European Journal of Family Business (2020) 10, 54-63
European Journal of Family Business (2020) 10, 54-63
Barriers to change in family businesses
José Daniel Lorenzo-Gómez
University of Cadiz
Received 2019-11-08; accepted 2020-01-21
JEL CLASSIFICATION
M19
KEYWORDS
Strategic change; barriers to change; family business
CÓDIGOS JEL
M19
PALABRAS CLAVE
Cambio estratégico; barreras al cambio; empresa familiar
https://doi.org/10.24310/ejfbejfb.v10i1.7018
2444-877X/ © 2020 European Journal of Family Business. Published by Servicio de publicaciones de la Universidad de Málaga. This is an open access article under the CC BY-NC-SA license (http://creativecommons.org/licenses/by-nc-SA/4.0/).
*Corresponding author
E-mail: daniel.lorenzo@uca.es
Abstract A series of characteristics affects the willingness of a family business to change and renew. Both change and renewal are necessary to maintain the continuity of the company in the long term in order for it to be handed down to the following generation. Approaches to the identification of barriers to change that are specific to the characteristics of family businesses are analyzed with the aim of identifying factors that potentially have the greatest impact on the decision-making and implementation of change processes. These factors include the generation at the head of the family business; the influence of interest groups, particularly the duality between the company and the family; and the greater or lesser participation of professionals from outside the family.
Barreras al cambio en la empresa familiar
Resumen La empresa familiar presenta una serie de características que condicionan su disposición al cambio y la renovación, que son necesarios para mantener la continuidad de la empresa en el largo plazo, para que pueda ser legada a las siguientes generaciones. Se analizan algunas aproximaciones a la identificación de las barreras al cambio que son más específicas de las características propias de la empresa familiar, para identificar los factores que pueden tener mayor incidencia en la decisión e implantación de procesos de cambio en las empresas familiares. Entre estos factores se pueden citar la generación al frente de la empresa familiar, la influencia de los grupos de interés -particularmente la dualidad entre empresa y familia-, y la mayor o menor participación de profesionales externos a la familia.
Introduction
When compared to a non-family business, it is a widely held belief that family businesses are more conservative with regard to taking risks, and that they rarely innovative (Bermejo, 2008; Tàpies, 2009). The literature developed within the academic field to understand the more or less change-oriented character of family businesses offers a different perspective. On the one hand, some studies indicate that, over time, family businesses become more conservative and do not want, or cannot, assume the risks associated with the need for change and renewal (Autio and Mustakallio, 2003; Zahra, Hayton, and Salvato, 2004). The intention of the founders to build a lasting legacy over time may lead to conservative decision-making. this could be due to the risk of failure of new projects and the risk of destruction of family wealth (Sharma, Chrisman, and Chua, 1997; Zahra, Hayton, and Salvato, 2004; Gómez-Mejía et al., 2007). On the contrary, other authors such as Aronoff (1998) have suggested that family businesses can be particulary innovative and aggressive in their markets. For their part, Craig and Moores (2006) consider that family businesses do not have to be more risk-averse or less willing to change than non-family businesses. It is even proposed that as they evolve, family businesses can become more innovative than at the outset (Lorenzo and Núñez-Cacho, 2012).
In principle, there are several specific features that could be considered favorable for change in a family business, such as long-term orientation (Tagiuri and Davis, 1996; Ward and Aronoff, 1994); the will to continue through to the following generations (Gallo, 1995); patient capital (Sirmon and Hitt, 2003); and the duration of terms in power of the core leaders (Tàpies, 2009).
In a non-family business, when the time comes to replace people in the most senior positions, a person who has reached retirement age is usually replaced by someone who has a similar professional profile, but younger. In the case of a family businesses, more than a change in management, a generational change occurs, replacing a person who has reached the end of his working life with a person from the next generation. This implies a majorshift in mind-set, as the new manager may be 30 years younger than the previous one, and therefore have almost all of his or her working and professional life ahead of them.
