Family Firm Types Based
on the Professionalization
Construct: Exploratory Research
Family Business Review
26(1) 81–99
© The Author(s) 2012
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DOI: 10.1177/0894486512445614
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Julie C. Dekker1, Nadine Lybaert1, Tensie Steijvers1,2,
Benoît Depaire1,2, and Roger Mercken1
Abstract
This article responds to the calls from the research field to find effective ways to distinguish between different
categories of family firms. The authors contribute to this literature by extending and refining previous family firm
typologies. To attain this objective, the authors introduce the professionalization construct as basis for distinguishing
family firms.As this construct is often approached in an oversimplified, one-dimensional manner, they first conduct an
exploratory factor analysis to reveal its multidimensional nature. Based on these results, drawn from a representative
sample of 532 Belgian family businesses, a cluster analysis facilitates a distinction between different “types” of family
firms based on a multidimensional conceptualization of firm professionalization.
Keywords
family business, professionalization, family firm typology, model-based clustering
Introduction
The diversity within the group of family businesses has
encouraged academics to develop different types of classification schemes in order to deepen the insights into
these complex systems. A review of the existing family
firm typologies (Basco & Pérez Rodríguez, 2009; Birley,
Ng, & Godfrey, 1999; Corbetta, 1995; Davis, 2009;
Dyer, 1988, 2006; Gersick, Davis, Hampton, & Lansberg,
1997; Lubatkin, Schulze, Ling, & Dino, 2005; Poza,
2007; Sharma, 2004; Sharma & Nordqvist, 2008;
Westhead & Howorth, 2007) has revealed several of their
limitations and particularly their general narrow approach
of the family firm diversity. With a few exceptions, most
of them base family firm differentiation mainly on firm
composition, being the amount of family involvement.
We believe these differentiations need to be extended.
In this article, we contribute to the literature through
expanding previous typologies by also looking at how the
firm operates and deals with the family and nonfamily
involvement. This is done by integrating the concept of
family business professionalization. In the narrow definition of this concept, the family business literature has a
tendency to equate professionalization solely with the
entrance of an external, nonfamily manager (e.g.,
Bennedsen, Nielsen, Pérez-González, & Wolfenzon,
2007; Klein & Bell, 2007; Lin & Hu, 2007; Zhang & Ma,
2009). This corresponds with several of the composition-based typologies, where the amount of family
involvement is the focal point. Yet, what results from this
approach is an outdated assumption that family members
are inherently nonprofessional managers who must be
replaced so that the firm can grow (Hall & Nordqvist,
2008). However, family firms are often reluctant to hire
external nonfamily managers, given the focus of many
1
Hasselt University, Diepenbeek, Belgium
Research Foundation Flanders, Brussels, Belgium
2
Corresponding Author:
Julie C. Dekker, KIZOK Research Center, Hasselt University,
Agoralaan, Building D, Diepenbeek 3590, Belgium.
Email: [email protected]
82
Family Business Review 26(1)
family firm owners to keep control of the firm by also
conducting the firm’s management. This attitude can
cause different agency costs to occur. These costs can
relate not only to problems of altruism and self-control but
also to agency costs that can arise due to free riding, ineffective management, nonalignment of interest among family members, nepotism, and distributive injustice, which
will urge family firms to professionalize their business in
other ways rather than hiring nonfamily managers (GomezMejia, Nuñez-Nickel, & Gutierrez, 2001; Lubatkin et al.,
2005; Schulze, Lubatkin, & Dino, 2003; Songini & Gnan,
2009; Van den Berghe & Carchon, 2003). Therefore, professionalization needs to be considered as a broader construct rather than as the entrance of a nonfamily member
in order to resolve these different agency problems
(Flamholtz & Randle, 2007; Hofer & Charan, 1984). For
further theoretical underpinnings for the family business
professionalization process, we refer to the work of
Moores and Mula (2000), Songini (2006), and YildirimÖktem and Üsdiken (2010).
Based on this broader construct of professionalization,
the general aim of this study is to develop a novel way to
discriminate between different types of family firms based
on the professionalization construct. Therefore, as a first
research question, we posit the following:
Research Question 1: What are the dimensions
professionalization consists of within a family
firm context?
If it is expected to be broader than the nonfamily involvement (Flamholtz & Randle, 2007; Hofer & Charan,
1984), which other dimensions does it comprise? For this
end, we use an exploratory research approach to identify
the different dimensions, since the literature does not
provide any profound scale instruments. A second
research question, which then arises, is the following:
Research Question 2: Is the construct of professionalization useful to distinguish between
family firms?’
The construct must enable us to differentiate between
several distinct groups in order to have a contribution. For
this, we will use a clustering method to assess whether the
dimensions of professionalization will generate different
family firm groups. If both research questions are
answered successfully, we will be able to achieve the
main objective of the study, which is developing a new
and profound way of identifying different family business
types based on professionalization.
By addressing these research questions and attaining
the main objective, this study can be another stepping
stone toward a comprehensive understanding of the family firm diversity. It also contributes to filling the current
knowledge gap in the research field on professionalization. Researchers such as Debicki, Matherne, Kellermanns,
and Chrisman (2009) indicate that this concept is in need
of some good empirical research as it has not been sufficiently examined up till now.
The remainder of this article is structured as follows:
first, by highlighting the limitations of the existing family
firm typologies, we are able to identify the need for further
extension and clarification. Next, we apply the professionalization concept as a basis for enriching existing typologies. The multidimensional nature of professionalization
is unraveled in the empirical part of the article where we
address Research Question 1. Research Question 2 is discussed in the succeeding empirical analysis, which focuses
on discovering different family firms types. The findings
are then brought together to achieve the main objective of
the study. We provide the reader with a further discussion
of our findings, as well as their implications, limitations,
and suggestions for future research.
Creating a Basis for
Discriminating Among
Family Firms
Existing Family Firm Typologies
As in any field of study, variety necessitates a way of
classifying the objects of study—to simplify the number
of types—which helps researchers explain them and
communicate about them (Davis, 2009). As such, authors
have repeatedly inquired ways to distinguish among different types of family firms (Basco & Pérez Rodríguez,
2009; Chrisman, Sharma, & Taggar, 2007; Dyer, 2006;
Melin & Nordqvist, 2007; Sharma & Nordqvist, 2008).
The family business research field has responded to this
family business heterogeneity by developing typologies
to classify them (e.g., Basco & Pérez Rodríguez, 2009;
Birley et al., 1999; Corbetta, 1995; Davis, 2009; Dyer,
1988, 2006; Gersick et al., 1997; Lubatkin et al., 2005;
Poza, 2007; Sharma, 2004; Sharma & Nordqvist, 2008;
Westhead & Howorth, 2007).
Dekker et al.
