Evaluation of the unique challenges facing family farms in South Africa
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The economic landscape of most nations remains dominated by family businesses. Therefore, it is fitting that academia has begun to recognise the importance of family business studies. Family businesses are here to stay. Families who work together and live together face certain unique challenges that other families do not face. They have more opportunity for closeness and, at the same time, there is more opportunity for disagreement. Paradoxically, many of their outstanding strengths are also their profound weaknesses. In order to balance the needs of the family farm and the family it is important to establish sound business practices which not only enhances the economic productivity of the farm, but also the happiness of the family. Hence, the family and business are intertwined in family businesses. The success of a family business is more dependent upon effective management of the overlap between family and business than on the resources or processes in either the family or business systems only. A well-functioning system helps build trust within the family and a good family dynamic, in turn, becomes an asset to the business. The latter happens as it enables each separate piece of governance to function better and add more value, while remaining aligned with other components of the governance system. However, a growing business becomes increasingly complex and creates its own demands for a more formal organisational structure. Family business managers must adopt their governance practices accordingly. Indeed, success drives the need to adapt and change and all family businesses eventually face this reality. The main objective of this study is to evaluate the unique challenges facing family farms in South Africa and to make recommendation to enable the family farming businesses to overcome these unique challenges to ensure long-term sustainability. The research was conducted by means of a literature and empirical study. The purpose of the literature study was to gain in-depth knowledge on family businesses. Specific topics covered in the literature research include; the definition of a family business, roles of the family, the business and ownership, advantages and disadvantages, family harmony, corporate governance, management succession, ownership succession and the role of family farms. The literature molded the basis for evaluating the unique challenges facing family farms. Without theory, results will remain isolated pieces of information. These unique challenges were empirically tested in practice by means of a structured measurement instrument (questionnaire) and consequently evaluated. Based on the findings of the empirical study, it was concluded that some unique challenges facing family farms that are neglected include; performance measurement and compensation of family members, corporate governance in the family farm, ownership succession and family harmony amongst all family members (active and inactive). While no formula addresses all situations, adopting a balanced, strategic approach to managing the unique challenges to family farms, delivers positive returns and enhances the chances of passing on the family farm legacy.
- ETD@Vaal Triangle Campus