In addition, those who succeed the previous generation usually have a different profile, to their retiring relatives. Generally, present generations tend to have a higher level of training in comparison with previous generations. This is particularly so in the case of family businesses, where it is increasingly common for potential successors to have gone through a stringent selection process to obtain positions of greater responsibility (De Massis et al., 2008). The training of the successor usually includes a solid academic background with work experience outside the family field, which is added to the years of learning the fundamentals of the family business – all under the tutelage of the previous generation (Cabrera-Suárez, 2011). Likewise, the successors receive a substantial legacy in the form of the values of the family business, such as effort, perseverance, austerity, excellence, long-term orientation and entrepreneurial drive. This legacy provides the basic foundations with which they understand entrepreneurship (Bermejo, 2008).
With the training acquired and the values assumed, when the next generation enters into the management of the family concern, they can then develop their own ideas. They do not lose sight of the need to maintain the entrepreneurial drive of their predecessors to continue consolidating the family business. In other words, the new managers are in the best situation to reinvent the company, considering that they know the business from within, but with the fresh vision of a person with their working life ahead of them. Another factor that favors the renewal drive of the next generation is family support to carry out a long-term mandate. This will not be as conditioned by short-term results as in other types of companies, but by the patient capital (Sirmon and Hitt, 2003) of the family business.
These specific characteristics of family businesses create a space that is favorable to change and renewal. However, family businesses do not always manage to carry out their renovation adequately, and in many cases, they do not get past the succession processes that should open the way to new stages (Gallo, 1998). The questions to be asked are, if family businesses have characteristics that promote change and renewal, why do they often fail in their renewal, and why are they still considered conservative and risk-averse? This leads us to propose the existence of specific barriers to change in family businesses.
From a path dependence perspective (Liebowitz and Margolis, 1995; Sterman and Wittenberg, 1999; Sydow, Schreyögg, and Koch, 2009), company strategy is heavily influenced by past history (Jaskiewicz, Combs, and Rau, 2015; Kammerlander et al., 2015). The past history of the company can have both positive and negative implications (Miller and Le Breton-Miller, 2005). Among the former, a greater sense of loyalty can be found among interest groups such as employees, customers and owners. There is also stability due to long-term relationships, both inside and outside the company, and a higher level of trust is perceived by customers and suppliers (Miller and Le Breton-Miller, 2005). On the other hand, the negative implications may mean less flexibility and willingness to change (Zahra, 2005). Thus, from a path dependence perspective, previous decisions in the family business could have created a dominant pattern that may act as a barrier to change processes.
Traditionally, family businesses have been analyzed more from the perspective of the company rather than from the influence exerted by the family (Rutherford, Kuratko, and Holt, 2008), which provides an additional reason to analyze the specific barriers derived from family status. In order to review possible barriers to change contributions to the literature on change and family business are analyzed below. A comparison is made between the different ways of considering the obstacles to change, looking for common elements, which are analyzed in terms of their application to the specific case of the family business.
Barriers to change in organizations
Strategic change is defined by Van de Ven and Poole (1995) as being the difference in form, quality or status, over time of the fit, adaptation or adjustment of an organization with its environment. Changes in this adjustment include both internal and external factors (Rajagopalan and Spreitzer, 1997). Among the former, changes in the content of the company’s strategy determined by its scope, deployment of resources, competitive advantages and synergy are considered. External factors refer to changes in the environment that prompt the organization to initiate and implement changes in the content of the strategy. A change is strategic when it affects issues and problems that are important for the survival of the institution, and go beyond functions and levels of the organization (Van de Ven, 1993: 314).
Change in organizations has been studied through different approaches. Some of these studies have focused on specific aspects of the change process, such as the factors that motivate it, or the actions to be taken by the management of the organizations. Van de Ven and Poole (1995) analyzed the reasons that trigger change processes, concluding that there are four drivers of change. Two of the drivers are internal and two are external. The internal drivers relate to a change of objectives and modifications to the correlation of power in the organization. The external drivers are derived from the life cycle and the evolution of different sectors. The actions to be taken by management in the process of change have been studied by Baden-Fuller and Volberda (1996), where the separation of change and stability, in a temporal or spatial sense is proposed. Temporal separation alternates stages of change with stages of stability, while spatial separation consists of starting the process in one organizational unit, and later extending it to the entire organization.