If we scrutinize the existing set of typologies and
classification schemes, we find a subgroup that differentiates family firms solely on the amount of family
involvement in ownership and/or management (e.g.,
Birley et al., 1999; Corbetta, 1995; Gersick et al., 1997;
Lubatkin et al., 2005; Poza, 2007; Sharma & Nordqvist,
2008; Westhead & Howorth, 2007). Family firms are
assigned to the same type due to their similarity in ownership structure, which is then the basis for concluding
more or less identical behavior regarding other firm
aspects. This oversimplifies the essence of a family business to such an extent that the mere presence of family
becomes a representative for all firm behavior, activity,
and outcome. One of these mentioned outcomes is financial performance. Yet linking this with a typology based
on family involvement is rather dubious given that studies have revealed contradictory results when it comes to
the effects of family involvement on firm’s financial performance (Stewart & Hitt, 2012).
There are, however, other existing typologies and
classification schemes that go beyond firm composition.
Dyer (1988), for example, integrates aspects of family
business culture. In one of his later works, he uses agency
costs, familial liabilities, and familial assets as basis for
typologizing family firms (Dyer, 2006). Sharma (2004)
also dissociates herself from the traditional disposition
by creating a framework for the conceptualization of
family firm performance, with reference to both family
and business dimensions. The family–business interaction is also used for the holistic framework developed by
Basco and Pérez Rodríguez (2009), who build on the
family firm classifications of Ward (1987) and Poza
(2007). They extend Poza’s idea by suggesting management of a whole integrated system instead of jointly optimizing two systems (i.e., family and business).
In line with these latter family firm types—which
take into account family systems, family values, or
family objectives—we propose a way of differentiating
among family firms that goes beyond the mere amount
of family involvement in ownership and/or management. A shortcoming of the typologies that mainly focus
on ownership and/or management aspects is that they
generate a very static presentation on how the family
firm “is,” that is, on how the family firm is composed.
This makes it impossible for the users of these schemes
to discriminate between family firms that do operate differently (e.g., working procedures, controlling mechanisms, decision-making authority, management quality),
83
although they have equal representation of family
within ownership and management. Like Miller (1996),
we argue that a typology or classification scheme should
not be too thin or arbitrary, meaning that it either has too
few components or that it fails to show how and why
these components interrelate. Such schemes make simplistic distinctions that have few implications (Doty &
Glick, 1994). Finally, some of the existing family firm
types suffer from overlaps and are not jointly exhaustive
(e.g., Corbetta, 1995; Davis, 2009). Yet mutual exclusiveness, internal homogeneousness, and collective exhaustiveness are necessary attributes to qualify as classification
systems (Chrisman, Hofer, & Boulton, 1988).
When reviewing the existing family firm typology literature, we believe that this research domain is in need of
an extended and more profound version of the family
involvement–based typologies. When family involvement
diminishes, and more and more nonfamily managers start
entering the business, family business literature often refers
to this phenomenon as the process of professionalization
(e.g., Berenbeim, 1990; Chittoor & Das, 2007; Daily &
Dalton, 1992). Yet this construct entails much more than
just the hiring of nonfamily managers. The identification
of its exact content will therefore be addressed in Research
Question 1. Through these improvements, this new typology based on professionalization can be complementary to
some of the existing typologies that also go beyond firm
composition. They tend to have a more profound contribution to the research field as they focus on other aspects such
as family business culture (Dyer, 1988), performance on
financial/family objectives (Sharma, 2004), or family firm
orientation (Basco & Pérez Rodríguez, 2009). Combined
they are another step toward the comprehensive understanding of the heterogenic group of family firms.
Professionalization of the Family Firm:
Defining the Construct
Firm professionalization, when it is studied in the general business literature, tends to be understood in an
organizational development context. As firms evolve
through the organizational life cycle, the complexity of
firm operations increases as well as the demand for
more sophisticated management and organizational systems. As such, there is a shift toward firm professionalization, which enables the firm to progress to the next
level (Flamholtz & Randle, 2007; Gabrielsson, 2007;
Gedajlovic, Lubatkin, & Schulze, 2004; Hofer & Charan,
84
1984; Whisler, 1988). Also, through an agency perspective family firms are expected to professionalize when
they are confronted with typical agency problems caused
by, for example, parental altruism, self-control, free riding, or nepotism. To resolve these agency problems,
family firms can adopt agency cost control mechanisms,
such as formal governance systems, managerial control
systems, and encourage the involvement of nonfamily
members in governance and managerial roles, which are
all part of the professionalization process.
Flamholtz (1986; Flamholtz & Randle 2007), being
one of the key authors concerning business professionalization, describes this process through the introduction of several features such as formal planning, regular
scheduled meetings, defined responsibilities, performance appraisal systems, formal training, management
development, formal governance bodies, and control
systems. Even though the construct cannot be captured
in one sound definition, researchers do not seem to be
hesitative to study (a part of) the phenomenon (e.g.,
Songini, 2006; Von Nordenflycht, 2010). Stewart and
Hitt (2012) recently argued that, even though professionalization lacks a singular meaning in popular or
scholarly discourse, the term implicitly or explicitly
entails other dimensions, such as formal training, meritocratic values, formalized structures, or independent
directors (e.g., Chua, Chrisman, & Bergiel, 2009; Chua,
Chrisman, & Sharma, 1999; Tsui-Auch, 2004). When
this professionalization construct is applied within the
context of family firms, it has an additional unique
dimension of hiring external nonfamily managers, which
caused most empirical studies on family firm professionalization to solely focus on this particular feature (e.g.,
Bennedsen et al., 2007; Chittoor & Das, 2007; Gedajlovic
et al., 2004; Klein & Bell, 2007; Lin & Hu, 2007; Zhang
& Ma, 2009). However, this simplification of the professionalization concept has created a tendency in the literature to equate professional managers with external,
nonfamily, nonowner managers, which in turn leads to
the outdated assumption that family members are inherently nonprofessional managers who must be replaced
for the firm to grow (e.g., Berenbeim, 1990; Bloom &
Van Reenen, 2007; Chittoor & Das, 2007; Daily &
Dollinger, 1992, 1993; Gulbrandsen, 2005; Levinson,
1971; Schein, 1995). As such, Hall and Nordqvist (2008)
caution that professional management and family management are often seen as mutually exclusive. We argue
that the inferences about family firm activity are limited
Family Business Review 26(1)
when the entire process of professionalization is reduced
to a binary variable, namely, as something that can “happen overnight” within the firm.
As argued earlier in this article, the existing family
firm types that are based on the amount of family
involvement actually resemble the narrow definition of
professionalization. Both link firm behavior to the proportions of family/external involvement. Family firm
types that are based on high family involvement correspond to the narrowed definition of nonprofessionalized
firms. As externals enter the business, family involvement decreases, shifting the firm to another type, and making them—almost instantly—professional. These family
firm types need to be adjusted in accordance with the
actual, multidimensional construct of professionalization, as indicated in the general literature (e.g., Flamholtz
& Randle, 2007; Hofer & Charan, 1984; Songini, 2006)
and more recently also within the family literature (e.g.,
Hall & Nordqvist, 2008; Stewart & Hitt, 2012). By
extensively reviewing various studies regarding the professionalization topic, we attempt to grasp the content of
this construct. Multiple features repeatedly return in the
professionalization descriptions of the present literature.
