OREGON STATE UNIVERSITY

Family, environmental issues boost bottomline for business

01/19/2005

CORVALLIS - Oregon firms promoted to the public as "family businesses" enjoy a boost in performance, but family businesses that showcase environmental policies have the potential to do even better, according to a new survey by Oregon State University researchers.

Justin Craig, Clay Dibrell, Jon Down and Mark Green - all faculty in OSU's College of Business - randomly surveyed 1,880 small- to medium-sized businesses throughout the state and then analyzed 430 responses. The research, done in conjunction with OSU's Austin Entrepreneurship Program and the Austin Family Business Program, is designed to provide a snapshot of business in Oregon.

Family businesses increasingly stress "family" in marketing campaigns, said Craig, an assistant professor of entrepreneurship. And when they do, it appears to pay off.

"Family branding is investing in the family name, and by association, their family values," he said. And that family branding works to shape customer perceptions of a firm's character and personality, which is formed by reputation, heritage, and perception of quality and performance.

In the end, it all comes down to attracting potential customers and creating greater growth, said Dibrell, an assistant professor of strategic management.

Green, director of the Austin Family Business Program and the holder of the A.E. Coleman Chair in Family Business, emphasized that successful family businesses anticipate and accept change.

"Among other things, the successful family firms focus on long-term results," Green said. "They serve niche and specialty markets and work to develop strategic alliances." Family businesses in the state that stress a positive natural environmental policy had significantly higher business financial performance than firms that did not, Dibrell said.

The data, collected and analyzed for more than 18 months, will be presented at the annual Babson College-Kauffman Foundation Entrepreneurship Research Conference in Massachusetts this June. The conference is the premier academic forum for entrepreneurial research in the world, Dibrell said.

The study, funded by the Austin Family Business Program, measured 181 non-family businesses and 249 family-owned businesses, Dibrell said. The sample firms are all small- to medium-sized businesses with anywhere from six to 499 employees.

The team found that family businesses in the study were statistically different than non-family businesses on issues related to strategic flexibility, use of time and attitude toward natural environmental issues. But there was little difference between issues related to strategy, innovation, strategic planning, ability to react to external and internal changes, information technology, asset investments and financial performance metrics.

"We have countered the myth of family business that holds that they are static in decision-making and innovation," Craig said. "But family businesses can often be more flexible and quicker with decisions than non-family businesses."

Businesses in the study seemed to place the greatest emphasis on using customer service to compete and provide unique value to their customers over the competing strategies of product differentiation and low-cost production, Dibrell said.

The majority of the businesses surveyed - 52 percent - were 10 to 30 years old, with 36 percent of the firms more than 30 years old. Just 2 percent of the firms were less than five years old. Manufacturing firms made up the bulk of the respondents at 22 percent, followed by mining and construction at 17 percent, and business services at 14 percent.