In today’s turbulent times, family firms lead a tenuous existence. Indeed, most family enterprises do not start out as family businesses. Studies conducted by the AXA Family Business Research, Monash University, have found that approximately 35 percent of family firms survive through to the second generation.
The reasons for the demise of these firms include poor economic conditions, lack of capital and resources, and incompetent management. Moreover, organizational culture of the family business also plays an important role in determining whether the firm continues successfully beyond the first generation.
In this and
other articles in this series we will describe the kinds of cultures found in the business side of the family firm, outline the advantages and problems associated with each cultural pattern, and discuss how one might go about changing the culture.
The culture of any group can be viewed on four levels:
- artifacts
- perspectives
- values
- assumptions.
Artifacts and PerspectivesArtifacts are the more tangible aspects of culture. They are physical, such as the dress code, physical layout of the offices (or plant), company logo, and other emblems used by a group; verbal, such as the language, colloquialisms, anecdotes, and myths shared by the group; and behavioural patterns such as rituals and ceremonies. Artifacts are the most visible manifestations of culture, and can be thought of as the symbolic representations of the next level of culture, that is, the socially shared perspective.
Perspectives are the norms and rules of conduct that the group deems acceptable for handling such problems as developing a new product, giving a performance appraisal, hiring and training new employees, or gaining a promotion.
Values and AssumptionsWhile perspectives are situation-specific rules,
values are broader principles, such as how to serve a customer, honesty, and interaction with superiors or underlings. Values are both formal and informal, and they can often be found in the philosophy espoused by the group. Since groups do not always act in accordance with their espoused values, distinguishing between the ideal and real values is important in distinguishing the cultural traits of an organization.
At the foundation of the culture are the group’s basic assumptions. The other three levels of culture are based on this most fundamental level.
Assumptions are the premises on which a group bases its world views and which the artifacts, perspectives and values are based. In family firms, certain kinds of assumptions are often found regarding the nature of relationships, human nature, the environment, the nature of human activity, and whether preferential treatment should be given to certain individuals.
ConclusionThe cumulative set of assumptions that a group holds is called the cultural pattern of the group. Indeed, the core of any culture is this pattern of interlocking assumptions that creates a unique belief system. Because basic assumptions are the key to understanding culture, the next four articles will broadly define the kinds of family business culture commonly observed.
This article has been extracted and modified from Dyer, W.G. (1996). Culture and continuity in family firms. "The Best of Family Business Review (FBR): A Celebration." Family Firm Institute, Inc. Boston, USA. Other articles in this series:The Paternalistic Culture in Family Firms
The Laissez-Faire Culture in Family Firms
The Participative Culture in Famiy Firms
The Professional Culture in Family Firms
Ensuring Continuity in Family Firms