As such, we ascertain that, when applied to the family
business context, the concept of professionalization is
not only limited to (a) the entrance of external managers
but also encompasses (b) the establishment of effective
governance structures such as boards and councils
(Flamholtz & Randle, 2007; Songini, 2006; Suáre &
Santana-Martín, 2004), (c) the professionalization of the
board by the appointment of nonfamily and external
board members (Lane, Astrachan, Keyt, & McMillan,
2006; Songini, 2006; Stewart & Hitt, 2012; Whisler,
1988; Yildirim-Öktem & Üsdiken, 2010), (d) a delegation of control and decentralization of authority (Chua
et al., 2009; Hofer & Charan, 1984), (e) the establishment
of formal financial control mechanisms (Chua et al.,
2009; Flamholtz & Randle, 2007; Giovannoni, Maraghini,
& Riccaboni, 2011; Perren, Berry, & Partridge, 1998;
Sonfield & Lussier, 2009; Songini, 2006), and (f) the
establishment of formal human resource control mechanisms (de Kok, Uhlaner, & Thurik, 2006; Dyer, 2006;
Flamholtz & Randle, 2007; Kopriva & Bernik, 2009;
Tsui-Auch, 2004).
In concurrence with other recent studies (e.g., Chua
et al., 2009; Sonfield & Lussier, 2009; Songini & Gnan,
2009; Stewart & Hitt, 2012), we thus argue that professionalization, when it is studied within a family business
Dekker et al.
context, must be considered as a multidimensional construct and entails these previously mentioned features,
which are derived from the literature. These features may
not be viewed as independent dimensions, as different
features can be related and/or constitute one dimension.
Therefore, an exploratory factor analysis is needed to
uncover the independent dimensions of the professionalization construct, which is also our first research
question.
Data Collection and Research
Methodology
The population for this study contains all nonlisted
small and medium enterprises (SMEs)1 located in the
Flemish Region of Belgium.2 The requirement of a
minimum of 10 employees was imposed to exclude the
micro-organizations. Considering these criteria, we held
a selection frame of 6,556 SMEs, which was drawn from
the Bel-First database of Bureau Van Dijk containing a
complete list of private companies in Belgium. A structured questionnaire was mailed to these sampled firms in
February 2010, and as such, we addressed the entire
population that met our criteria. After a three-wave mailing, a total of 890 questionnaires were obtained, which
yields a response rate of 13.58%. From this total
response set, we selected all family businesses that
resulted in a final response group of 532 organizations.
The applied definition regards a firm as being a family
firm if more than 50% of ordinary voting shares are
owned by members of the largest single family group
related by blood or marriage (Chrisman, Chua, & Litz,
2004; Chua et al., 1999; Westhead & Howorth, 2007). T
test results confirm that there are no significant differences between the early and late respondents, suggesting that the chance for a response bias in the results is
very small (Kanuk & Berenson, 1975). In addition, the
F value of Levene’s test for equality of variances indicates equal variance in the groups of early and late
respondents. Each respondent received a list of survey
questions, which are a translation of the discovered
professionalization features described in the previous
section and investigate the extent of their firm’s professionalization.
To answer Research Question 1, related to identifying the different professionalization dimensions, we perform an exploratory factor analysis, that is, a principal
component analysis with Varimax rotation. To answer
85
Research Question 2, that is, whether the professionalization construct is useful to distinguish between family
firms, we need to search for distinct and mutually exclusive groups of family firms with reference to the different
professionalization dimensions. Therefore, we conduct a
model-based clustering technique, that is, latent class
clustering.
Identifying Different Dimensions
of Professionalization: A Factor
Analysis
Measuring Professionalization
Data related to professionalization is collected by means
of survey questions designed to measure this concept in
its different facets as the review of the extant literature
reveals no existing scales. Regarding the exploratory
approach of this study, the developed variables are based
on professionalization characteristics discussed in previous studies (e.g., Chua et al., 2009; Dyer, 2006; Flamholtz
& Randle, 2007; Hall & Nordqvist, 2008; Songini, 2006;
Yildirim-Öktem & Üsdiken, 2010). Through each variable, we intend to assess a different feature of professionalization as they are described in the relevant literature.
Since the presence of nonfamily managers is virtually always related to the professionalization level of the
family business, we included variables to assess the
amount of nonfamily involvement within the management team and board of directors, as well as the amount
of external board members. By these means, we intend
to assess the professionalization of the management team
(Chittoor & Das, 2007; Sonfield & Lussier, 2009) and
board professionalization (Lane et al., 2006; Songini,
2006; Stewart & Hitt, 2012; Whisler, 1988; YildirimÖktem & Üsdiken, 2010). Further questions included
measurements to evaluate delegation of control and an
increasing decentralization of authority around the (family) owner as part of the professionalization process
(Chua et al., 2009; Gulbrandsen, 2005; Hofer & Charan,
1984). Finally, numerous authors have asserted that professionalization of the family business is related to the
diffusion of formal controlling systems throughout the
company. Questions were integrated based on the work
of Daily and Dollinger (1993), Flamholtz and Randle
(2007), Giovannoni et al. (2011), Pérez de Lema and
Duréndez (2007), and Songini (2006) to assess different
financial control systems such as budgeting, planning,
86
and performance evaluation. Besides these financial
control systems, authors such as de Kok et al. (2006),
Dyer (2006), Kopriva and Bernik (2009), and Kotey and
Folker (2007) recently started dwelling on the importance of personnel controls, especially within a family
business context where problems relating to familial
altruism or nepotism are not uncommon (Kellermanns
& Eddleston, 2004). These problems can cause performance evaluation of family members to be colored
(Schulze, Lubatkin, Dino, & Buchholtz, 2001), or maintaining a set of irrelevant criteria during selection and
evaluation (Dyer, 2006). Therefore, we also included
questions to assess the use of control systems related to
personnel, such as formal recruitment, training, evaluation, and reward systems. An overview of these different
items is presented in a table later.
These variables are measured on either the presence or
absence of a certain feature (e.g., presence of incentive
payment system) or on interval level (e.g., number of family members on the board of directors). The final survey
instrument was created by five academic researchers. The
questionnaire was then tested during a pilot exercise by 8
academic experts and 10 family business CEOs to gain
their views on the clarity and focus of the questions.3
Exploratory Factor Analysis
To uncover different underlying dimensions of the professionalization construct, an exploratory factor analysis is performed, more specifically, principal component
analysis (PCA). The quality and appropriateness of the
data set for conducting a PCA is evaluated by assessing
the degree of interrelatedness (Hair, Black, Badin,
Anderson, & Ronald, 2006). The Bartlett test of sphericity ( 2 = 2842.643; significance level = .000) and the
Kaiser–Meyer–Olkin measure of sampling adequacy
(.805) both indicate that the data matrix has sufficient
correlations to justify the application of a PCA. As such,
we can expect that the factor analysis will yield distinct
and reliable factors (Field, 2009).
