International Journal of Entrepreneurial Behavior & Research

Entrepreneurial leadership and familiness as resources for strategic entrepreneurship

Juha Kansikas Anne Laakkonen Ville Sarpo Tanja Kontinen
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Entrepreneurial
Entrepreneurial leadership and leadership
familiness as resources for
strategic entrepreneurship
141
Juha Kansikas, Anne Laakkonen, Ville Sarpo and
Tanja Kontinen Received 22 November 2010
Jyväskylä University School of Business and Economics, Revised 19 April 2011
30 May 2011
University of Jyväskylä, Jyväskylä, Finland 12 August 2011
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Accepted 22 August 2011

Abstract
Purpose – This paper seeks to investigate how familiness and entrepreneurial leadership are related
to each other in family firms. Familiness and entrepreneurial leadership are viewed as resources for
strategic entrepreneurship. The aim of the paper is to shed light on familiness in three family firms and
contribute to the field’s growing body of work.
Design/methodology/approach – The paper employs a case study method. The interviewees were
interviewed by theme questions and secondary information was gathered to strengthen the empirical
section. Qualitative interpretation of empirical data was used.
Findings – The findings demonstrate the variety of familiness and entrepreneurial leadership within
family firms. The degree of familiness varies between firms and the nature of entrepreneurial
leadership also differs. The findings suggest that familiness is related to entrepreneurial leadership. It
is a resource for strategic entrepreneurship in family firms.
Research limitations/implications – The limitation of the study is the case study method. The
paper is based on qualitative and interpretive approach. The paper endeavours to understand
familiness related to entrepreneurial leadership rather than generalise the results statistically.
Practical implications – The paper offers a perspective for business schools in teaching leadership
for family firms. Education needs to be tailored to meet the relevant needs. Benchmarking from this
case study offers one pathway for this.
Originality/value – The study contributes to research on structural, cognitive, and relational
familiness. The paper shows that informal relations and flexibility are typical for entrepreneurial
leadership in family firms.
Keywords Entrepreneurial leadership, Familiness, Family business, Strategic entrepreneurship,
Family firms, Leadership, Entrepreneurialism
Paper type Research paper

1. Introduction
Strategic entrepreneurship is entrepreneurial (i.e. opportunity-seeking behavior) and
strategic (i.e. advantage-seeking) planning and action taking designed to create wealth
(Hitt et al., 2001; Kraus et al., 2011). The drivers of strategic entrepreneurship are
entrepreneurial leaders who focus on developing actions which lead to
International Journal of
opportunity-driven decision-making. Entrepreneurial leaders are “[. . .] Entrepreneurial Behaviour
stress-resistant, unselfconscious, assertive, nonexperimental in their actions, & Research
Vol. 18 No. 2, 2012
conscientious, conformist and competitive.” Rapid decision-making and an pp. 141-158
achievement-oriented culture characterize entrepreneurial leaders in SMEs. The q Emerald Group Publishing Limited
1355-2554
personality profile of an entrepreneurial leader would appear to be a mix of the DOI 10.1108/13552551211204193
 IJEBR leadership qualities needed in an SME, business logic, and also entrepreneurialism
18,2 (Nicholson, 1998, p. 537).
The strategy of an SME needs flexibility on the part of the entrepreneurial leader, an
ability to survive with scant resources, and realization of the fact that a SME cannot be
evaluated and measured as precisely as bigger business entrepreneurial units. A small
unit, like a family-led firm, utilizes the resources that are available to it and acts as
142 circumstances dictate, changing direction as needed. Family firms have a resource that
distinguishes them from non-family firms: familiness, which offers an opportunity for
the creation of competitive advantages. Familiness can be defined as “the unique
bundle of resources a particular firm has because of the systems interaction between
the family, its individual members and the business” (Habbershon and Williams, 1999,
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p. 11). Given that familiness is generally regarded as a resource, we have adopted the
concept of familiness proposed by Pearson et al. (2008) whereby familiness is defined
according to the resources available to the) family firm. These resources can be
grouped under three dimensions: structural (network ties), relational (trust, norms,
obligations, identification) and cognitive (shared vision, shared language). In this study
these three dimensions of familiness are investigated to contribute to understanding
how family relationships are related to entrepreneurial leadership. Studying
entrepreneurial leadership contributes to knowledge of strategic entrepreneurship by
showing how opportunities are recognized, and how innovativeness, risk-taking and
proactiveness are encouraged in the process of leading organizations. Entrepreneurial
leaders accumulate strategic resources by recognizing opportunities (Currie et al.,
2008). The ability to make strategic plans for the future is needed by entrepreneurial
leaders to maintain goal achievement (Kuratko and Hornsby, 1996).
The linkage between familiness, as a strategic resource unique to family owned
firms, and entrepreneurial leadership in three family firms, designated Alpha, Beta,
and Gamma, respectively, is the topic of the present study. This study seeks to
investigate how familiness, as defined by Pearson et al. (2008), is related to
entrepreneurial leadership (D’Intino et al., 2008; Skodvin and Andresen, 2006; Hansson
and Mønsted, 2008; Gupta et al., 2004; Chen, 2007; and Witt, 1998) in family businesses.
The study contributes to the existing research on strategic entrepreneurship by
investigating familiness and entrepreneurial leadership as resources for strategic
entrepreneurship in family businesses. The research question addressed in this study
is: How is familiness related to entrepreneurial leadership?