Barriers to change have also been studied by different authors, who have proposed different classifications and models to identify specific obstacles that can limit, restrict and even impede change in organizations. The literature reports different perspectives to identify the barriers to change. In a study of innovation, innovation is assumed to involve change (Collinson and Wilson, 2006; Sandberg and Aarikka-Stenroos, 2014; Wolfe, Wright, and Smart, 2006). In this sense, knowing the barriers to change allows for a better understanding of innovation activities within the organization, and facilitates the growth of innovative companies (Hölzl, and Janger, 2013). Oke (2004) points out that barriers impede innovative activities, while Rumelt (1995) defines the effort required to overcome obstacles to innovation.
A number of these studies are revised below, such as those carried out by Gilbert (2005), König, Kammerlander and Enders (2013), which focused on family business, and Rumelt (1995), whose generic model has been adapted for family business by Lorenzo and Núñez-Cacho (2012).
Gilbert (2005) quotes Miller and Friesen (1980) as well as Tushman and Romanelli (1985) to highlight that the definitions of inertia refer to the inability to make changes in the organization in the face of significant external changes that demand an adaptation of the organization. Rumelt (1995) defines inertia as the resolute persistence of current forms and functions. Klein and Sorra (1996) states that the implementation of changes ultimately consists of changing the behavior of people, which depends on an adjustment of values, as well as the implementation climate.
Inertias according to Gilbert (2005)
Gilbert (2005) proposes that a distinction be made between resource inertia (resource rigidity) and routine inertia (routine rigidity) to better understand the phenomenon of organizational inertia. Inertia in relation to resources refers to the fact that family businesses may be less willing to invest in resources because of the need to face changes for two reasons. On the one hand, dependence on external resources that are not controlled by the family, such as access to capital markets; and on the other hand, the fear of losing a consolidated position in the current circumstances, in terms of market power (Gilbert, 2005).
Routine rigidity refers to the persistence and inflexibility of the current routines of the company. Routines are defined as patterns of regular and predictable behavior in companies (Nelson and Winter, 1982). Grant (1991) points out that these behavior patterns are carried out as a sequence of actions coordinated by people. Nelson and Winter (1982) consider routines to be hereditary and selective, because they facilitate a better adaptation to change in organizations that have suitable routines.
Routines are developed and maintained with experience (Grant, 1991). In some ways, organizations could be considered as developing routines that are a reflection of their capacity to act, using their resource endowments and capabilities (Wernerfelt, 1984; Barney, 1991), and following a particular strategy. In a process of change, some routines may be inadequate or cease being necessary, as they respond to previous premises. The organization has to develop new routines that respond to new premises, replacing previous routines. However, the entrenchment of routines in the organization makes their removal and substitution a challenge. Indeed, the unspoken nature of some routines makes them more difficult to deactivate (Gilbert, 2005).
Gilbert (2005) stresses that the effects of the perception of threat affects the two types of inertias differently. Threat perception can be associated with three characteristics: a negative focus; an emphasis on losses; and a feeling of loss of control (Gilbert, 2005).
In the absence of a clear threat, the response is often resource rigidity. For instance, the company investment policy is not changed unless there is clear motivation, which comes about through changes in the environment. However, the perception of threats that could reduce the rigidity of resources, can in fact lead to an increase in the rigidity of routines. This can happen due to a lack of correlation between the response that should be given to the threat situation, and the existing routine of the organization (Gilbert, 2005). In other words, inertia has two components. Firstly, there is a motivational component, which is related to the reasons for undertaking changes. Secondly, there is a procedural component, which relates to the courses of action for dealing with perceived threats, which can lead the company to perform different activities without routines (Johnson, 1988). It is one thing to acquire the required resources to confront the need for change, and quite another to develop new routines for the organization to function in a different manner. The reaction to the threat may be more or less rapid, in the form of resource acquisition, but the contribution of these new resources in the form of results, requires the development of new routines, which require time and maturity within the organization.
