businesses. Consequently, a perspective that aims to understand the relationship between family businesses and institutions, taking account of transgenerational influences should further theory. Transgenerational family businesses are an appropriate object of study in this context, because of the institutional changes they undergo due to the influence of institutional forces over time.

This study shows the relevance of understanding how these issues are dealt with in different generations of a family institution. Aspects related to entrepreneurship in the context of family businesses have been attracting attention from researchers interested in family businesses and scholars of institutional entrepreneurship.