Based on an orthogonal factor rotation,4 the PCA generates a five-factor model, which accounts for 55.67% of
the total variance. By conducting an orthogonal rotation
(Varimax), the factor solution will result in noncorrelating factors. The number of factors is determined based
on the latent root criterion, which considers only factors
with a latent root or eigenvalue greater than 1 as being
significant. For the interpretation of the factor solution
Family Business Review 26(1)
presented in Table 1, variables are considered as
belonging to a specific factor when their factor loadings are .50.5
Through the factor analysis, highly correlated variables are grouped together and new composite measures
are created to represent these variable groups. As Table 1
indicates, five factors were obtained with regard to the
professionalization concept. Significant factor loadings
are shown in boldface. Cronbach’s alpha coefficient
gives an indication of the internal consistency, which has
a general threshold value of .6 for exploratory factor analysis (Hair et al., 2006). For social science data, it is argued
that a value of .5 can be acceptable (Kline, 1999). Each
factor is labeled in accordance with the variables of which
it comprises. Thus, the final retained factors are labeled
Financial Control Systems (F1), Nonfamily Involvement
in Governance Systems (F2), Human Resource Control
Systems (F3), Decentralization of Authority (F4), and
Top-Level Activeness (F5).
For the validation of the factor solution, we assessed
the robustness of the solution across the sample by randomly splitting the sample into two subsets and estimating
the factor model for each subset to test for comparability
(Field, 2009; Hair et al., 2006). The Varimax rotation solutions for the split samples are highly comparable both in
terms of factors retained and the allocation of variables to
the factors.
The results of the exploratory factor analysis thus
seem to indicate that the professionalization construct
entails five different dimensions. This implies that family firms can increase their professionalization level by
adjusting one or more of these individual dimensions.
Based on the factoring results, we can answer our first
research question, that is, the identification of the different dimensions of professionalization within a family
business context. From a theoretical point of view, this
five-dimensional construct might not render itself as a
workable tool to use for family firm differentiation. If
we would only consider high and low scores for each of
the five dimensions, this would still generate more than
32 different types. As such, to answer Research Question 2,
that is, whether the construct of professionalization is
useful to distinguish among family firms, we need an
empirical technique to assess where and in which type a
firm is located. For attaining this objective, a modelbased cluster analysis is most suited. Factor scores are
computed for each of the five revealed professionalization dimensions, and this for each company in our data
Dekker et al.
87
Table 1. Factor Loadings for Varimax Rotated Five-Factor Model.
Factor
Variable Description
Use of budgets
Budget evaluation system
Formalized financial goals and objectives
Firm performance evaluation system
Family involvement in board of directors (reversed)
External board directors
Family involvement in management team (reversed)
Nonfamily CEO
Formal recruitment system
Formal training system
Incentive payment system
Personnel performance evaluation system
Formal scheduled staff meetingsa
Delegation of control
Centralized individual decision making (reversed)
Centralization of authority (reversed)
Board activeness
Management activeness
Cronbach’s alpha
Accumulated percentage of variance explained
KMO index
Barlett’s significance test of sphericity
F1
F2
F3
F4
F5
.870
.842
.642
.553
.040
.041
.319
.238
.109
.046
.051
.355
.416
.104
.167
−.018
.063
.250
.78
25.00
0.805
0.000
.098
.065
.151
.119
.816
.738
.625
.623
.000
.050
.152
.003
.131
.057
.031
.116
.090
.027
.65
33.97
.074
.082
.336
.051
.174
.070
.233
−.098
.655
.622
.532
.503
.459
.065
−.033
.307
−.027
.221
.62
42.04
.003
.028
.116
.134
−.003
.002
.243
.134
.081
−.070
.101
.268
.218
.813
.681
.584
.083
.144
.57
49.11
.036
.032
.093
.142
.192
.273
−.192
−.287
.073
.134
−.100
.031
.162
.017
.223
−.007
.829
.637
.55
55.67
a.This variable has a factor loading <.50 but is kept into the final solution as it brings the Cronbach’s alpha level of Factor 3 to an acceptable
level (i.e., .62). Also, given the size of the our data set, the inclusion of this variable is justified.
set, so that they can be used as input variables in the
model-based clustering. These factor scores represent
the degree to which each company scores on the group
of items with high loadings on a factor. Barlett’s
approach generated orthogonal factor scores, with a
mean of 0 and a standard deviation of 1.
Identifying Different Types of
Family Firms: A Model-Based
Cluster Analysis
To answer Research Question 2 positively, we must
prove that these professionalization dimensions are useful to distinguish among family firms. If all the family
firms were to fall under one and the same type, then
having five different dimensions would render itself to be
unnecessary. Therefore, a statistical analysis is required to
assess if the family firms in the data can be divided into
several distinct and mutually exclusive groups, based on
their individual scores on the five factors. To attain this
objective, McCutcheon (1987) indicates that an analysis
of typologies requires a model-based clustering, also
known as latent class (LC) clustering or finite mixture
models, which is a technique that regards a mixture of
underlying probability distributions. Moreover, LC
clustering holds several advantages in comparison with
traditional clustering methods. First, by applying finite
mixture models, clustering is based on posterior membership probabilities estimated by the maximum likelihood
method instead of some kind of distance criterion that can
be quite arbitrary. Moreover, instead of exclusively
assigning cases to a single cluster, cases are assigned
with a certain probability to each cluster (Bartholomew,
Steele, Moustaki, & Galbraith, 2008; Rousseeuw, 1995).
The cluster with the highest probability then becomes
88
Family Business Review 26(1)
the modal class (Magidson & Vermunt, 2004). Third,
with model-based clustering, it is possible to combine
indicators of different scale types, contrary to traditional
clustering that requires the same measurement level for
all variables (Magidson & Vermunt, 2002). Finally, the
determination of the number of clusters is less arbitrary
as it involves rigorous statistical tests (log likelihood,
Bayesian information criterion [BIC], Akaike’s information criterion [AIC], consistent Akaike’s information
criterion [CAIC], Average weight of evidence [AWE]).
In the traditional hierarchical clustering, the number of
clusters is determined by measuring overall similarity
through means of a distance measure (Hair et al., 2006).
The goal of LC analysis is to determine the smallest
number of latent classes that suffices to explain the associations observed among the indicator variables.6 As
such, the most optimal trade-off between model’s parsimony and fit is chosen (Magidson & Vermunt, 2004).
