Prologue

Researching family business: An interview with Professor Danny Miller

Ken Moores
Australian Centre for Family Business, Faculty of Business, Technology and Sustainable Development, Bond University, Gold Coast QLD

PP: 278 - 281

Keywords

family business, family firms, family business research

Article Text

In 2005 Danny Miller and Isabelle Le Breton Miller published Managing for the Long Run: Lessons in Competitive Advantage from Great Family Businesses (Harvard Business School Press) which together with a series of articles have had a significant impact on scholarship in the field of family business. Here we explore with Danny his motivations for entering this emergent field and seek his insights for those wanting to follow his lead into family business research. Specifically Danny answers the why, what, and how of his entry into family business research: why he was motivated to move to the field, what he found and focused on, and how he sought to make contributions to the broad areas of management and organizations from the context of family business.

KM: Danny, you have had a long and illustrious career as a researcher in the areas of management and organizations. What prompted you more recently to consider researching within the area of family business?

DM: Isabelle and I had become disillusioned by the short-termist nature of public corporations: their tendency to pursue quick returns, to under-invest in the future, to overpay their briefly tenured top executives, to chase spurts of cheap growth followed by cataclysmic layoffs, and in general to display corporate immorality and opportunism. Too rarely, it seemed, was there much concern about the consequences of such an orientation to stakeholders beyond short-term investors and upper echelons - stakeholders such as patient investors, employees, business partners, customers and society. We should say also that we thought that the most popular theories in strategy and organization, theories ranging from agency, to stewardship, to institutional theory, to transaction cost economics and the resource based view, could be put to better use, and perhaps might even be renewed or significantly revised and augmented by applying them to family businesses.

KM: In undertaking the Managing for the Long Run project did you come to the realization that there was something significantly different with family businesses from other classes of organization? If so, what was the essence of that difference?

DM: Indeed we did discover some signal differences. The best family firms were quite special along four axes, axes that we termed 'the four C's' of continuity, community, connection and command. Continuity refers to an unusually long time perspective for a substantive mission, and for farsighted goals, investments, and executive tenures. Strong family businesses build on their strongest traditions of the past while preparing assiduously for the future and its generations. Community constitutes an unusual care for employees and their working lives, and a rich corporate culture that fully engages their talents and commitment. Family firms are highly selective in whom they hire and promote, and they train and socialize incessantly, so staff collaborate well and are motivated to work for the best interests of the firm. Connection is all about especially generous, open, and enduring partnerships with outside parties such as clients, suppliers, and the community. The focus is on building relationships, not on finessing individual transactions. Finally, command refers to a family executive's freedom to make quick and bold decisions. After all, few boards have the sway to override a family executive. In the best family firms, these Cs are used selectively, tailored, and blended in unique ways to support different business strategies such as quality, cost, brand, or innovation leadership. The rather dramatic ways in which they do that are what our book is all about.

KM: Family business as a research pursuit (destination) is beginning to gain real traction (as evidenced by the number of papers being published in 'better' journals, conference proceedings, special editions, etc[1]). Why do you think it has taken this long for the scholarly community to mobilize?

DM: Most attention of the media, business schools, and the American public has been on the large, modern corporation, an entity credited with innovation and great economic progress - and thus one that has served as a fount of business examples, cases, lessons and theories. Business schools were seen as academies to train students for these public enterprises, and the experiences of those enterprises and their often celebrated leaders drove and still drive curriculum development. Family firms, however, have received far less attention and less respect. In fact, economic historians have viewed the family business as an antiquated form, beset by selfishness and parochialism, a lack of 'professional management', and an inability to garner the scale required in many modern industries. Today, we are more aware of the major role that family firms play throughout the world, and this awareness has become more acute with the rise of globalization and the attention garnered by the burgeoning economies of Asia and Latin America - economies densely populated with large family firms. Indeed, the longevity, international scope, scale, and competitive advantages of some of these firms have attracted the scrutiny of the business press and researchers alike. So has a growing dissatisfaction with the more opportunistic approaches to managing the public corporation - a reaction that has become especially salient in the course of today's economic crisis.

KM: From your observations, where are the gaps in the research that need to be explored?