2. Theoretical background
Entrepreneurial leadership
Entrepreneurial leadership in a business gains its formal legitimization from the
leader’s status, profession, and leadership capabilities (Guo, 2009). However, while the
position of the leader legitimizes entrepreneurial leadership, this kind of leadership
cannot be based solely on power and hierarchy. Instead of a hierarchical chain of
command and control, entrepreneurial leadership is based on individual skills such as
achieving goals innovatively and collecting the requisite resources (Skodvin and
Andresen, 2006). Entrepreneurial leaders are able to recognize opportunities and
evaluate them through increasing the flow of information. (Hansson and Mønsted,
2008). This can manifest itself in the form of entrepreneurial vision, which seems to
 lead to performance and growth when strategy mediates their relationship. (Ruvio et al., Entrepreneurial
2010). In this way, through risk taking and initiatives, entrepreneurial leadership aims leadership
to create innovations, (D’Intino et al., 2008).
Entrepreneurial leaders are able to work in any organization and in any task, by
leading individuals and teams entrepreneurially, and by managing resources
productively (Young, 1991). Leaders with entrepreneurial skills and characteristics
may possess what it takes to become an entrepreneurial leader. Being an 143
entrepreneurial leader as an employed manager is close to intrapreneurship and
being an intrapreneur. These two concepts may overlap somewhat since intrapreneurs
are frequently seen in leading positions in entrepreneurial projects and in new
initiatives in companies. There is a need to distinguish two categories of
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entrepreneurial leadership: entrepreneurs who are leaders and leaders who possess
an entrepreneurial leadership style without being entrepreneurs themselves. Any
individual with an entrepreneurial leadership style in any organization can be deemed
an entrepreneurial leader.
Chen (2007) states, that risk-taking, pro-activeness, and innovativeness characterize
entrepreneurial leadership when it is defined as entrepreneurs’ way of leading in new
ventures. Entrepreneurial leadership is needed in coping with uncertainty.
Entrepreneurs in different contexts, such as industry, business ideas, and culture,
are able to create a leadership style which enables them to survive in a situation where
resources are scarce.
Offering encouragement through one’s entrepreneurial vision in daily routines is
typical of an entrepreneur’s way of leading an owner-managed business (Witt, 1998).
Encouraging and motivating others, and showing an example of “how to do it” is
typical of the leadership shown by entrepreneurs. In small businesses, entrepreneurial
leadership is often rooted in a single decision maker. Entrepreneurs influence the
business culture and its characteristics by their daily operational actions. According to
Gupta et al. (2004, p. 254), “Both entrepreneurial leadership and team-oriented
leadership require an ability to be effective at bargaining and team building. However,
while team-oriented leadership focuses on effective coordination and communication,
win-win problem solving, and intragroup relationships, entrepreneurial leadership
emphasizes path clearing for opportunity exploitation and value creation”.
Entrepreneurial leadership is based on a straightforward way of leading a unit
toward set goals. This logic means that it is focused on action rather than on
communication and monitoring. However, in cases where this leads to lack of
consultation with, or lack of harmony between, the firm’s employees, then conflicts can
arise. Creating value through results achieved makes entrepreneurial leadership a
progressive and productive way to lead a unit of people.

Familiness as a strategic resource

Familiness is a resource that stems from family relationships (Sarathy et al., 2010;
Sirmon and Hitt, 2003), and it has been conceptualized as having three dimensions:
structural (networks), relational (trust, norms, obligations, identification) and cognitive
(shared vision and language) (Pearson et al., 2008). From the resource-based viewpoint
familiness is seen as a resource in that it can create a sustained competitive advantage
(Barney, 1991, 2001; Rutherford et al., 2008). According to Barney (1991, p. 117),
 IJEBR “Indeed, it may be the case that a manager or a managerial team is a firm resource that
18,2 has the potential for generating sustained competitive advantages.” In Barney’s study,
the family, as a unit, is a resource in a family business. Irava and Moores (2010)
suggest that familiness is a resource in multigenerational family firms where different
generations participate in business operations through management, ownership,
and/or governance.
144 Chrisman et al. (2006) see familiness as resources stemming from the family’s
influence on the daily operations and decision-making, such as entrepreneurial
leadership, of a family firm. This is line with Habbershon (2006), according to who
“The term ‘familiness’ is not a generic substitute for the broader notion of family
influence but specifically refers to the idiosyncratic bundle of resources and
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capabilities resulting from the family influences.” According to Habbershon and