Based on the information criteria (BIC, AIC, CAIC),
which weigh both model fit and parsimony, the fourcluster model is selected as final solution as it generates
the best values regarding these criteria.7 The estimation
algorithm is run several times and with different parameter start values, to assess solution stability and avoid
problems of local maxima.8 Based on the generated
parameter estimations, the class-specific means can be
computed, which makes the profiling of the clusters
much more practical. In Table 2, the Profile Output is
reported, showing the cluster sizes and the class-specific
marginal means for all indicators. These means are
interpreted relatively to each other and make it possible
to define the discriminate features between the clusters.
The quality of the clustering solution is assessed by calculating the entropy criterion9 (McLachlan & Peel,
2000). In case of perfect classification, the criterion
equals to 1, and for the worst case clustering, the value
of the criterion equals 0. For our data we calculate the
entropy score I(4) = .94, which indicates a very good
separation between the clusters.
Based on the clustering output presented in Table 2,
we can describe the four clusters as follows:
Cluster 1: This cluster contains family organizations that use a limited amount of formal financial control systems (F1) and have a low amount
of nonfamily involvement within the governance
systems (F2). The latter thus indicates that firm
governance is highly centered on the owning
family. They also have low amounts of formal
human resource control systems (F3) within
the organization. There is a moderate amount
of centralization of control (F4), and finally,
the activeness of the management team and the
board of directors (F5) is low, indicating that the
amount of formal meetings is probably fixed to
meet legal requirements. Firms in this cluster
thus score relatively low on all five professionalization dimensions. A total of 42.67% of the
organizations in the data set have a high probability of belonging to this cluster.
Cluster 2: This cluster contains 41.35% of the family firms from our data set. The cluster is characterized by very high amounts of formal financial
control systems (F1), such as output controls,
budget controls, and financial performance
evaluation systems. As in Cluster 1, these firms
also have a high family involvement within the
governance systems, since the class-specific
marginal mean for nonfamily involvement (F2)
is considerably low. Furthermore, the usage of
formal human resource control systems (F3)
is slightly higher than in Cluster 1. There also
appears to be some amount of centralization of
control (F4) present and the top level activeness
(F5) has increased a bit compared with Cluster
1, yet it is still quite moderate.
Cluster 3: Organizations that have been assigned
to Cluster 3 have, on average, high amounts
of formal financial control systems (F1) and
human resource control systems (F3) present
in their organization. The amount of nonfamily
involvement in the governing systems (F2) has
increased notably, making the amount of family involvement the absolute lowest in this type
of family firm with regard to all four clusters.
Furthermore, this firm type is characterized by
high amounts of decentralization and delegation of control (F4) compared with the other
three clusters. Finally, the amount of top level
activeness (F5) appears to be somewhat lower
than average. The number of firms belonging
to Cluster 3 based on their probability structure
is fairly smaller than the amount belonging to
Cluster 1 or 2, namely, 11.28%.
Cluster 4: This is by far the smallest cluster, containing 4.70% of the family firms of the data set.
Dekker et al.
89
Table 2. Latent Class Clustering: Profile Output of the Four-Cluster Model.
Factors
Cluster 1
Cluster 2
Cluster 3
Cluster 4
Cluster Size
F1—Financial Control Systems
F2—Nonfamily Involvement in Governance Systems
F3—Human Resource Control Systems
F4—Decentralization of Authority
F5—Top Level Activeness
42.67%
0.9085
0.2989
0.0462
0.0456
0.0550
41.35%
0.8999
0.4463
0.0073
0.0600
0.0817
11.28%
0.6972
1.9714
0.1178
0.2261
0.2324
4.70%
1.2449
1.7320
0.0674
0.4497
0.3634
Figure 1. Four family firm types in a five-dimensional professionalization framework.
90
Family Business Review 26(1)
The cluster mean for the use of formal financial control systems (F1) is the absolute lowest
in this type of family firm compared with the
other three clusters. As in Cluster 3, nonfamily involvement within the governance systems
(F2) is considerably high, making these firm
types less family dominated. The use of formal
human resource control systems (F3) is moderate, and the decentralization of authority (F4)
appears to be quite low. The activeness of the
management team and the board of directors
(F5) in this last cluster is high, which indicates
that we can expect more formal meetings in
this type of family firm.
The four family firm types, which are derived from
the LC clustering, are visualized in Figure 1 with respect
to the five professionalization dimensions. The scales
are constructed based on the standardized values of the
class-specific marginal means presented in Table 2; as
such, they will take on a value between [0, 1], which
makes comparison possible.
Based on the five professionalization dimensions, the
cluster analysis rendered four unique family firms types.
This implies that family firms differ from each other not
only in the way that they professionalize but also in the
amount that they professionalize. Thus, we can answer
Research Question 2—whether the construct of professionalization is useful to distinguish among family
firms—with a positive reply.
Deriving Types of Family Firms
To anchor the empirically derived clusters in a more
theoretical setting of specific family firm types, we construct a distinctive label for each group based on the
unique traits that characterize each cluster, namely,
Autocracy, Domestic Configuration, Clench Hybrid,
and Administrative Hybrid. Furthermore, we provide
each cluster with a family firm type description, by
combining theoretical and empirical insights. By constructing these typifications, which are mutually exclusive, collectively exhaustive, and internal homogeneous,
this research contributes to the discussion on family
firm heterogeneity as they will allow us to differentiate
between family firms on a general, organizational level.
This means that we can discuss and compare one group
of family firms—yet taking firm-level idiosyncrasy into
account—to another group with regard to different professionalization dimensions.
Cluster 1: Autocracy
When evaluating the cluster results in the preceding
paragraphs, Cluster 1 appears to have low scores on all
professionalization dimensions. As such, we believe this
cluster to represent the typically owner-managed family
firms where the level of professionalization is very low.
The owner (or a very limited selection of the family)
retains personal control over the business and there is a
high centralization of authority, somewhat comparable to
the “Controlling Owner” family firm type developed by
Gersick et al. (1997) and Lubatkin et al. (2005). Yet
going beyond the ownership/management structure, most
of firm’s operations and planning tends to be done on an
ad hoc basis. In this type, there is a high family involvement on every level of the business and little openness to
outsiders, which indicates that most executive positions
are expected to be fulfilled by family members. This type
is further characterized by few formal governance systems, since everything is usually centered on the head of
the company. If governance systems, such as a board, are
present—to meet legal requirements for example—they
are expected to be quite passive. These so-called rubber
stamp boards will not lead to much actual board involvement (Lane et al., 2006; Pieper, Klein, & Jaskiewicz,
2008). Regarding the amount of internal formalization,
the low amounts of financial and human resource control
systems indicate that few formal control mechanisms are
present, apart from the necessary financial accounting
systems. Instead, these types of companies rely extensively on informal controls, such as shared values and
norms, kinship ties, common interest, rituals and ceremonies, which are proven to have great significance and
influential power within the family business context
(Daily & Dollinger, 1992; de Vries, 1993; Habbershon &
Williams, 1999; Pollak, 1985). As such, these firms are
characterized by altruism, loyalty, and trust and are
highly centralized around the family, similar to Dyer’s
(2006) “Clan Family Firm Type.” In the family business
literature, this type description has resemblance to
what authors have defined as autocratic management
or leadership style (Dyer, 1989; Sorenson, 2000). Dyer
(1986) indicates that in this paternalistic culture, relationships are arranged hierarchically and the leader
retains all key information and decision-making
Dekker et al.
authority. Based on these similarities, we labeled
Cluster 1 the Autocracy type.
