Conflict Management Strategies Used in Successful Family Businesses.

This paper analyzes a survey of 59 family businesses. Findings indicate that in comparison to nonfamily businesses, family businesses have a more complex set of issues to consider when managing conflict. The integrative conflict strategies of collaboration, accommodation, and compromise produce relatively better outcomes for both family and business. Competitive and avoidance strategies can result in relatively negative outcomes for both business and family. High levels of collaboration contribute to positive outcomes for both family and business, and high levels of compromise and accommodation contribute to positive family outcomes. Based on a comparison of means, this paper identifies conflict management profiles for achieving positive outcomes for both business and family.

Introduction

Conflict seems to be a prominent characteristic of family business. This reputation may have developed from highly publicized family disputes in which volatile conflicts destroyed families and businesses (Levinson, 1971). Although many family businesses find ways to control conflict (Lee & Rogoff, 1996), we know very little about how it is managed or the impact of conflict management strategies on either the business or the family. And although there are case descriptions and theoretical articles about conflict (e.g., Harvey & Evans, 1994; Levinson, 1971; Kaye, 1991), there are relatively few data-based studies. Given the prominent reference to conflict in the family-business literature, this is certainly an area that deserves further empirical research.

The purpose of this study is to identify conflict management strategies used in family businesses and to determine their effect on business and family outcomes. Numerous authors agree that managing conflict is important to the success of a family business (e.g., Dyer, 1994; Goldberg, 1995; Harvey & Evans, 1995; Kaye, 1991; Ward, 1987). Conflict management requires an understanding of the unique nature of conflict in a family business. This study relies extensively on the organizational behavior literature (Dyer, 1994) to propose the conflict management strategies that are most likely to produce positive business and family outcomes. It provides an empirical test and discusses research outcomes.

The Unique Nature of Conflict in Family Business

A primary difference between family and nonfamily businesses is that family businesses are concerned about both business and family outcomes (Dunn, 1995). They are concerned about a profitable business and, to varying degrees, about family-member involvement in and satisfaction with the business. The inclusion of family in a business makes resolving conflict unique in a variety of ways.

First, family adds complexity to conflict. To maintain relationships in the family, family businesses must accommodate issues important to the immediate family and, in some cases, extended kin. This is especially true when family members are involved in some way in the business as owners, managers, employees, or even nonparticipating stockholders.

Family-related issues may take precedence over business concerns (Dunn, 1995).

For example, a family in business must address issues such as the role carryover between business and family, primogeniture, family-member voice, equal treatment of family members, triangulation struggles, sibling rivalry, nepotism, work- family conflict, and succession (see Boles, 1996; Correll, 1989; Dumas, 1989; Lansberg & Astrachan, 1994).

Second, family norms for resolving conflict set the tone for conflict management norms in the business (e.g., Dyer, 1986). The owner of the business usually establishes norms for interaction in the business (Sonnenfield & Spence, 1989). These norms include how decisions are made and conflicts resolved (Dyer, 1986; Kets de Vries, 1993). Family norms have even more influence when multiple family members work in the business (Kaye, 1991).

A proactive problem-solving approach to conflict management in the family can provide the basis for a positive problem-solving orientation in the business (Dunn, 1995), which is vital for such things as succession planning and transition between generations (Goldberg, 1995; Lansberg & Astrachan, 1994; Seymour, 1993).

In contrast, contentious conflict management norms within the family can foster contention within the business. For example, different family members might develop competing coalitions with employees to promote personal agendas.

Third, the dynamics of power in family businesses are unique. In most family businesses, family members have access to key information and retain decision authority (Dyer, 1986). Because of their family connections and access to "insider information," even family members without high formal positions can wield informal power in the business. Power exerted by family members can overshadow the authority vested in roles and positions within the business organization. Moreover, unlike organizations in which the CEO has final decision authority, in family businesses, family members outside the actual business management can exert influence in high-level business decisions.

If family businesses are to achieve desired outcomes for both business and family, they must learn to manage conflict in ways that will maintain family relationships, accommodate many issues, and respond to all the interests in the business and the family. However, research suggests that most family businesses use conflict management strategies that cannot handle myriad concerns. Instead, they use strategies that dampen input and accommodate only limited interests.

In his study of family businesses, Dyer (1986) found that most family businesses are autocracies. Autocratic leaders withhold information, retain decision authority, and give family members preference when making decisions. Conflict is managed through centralized control.

Dean's (1992) research verifies the widespread use of autocracy in family businesses. Of 234 family businesses surveyed, 53% report using owner authority to resolve disputes, 31 % use compromise, 23% use consensus, and 2% use mediation. The strategies used less frequently, compromise or consensus, are approaches capable of integrating diverse issues among many parties. However, the use of owner authority might be viewed as a competitive strategy that tends to focus on a narrow set of issues, yields less than optimal outcomes, and produces negative relationships (Savage, Blair, & Sorenson, 1989).

Conflict Management Strategies

Organizational behavior researchers can draw on an extensive literature about conflict management (e.g., Thompson, 1990; Tjosvold, 1991; Wall & Callister, 1995). The dominant conflict management models in this literature are similar two dimensional models (Blake & Mouton, 1964; Pruitt, 1983; Rahim, 1983; Thomas & Kilmann, 1974). In each of these models, either four or five conflict-handling strategies or styles are plotted within a two-dimensional space (see Table 2).

For example, the Thomas and Kilmann model (1974) conceptualizes five conflict-handling styles based on two basic concerns: competition (high concern for self, low concern for others), collaboration (high concern for self and others), compromise (moderate concern for self and others), accommodation (low concern for self and high concern for others), and avoidance (low concern for self and others).

Research provides strong support for the dual-concern models. Multidimensional plots of interrelationships show that the five conflict styles fit in a two-dimensional space in the manner theorists suggest (Van de Vliert, 1990; Van de Vliert & Euwema, 1994). In addition, tests confirm that the motivating concerns depicted in the models are highly correlated with choosing to use some of the conflict strategies. "Concern for self" is strongly associated with a competitive strategy and "concern for others" is highly related to an accommodative strategy. "Concern for self" and "concern for others" contribute a small variance to the choice to collaborate and …