They propose that better approaches are those that equally optimize family-business association. The approaches lead to the rise of unique resources that permit the family company to enjoy individual competitive advantages and at the same time controlling challenges and issues that confront them. The challenge faced by the family business in joint optimization is the possibility of becoming out-of-sync in regard to the life cycle and time. Statistics indicate that the survival rates of family-owned business are very low; very few family businesses go up to the fourth generation (Poza 2009, p179).
The second phase, the growth phase lies within the organizational maturity. The third stage is the mature stage and in this stage, the business is a representation of a sophisticated set of stakeholders. The stage generally represents the overall growth of the family business in terms of the stakeholders such as the banks, family members who have worked in the company, substantial contribution from the key nonfamily managers, investors, and other family members with emotional and financial interests, the government, and the low-level employees. The stage can fail when the family-controlled business are weighed down by the sophistication of the stakeholder base (Poza 2009, p179).
Corporate Governance of a Healthy Family Business Corporate governance in a family business refers to the set of legal, cultural, social, and administrative determinant features of control, ownership, and management of the family enterprises. It is important to note that the concept of corporate governance is a difficult one for the family enterprises. Many family enterprises have the notion that corporate governance is thought to apply only to the large companies.
However, the notion is wrong since corporate governance is “a broader philosophical view of rethinking for any sized organization, an essential set of tools and rules vital to their survival and growth in this very competitive and changing world market” (Kaslow 2006, p121). The establishment of a family council is vital for the family business in this present age. It is as important as the formation of shareholders agreements, a board of directors, and other related stakeholders for the business (Kaslow 2006, p121). Ayub and Duguid (2011, p2) state that the success of a family business lies within effective governance and good communication.
These two elements are able to address problems arising from the complex between the business and the family and within the family.
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