Williams (1999) family influence can increase resources (familiness as a positive factor)
or decrease resources (familiness as a negative factor), and thus the consequences of
familiness, stemming from the family influence, can be productive or
counter-productive for a family business and its future. Similarly, familiness can be
distinctive (with a positive influence on the firm’s performance) or constrictive (with a
negative influence on the firm’s performance) (Chrisman et al., 2003, 2005; Schulze and
Gedajlovic, 2010; Minichilli et al., 2010; Zahra et al., 2004). Distinctive familiness can
result from importing family concepts into daily business operations with nonfamily
members (Chrisman et al., 2008). This finding is in line with Sirmon et al. (2008) and
Danes et al. (2008), who recognized that family influence creates positive performance
when other views, including non-family ones, are represented in the governance of a
family business.
Interorganisational familiness is a combination of informal family-like relationships
between non-family and family members. Interorganisational familiness influences the
non-family members of a family business as well as the family members. It brings
individuals together in a family business through shared norms and values. Family
firms with their long-term orientation offer a venue for the creation of
interorganizational familiness. (Lester and Cannella, 2006). In cases where familiness
fosters trust among customers toward a family firm (Craig et al., 2008; Carrigan and
Buckley, 2008), interorganisational familiness constitutes a brand-building resource for
the firm through its personnel. Where interorganisational familiness exists, familiness
on the individual level can also be studied. Founder-managed organizations may be
characterized by familiness where the dominant influence is that of the founder.
Individual familiness is close to what Venter and Kruger (2004) call founder capital, in
contrast to family capital. Founder capital is a combination of the resources produced
by the founder of a family business. Family capital in turn denotes resources that are
created by the family together. Thus founder capital refers to individually generated
resources while family capital is collectively generated.
As Hmieleski and Ensley, 2007 (p. 885) state, more research is needed in leadership
among entrepreneurs in order to understand “[. . .] linkages between individual, team,
and firm level variables. These linkages are not well understood within the leadership
literature and appear to be more complex than we would like to have believed in the
past. In this light, we challenge others to develop and test further contextual leadership
models using multiple internal and external variables.” In the present study, a
 qualitative multiple case study method is applied. According to Ng and Thorpe (2010), Entrepreneurial
there is a need to conduct qualitative research to better understand entrepreneurial leadership
leadership in family firms and the interaction and participation of family and
non-family members in family business leadership.

3. Methodological choices 145

Three anonymous family firms were selected for the present study. The case study
method is based on replicating the same theme interview questions with all the
interviewees. The themes relating to familiness taken for the interviews were based on
Habbershon (2006); Habbershon and Williams (1999). The cases were selected
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according to the following criteria:

.
The owner works as CEO and/or chair of the board in the firm’s main business.
.
At least one more family member owner (if existing) is active in the firm’s main
business (as board member and/or employee).
.
At least one family member representing a different generational perspective
from those in the previous two criteria is active in the firm’s main business (as
board member and/or employee).
.
At least one non-family member is active at the top management level of the
firm’s main business.

Alpha Ltd. was chosen for this case study as it has entrepreneurial leaders from two
generations. The turnover of Alpha Ltd. was e13.5 million in 2008. The company
currently has 90 employees in Finland in 11 locations, and eight employees in Sweden.
Alpha offers a possibility to understand familiness from the perspectives of both the
founder and the next generation. Beta PLC has its main headquarters in Finland and
six production facilities employing almost 500 people. It is the global market leader in
its field. Gamma PLC is a global company. It develops, manufactures and markets its
products. The company has also expanded into the consumer market. The company
headquarters are in Helsinki, Finland, with production plants in Finland and in China.
Currently, the company employs approximately 370 employees in eleven countries.
Methodologically, the interpretive analysis was implemented following
Eisenhardt’s (1989) suggestion on selecting cases not for the purpose of testing
hypotheses or sampling, but to allow theoretical flexibility and the process of
interpreting the results to be conducted in accordance with the informants’ perceptions.
The analysis is based on Eisenhardt’s (1989) suggestion for studying impressions
through the multiple perspectives of family firm informants. The long-term horizon of
the Alpha, Beta, and Gamma cases enables us to study how and why familiness is a
strategic resource in leading these entrepreneurial family firms. The study is based on
a qualitative interpretation of the empirical materials. Direct quotations are used to
enable the reader to follow the interpretation of the data. The interviewees’
demographics are shown in Table I. In the case of Alpha and Gamma the interviews
were conducted in Finnish. They were transcribed in Finnish and later translated into
English. In the case of Beta the interviews were conducted in English and the analysis
was done with the interview material in English.
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18,2

146

Table I.
IJEBR

Informants of the study

Role in the Length and timing of Language of the
Informant Family firm family Professional position Age Gender the interview interview

Bob Alpha Ltd. Founder Board member, main owner (60%) 52 Male 2 h 15min Finnish
March 2009
Jim Alpha Ltd. Next Part time employee, minority shareholder 21 Male 1 h 38min Finnish
generation (10%) March 2009
Joe Alpha Ltd. Next CEO, minority shareholder (19%) 33 Male 2 h 6min Finnish
generation March 2009
Steven Beta PLC Next CEO, minority shareholder 39 Male 1h English
generation April 2009
Jill Beta PLC Next Head of Communication, minority 37 Female 1h English
generation shareholder April 2009
Donald Gamma PLC Founder Board member, majority owner 67 Male Approx. 1 h 30 min Finnish
Rosie Gamma PLC Founder’s Employee, minority owner 66 Female 1 h 5 min Finnish
wife
Edward Gamma PLC Founder’s Head of Product Lifecycle Management, 54 Male 1 h 36 min Finnish
cousin minority owner
Ben Gamma PLC Nonfamily CEO 48 Male 1h Finnish
 4. Findings of the study Entrepreneurial
Alpha leadership
After Joe took over as managing director of Alpha, the company entered a new era of
leadership. Initially Bob had led the company according to his own vision but as soon
as the company had achieved some level of growth and market position, he set his
sights on different interests that have gradually led him more and more away from the
everyday goings on of the company. Both Joe and Bob are very open to other expert 147
opinions and views that might benefit their company, which prevents them from being
locked in their own views. It is for this reason that they have external members on the
board who continually bring their own expertise into play. There is a strong family
dynamic behind the leadership with a high tolerance of external views (1, see Table II).
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The leadership dimension of the resource pool seems to be related to autonomy as an

