Angela Pike-Bowles *
Department of Applied Management, Administration and Ethical Leadership, University of Fort Hare, South Africa.
Juliet Townes
Department of Applied Management, Administration and Ethical Leadership, University of Fort Hare, South Africa.
In this post, we present a brief overview of our recently published book chapter titled “A Qualitative Exploration of Risk Management Strategies in Family Businesses”
Business performance is a multidimensional concept that requires consideration of both economic and non-economic factors when measuring performance. This is especially true in family businesses, where non-economic objectives are prominent antecedents. In this type of business, the family and the business are “inextricably intertwined.” The effects of social exchange between generations mean that successful enterprising families show tremendous respect for the sensitive relations between the family and the business. Family businesses are concerned not just with financial factors, but also with the requirements of the family. As a result, a family’s identity, reputation, and the maintenance of its values may occasionally affect the business’s performance. Family members involved in the ownership of a family business, therefore, have control over a business’s performance and success. Family businesses outperform non-family businesses because they do not incur free-rider agency costs, thereby improving financial performance.
Family businesses are more adaptable to technological advances, have greater flexibility in responding to consumer requirements, and have a business structure that allows for swift decision-making. There is also a positive association between family members’ emotional attachment and family business performance.
Risk management (RM) enables decision-makers to comprehend and measure the effect of risk in businesses, and controlling difficult risks increases productivity. RM includes the strategies, techniques, and supporting tools used to identify and control risk to an acceptable level in a business. It is a coordinated collection of actions and procedures that drive a business to minimise risk and achieve business goals.