November 5, 2008
November 5, 2008
From Oregon State University College of Business,
CORVALLIS, Ore. -A new study by Oregon State University researchers shows that promoting the fact that the business is a “family” business positively influences customer purchasing decisions. Family businesses are important to the United States economy, comprising an estimated 80 percent of the 15 million businesses in the U.S. They contribute to more than 50 percent of America’s gross domestic product, and generate 78 percent of new jobs in the economy.
The study was published in the most recent issue of the Journal of Small Business Management, a leading scholarly journal for entrepreneurship.
Clay Dibrell, an associate professor of management in the College of Business at OSU, along with Justin Craig and Peter S. Davis, investigated whether family firms benefit from initiatives to develop and promote the family aspects of the company as a basis for competitive advantage, and thereby, enhance performance. Craig has a courtesy appointment with OSU and Davis is a professor at the University of North Carolina-Charlotte.
A survey of leaders drawn from 399 family businesses nationwide provided information regarding relationships among the extent of their efforts to promote their company’s family-based brand identity, the extent to which they aligned their business with the needs of the customer, and company growth and profitability.
“There is a positive relationship when businesses brand themselves as family businesses to financial performance,” Dibrell said.
Dibrell said that companies such as SC Johnson and E.&J. Gallo Winery, as well as Columbia Sportswear, have been successful at leveraging family history to create an identity that appeals to consumers.
“When people think family business, they think quality, wholesome, continuity,” he said. “You feel that you have a connection to this business because you also have a family. It’s something you feel you can trust.”
The study showed that family businesses influence their target market purchase decisions by reminding them that there is a family behind the business and not a faceless corporate entity. In essence, there is significant added value and competitive advantage associated with promoting family involvement to customers. The authors suggest that this finding is linked to a family business’ long-term strategic horizon, the high priority family businesses place on community involvement, and the reputational capital attributed to the family name – all of which translates to a perception of greater value to the customer.
“Our study offers practitioners several relevant insights into how a family business can elevate financial performance,” the authors noted. “Ultimately, as the backbone of most economies throughout the world, family businesses contribute to the economic and social fabric of their communities. Family businesses are proud of what they do, and what they contribute.
“It is our belief, which is supported by our findings, that they should communicate this pride to their customers, as we have shown it does produce competitive advantages.”
The full text of the study is at: http://www3.interscience.wiley.com/cgi-bin/fulltext/120083728/HTMLSTART
Editors: A photo of Dibrell can be found at: http://oregonstate.edu/dept/ncs/photos/claydibrell.jpg