entrepreneurial orientation through Bob having given Joe a strong sense of freedom
and space to take the company forward in his own way as well as through both Bob’s
and Joe’s obvious tolerance of creativity and failure among the employees (2).
Bob has an extensive network of contacts ranging from business contacts through
political contacts to contacts in sports and leisure. He has been able to benefit from
these contacts on a personal level, and they also benefit the company, for example in
Bob’s ability to reach people fast and to get his voice heard. Joe is still in the process of
starting to create his own networks, but already has the idea that these can be utilized
to the economic advantage of the company. He wants to look into the possibility of
entering the Russian market, but this needs a lot of preparation and knowledge, and it
is an example of what social networks can be useful for (3, 6). “There is a girl in my
daughter’s class and her dad works for a company selling log houses to Russia. We
went skiing with them so we ended up talking about mechanical wood processing and
how that works and especially in Russia, that’s what we talked about and then he said
that hey, one of his friends sells to Norway and has done so for 20 years, call him and
have lunch with him and you’ll be able to learn a great deal about the Norwegian
market” (Joe, 4) The family wants to dominate their organizational culture in the sense
of their firm being like one big family. When the organization celebrated its twentieth
anniversary, Bob invited everybody to his own home to celebrate, so 160 people ended
up coming to the party and felt respected and valued on that account. As already
mentioned, Bob and Joe see value in good communication and want the atmosphere
among the management and the employees alike to be one of openness (2, 3).
The family believes in working hard, respecting one another as individuals, being
honest and straightforward, having and giving the freedom to speak out, and they
believe that it is not only a right to innovate but it is also a responsibility. Joe has had to
earn his place in the top management and has made it clear that Jim will have to do the
same thing (5). Bob promotes a culture of reflection and has been able to transmit this
to his children. All three, dad and the two sons, demonstrate strong skills of
self-reflection which help them not only to get along with one another but see their own
roles in the company clearly, which is to the benefit of the company. Although Bob’s
wife is not involved in the business, her role as a support person for everyone as well as
that of an occasional communicative mediator is clear. They all feel that family comes
first and that should there ever be a situation in which the family and company were
somehow in serious conflict, they all feel that the company would be second and the
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18,2

148
IJEBR

Table II.

leadership
entrepreneurial
Familiness and
Familiness dimension (Pearson et al.,
2008/Entrepreneurial leadership Structural (social contacts and Cognitive (shared vision and Relational (relationships creating
dimension networks) purposes) attachments)

Innovativeness, (D’Intino et al., Innovativeness is expected (5, Family expects innovativeness (5, Relations combine innovativeness (5,
2008); Innovative goal achievement Alpha) Continuous idea generation; Alpha) Innovativeness shared with Alpha) Multigenerational decisions
and resource collection (Skodvin and highly innovative culture in the the stakeholders (7, 11 Beta) are made, relations are based on
Andresen, 2006) company (7, 11 Beta) Highly Founder-based innovativeness (16, long-term trust (7, 9, 11 Beta) Low
innovative culture (16, Gamma) Gamma) degree of relations (20, Gamma)
Opportunity recognition (Hansson Value creation through opportunities Opportunities are strongly shared (4,Opportunities combine the family (4,
and Mønsted, 2008); opportunity is active (4, Alpha) Opportunity Alpha) Jointly with the family; Alpha) Multigenerational
exploitation and value creation recognition by family (9, 10, Beta) conflicts possible (9, 10 Beta) belongingness creates both harmony
(Gupta et al., 2004) Carefully analyzed opportunity Collaboration between the founder and conflicts; family council fosters
exploitation (18, Gamma) and the management (17, Gamma) family decision making (9, 10, 15
Beta) Low degree of relations (20,
Gamma)
Proactiveness (Chen, 2007) Stakeholder participation is high (3, Multigenerational sharing is high (2, Multigenerational sharing is high (2,
2, Alpha) Flat hierarchies enable Alpha) Informal culture with family Alpha) Informal relations (7, Beta)
high proactiveness (7, Beta) and nonfamily members (7, Beta) Informal relations (20, Gamma)
Flexibility enables proactiveness (19, Founder capital (20, Gamma)
Gamma)
Risk taking (Chen, 2007) Risk taking is cautious, based on Multigenerational planning when Multigenerational attachments are
planning (6, Alpha) Risk taking is risks are taken (6, Alpha) Companies strong (6, Alpha) Family values
active through investments (8, Beta) with same values are purchased (13, influence risk taking (13, Beta)
Careful risk taking, strategic risks Beta) Founder capital and Founder capital (17, Gamma)
(18, Gamma) management (17, 19 Gamma)
Vision making (Witt, 1998) Openness exists (1, Alpha) Vision is Family sharing is open (1, Alpha) Strong family ties (1, Alpha) Strong
taken into practice with the Vision is shared with family and family ties, family members outside
networks (12, Beta) Vision is nonfamily members (12, Beta) Vision the family business are activated for
communicated to employees and to is the founder’s creation (16, Gamma) participation (12, 14, Beta) Weak
stakeholders (16, Gamma) family ties (20, Gamma)
 family’s best interest put first. “We want the people here [employees] to feel like they Entrepreneurial
are family, that comes from our home [. . .] and if things got really bad here, I would leadership
leave, if no reconciliation was possible because then there is no room in the same
company for two strong personalities” ( Jim) (1).