Cluster 2: Domestic Configuration
In this type of family firm, management is still largely in
hands of the family. It is expected that the amount of
external nonfamily members in the management team (or
the board of directors if present) is very limited, hence the
labeling “Domestic.” Corbetta (1995) applied the term to
refer to family firms where ownership and directive bodies were exclusively made up by family members. As in
the Autocracy type, family involvement in firm’s operations and centralization of authority (around the family)
is still very high. However, this group of family firms
typifies itself by professionalizing through the implementation of control systems. These firms typically have
formalized budget plans and several monitoring systems
to warrant that actions of (family) managers correspond
to organizational goals; also, organizational output is
measured and compared with the predetermined standards so that possible deviations can be adjusted, periodic
reports on behavior and output are drafted to assess performance, and rewards are assigned accordingly. Thus,
both financial and human resource control systems are
being introduced. The amount of top level activeness can
moderately increase when compared with the Autocracy
type due to the fact that the implementation of formal
control systems has enforced the organization’s board
and/or management team to increase their activity accordingly in order to supervise the transitions.
Cluster 3: Administrative Hybrid
This type represents family firms with high levels of
professionalization. They have opened up their organization to external, experienced nonfamily managers, which
creates a hybrid on the management level. The term
Hybrid has been used in prior studies to indicate the combination or codependence of family and nonfamily
managers (Tsui-Auch, 2004; Zhang & Ma, 2009). Thus,
family involvement in firm’s operations diminishes and
authority is decentralized. Decision-making power and
control is therefore spread to the subordinate levels in the
company and not solely centered on the family ownermanager anymore. The board of directors, also including
external and independent board members, fulfills an
active role in advising and supervising the firm’s activity.
Simultaneously with the development of adequate
91
governance bodies, more and more formal control systems are introduced in the company. By developing
financial control systems, this firm type can rely on budget plans, output measure, and formal performance evaluation systems, similarly as to the Domestic Configuration
type. These enable the family firm to assess corporate
activity in a more formal and objective manner. Also,
personnel issues have been adjusted, such as establishing
formal recruiting and training systems to further develop
the capabilities of personnel (family and nonfamily) and
to ensure long-term welfare. The Administrative Hybrid
thus represents the type of family firm where professionalization is the highest compared with the other types.
Cluster 4: Clench Hybrid
The Clench Hybrid is characterized by professionalizing
through decreasing family involvement and opening up
to nonfamily members. To effectively manage this shared
liability, different governance bodies are developed and
actively participate in firm’s operations. All management
functions are not solely in hands of the family anymore,
neither are the board seats. Although this hybrid is a mixture of family and nonfamily members in the organization, the control systems are not (yet) adapted to this new
composition. Since the amount of financial and human
resource control systems are low, they rely to a great
extent on informal controls, such as shared values and
norms, strong bonds, mutual trust, loyalty, routines, and
so on, similarly as is in the Autocracy type. In the Clench
Hybrid type, the members of the organization are, as it
were, “clenched” together. Family and nonfamily are
expected to coexist in the company, yet without the support that properly defined, formal mechanisms might
offer. Furthermore, in this type, even though the activeness of the management team and board of directors has
substantially increased, control is still quite centralized.
This might be necessary for the company to successfully
cope with these new developments, for instance, the
entrance of nonfamily members, and as such guide the
company through the transitions.
Rendering a Practical
Family Firm Typology
Based on the insights generated by the LC cluster
analysis, we were able to identify four unique, nonoverlapping types of family businesses. Similar to several of
the previously developed typologies, the amount of
92
family involvement is part of the basis for differentiation. Yet these novel types also encompass additional
dimensions, taking them one step further than the original classifications.
With the general objective of this study being the development of different types of family firms based on the professionalization construct, we contribute to the present
state of the art by also proposing a simplified version of the
empirically derived four types in a five-dimensional framework (Figure 1) without losing any information regarding
the content description of the different types. Regarding the
five factors generated by the exploratory factor analysis—
Financial Control Systems (F1), Nonfamily Involvement
in Governance Systems (F2), Human Resource Control
Systems (F3), Decentralization of Authority (F4), and Top
Level Activeness (F5)—we argue that it is possible to
make a distinction between two higher level dimensions.
Factors F2, F4, and F5 are more related to the governing
aspects of the business, that is, the firm’s willingness and
openness not only to engage nonfamily members in the top
level of the company but also to provide firm executives
with proper supporting governance mechanisms and decision-making authority in order to work effectively. We
label this higher level dimension, which represents a bundling of these three factors, as the Effective Openness
dimension. Factors F1 and F3 both measure the implementation of formal control systems. As one signifies the
amount of financial control systems (F1) and the other the
amount of human resource control systems (F3) they will,
when combined, give an indication of the amount of
Internal Formalization of the company.
Based on these theoretically constructed higher level
dimensions that contain the five empirical factors, we
are able to build a two-dimensional representation of the
four family firm types, which is represented in Figure 2.
The horizontal axis presents a continuum of the amount
of Internal Formalization present within the company.
Values can thus range from very low amounts, with
almost no formal financial and/or human resource control systems present in the business, to very high levels
of formalization. The vertical axis is the continuum for
Effective Openness. The low values indicate high
amounts of family involvement with centralized control
around the family and few active governance bodies. A
more open and decentralized situation occurs as we
move upward on the axis. The four types can then be
distinguished based on the quadrants created by the two
axes. This two-dimensional presentation of the family
Family Business Review 26(1)
Figure 2. Four family firm types in a two-dimensional
framework: Rendering a practical framework.
firm types makes the typology much more accessible for
other researchers, without detracting any content or
meaning from the four types.
Discussion and Implications
The findings in this article can instigate further discussion in the research field relating to family firm diversity and the professionalization process. In this study,
we empirically explore the possibility of approaching
professionalization in a multidimensional way. This has
considerable implications for current literature concerning professionalization of the family business. As mentioned, most empirical studies in this field mainly focus
on the unique dimension of professionalization when it
is applied to a family business context, that is, hiring
external nonfamily managers (e.g., Gulbrandsen, 2005;
Klein & Bell, 2007; Lin & Hu, 2007).