Gilbert (2005) suggests that overcoming resource inertia can increase routine inertia, and vice versa. Routine inertia is aggravated by the response to the perception of threats, which implies the contraction of authority, the reduction of experimentation and concentration on available resources which are derived from overcoming resource inertia.
Access to external resources, autonomy of business areas and a focus on the detection of opportunities all help overcome routine inertia and reinforce change processes. However, if an external opening does not exist, the rigidity of routines can become consolidated and perpetuated. In this sense, the incorporation of new knowledge, through the integration of new people into the organization, facilitates overcoming inertias. Thus, in the case of family business, the generational replacement which implies the incorporation of people from the next generation should favor the renewal of the company (Cabrera-Suárez et al., 2001, 2018).
Barriers according to König, Kammerlander and Enders (2013)
König, Kammerlander and Enders (2013) analyzed the effect of family influence on the adoption of technological changes by reviewing the literature on obstacles to change. König et al. (2013: 422) highlight the role of five barriers identified in the literature:
— Formalization, which refers to the degree to which an organization has standardized its processes for detection, interpretation and response to environmental changes. Excessive rigidity in the formalization of these processes can reduce the response capacity of the organization, as well an underestimation of the need for innovation. What is more, the long-term orientation of family business leads to assessing possible innovations in the future. This helps avoid short-term perspectives, which can lead to the detection of changes not being immediate.
— Dependence on resources from external capital providers. It is in the interest of family owners to reduce this dependency, prioritizing long-term orientation of the family business as opposed to the more short-term perspective of non-family businesses.
— Political resistance. The changes to be implemented can be seen as a threat by some people or groups in the organization, who feel that their position may be at risk, and do their best to delay and even obstruct changes.
— Emotional ties to existing assets. The emotional attachment of company decision makers to some assets, whether tangible or intangible, as well as to people, can differ and impede renewal decision-making.
— Rigid mind sets. Mind sets influence whether new routines, which are necessary for the development of the changes to be implemented, are adopted earlier or later. Given that there is less participation of external opinions, strong family influence can increase the level of rigidity of mind sets in the family business.
According to the analysis made by König et al. (2013), family influence reduces the effect of the first three barriers by reducing the level of formalization in the company, the degree of dependence on external resources, and the political resistance of company members. Conversely, greater family influence would increase the decision makers’ attachment to existing assets in the company, as well as the level of rigidity of mind sets in the family business. This would leave less room for the incorporation of ideas from sectors outside the family.
The Rumelt Model (1995)
The inertia identification model developed by Rumelt (1995) considers five inertial forces, which operate sequentially. That is, overcoming the first inertia leads to addressing the second, and if this obstacle is resolved, the third force appears, and so on. Rumelt (1995) identifies five frictions or sources of inertia:
— Distorted perception, which consists of not correctly interpreting the signals that indicate the imminence of change nor the opportunity of the change;
— Lack of motivation for change, when advantages are not found for undertaking a change process;
— Lack of creative response, in the sense that the direction that should be taken is not clearly perceived;
— Political barriers, with regard to internal organizational problems that prevent or delay the implementation of change. This is usually due to the resistance of individuals or groups that consider their position threatened by the change;
— Collective action problems, refers to the lack of unity in actions, a lack of leadership to move the process forward.
According to the interpretation of inertias by Rumelt (1995), the first condition for starting a process of change is the perception of a need for it. You do not start a process of change in an organization if the need for it is not clearly perceived. If the signs indicating the imminence of a change are correctly interpreted, the next problem would be to identify the advantages of the change. This requires an understanding that what is to be gained from the change outweghs its inconveniences. For instance, the cannibalization of the firm´s own products due to the change. Another example could be sunk costs from not recovering investments not yet amortized, which are abandoned because of the new direction taken by the organization. When distorted perception, makes it difficult to identify the need for change is addressed, and its advantages are appreciated, the third obstacle may be that the appropriate path to follow is not found (Lorenzo and Núñez-Cacho, 2012). Being clear about the course to follow leads to facing the next source of inertia, which is the existence of internal political and organizational barriers that shape the process. These could be, for example, differences and rivalries between departments and organizational units (Núñez-Cacho, Lorenzo, Maqueira, and Minguela, 2017). Finally, once internal resistance is overcome, any lack of cohesion in the actions to be undertaken can also be a factor in the failure of the change process.
