Embracing family business qualities to advance social enterprises

Social enterprises exist to catalyse positive social change, but often face challenges due to limited resources, conflicting demands, and a lack of legitimacy.

A new study by researchers from Monash University and the University of Sheffield, published in the Journal of Business Ethics, uncovers a new way for social enterprises to tackle some of these challenges.

The research, based on an in-depth case study with a Malaysian social enterprise, suggests social enterprises can tackle some of these challenges by behaving more like family businesses and embracing the qualities of the family.

What’s unique about family businesses?

Family businesses are an engine for growth and job creation because they benefit from the qualities of the family. Indeed, some of the biggest businesses globally are family businesses, such as Tata Group and ALDI Group.

Family businesses, where family members influence the management of the organisation, embrace the norms, values, and goals of the family in making decisions about the organisation while fulfilling family interests.

Such shared norms and goals are beneficial for family businesses, because they promote citizenship behaviours, such as helping others and proactively taking on additional roles, even among non-family members.

Despite the benefits of family qualities in family businesses, there are also risks. Normative pressure and maintaining harmonious family relationships can impede innovation by promoting groupthink, reducing external and new sources of information, avoiding risks, and tolerating lower financial returns.

How social enterprises can embrace family qualities

The research suggests there are four mutually-reinforcing ways social enterprises can embrace the qualities of the family – a sense of belonging, shared values, affective attachment, and norms of care.

Dr Wee Chan Au, a lecturer in management at the Monash Business School, was part of the study, and said it wasn’t within the research team’s expectations to witness family qualities in the social enterprise. For example, it wasn’t a family-owned firm, yet terms such as “brother”, “sister”, and “family” are widely used when the members talk to and about each other.

“This motivated us to dig deeper and understand more about this interesting phenomenon. We wanted to know if the ‘family element’ can do good or harm a social enterprise without kinship ties,” says Dr Au.

The study found that strong initial values attracted and retained like-minded individuals, which further amplified the importance of the values.

These shared values facilitated a sense of belonging and a commitment to the organisation’s longevity. Together, these shared values and sense of belonging also contributed to strong attachment, which meant high levels of trust and quality relationships within the organisation.

Overall, these qualities resulted in the creation of norms of care whereby individuals inside the organisation continuously supported each other in ways extending beyond their roles.

“We've always got each other’s back” was one statement employees repeated to reflect their strong ties and caring norms.

“Such family qualities are instrumental for social enterprises operating in competitive environments with limited resources,” Dr Au says.

“These qualities generate additional resources for the organisation. They mean that social enterprises can tackle difficult situations, can innovate, and can meet the needs of clients.”

When employees feel like they’re being cared for and supported, they’re likely to commit to their work whole-heartedly – just one example of how family qualities bring about resources to social enterprises.

What are the potential risks?

Dr Au stresses that social enterprises can benefit from embracing family qualities to generate more resources. However, these organisations should also be mindful of the risks.

For example, the emotional demands to care for everyone may limit the ability to make strategic decisions to protect and care for the organisation.

In addition, individuals may also feel overwhelmed to provide intense emotional and psychological support to their peers and subordinates on a regular basis, beyond the usual work demands. This can potentially lead to burnout and introduce resource challenges for social enterprises.

Overall, this new research suggests a way for social enterprises to tackle the challenges they face by embracing family qualities; however, this isn’t a panacea, and introduces challenges.