Beta
Leadership within the company is participative. The flat hierarchy allows easy
149
approachability to the managers and the owner by the employees. Doing business with
their partners, Steven (owner-managing director) adds, is based on equality since about
400 of their customers are small family companies, which are on the same level and not
corporate businesses like Bauhaus or OBI. He goes on to say that being a family
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member and an owner is not constraining; in fact, it is advantageous for doing business
because similar issues arise in their partner companies, e.g. succession. They are able
to exchange experiences and learn from each other. Steven does not distinguish
between listed or privately owned companies. As the main owner and CEO, he leads
the company, directing its management (7). Steven states that the company has a
tendency to invest more aggressively than is probably the case in other family
companies of similar size. The focus is still on expanding the business since there is
little property involved. In comparison to 2007 the company increased their investment
in R&D to e1.8 million (company Financial Report, 2008, 2009) in order to develop their
new innovative products, which were introduced in the spring of 2010 (8).
Within the company Steven holds a dual position. On the one hand he is the main
owner of the company and on the other he is the Managing Director. Jill and her
husband see more advantages than constraints in this situation. Steven’s focus is on
the long-term investment targets, for example which product line is in line with the
company’s vision and in which markets it is good to invest. He professes to have
brain-storming discussions with the other family members, mainly with his father who
is retired. In Steven’s opinion, his dad always has good ideas and serves the company
as a consultant (9). Disagreements in the decision-making process mainly take place
between Steven’s father and his wife. Usually, they are related to the hiring of
personnel or to the business plan or product development, says Steven (10).
The company’s values are the basis for achieving these goals, starting with the first
one, courage. It enables completing what has been started, even in the face of obstacles.
When the company cooperates with other family businesses across Europe, these
relations are based on long-term relationships involving honesty and a high degree of
trust, allowing both parties to succeed and expand their business (company Financial
Report, 2008, 2009; Steven). According to Jill, the company builds on healthy
co-operation, which also means innovating constantly and therefore fostering
entrepreneurship within the company (11). Jill believes that the family business is a
very positive entrepreneurship resource since the family wants to foster
entrepreneurship among their employees. The aim is to encourage proactiveness,
goal-orientation and commitment, which also stimulate future-oriented thinking
(company’s Mission, Vision and Values, 2009) (12). The acquisition of Company DX
Ltd. was easier because of their shared values. Other similarities such as both
companies being located in the eastern part of Finland and both being mainly owned
by one person made it easier for them to grow together from the standpoint of their
 IJEBR values. Jill is convinced that their family values are well established within the
18,2 company and functioning (13).
Mark and his wife founded the family business. They started the company from
scratch and had a huge impact on the business. Since their divorce in the early 2000s,
communication has been facilitated (Jill). Furthermore, since their son Steven is the
managing director, as well as the main owner, it is much easier to run the business. The
150 second generation and their relationships with one another seem to be very
harmonious. They each have their own business: Jim is active in forestry, Steven is the
CEO of the company and Susanna takes care of her children and is involved in social
activities. Another reason for their good relationship is that they meet often as a family
since they live in the same area (Jill). Jill adds that the family has an unwritten rule not
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to engage in conflict in front of the other shareholders at the Annual General Meeting.
If there are disagreements, they are handled within the family (14).
During the succession process, the company set up a Family Council. Jill admits that
they no longer meet as they used to do. In the past, meetings took place two to four
times a year. Now they meet twice a year at the most. One reason for this may be that
the family is fairly small, she states. The Family Council as such does not influence the
company’s operations. If family members want to have an impact on the company,
they have to consider the directors on the board and the management (15).

