Management Capabilities and Environmental Characteristics in the Critical Operational Phase of Entrepreneurship—A Comparison of Finnish Family and Nonfamily Firms

Abstract

This study seeks to clarify which factors associated with the start-up and critical operational phase of family and nonfamily firms influence the ability of those firms to survive over the critical first three years of their existence. In search of potential differences in the structural characteristics between these two types of firms, this study compares owners of Finnish family and nonfamily businesses in motives for founding the firm, characteristics of the local environment, changes in strategic factors, changes in networks, and differences in style of management. The findings revealed marked differences in individuals’ motives for founding a business: for family business owners, the presence of negative situational factors were the more important motivating and precipitating factors in creating a new business. With respect to style of management, in a typical family enterprise, ownership, management, and family are combined in a single entity. In the surviving nonfamily firms, entrepreneurial teams were found to be important in bringing the skills needed for the strategy-development process. Finally, family firms were most commonly located in the capital area, although some were also found in rural areas, whereas nonfamily firms were most commonly found in service center regions.