Correlation between the various interpretations of barriers to change
Lorenzo (2001) proposes the classification of Rumelt’s (1995) five inertial forces into two categories: perception inertias and action inertias. The former would capture what Rumelt refers to as distorted perception and lack of motivation for change in relation to the impossibility of initiating a process of change because its need nor its resulting advantages are not clearly perceived. Action inertias, on the other hand, refer to obstacles to carry the process of change forward, once its implementation has been decided. These would include a lack of creative response, internal organizational barriers and disjointed actions.
In a certain sense, parallels could be established between perception inertias and action inertias (Lorenzo, 2001) with Gilbert’s (2005) proposal to distinguish between inertias related with a lack of resources and routines. In Gilbert’s (2005) scheme, the lack of perception of the need for change is seen as a barrier because it begins with the absence of resources as the first inconvenience to be overcome. Additionally, it seems that it is taken for granted within the scheme, that the need to undertake a change is correctly interpreted.
Barriers related with a lack of resources to renew activities of the organization could correspond with the second and third forces of the Rumelt model (1995). This model refers to a lack of motivation for change and the absence of a creative response to guide a change process. Any lack of motivation for change could be related to the need to change the resource base in order to implement change. This would compel acceptance of sunk costs from previous investments that will not be fully recovered, and have consumed the available financial resources, thus preventing access to alternative sources of resources. The unwillingness to invest in the process of change would also be part of this group of inertias. Additionally, a lack of creative response, the difficulty in finding the right path to guide the organization could be linked to a lack of adequate resources to guide the process of change. Gilbert (2005) refers to this type of inertia as a lack of motivation to respond to changes.
The need to develop new routines in the organization to change the activities carried out could correspond to internal organizational barriers, especially regarding the disconnection of actions, which form the fourth and fifth forces of the Rumelt (1995) model. The inability to change ways of working and routines, as well as the logic that justifies investments, is considered by Gilbert (2005) as inertia related with the structure of the change response.
The five types of obstacles identified by König et al. (2013) are in line with other models of barriers to change. The existence of rigid mind sets can affect both the perception of the need for change and the development of routines for correct implementation of changes in the organization. Gilbert’s (2005) resource inertias may correspond with attachment to existing assets, a high degree of formalization, as well as dependence on external resources. Clearly, internal resistance from some sectors of the organization would have parallels with inertia routines. Table 1 summarizes the similarities found between inertia models analyzed.
Table 1. Correspondence between models of inertial forces
|
Lorenzo (2001) |
Rumelt (1995) |
Gilbert (2005) |
König et al. (2013) |
|
Perception inertias |
Distorted perception |
-- |
Rigid mental models |
|
Lack of motivation |
Resources inertias |
Emotional ties to assets |
|
|
Action inertias |
Lack of creative response |
Formalization |
|
|
Dependence on external resources |
|||
|
Organizational barriers |
Routine inertias |
Political resistance |
|
|
Distorted perception |
Rigid mind sets |
Source: Authors´ own
4. Specific barriers to change in the family business
The aim of this article is to analyze the barriers to change in family business. Although the family business model has certain characteristics that may favor change processes compared to non-family companies, some obstacles to change may also be more significant due to the influence of the family that controls the business.
As previously indicated, König, Kammerlander and Enders (2013) note that family influence reduces inertias. They call these inertias formalization, emotional ties with assets, and dependence on external resources. Hence, these obstacles are seen as being less relevant in the case of family businesses. Conversely, political barriers and rigid mind sets could have a greater negative effect in case of there being strong family influence. Lorenzo and Núñez-Cacho (2012) apply the Rumelt (1995) model to the family business model in order to interpret, within the family and the business, the obstacles to change.