DM: Family firm research is still in its early stages, and all early research can benefit from making fundamental distinctions that reduce complexity and enhance precision and richness. Specifically, given the diversity of the breed, we need to develop taxonomies of different types of family firms and to develop comparative studies among these that contrast different governance structures, national cultures, scales, and industries. The stewardship exhibited by the owners of private family companies may be quite absent in public family enterprises where powerful family owners can exploit minority shareholders for personal benefit. It would be a mistake, then, to lump together assorted types of family companies as these are very different animals. We need also to discover the important similarities and differences between family and non-family firms of a given type. In doing so, we have to get beyond studies of performance differences to better appreciate the sources of these differences. And it would be useful too to link our studies of family firms more closely to the managerial theories used to study other types of organizations - theories ranging from agency and institutional theory, to transaction cost economics and the resource based view. Certainly, these theories may bring insights into family firms and their advantages and challenges. But perhaps more importantly, the act of studying this rather different form of enterprise may surface weaknesses in current theories and give rise to more relevant perspectives.

KM: Some suggest that families in business do not willingly divulge information that researchers need in order to answer the research questions that are of real interest. Is that your experience and, from a methodological point of view, what advice would you give to a scholar interested in family business research?

DM: We too have found secretiveness to be common among family firms. But there are some expedients that may help to overcome it. For example, some researchers gain access to family firms via their consulting work. Others do so by guaranteeing confidentiality in surveys or giving target firms sign off authority on any case studies. A fine source of public information on private companies is the roster of comprehensive biographies written on family firms and their leaders. Many biographers have spent years studying one or two important companies and poring through revealing archives. In fact, many large, well-known family businesses can be researched by reading the myriad articles that have been written on them. Finally, when family businesses are public, much information can also be gleaned from financial statements. All of that notwithstanding, because privacy is such a competitive asset to many private companies, the secrecy challenge is not one that is likely to disappear.

KM: In your opinion can scholarship in family business contribute to our more general understanding of management and organizations? If so, what advice would you offer those seeking to achieve such contributions through family business research?

DM: Yes there is much to learn for non-family companies from the four Cs we mentioned, and from how these orientations can support different types of competitive advantage while benefiting all stakeholders. Firms with longer time horizons and enduring values, with vibrant and humane cultures, with rich, inclusive partnerships, and with courageous, far-sighted executives have much to teach us. And although they pay a significant short-term cost for these assets, these businesses can reap sustained and substantial benefits. However, unusual courage will be required among managers and boards of public firms to implement the lessons. Unlike family executives, public ones do not have as much power to pursue a long-run orientation in the face of impatient directors and shareholders. Thus a top priority for researchers might be to examine which non-family enterprises - which kinds of governance structures, leaders, values, cultures, and incentives - are best able to support the practices of the best family companies. For example, the best family firms we studied employ long run incentives and monitoring systems for their managers, who in turn invest generously in the future of the business and are not tempted to pursue short-sighted expedients.

KM: Given your standing as a distinguished international scholar, journal editors are likely to take notice of your insights. Have you any suggestions you would like to pass on to them that may encourage them to perhaps consider, if they have not already, family business manuscript submissions?

DM: Editors may be reminded that family firms represent an extraordinarily important form of enterprise, one that is both dominant in number and impact worldwide, and extensive in variety. Studying them is particularly important. Moreover, many family firms represent a very different way of managing - one that, when performed effectively, contains important lessons for nonfamily firms. Finally, as noted, the special nature of family firms may give researchers greater insights into the application of existing theories and perhaps pave the way to new theories that will benefit family and non-family firms alike.

KM: Would you like to make any final comments?

DM: Family firms are challenging to study. But to Isabelle and I, the rewards in conceptual and practical insight were well worth the effort. Perhaps long-lived family firms will show us all the way to a more inclusive, more responsible, and ultimately a more moral approach to management.

KM: Danny, thanks for sharing these insights. I am sure your comments will inspire others to explore the opportunities that lie within the emerging field of family business scholarship.

Danny Miller earned his PhD in Management Policy from McGill University in 1976 and since then has been a prolific scholar publishing numerous articles in the top management journals and authoring a variety of books (including The Icarus Paradox: How Exceptional Companies Bring About Their Own Downfall). Since 1986 he has been Research Professor, Ecole des Hautes Etudes Commerciales, Montreal and from 2002 has also held a Chair in Family Enterprise and Strategy, at the University of Alberta.

[1] See Craig JB, Moores KJ, Howorth C and Poutziouris P (2009) Family business research at a tipping pointthreshold. Journal of Management & Organization 15(3): 282-293.

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