Despite the significant influence of family dynamics on family business operations, the underlying family dynamics remain underexplored – particularly through the lens of family science theories. Little is known about the unique characteristics of families that own a business compared with families that do not own a business.

Even less is known about the challenges faced by family businesses as they transition from the second to the third generation —a critical phase often referred to as the “third-generation hurdle”. This phase marks a significant shift in complexity from a nuclear family to an extended family system with several nuclear families – each with their own visions and interests for the family business. While some scientists describe this phase as particularly dangerous, where so many families “meet their downfall”, others suggests that family businesses not only overcome this challenge but also outlast non-family businesses as many have thrived for centuries.

This study seeks to address these inconclusive findings by comparing family functioning in nuclear families with and without business backgrounds. Based on the Circumplex Model (Olson, 2011) this study aims to uncover intergenerational differences and similarities in cohesion, communication, adaptability, decision-making, and conflict resolution within these two different family groups.

This investigation will enhance our understanding of how nuclear business families differ from their non-business counterparts in terms of family functioning, how they manage increasing generational complexity over time, and how they address economic and financial conflicts of interest.

Project team

Method

To understand cohesion, communication, adaptability, decision-making, and conflict resolution strategies, qualitative semi-guided interviews will be conducted with

  • nuclear families without a business background
  • nuclear families who own a business within the third generation
  • nuclear families who own a business that has surpassed three generations

Research question(s) and hypotheses

How do nuclear families with and without a business characterize their intergenerational family functioning?

Sub questions:

  • How do nuclear business families within the third generation (≤3G) characterize their intergenerational family functioning compared to that of nuclear families with-out a business?
  • How do nuclear business families that have surpassed three generations (>3G) characterize their intergenerational family functioning compared to that of nuclear families without a business?
  • How do nuclear business families within the third generation (≤3G) characterize their intergenerational family functioning compared to those business families that have surpassed three generations (>3G)?

Scientific and practical relevance

Theoretical Implications

  • A theoretical implication of our project is the possibility to adapt Olsons FACES IV- Scale (2008) for business families by taking their intergenerational dynamics into account. A deeper analysis of the scale’s items could discern any context-specific biases and enhance the scales validity when measuring family functioning in business families
  • The findings from this study will significantly contribute to the family business literature. By exploring the unique aspects of family dynamics within business settings, this research provides a deeper understanding of how these dynamics differ from non-business families, filling a crucial gap in current literature
  • This research is particularly significant for the field of family science, as it employs Olson’s Circumplex Model (2011), which is rooted in family therapy.

Practical Implications

  • Business Families: Identifying the differences and similarities in intergenerational family functioning between nuclear business families within the third generation (≤3G) and those that have surpassed three generations (>3G) provides essential insights for younger business families (≤3G). on which adaptations in their nuclear family functioning are necessary for long-term survival. Also, by understanding their unique strengths and challenges in family functioning compared to non-business families, business families can tailor their decision-making processes, communication strategies, and conflict resolution approaches, enhancing family well-being.
  • Family Business Advisors & Therapists: For advisors working with family businesses, it is crucial to identify the current condition of the family’s dynamics they are working with. These professionals can reference specific characteristics and similarities unique to business families in contrast to non-business families in their consulting practices. Additionally, the capability to identify critical adaptations necessary within the nuclear family functioning of business families across the first three generations forms a vital basis for forecasting long-term viability. This knowledge can facilitate the development of predictive models, enabling consultants to foresee potential challenges and devise proactive strategies. Such models are essential for providing informed guidance on best practices for managing transitions, resolving conflicts, and ensuring the sustained success of family businesses. Also, it is particularly important for therapists to understand how to evaluate the family system their clients fall into, as their primary goal is to treat dysfunctional patterns in the family system

Funding body

Funding amount

36.000 EUR

Project duration

July 2024 – July 2026

If you are interested in further information / a cooperation, please contact:

Sigmund Freud Private University                                                 
Faculty of Psychology
Freudplatz 1
AT-1020 Vienna