Feuding families: when conflict does a family firm good.

Using the conflict theory lens and insights from the family business literature, we develop a theoretical model concerning the effects of task, process, and relationship conflict in family firms. Family firms are characterized by different control structures and generational involvement. Accordingly, we discuss the expected effect control concentration has on task, process, and relationship conflict, and propose that generational involvement affects the importance of task and process conflict to a family firm's performance. Furthermore, our model suggests that relationship conflict moderates the outcomes of task and process conflict. The degree of relationship conflict in family firms is in turn influenced by altruism, which characterizes interactions among family members.

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Family firms are often plagued by substantial conflict. Indeed, the family and business are so entwined in family firms that the potential for discord is greater than in firms with other governance forms (Lee & Rogoff, 1996). This can be explained by psychodynamic effects other businesses do not experience, such as sibling rivalry, children's desire to differentiate themselves from their parents, marital discord, identity conflict, and ownership dispersion among family members (Dyer, Jr., 1986; Dyer, Jr., 1994; Ling, Lubatkin, & Schulze, 2001; Schulze, Lubatkin, & Dino, 2003a; Schultze, Lubatkin, Dino, & Buchholtz, 2001; Schwenk, 1990). Prior research has mainly focused on the dark side of conflict (Beckhard & Dyer, Jr., 1983; Danes, Zuiker, Kean, Arbuthnot, & Kaye, 1999; Dyer, Jr., 1986; Gersick, Davis, Hampton, & Lansberg, 1997; Levinson, 1971) while overlooking its benefits, or the bright side (Harvey & Evans, 1994; Sharma, Chrisman, & Chua, 1997; Tjosvold, 1991; Wall, Jr., Galanes, & Love, 1987). The negative effects of conflict are most often rooted in relationship conflict, whereas the benefits of conflict tend to be the result of task and process conflict (Jehn, 1995; Jehn, 1997b). This distinction among the three types of conflict has never been applied in an interactive way to the family firm literature and may explain why some families are able to successfully work together and run a family business, while others are not. Furthermore, it may illustrate why some family businesses can effectively utilize the talents and opinions of family members involved in the business, while others are laden with animosity that decreases performance.

The dominant presence of the family and the overlapping of control and management activities complicate the understanding of conflict in family firms (Daily & Dollinger, 1992). Unlike in other organizational forms, the effects of conflict on performance cannot be completely understood without taking into account the influence of psychodynamic effects of family relationships in family firms. Thus, family firms represent an excellent phenomenon to apply and further develop conflict theory, and in doing so, to better understand the challenges conflict poses to the family firm.

Researchers have argued that with the entering of each generation and the dispersion of ownership in a family business, the dynamics among family members change (Gersick et al., 1997; Harvey & Evans, 1994; Schulze, Lubatkin, & Dino, 2003b; Sharma, Chrisman & Chua, 1997) and the interactions of family members involved in the business become more complex (Dyer, Jr., 1986). In line with this research we propose that the involvement of different generations in the family firm impacts the importance of task and process conflict on performance and the concentration of control influences the occurrence of task, process, and relationship conflict. Furthermore, we argue that altruism, which is characteristic among family members, influences relationship conflict in family firms and may help to mitigate negative performance effects.

This article contributes to the family firm literature in four ways. First, our theoretical model adds to the understanding of how the different types of conflict are related, and thereby advances conflict theory beyond the "separation perspective" that assumes that the three types of conflict are mutually independent (Janssen, Van De Vliert, & Venstra, 1999; Simons & Peterson, 2000). Therefore, we are the first to propose an interactive model of conflict for the family firm. Second, we present a balanced inter-generational and intra-generational view of the family firm that describes consequences of conflict. Third, our theoretical model outlines how control concentration affects the occurrence of conflict in family firms. Lastly, we introduce altruism as an explanation for why some family firms are stricken by more relationship conflict than others, and therefore experience more of the associated negative effects.

We begin our discussion by presenting the different types of conflict and their effect on performance. We then describe how altruism influences relationship conflict in a family firm. This is followed by a discussion on the effects of control concentration on conflict and how the benefits of conflict can differ according to the generational involvement of a family firm.

A Conflict Perspective in Family Firms

The effects and implications of conflict in family firms are more complex than in non-family managed businesses and therefore, the ways conflict can improve or impede a family business must be understood. Conflict can come at a particularly high cost in family firms because family members are "locked" into the firm, thereby making conflicts more persistent and interests more difficult to align (Schulze et al., 2003a). Family members are often "locked" into the firm because of their inability to sell their shares for current market price. Furthermore, the exit costs of leaving the family firm are high because the family member may lose firm-specific knowledge, experience, possible rights of inheritance, status, and other privileges associated with employment in the family firm (Gersick et al., 1997; rling] et al., 2003a; Schulze et al., 2003b).

While most of the family firm research tends to assume that conflict is unhealthy and disruptive, it should be noted that conflict may have a positive effect on a family firm's performance. There are basically two ways of interpreting conflict's effect on performance. One view portrays it as harmful with the risk of tearing the involved group apart (Wall, Jr. & Callister, 1995; Wall, Jr. et al., 1987). The other view recognizes that conflict can be highly beneficial to a firm's performance by increasing options, by preventing premature consensus, and by increasing involvement and motivation of family firm members (Tjosvold, 1991; Wall, Jr. et al., 1987).

Research suggests that there are three types of conflict: task, process, and relationship conflict (e.g. Jehn, 1995; Jehn, 1997b). Each of these types of conflict can occur in varying degrees of frequency and intensity (De Dreu & Van Vianen, 2001). However, research has shown that the frequency and intensity of conflict are strongly related. That is, highly intense conflict is associated with more frequent conflict (De Dreu & Van Vianen, 2001). Therefore, for the purpose of our article, higher degrees of conflict refer to more intense and frequent occurrences of conflict. Now we will discuss how each of the three types of conflict can impact a family firm's performance.

Task conflict is about the ends on which tasks should be accomplished. It allows group members and individuals to identify diverse perspectives and increases the understanding of tasks at hand (Amason & Schweiger, 1994; Jehn, 1997b). As such, task conflict focuses on the discussion of goals and strategies. Task conflict has been found to improve decision-making outcomes and productivity by increasing decision quality through dialectically styled discussions (Jehn, 1995; Jehn, 1997b). Task conflict has also been shown to increase the acceptability of final decisions due to the consideration and utilization of each other's input (Amason, 1996). However, only moderate levels of task conflict have been shown to be beneficial to the performance of top-management teams or work groups in non-family business settings (Amason, 1996; Jehn, 1995; Jehn, 1997a; Jehn & Mannix, 2001). Firms with very high levels of task conflict tend to have problems completing tasks and reaching goals, while firms with very low levels of task conflict often become stagnant and lack the development of new strategies. Attaining moderate levels of task conflict in family firms may be particularly important since family and business interests often collide and need to be considered simultaneously (Taguiri & Davis, 1992). When environmental changes can be detected, belief structures can be challenged and actions can be taken.