Governing by managing identity boundaries: the case of family businesses.

Integration of domains and of role boundaries varies among individuals, ranging from fully integrated to highly segmented, with each state posing unique boundary management challenges. Some individuals tend to have fluid boundaries between "home" and "work" with no distinction between what belongs at home and what belongs at work, and no differentiation of when and where home and work tasks are completed (Nippert-Eng, 1996). In this case, there is a substantial overlap of the cognitive domains representing objects, people, thoughts, activities, and emotions. The reverse is true for an extreme segmenter, whereby she or he has different objects, activities, and "selves" or "ways of being" within each context (Nippert-Eng, 1996, p. 6). From a boundary theory perspective, a segmenter has more role clarity but has to exert more psychological effort transitioning between roles; conversely, an extreme integrator faces role blurting and has the challenge of creating and maintaining boundaries (Ashforth et al., 2000).

Just as individuals can vary in the degree to which they segment or integrate domains and roles, evidence exists that social groups (such as organizations) also collectively create and maintain various types of boundaries. Research in the work-family literature, for example, demonstrates that workplaces vary in the degree to which they create a boundary between home and work (Clark, 2000; Kirchmeyer, 1995; Kossek & Ozeki, 1998). Similarly, organization identity researchers have documented that organizations can vary in the degree to which they segment or integrate their various identities (Foreman & Whetten, 2002). Hence, we may speak of identity boundaries as the socially shared distinctions between aspects of an organization's identity (e.g., "family" aspects and "business" aspects).

Identity Segmentation--Integration Continuum: The Family Business Context

Within the family business context, the two relevant identities (the family and the business) can be segmented or integrated to different degrees. Building on the preceding discussion that demonstrates the ability of individuals and collectives to engage in boundary work, we posit that family businesses can be arrayed on a continuum anchored by high segmentation of family and business identities, a state that resembles a nonfamily business, to high integration (Figure 1). Later in the paper we explore cases of partial integration and partial segmentation. We discuss later how the level of integration between domains is manifest in several observable means: association between the family and business image, culture, personnel, ownership/governance, contractual relations with family, and the relationship between family and business finances. In addition to these factors being manifestations of a current state of integration, we also argue later in the paper that these factors can be consciously manipulated in order to create and maintain the desired level of integration. While these dimensions are not exhaustive, based on the integration of the work--family boundary literature (Nippert-Eng, 1996, pp. 149-55) and the family business literature (e.g., Lansberg, 1983; Tagiuri & Davis, 1996) they are representative of the characteristics that denote the degree of integration between the family and business identities.

Image. The name a family business uses can be a telling indicator of where it falls in the segmentation--integration continuum because a firm's name is an important "identity marker" (Ashforth, 1998, p. 220). Similarly, Tagiuri and Davis (1996, p. 202) indicate that a family name is "an identity for family members and has a meaning to people inside and outside the firm." Carrying the family name over to the business reinforces the mingling of the two identities, as is the case in firms such as S.C. Johnson Company and Ford.

Similarly, family businesses may choose to either disclose or conceal their family-owned status in their marketing and advertising. Considering the earlier companies again, we note that S.C. Johnson ends its products' television commercials with the tagline "S.C. Johnson--a family company," suggesting a conscious effort to link the family image with its products. Yet companies such as Ford (which use a family name) do not highlight the family aspect in the imagery of the company to such a degree, if at all.

[FIGURE 1 OMITTED]

Culture. The degree to which the core values and beliefs of the business and the family overlap is an important barometer of the overlap between the business and family systems. Astrachan, Klein, and Smyrnios (2002) gauge the integration of cultures not only through an overlap between family values and business values but also by the family's commitment to the business; this is because the family's core values are the basis for developing a commitment to the business. Herman Millar Inc. exemplifies a family firm where the family and business cultures are tightly integrated. The company hires individuals who are "strongly committed to the beliefs and ideas of the senior family members. Employees of this firm share the family's outlook toward customer service, quality, and productivity" (Kets de Vries, 1993, p. 63).

How individuals use language can be a manifestation of cultural values. Cross-realm talk, for example, occurs when an individual engages in conversations about aspects of a particular domain of their life, such as work, with individuals from another domain such as family. The more we integrate, the more frequently we are likely to discuss aspects of each world while physically located in another, thereby promoting cross-fertilization between realms (Nippert-Eng, 1996). Members of highly integrating family businesses may discuss business in family gatherings, and family dynamics in business decisions, fostering blurring of boundaries between the two domains. On the other hand, members of highly segmenting businesses restrict cross-realm talk and engage in it during predictable times, maintaining clear boundaries.

Personnel. The employment practices of family business can be another strong indicator of the mingling of family and business roles and identity because the individuals we surround ourselves with "calls forth aspects of our selves more instantaneously and more thoroughly than anything else" (Nippert-Eng, 1996, p. 68). The selection, compensation, appraisal, and training practices of family firms reveal the level of overlap between the family and the business identities (Lansberg, 1983). The number of family members employed by the business, the levels at which they work, how they are hired, and how they are compensated, evaluated, and trained are critical indicators of location on the segmentation--integration continuum. Some family businesses may not allow family members; some may employ family according to certain rules; and others may freely employ them (Whiteside & Brown, 1996). The weight given to family membership, particularly for higher level managerial positions, provides insight on permeability of the family--business boundary. Having people common to both realms provides for cross-fertilization, and the presence of family members in key positions allows control over decision making, enabling uniformity between family and business values and systems (Astrachan et al., 2002). Using Shanker and Astrachan's (1996) classification of family involvement, the level of integration will be high in firms with considerable family involvement, medium in firms with some family involvement, and very low in firms with little direct family involvement.

Ownership and Governance. Ownership is central in determining the influence of a family on a business (Astrachan et al., 2002). Firms that restrict the level of outside ownership have a substantial overlap between the family and business systems. On the other hand, when stock is offered to nonfamily employees, their influence is likely to pierce the boundary as these members have a formal mechanism through which to affect the business.

Key decision-making groups can also be examined in determining the integration or segmentation of the family and business systems. The makeup of a firm's board of directors and top management team gives initial evidence of one tendency or another. In some firms, key decision making is controlled exclusively by family members (suggesting a tendency toward integration), whereas in others, a mixture of family and nonfamily individuals share responsibilities (suggesting a greater ability for segmentation). Furthermore, in some companies, the top management team consists of only family members, while the board comprises a number of outsiders brought in for various areas of expertise and with varying levels of power (suggesting a mixture of integration and segmentation).

Financial and Contractual Relations. As Nippert-Eng (1996, p. 63) argues, money is a "direct extension of one's self" and, therefore, its handling reveals an individual preference for integration between home and work. A highly integrating monetary policy stems from the notion that one's personal interests and work interests overlap. Within the family business context, family funds may be used to the benefit of the firm or business funds may be diverted to the benefit of the family. Family business in general may be more integrating because of institutional factors such as tax laws. Nonetheless, family firms differ in the degree to which they comingle family and business funds (Haynes, Walker, Rowe, & Hong, 1999), indicating differences in the permeability of boundaries between realms.