An exploratory study of family harmony in family businesses / Sunette Pottas

Abstract

Family businesses are one of the driving forces behind economic growth in South Africa. It is therefore very important to understand all the different aspects of family businesses to ensure sustainability and continuity through different generations. The reasons for their failure are often predictable and the fact that the 'family dynamics' and family business issues is not well understood. Family harmony is a situation where family members acknowledge each other's achievements, that they are emotionally attached and close to each other, where they support and care for each other's welfare and this gives them a competitive advantage and as a result are in a better position to work together, trust each other, and react faster to the changing economic environment. It also leads to better, wiser decisions being taken, leading to success in business. The research was conducted by means of a literature and empirical study. The literature study entails literature on the key dynamics of family businesses and factors that influence harmony in family businesses. A convenience sample, by means of a snowball sample technique was used to identify family businesses. A total of 13 family businesses and 91 respondents participated in the Lejweleputswa District in the Free State province in South Africa. Literature revealed that there are thirteen latent variables that could be used to assess family harmony in family businesses. These determinants of family harmony are: open communication, mutual t rust and respect, conflict between family members, family commitment, personal needs alignment, division of labour, fairness, leadership, governance, non-active family members, non-family members, senior generation of family members and financial performance. The reliability of the questionnaire was determined by calculating the Cronbach alpha coefficient of the variables. The Cronbach's alpha reliability coefficient normally ranges between 0 and 1. The closer the Cronbach's alpha coefficient is to 1.0, the greater the internal consistency of the items in the data. The participating family members had the highest level of agreement with the following variables concerning the statements in the questionnaire; Family Commitment (x=5.877), Financial performance (x= 5.723) and Mutual trust and respect (x= 5.716). Mutual trust, respect and leadership are the more preferable variables for the participating family members because they have the highest correlation to family harmony in family businesses. In the relationships of, active and inactive family members and the gender of the family members in regard with family harmony (dependable variable) and the perceived future continuity ( independent variable) there is never a practical significant difference. Recommendations are made to improve family harmony in family businesses and subsequently the sustainability and longevity of the businesses