Gamma
The founder has been the de facto leader of Gamma since its inception. He constructed
the company culture and the underlying vision. His persona, knowledge and drive have
attracted employees into the company and committed them to it as well. Donald can be
described as a textbook example of a true entrepreneur. He is an inventor and an
entrepreneur who has successfully commercialized his inventions. The innovative
atmosphere of Gamma has been strengthened through the high amount of freedom
granted to the employees. This autonomy guarantees an open environment to create
new ideas and to experiment. Furthermore, in order truly to support innovativeness,
Gamma has increased its R&D expenditure annually between 2005 and 2009. As
mentioned earlier, entrepreneurial leaders are trusted and this trust is based on how
they have performed in the past. Donald fits this profile very well since he is trusted
throughout the company and people know his accomplishments. Nevertheless, neither
Donald nor the company relies on past merits. Gamma is constantly looking for ways
to improve and to evolve (16).
Decision-making has been largely Donald’s responsibility since he has always been
the primary source of ideas and knowledge. Donald has been good at recognizing
opportunities and this has contributed tremendously to the development of Gamma. A
long-time member of the management team, Edward, describes the company
decision-making as a team effort, but nevertheless the most important member of that
team is Donald. The other members of the management were responsible for providing
insight into the feasibility of Donald’s plans from their point of view. The weightiest
decisions in the company’s history have been made by Donald and he has carried the
responsibility for those decisions. As the company has grown it has naturally evolved
into a company which does not revolve around the founder. This has been a conscious
decision by Donald himself (17).
 The founder himself asserts that he is a lazy leader and that he lets all the flowers Entrepreneurial
bloom. Donald trusts the employees and grants them freedom to create and innovate. leadership
This has proven to be a very effective type of leadership. But he does interfere when
necessary, when the employees are not striving in the right direction. In the early
stages the company demonstrated strong entrepreneurial leadership qualities, such as
innovativeness, proactiveness, and risk-taking. The company took tremendous risks
which were based on proactive opportunity-seeking and exploitation of potential 151
innovations. Donald himself confessed that he does not think about the risks. The
greater the challenge, the harder he works. This is in line with the statement that
entrepreneurs do not see themselves as particularly risk-taking persons. Currently,
Gamma is relatively careful with the risks it takes, and the risks it does take have a
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more strategic nature. When a promising opportunity arises the company thoroughly
analyzes and plans for the risks involved in the opportunity. As one of the top
companies in its industry, Gamma does not have to pursue every little opportunity but
rather focuses its resources on the opportunities it deems most promising (18).
Openness and flexibility are crucial components in an entrepreneurial organization.
Gamma has embraced these components from the start and they have been effective in
creating an entrepreneurial atmosphere. Edward stated that Gamma has a lot more
freedom and flexibility in terms of decision-making since they are a family-owned
company. Furthermore, he stated that if the company were a subsidiary of a larger
conglomerate the bureaucracy would be a lot more demanding, time consuming and
consequently detrimental to decision-making. Through centralized ownership Gamma
does not have this dilemma. This is clearly a positive attribute of familiness in this
particular case. Openness and flexibility are also essential in the organizational culture
of Gamma. Along with freedom and the family atmosphere they comprise the culture
of the company. Many employees feel positive toward the workplace mainly due to this
atmosphere (19).
Donald demonstrates the type of individual familiness as described by Venter and
Kruger (2004). Gamma does not portray a strong type of family capital but rather a
very strong form of founder capital. Furthermore, the familiness of the owning family
is very much restricted to the founder and to some extent to his wife. Family relations
in general play a minimal role in Gamma. Donald has evinced some regret about not
pushing his sons more toward the company. He states that he wanted to give them the
freedom to choose their own paths as he did with his employees. Therefore, the major
influence of the owning family stems from the founder. Nevertheless, his wife Rosie has
had a major role in the company’s history. She continues to work in the company and
has been a constant asset to Gamma; during the early years, especially, she was
involved in many areas. The different forms of support given by a spouse and her
impact cannot be underestimated. For the sake of clarity and comparability, familiness
in these cases is restricted to the direct effect it has on the company through
employment, ownership and business operations (20).

5. Discussion
The lens of familiness, proposed by Pearson et al. (2008), which is based on the social
capital approach to familiness, can be seen in entrepreneurial leadership from three
perspectives: structural (social contacts and networks), cognitive (shared vision and
 IJEBR purposes), and relational (relationships creating attachments) (see Table II). The
18,2 entrepreneurial leadership dimensions discussed are:
.
innovativeness;
.
opportunity recognition;
.
proactiveness;
152 .
risk taking; and
.
vision making.

As stated previously, familiness and entrepreneurial leadership are discussed here

through three family firm case studies.
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The three case studies showed similarities and differences in their entrepreneurial
leadership. Familiness, as a resource influencing entrepreneurial leadership, was found
in the case of Alpha, where it is manifested as open daily communication between the
two generations. In Alpha, familiness is influenced by outside expertise. Entrepreneurial
leadership in Alpha means co-leadership by two different generations. Familiness was
experienced as constrictive (Chrisman et al., 2003; Habbershon and Williams, 1999) in
Alpha when a non-family CEO attempted to lead the company after the initial era of
leadership by the founder, Bob. After the external CEO’s leadership had led to negative
performance by the firm, Joe eventually joined the company as CEO. This again
distinctively changed the nature of familiness in the firm. There is a clear synergistic
connection between Bob and Joe, and it seems that the family has managed to give
familiness a beneficial direction instead of constrictive one. Networks and cumulative
social capital help Alpha to sustain familiness. Creating social capital is an individual
endeavour, and although the entrepreneurial leadership in Alpha is co-leadership, Joe,
the CEO, creates his own networks. Networks seem to have a supportive role in
familiness, and they also enhance entrepreneurial leadership in Alpha. The business
culture and decision-making is the backbone of the entrepreneurial co-leadership in
Alpha. Open and healthy family relations support the creation of a distinctive and
synergistic familiness, which in turn has an influence on the kind of decision-making
needed in the SME business environment. As Sirmon and Hitt (2003) state, any instance
of familiness is unique, and this is true also in Alpha’s case. Were Bob or Joe to leave the
company for one reason or another, the familiness would no longer be the same.
Interorganizational familiness (Lester and Cannella, 2006) is strong in Alpha.
In Beta, the family continues to have a strong influence on the company since they
have a majority shareholding, especially in the case of one of the second generation
siblings, Steven, who is the Managing Director of the business. His wife holds a
management position and other family members assume responsibility for the
company by their voting rights and share distribution. The family practises a
business-first philosophy, focusing on performance outcomes, which is common
among companies that are quoted on the stock exchange, since they have to meet
shareholder expectations. During the interviews and on the basis of the financial
reports, distinctive familiness resources and capabilities were identified, which show
not only the competitive advantages of the company, but also the challenges and
weaknesses that the company and the family need to grapple with. Cohesion outcomes
arise due to stakeholder unity, the trust in the family group working in the business
 and the positive nature of the relationships in the family. Further, their recent Entrepreneurial
horizontal and vertical differentiation encourages professionalization. Moreover, leadership
despite the claim by some scholars that it is an admission of failure when FBs
transform into publicly listed companies, in the present case this transition was an
opportunity for the company, since it enabled the succession to take place smoothly.
The owner retired early from his position as CEO and hired an external Managing
Director until his son became the current CEO. Therefore, Steven had time to develop 153
his expertise and personal abilities prior to taking over the business. Furthermore, due
to expansion, it became necessary to split and transfer business responsibilities to a
mixed management and BoD, and hence not only acquire external knowledge,
resources and networks but also avoid, e.g. paternalism. The potential remains to
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improve communication, training and learning as well as implement family