Assuming that inertias to change could be divided into two main sections: those that affect the perception of the need for change and the availability of resources, and those related with the implementation of changes once investment has been committed. The effect of these obstacles to change in the specific case of family businesses is analyzed below.
Inertiae regarding perception of change and resources
When a family business does not correctly interpret the signs that indicate the need to undertake a change, or in the case of understanding that need, it does not perceive its advantages, for various reasons.
At times, the need to undertake changes may not be perceived due to the confusion of family and business issues, derived from the duality of roles (Tagiuri and Davis, 1996) played out by family members in the family business. At times, there is a priority of family interests over business interests, with a greater orientation towards socio-emotional variables (Gómez-Mejía et al., 2007), which reduces incentives to propose and develop proposals for renewal and change (Meek et al., 2010). Likewise, the double function of business and family roles can lead to communication problems that hinder the exchange of knowledge within the family (Zahra, Neubaum and Larrañeta, 2007).
Other possible sources of inertia specific to family business could be nepotism and paternalism. Nepotism carries the risk of promoting low-skilled people to positions of responsibility merely because they are family members (Kets de Vries, 1993). The perception of nepotism by external professionals significantly reduces the attractiveness of the family business as an organization to develop a professional career. This implies that there are less options for the integration of new ideas and opinions with the incorporation of people outside the family sphere, leading to difficulties to retain existing talent. Paternalism is more common in first-generation family businesses (Schein, 1983), and is materializes in excessive protection towards members of the family, to the extent that it interferes with decision-making and autonomy (Chirico and Nordqvist, 2010). Davis and Harveston (1988) use the term generational shadow to refer to the persistence of previous business models throughout the evolution of the company caused by excessive influence of the founder. This influence on family members can lead to a homogeneity of thought (Webb, Ketchen, and Ireland, 2010), resulting in a similar propensity in the face of environmental changes and an identical interpretation of the same signals (Miller and Le Breton -Miller, 2006).
The intention to maintain control of the family business could be at the origin of some problems of access to resources, especially financial. If the family only finances with family resources, the company cannot take advantage of all growth opportunities. However, this could be seen as more important than having external partners. As such, proposals that bring external sharing of decision making are dismissed, even thought, the company maintains the majority of votes. However, opening capital to external financing sources facilitates more innovation-oriented strategies regarding the ability to explore and acquire new knowledge and technologies (Pittino and Visintin, 2009; Tylecote and Visintin, 2007). Additionally, when the capital of the family business is distributed among numerous family members, it can favor the emergence of classic agency problems (values, objectives and vision). This can give rise to conflicts and the unalignment of interests for managers, family members and shareholders (Schulze et al., 2001).
Another specific factor of the family business, that can contribute towards inertia to change, relates to the complexity and uncertainty that succession processes imply (Cabrera-Suárez, 2011; Lorenzo and Núñez-Cacho, 2012). The willingness of management to carry out change processes can be affected, and, if there is a lack of a defined successor, or doubts about the continuity of the family business, the adoption of conservative attitudes towards innovation can occur. Proposals for change can be set aside until a more appropriate time, when uncertainties of the succession process have been clarified.
Inertia related with change implementation and routines
The difficulties of implementing a change processes in a family business can have various origins. Sometimes, despite recognizing the need to undertake changes, they are not initiated due to the difficulty of finding a suitable new course. This could stem from internal differences between departments or divisions of the company, or due to a lack of coordination and cohesion.
Some of these problems can originate from the characteristics of the generation leading the company. In this sense, a lack of adequate training and work experience beyond the family’s own company can negatively affect the creative capacity to respond to the demands of the environment (Miller and Le Breton-Miller, 2006), destroying entrepreneurial vision in the family business (Koellinger, 2008; Chirico and Norqvist, 2010). At other times, it may be that some family members are not interested in continuing the business, or do not want to acquire new knowledge (Le Breton-Miller et al., 2004). Furthermore, family conflicts and rivalries can lead to the organization’s older members decreasing their transmission of information to the next generation (Lansberg, 1999; Zahra et al., 2009). Bigliardi and Dormio (2009) indicate that the inexperience of the generation in power, or their lack of qualifications and knowledge, can lead to an inadequate strategic vision. Pittino and Visintin (2009) found that founders tend to be more innovation-oriented, adopting a more forward-looking and analytical strategy than second-generation and subsequent companies. Founders have greater formal and informal power to direct resources to the exploration of new projects (Zahra, 2005), while second and following generations may be more focused on preserving the family and business heritage (Eddleston, 2008; Ellington et al., 1996). Nonetheless, Craig and Moores (2006) argue that the family business can be more innovative in the generations following the first one.