Authors who tend to equate family firm professionalization with the entrance of a nonfamily manager argue
that these “professional” managers are more able to
achieve the strategic goals of the firm due to their skills
and abilities (Duréndez, Pérez de Lema, & Madrid
Guijarro, 2007) and adequate management training
(Chittoor & Das, 2007). They are also expected to contribute specialized technical knowledge that is lacking
within the family (Corbetta, 1995). In these studies, it is
argued that family management has certain boundaries,
partly due to the restricted pool of potential talent to run
the firm, rendering them to be inadequate to guide the
family business to the next stage (Bloom & Van Reenen,
2007). Family-managed firms tend to disdain formal
Dekker et al.
routine and resist delegation and decentralization of
authority and responsibility, making them less well
suited to exploit opportunities in complex environments
(Gulbrandsen, 2005). In this line of thought, family managers and professionalization become almost contradictory. Hall and Nordqvist (2008) also address this paradox
by stating that family managers are often seen as inherently nonprofessional as managers, regardless of their
background and relations to the firm. They continue by
saying that for nonfamily managers the opposite seems to
be true; they are inherently professional whatever their
previous background and understanding of the firm. Our
results show that professionalizing the family business
through hiring outside expertise is indeed possible, yet it
is not the only way to do so. The family business, while
retaining family management, can also professionalize
through other dimensions, such as through the development of formal governance systems to supervise and
guide corporate activity or by implementing formal control systems to warrant objectivity and transparency. In
this respect, we contribute to the literature by presenting
a more nuanced and extensive interpretation of the professionalization construct. Furthermore, we follow the
literature stream that stresses that family members can
also be professional managers. Family members may be
as likely as nonfamily members to have formal managerial training and education (Dyer, 1989). As such, family
membership is an irrelevant criterion when it comes to
qualifying as a professional manager, as the latter relates
more to having the necessary competences in order to
manage a business (Hall & Nordqvist, 2008).
Based on descriptions we found in the literature, we
explored the professionalization construct multidimensionally, in which different dimensions may act simultaneously. These different dimensions exposed in this study
are not novel in the sense that they have been linked to
professionalization previously. Our contribution is then
the empirical bundling of these different dimensions into
a comprehensive construct. Based on the dimensions of
professionalization, we were able to generate four distinct
types of family businesses. This can offer some counterbalance for those studies that tend to study family businesses as a homogeneous entity (e.g., Daily & Dollinger,
1993; Kotey & Folker, 2007; Morris, Allen, Kuratko, &
Brannon, 2010). These studies examine the family businesses as a specific category of organizations that differs
from other categories of organizations—being the nonfamily firms—which wrongfully creates the notion that all
93
businesses within this category show similar characteristics and face similar challenges (Melin & Nordqvist,
2007). Even though similarities exist, emphasizing them
can cause the differences, which are probably even more
profound, to be underestimated. As such, the research
field is in need of adequate differentiating tools to distinguish between different types of family firms (Chrisman
et al., 2007; Davis, 2009). By taking the versatility of
firm’s operations, ability, and practices into account in
order to classify family firms, we respond to the gap that
is underlined by Melin and Nordqvist (2007), namely,
the existing limitations caused by the assumption that all
family businesses conduct their governance and management in the same way. Therefore, through our family
firm typology based on professionalization, we take a
step toward filling the knowledge gap related to family
firm diversity.
When we position our study in the existing typology
literature, we can state that our typology is complementary as well as refining. As it is not possible to encompass all family firm related dimensions into a single,
workable typology, the research field will benefit most
from having different classification schemes wherein
each focuses on a distinct issue. For example, to assess
family firms regarding their culture, the typology of
Dyer (1988) would be most appropriate. Relating to
family firm performance on financial and family objects
or regarding family/business orientation, we would suggest respectively Sharma (2004) and Basco and Pérez
Rodríguez (2009). Yet when it comes to an interpretation scheme for family business activity, the current literature falls short. Often using family involvement as
sole discriminative basis makes it difficult to infer various firm behaviors and outcomes. As such, we have
refined these schemes so that the foundation for differentiation is broadened.
Besides these aforementioned contributions to the
family firm literature, this article also has multiple implications for theory as well as practice. At a time when we
are experiencing a rapid increase in family firm research,
the importance of finding effective ways to distinguish
among these ubiquitous firms cannot be overemphasized
(Sharma & Nordqvist, 2008). The developed framework
thus has implications for academics as it broadens their
interpretative scope of the family business and offers an
underpinned and novel way of scrutinizing family businesses. Even though it is not our intention at this point in
time to develop a scale for professionalization—as this
94
requires confirmatory analysis—we do believe to have
provided the research field with a thorough assessment
of the construct, which is something that has not been
done up till now. We have clearly marked out the boundaries of the construct when it is approached multidimensionally. This approach could help prove that the
traditional view of professionalization through an external manager is not sufficient, as it neglects the coupling
with other operative subdimensions. Furthermore, the
proposed typology in this article provides a contextual
framework for future discussion on the differences
among family firms. It will allow academics to make
sensible comparisons between family firms with references to their specific type and/or related professionalization dimensions. The typology can thus be used to
discuss more in-depth the different types of family businesses and the impact that a specific type-membership
has on, for example, firm performance, firm orientation,
or innovation capacity. Finally, academics can use the
typology to make certain presumptions about a family
business. For example, given that a firm belongs to the
Autocracy type, where professionalization is low, it
becomes very likely that informal controls play an
important role. These firms might be more guided by
shared values and norms, kinship ties, common interest
and vision, rituals, and ceremonies.
Besides the academic implications, we also believe
that our framework has a few implications for practitioners. As family firms are not always keen on having outside involvement, our study provides evidence that there
are more ways or dimensions through which a family
business can professionalize, without having to hire an
nonfamily manager. Based on our findings, the family
CEO can, for example, decentralize authority to subordinates, improve the objectivity of performance evaluation or selection criteria by introducing formal systems
of control, or encourage the board and management
team to fulfill a more active role in the governance of
the company. Furthermore, as a firm is able to identify
to which “type” it belongs, the comparisons between the
own business and that of others become more grounded.
Because these comparisons are done at the same level,
that is, within a specific type, the matching of specific
firm outcomes is more relevant and logical. As our
exploratory study is mostly a basis to initiate further
academic research on this topic, we believe that future
studies will truly reveal the important implications it
has for practitioners.
Family Business Review 26(1)
Limitations and Additional
Research
Beyond the contributions noted earlier, this article is not
exempt from limitations. Evidence was solely gathered
from the Flemish context. Even though the representation of family firms in Belgium is similar to other
European countries (International Family Enterprise
Research Academy, 2003), it would be beneficial for the
framework validity to explore a variety of national settings. Also, due to the lack of prior empirical research on
the topic of family business professionalization, we are
not able to employ existing measurement scales. However,
based on the conceptual insights in previous research, it
was possible to outline key components of the construct
and contribute to the in-depth understanding of the
related dimensions. Our exploratory study is thus a first
step in the empirical demarcation of the professionalization construct when it is approached multidimensionally.