governance bodies such as family councils or family protocols over the coming
years to prepare for the second succession.
Gamma differs from the other case companies since it is still in its first generation. It is
very likely that Donald’s sons will not be replacing him. According to Edward,
succession is not possible without a bridge between the generations. A bridge refers to
someone taking over the leadership of Gamma until one of the sons is ready to take over.
At the moment, none of the sons has expressed any interest in continuing in their father’s
footsteps. The vision, knowledge, networking skills and overall entrepreneurial attitude
of Donald are the basis of Gamma. As stated by Chen (2007), entrepreneurial leadership
can be characterized by innovativeness, proactiveness, and risk-taking in leadership
styles. This type of leadership can be found in Gamma. Furthermore, it can be concluded
that in the case of Donald it is the only way he knows how to lead. The aforementioned
characteristics apply to Donald’s personality and thus it is logical that they are also
prevalent in his leadership style. It can be stated that in Gamma the founder casts a very
large shadow. The influence of an entrepreneur carries only so far, and thus it is essential
to foster entrepreneurship within the organization. This is what has been done in
Gamma. Like Beta, Gamma is also a public company. Nevertheless, there are differences
in their performance. Whereas Beta has been performing well and satisfying its
shareholders, Gamma has been performing less well financially. This should not be
considered as evidence of the company’s inability to conduct business properly.
Through the family’s influence Gamma has not issued dividends but reinvested profits
into the long-term development of the company. It is a good strategy from the business
perspective but disappointing for the typical shareholder, who expects compensation for
his/her investment. As mentioned earlier, familiness in Gamma takes a more individual
form. When the inevitable happens and Donald leaves Gamma, for whatever reason,
there will be a drastic change in familiness. There is a distinct possibility that no
familiness will be left in Gamma after Donald. This may not have a profound effect on
the company itself since Donald has knowingly pushed Gamma in a direction where he
is not the focal point.

6. Conclusions
The purpose of this study was to find out what effects familiness has on the
entrepreneurial leadership of family companies and why. The main findings of this
study showed that Alpha, with members from two generations, has been able to
 IJEBR generate and sustain entrepreneurial leadership with a very strong growth-oriented
18,2 attitude extending across both generations. The motivation behind the choices and
decisions regarding the company’s strategies and leadership has been very
entrepreneurial and future-oriented. The owners’ focus on the future of the company
as a family business to be perpetuated is relatively recent; before that the family saw
the sale of the company as a very likely option. Joe took over the company as managing
154 director during a time of crisis following a period of non-family leadership and
commenced practising his own kind of entrepreneurial leadership with his own vision
of how to do things, which led to an upward curve financially. In the process he also
wanted to join the Finnish Family Firms Association. This in fact was a turning point
with regard to the future of the company: its sale was no longer an option; instead it
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was to develop as a family business.