Differences between different interest groups, represented by property, family and company (Tagiuri and Davis, 1996) can act as political barriers when making decisions. At times, when a new generation takes the lead in the family business and maintains the management team formed by the previous generation, there might be significant differences of opinion. Veteran managers may express firm resistance to changes due to misguided fidelity to the founder, as well as a lack of agreement with the new generation that assumes the decision making (Lorenzo and Núñez-Cacho, 2012).
In the transition between generations, the influence of the oldest generation can guide the company towards more conservative strategies (Ensley and Pearson, 2005). New leaders have to gain the trust of stakeholders, especially employees, which can cause a level of inactivity from the new leadership in this consolidation phase. This could last until they obtain the necessary support to appropriately implement change processes.
Conclusions
Theoretically, family businesses have a series of unique characteristics that should facilitate change and renewal processes over time. However, there is ample evidence that family businesses do not always overcome the processes of change, with the generational changeover being particularly delicate (Casillas, Díaz, Rus, and Vázquez, 2014). Consequently, it would be useful for family businesses to be able to identify the specific factors that could hinder change processes. Literature on strategic change provides previous studies on the barriers to change within and on family business, which have been reviewed in this article to identify shared elements. Gilbert (2005) and König, Kammerlander and Enders (2013) analyze the barriers to change in family business, while Rumelt (1995) presents a sequential model of inertial forces. The latter has been adapted to family business by Lorenzo and Núñez-Cacho (2012) in an attempt to identify the main obstacles to change arising from the specific characteristics of family businesses.
The barriers identified have been classified into two different groups. The first group contains barriers that affect the perception of the need to undertake changes and the availability of resources to face them. The second group includes barriers to implementation of changes within already consolidated organizations, where new routines are created to replace the existing ones. Detecting these inertias can make it easier for family businesses to overcome the obstacles that impede change and renewal of the family business, which is crucial for long-term continuity.
One of the features that influences the perception of inertias to change is the generation that is at the helm of the family business, which proposes different strategies to address the need for change (Pittino and Visintin, 2009). At times, the renewal drive of a new generation at the forefront conflicts with the influence of the previous generation. This is especially true in the case of the founder, where inertias persists in the form of entrenched routines that are more suitable to situations of the past than the present. The relationship between innovation, the generation at the helm and the life cycle of the family business has also been highlighted by Craig and Moores (2006).
The participation of interest groups with different approaches and aspirations, brought together in the model of the three circles of Tagiuri and Davis (1996), can favor the presence of political and organizational barriers that impede the development and implementation of renovation projects in the family business. Excessive family influence can diminish the consideration of ideas and proposals from outside the dominant family sphere, which can compensate, in some cases, deficiencies in work experience outside the family business, or in the qualification of family managers. The intention of the proprietary family to keep the property in the hands of the family, coupled with a reluctance to allow the entrance of foreign capital, could lead to a lack of motivation for change. Also, a reluctance to change may stem from fear of upsetting the family balance, which in turn is conditioned by the family’s non-financial goals. In this sense, the weight of the past and the history of the family business are reflected in barriers to change.
As we have seen, the family status of the company can be a source of specific barriers to change. A possible extension of this work could be the analysis of the specific characteristics of the family business that facilitate change processes, with the aim of establishing a possible explanatory model. In this vein, some studies have analyzed tradition as the basis for innovation in family businesses (De Massis et al., 2016) as a specific characteristic of family businesses that can, in actual fact, be a source of advantage in the face of change processes.
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