Our results can provide a basis for future scale development of the professionalization construct. For this, scholars will need to perform a confirmatory factor analysis on
newly gathered data, in search for a confirmation of the
exploratory results.
Besides exploring the cross-national utility of our
framework and further scale development, this article
instigates multiple other future research issues. First,
regarding the derived types, and thus building on the
results of the LC cluster analysis, future studies need to
explore further the profiles of the different types. Also,
the linkage between the four firm types and different
firm outcomes (e.g., financial performance, internationalization behavior, or innovation) must be analyzed. For
example, firms belonging to type x are more likely to have
a higher financial performance/international orientation/
innovation potential than firms belonging to type y. By
empirically determining the relation between a firm type
and possible firm outcomes, family firms can more consciously evolve in a certain direction to obtain the desired
outcomes. Second, relating to the multidimensional
construct of professionalization, and thus building on
the results of the factor analysis, future research can
assess the impact that different dimensions (or factors)
of professionalization have on firm’s outcome, such as
firm performance. Results have been inconsistent
until now about the effect of professionalization—
however, measured based on the presence of a nonfamily manager—on firm performance.
Dekker et al.
Some of these research suggestions, like crossnational testing or scale refinement, are solely intended
for quantitative approaches. Yet there are several critical research questions that only a qualitative study can
answer. In-depth studies must provide a notion of the
family firm identities with reference to the different
types. As a final research direction, scholars can contribute by identifying the critical incidents and causal
issues that can lead a firm to increase professionalization. What causes a family firm to undertake these
changes? Future research can clarify whether it is
deliberately initiated by the family firms to attain certain goals or if it is more an act of despair caused by ill
governance, distrust, or prior incompetence. Do these
divergent motivations affect the actual success of executing the professionalization process? As such, there
are still many directions in this research field which
remain underresearched.
Conclusion
In a final concluding note, we wish to point out that this
study has broadened and altered the way that the heterogenic group of family businesses is scrutinized in the
family firm literature. Based on previous shortcomings,
the objective of this study was to develop a novel way
to discriminate between different types of family
firms—which go beyond the amount of family involvement—by using the professionalization construct. To
attain this objective, we first had to address two distinct
research questions. The identification of the different
dimensions of professionalization within a family business context was the purpose of Research Question 1.
Through an exploratory factor analysis, this study was
able to identify five distinctive dimensions, which lead
to family business professionalization, namely, Financial
Control Systems (F1), Nonfamily Involvement in
Governance Systems (F2), Human Resource Control
Systems (F3), Decentralization of Authority (F4), and
Top Level Activeness (F5). These exploratory factor
results have paved the way for future research to approach
professionalization multidimensionally.
By answering Research Question 2, we were able to
justify the use of the multidimensional professionalization construct as basis for discriminating among family
firms. The cluster analysis generated four distinct groups
of family businesses that differentiated from each other
based on the dimensions of professionalization. This led
95
us to attain the final objective of the study, as we were
able to derive four unique types of family firms:
Autocracy, Domestic Configuration, Clench Hybrid,
and Administrative Hybrid.
Acknowledgment
We would like to express our sincere gratitude to the
FBR reviewers for their truly valuable comments, and in
particularly to our handling editor Justin Craig.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest
with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research,
authorship, and/or publication of this article.
Notes
1. The defined population is in compliance with the
official European definition of Small and Mediumsized Enterprises, that is, firms with 250 employees
or less, and a maximum turnover of €50 million or a
maximum balance sheet total of €43 million.
2. With the exclusion of all nonprofit associations, public institutions, educational institutions, and the
financial sector (i.e., financial services, banks, and
insurance companies).
3. The level of the academic reviewers ranged from
predoctoral students to full professors, and from different expert fields (e.g., family business, financial
accounting, governance, and mathematics). Regarding
the family business CEOs, different business industries were included, and firm size ranged from 10 to
200 employees.
4. The axes of the factors are maintained at 90°. As
such, each factor is independent of all other factors
and the correlation between the factors is determined
to be 0 (Hair et al., 2006).
5. Six variables were excluded from further analysis
due to a factor loading beneath the threshold value
of .50.
6. The probability density function f(yi), which will be
used in this study, can be denoted as follows:
K
T
x =1
t =1
f ( yi ) = ∑ P( x)∏ f ( yit | x).
96
Family Business Review 26(1)
For every case i, there are T response variables
regarding the different indicator variables y, which
are denoted as yit and where 1 t T. The model
then predicts the membership for every case i to a
single latent group. This is a single nominal latent
variable x with K categories or classes, and where 1
x K. On the right-hand side of the equation P(x)
then indicates the probability of belonging to a certain latent class x and f ( yit | x) as the probability
density of yit given x. The model assumes local independence among all indicators, meaning that variables are independent within latent classes (Vermunt
& Magidson, 2005).
7. Lower values indicate more adequate models. BIC
values of a 1-cluster throughout an 8-cluster solution
are, 7606, 7412, 7319, 7233, 7307, 7243, 7274,
7266, respectively. The AIC and CAIC values show
a similar pattern.
8. A local maximum is the best solution in a neighborhood
of the parameter space, but not the global maximum.
Local maxima are related to the complexity of the
model and can cause parameter estimates to be biased.
9.
( ) = 1−
∑ ∑
i −1
x =1
(1
(
i
)
i
)
.
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Tensie Steijvers is a postdoctoral research fellow at Research
Foundation Flanders (FWO) and assistant professor at the
Research Center for Entrepreneurship and Innovation (KIZOK)
at Hasselt University in Belgium. Her primary research interests include family enterprise research focusing on several
accounting, finance, and corporate governance aspects.
Author Biographies
Julie C. Dekker is a PhD student and senior researcher at the
Research Center for Entrepreneurship and Innovation (KIZOK) at
Hasselt University in Belgium. Her research interests are focused
on the professionalization process within family businesses.
Benoît Depaire is a postdoctoral research fellow at Research
Foundation Flanders (FWO) and assistant professor at the
Business Informatics Research Group at Hasselt University in
Belgium. His research interests are situated at the intersection
of data mining, statistics, and business studies.
Nadine Lybaert is a professor of accountancy at the Faculty
of Business Economics at Hasselt University and guest professor at Antwerp University in Belgium. She is associated
with the Research Center for Entrepreneurship and Innovation
(KIZOK) at Hasselt University. Her research focuses on the
intersection of accounting topics and family firms.
Roger Mercken is a full professor of auditing at the Faculty
of Business Economics at Hasselt University in Belgium. He
is associated with the Research Center for Entrepreneurship
and Innovation (KIZOK) at Hasselt University. His research
has been published in a number of journals, and he is the
author of three books.