Although it is too early to ponder on the possibility of the third generation entering
the company, there is a clear wish that the younger brother will step in and take an
active role in the future. At present his input is seen in his strong desire to
internationalize and innovate more. All the family members share a very strong
entrepreneurial orientation, which in turn shows in the entrepreneurial performance of
the company, in its continuing growth as a company, in its ability to innovate and
come up with new products in a field where technological advancement is a
prerequisite for success, and in its view of itself as a company with design products
that its competitors imitate. There is also a very strong will to enter new market areas
and eventually go global.
The familiness factor is very strong in Alpha. Although Bob’s wife, and the mother
of Joe and Jim, is not involved in the business, she has a strong and supportive
influence on the family’s business ventures as well as being a personal support for her
husband and sons, and also often acts as a mediator in the communication between the
two generations. Bob is clearly pleased that his sons are in the family business and sees
value in transgenerational business operations. He has also noted that his son Joe is
complementary to himself in regard to leadership and good ownership qualities.
Whereas he is the visionary, seeing the big picture, his son finds ways in which to
reach their agreed goals. Both the father and sons see Alpha’s future in the growth and
internationalization of the company.
Entrepreneurial leadership has been strong in Gamma throughout the years.
Gamma will face a challenge in the future since Donald will not be around forever. It is
very unlikely that his sons will assume his position in Gamma, but the company has a
very skilled management team. Donald has been smart in steering the company toward
a future in which the company does not revolve around him. One of the recent and most
important steps in this process came when Donald stepped down as CEO and long-time
employee Ben took over the position. Donald continues as a board member and will
have a role in Gamma’s future. He wishes to see Gamma evolve into a position where
both business segments are thriving and the company finally issues dividends. This
strategy has required a great deal of patience and belief, and will continue to do so in
the future.
Donald will leave very big shoes to fill and the continuation of the present level of
entrepreneurial spirit and entrepreneurial leadership will be an interesting issue for the
company. Fortunately, both Edward and Ben have been in the company for many
 years and are very capable of steering the company in the right direction. As Entrepreneurial
mentioned earlier, entrepreneurship has been fostered within the company and thus leadership
strengthens the core of Gamma. Internationalization and global operations have
always been essential for Gamma, and the company will continue on this path in the
future. Familiness in Gamma derives entirely from Donald, and it takes the form of
individual familiness. In particular, in terms of relationships, networks and knowledge
he has been an irreplaceable leader. His wife, Rosie, has been a tremendous source of 155
support and a dedicated employee, but in terms of effect on the company she has a
minimal role. Another impending issue is ownership, in particular the extent to which
the owning family will be involved in the future. The difference between active and
passive ownership is huge.
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The results of this study show just how heterogeneous family firm entrepreneurial
leadership is. In practice, predominant in Alpha is the kind of entrepreneurial
leadership in which familiness is the cement binding together relations, opportunities,
innovativeness, and sharing. This can be seen in the careful way Alpha prepares for
risks with advance talks. Openness to stakeholder relations is typical of the
entrepreneurial leadership in Alpha, Beta, and Gamma. Beta is a large organisation
with a flat hierarchy and informal employee relations. Although conflicts are possible,
all three cases are typified by the importance of familiness in opportunity recognition
and multigenerational decision making. Beta is different from Alpha in its eagerness to
take risks and to buy out other companies. Gamma differs from Alpha and Beta in its
founder-centeredness and its weak family ties. In the case of Gamma familiness is
“founderness”. Gamma’s vision making and risk taking are dominated by founder
capital and the low creation of attachments in the family.
Pedagogically, family firm-focused business school teaching should be tailored
according to the leadership styles of key family and non family managers. Since each
family firm is unique in its blend of entrepreneurial leadership characteristics,
education needs to be planned according to local characteristics. Benchmarking the
practices of family firms might be a good way to perceive entrepreneurial leadership
styles and their uniqueness. Comparing cases on how to lead entrepreneurially in
different, changing environments could benefit the next generation of entrepreneurial
leaders in family firms. The knowledge accumulated through managing a family firm
creates opportunities for knowledge sharing.
Politically, family firms are the backbone of many national and local economies.
The importance for tax revenues, local employment, and local culture of family firms is
unquestionable. As such, to acquire the leadership experience needed to run a family
firm, the next generation in the family firm should be encouraged to work both outside
and inside family firms. If entrepreneurial policy can somehow support this
phenomenon, it can help to increase the survival of family firms. A family firm is often
a family-led SME, which presents a challenging arena for daily business operations.
However, large family companies also need entrepreneurial leadership to increase
performance.
Further research to quantify the findings of this study is needed. Statistical analyses
of the influence of familiness on entrepreneurial leadership and the factors which
moderate this relationship would increase our understanding of the characteristics of
family firms. Studies collecting rigorous statistical data on family firms and
 IJEBR entrepreneurial leadership could increase knowledge on a relatively under-researched
18,2 topic. The lack of quantitative studies on several aspects of the entrepreneurial
leadership of family firms constitutes a methodological and thematic gap in the
research literature. In addition, cross-cultural replication studies on familiness and
entrepreneurial leadership should be encouraged in order to identify differences
between leadership styles in other cultures. Leading a family firm is a highly cultural
156 issue – individuals who are led and individuals who lead create a sub-culture of their
own within the variety of global cultures. Cross-cultural studies can enrich overall
understanding of entrepreneurial leadership.

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About the authors

Juha Kansikas is an Associate Professor of Entrepreneurship at the University of Jyväskylä,
Finland, and Adjunct Professor at the Mendel University, the Czech Republic. His research
interests are family entrepreneurship, international entrepreneurship, and entrepreneurship
education. Juha Kansikas is the corresponding author and can be contacted at: [email protected]
Anne Laakkonen acts as PhD candidate at the University of Jyväskylä, Finland. She is
studying currently the PhD double degree at the Hasselt University at the city of Hasselt,
Belgium. Her research interests are family businesses and identity.
Ville Sarpo acts as PhD candidate at the University of Jyväskylä, Finland. He studies
strategic entrepreneurship in family firms.
Tanja Kontinen is an Assistant Professor at the University of Jyväskylä, Finland. She has
published articles on family firm internationalization in such as Journal of Small Business and
Enterprise Development and Journal of Business Strategy, and her studies have been accepted for
the Journal of Small Business Management, and Entrepreneurship: Theory & Practice.

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