Cross-Cultural Perspectives on Strategic Decision Processes in Family Enterprises

Abstract

The proportion of FOBs is rather high in the world economy; however, the processes related to strategic decision making in such firms have not been thoroughly analyzed from the cross-cultural perspective. This study explores how culture, governance systems, and family influence strategy formulation within FOBs in five different cultural clusters, namely East Asia, South Asia, Western Europe, Latin America, and the Middle East. This study uses a mixed methods research design combining the survey responses of 486 participants with the interviews of 42 executives of family businesses to propose a conceptual model connecting cultural orientation (collectivism and individualism) to strategy-related performance indicators such as long-range planning, conflict management, succession planning, innovations and stakeholder engagement. The findings indicate that there is greater inclination towards consensus-building in collectivist cultures whereas individualistic cultures show faster decision-making cycles which are not inclusive of a wider range of people. Governance reforms are positively moderated between cultural orientation and strategic performance in all clusters. This research develops an analytical framework of theoretical and empirical value, which enhances knowledge of FOB governance and provides insights that are useful to family business consultants, policy makers, and practitioners within different cultural settings. In particular, the study fills a critical research void in the family business comparative literature by synthesizing institutional theory and cultural dimensions theory into a single conceptual framework.