Conflict and Harmony in Family Business Relationships

Introduction

A significant percentage of the private sector is comprised of family businesses. Family business has its own dynamic, propelled by shared family history, personal values, and intimate knowledge of shared concerns, among other factors. When a family operates harmoniously, members communicate with ease, which in turn propels the business forward. Most importantly, a harmonious family is unanimously committed to long-term goals and highly motivated to succeed. This shared purpose and vibrancy enable business success.

Conflict, on the other hand, has a tendency to creep into the business and, ultimately, dissolve it. Conversely, conflicts originating from business concerns can erode the cohesion of the family structure itself. It is therefore important — for both family and business, and for the economic welfare of the nation as a whole — that conflict in family businesses be investigated so that constructive solutions may be generated.

Potential Conflicts in Family Business

Family business comprises a significant part of the private economy, and in the U.S. the private sector is considered the primary determinant of wealth. Ironically, it is often success itself that can introduce family problems, and family problems, in turn, can introduce problems into the business. These include envy, nepotism, and the prioritizing of company over family. The difficulties may begin with the founder, who insists on running the business according to a fixed pattern and sometimes favors certain family members over others, giving rise to inter-family rivalries.

The father-son rivalry may emerge when a father is reluctant to relinquish control of the business to his son, while the son, seeking responsibility commensurate with his maturity, resents being kept in an infantile role. This dynamic can breed serious intra-company conflict. It is sometimes seen in scenarios where men holding the title of company president are undermined by their fathers, who retain positions as chief executive officer or chairman of the board. This stalemate can produce guilt and mutual blame, particularly if the business suffers as a result of competing visions for its development.

Father-daughter dyads (Dumas, 1989) are subtler yet similar to father-son dyads and may cause comparable intra-family and intra-business dissolution. The brother-brother rivalry is another variant in which each brother vies for the favor of the founding father. This dynamic may be exacerbated when mothers and wives are also involved in the business. Such jockeying for power can influence every decision made and impact all levels of the organization, effectively transforming operational matters into family conflicts. Additional tensions arise when a younger brother displaces an elder, or when a female family member assumes a position previously held by a male. All of these configurations and rivalries create intrafamily friction that extends to other relatives and permeates the business (Levinson, 1971).

Some may see the solution as placing business concerns before family concerns, but as Barker, Rimmler, and Moreno (2004) discovered, it is family identity that serves as the key to ensuring business endurance and bottom-line success. Ownership signals commitment to the business, and generally the longer the business has been in existence, the sharper the sense of generational commitment. Yet this commitment only emerges when the family recognizes that the business is, ultimately, secondary to their relational bonds. In line with this finding, Morris et al. (1998) encourage family business owners to devote more time to their families and less to strategic planning and business matters — much as they would prioritize customers above all else. Family failure signals business failure; therefore, family must precede business for the business to endure.

On the other hand, conflict may persist even when family members are deeply involved in the business, owing to the rivalries described above. Intra-family rivalry can result in litigation, and it is extraordinarily difficult for an attorney — specifically a family law attorney — to separate the "family" from the "business" in such cases (Randall, Keefer, & Ranson, 2011). The central question then becomes: what should be done when family rivalry is actively intruding into the business?

The Confucian Solution

The Western model explains family conflicts in family business according to the typical dual-concern model. The Asian perspective offers an alternative approach in which concern for relationships, family and interpersonal norms, and collective interests are prioritized. Analyzing the Confucian approach can serve as a counterpoint to the Western model and provide insights into how negative family dynamics within a Western family business might be resolved.

Confucianism defines human relationships according to five cardinal virtues: humanity and benevolence, righteousness, propriety, wisdom, and trustworthiness. It also recognizes five basic relationships: father and son, ruler and ruled, husband and wife, elder and younger brother, and friend. Only the last is equal in standing; each of the others carries defined norms and conventions. Throughout, Confucianism urges individuals to subordinate their self-interests for the sake of group harmony.

Three concerns may also influence the choice of conflict-management strategies in the Chinese family business: concern for interpersonal relationships in general; concern for family and interpersonal norms as prescribed by the Confucian code of conduct, under which certain hierarchical norms — such as the child's deference to the parent — continue to apply even within a business context; and concern for collective interests. These concerns shape how conflicts are settled in a Chinese family business, and the stronger the adherence to Confucian principles, the more effective these strategies tend to be. Paradoxically, however, these same Confucian values can both initiate and resolve problems within a Chinese family business. Yan and Sorenson (2004) posit that Western individuals can apply these same values — adapted to a Western framework — to the resolution of their own family business conflicts.