Paper presented at RENT XX – Conference on Research in Entrepreneurship and Small Business. Brussels, Belgium, November, 2006.
PSYCHOLOGICAL OWNERSHIP AND FAMILY BUSINESSES – IDENTIFYING THE COMMON GROUND THROUGH DISCRIMINANT ANALYSIS Markku Ikävalko1, Timo Pihkala and Iiro Jussila Lappeenranta University of Technology, Finland
Summary This paper focuses on the relationship between the theory of psychological ownership and the concept of family business. The purpose of this paper is to study the “family business” dimension of small business owner-managers’ ownership profiles. The research is conducted by studying the ownership profiles of entrepreneurs and the possible connection of the ownership profiles to respondents’ perception of the familyness of their firms, thus partly exploring the limitations and possibilities of using subjective individual perspective in family business research. In this way we also aim to clarify the no-mans-land, the so called grey area between family businesses and nonfamily businesses. The results of this research also indicate that the different dimensions of psychological ownership can be clearly identified in the sample of small business owners and that there is a family business like continuity dimension within the ownership profiles. Keywords: Family businesses, psychological ownership, collectivism, individualism
1. Introduction Family businesses seem to offer a sustaining challenge for researchers. One of the initial reasons for this may be the fact that family businesses form a clear and differentiating pattern in the system of business ownership at macroeconomic level. Family seems to be the central unit in concentrating ownership to one controlling group in, for example, most European countries (Brundin, Melin & Samuelsson, 2005). In addition, as in many countries families are controlling a significant portion of listed companies, it could be stated that a family system has some kind of ‘gravity’ in compressing and maintaining ownership. One could claim that a family is the most common form of collective groups, and therefore it is not surprising that families also act as important owners in business field. When “an owner” is often regarded as an individual person, in family business the family is often seen as the owner (e.g. Tagiuri & Davis, 1996; Gersick, Lansberg, Desjardins, & Dunn, 1999). According to Chua, Chrisman, and Sharma (1999), it seems to be rather generally accepted that a family’s involvement in the business makes family business unique. A reason for the increasing 1
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interest on family firm ownership seems to be the desire to understand and theoretically master the social dimension - the ‘familyness’ - of family business (Habbershon, Williams, & MacMillan, 2003; Kets de Vries, 1996). The role of ownership is one of the key concepts also in studies on succession (Bird, Welsch, Astrachan & Pistrui, 2002; Thomas, 2002; Karlsson & Koiranen, 2003). Interestingly, there is still a lot of research needed on the way to have some kind of agreement of family business definition. Westhead and Cowling (1998) have reviewed and analysed the definitions of family business used in previous research. Sometimes it seems rather unproblematic to define a firm that definitely is a family business and a firm that definitely is not. However, the so called ‘grey areas’ between family businesses and non-family business highlight the existing challenges in defining family business. Westhead and Cowling (1998), for example, found that the proportion of family businesses in the UK varied dramatically depending on the definitions used in studies. This illustrates well the unfortunate outcomes of the wide selection on different definitions of family businesses. In this paper we start from the notion that despite a family firm is a collective structure a lot of research is conducted from a certain individualistic point of view. For example in surveys there is usually one person representing the whole firm (Thomas, 2002). Sometimes also the key person’s individual and subjective perception of the firm has been utilized to determine whether or not an enterprise is a family firm (see Westhead & Cowling, 1998). The condition of “perceived to be a family business” is very challenging. It is a rather uncomplicated and straightforward variable in empirical research, but frequently criticized in theoretical writings (Chrisman, Chua, & Sharma, 2003; Chua, Chrisman & Sharma, 1999). This condition basically contains a person’s definition of a family business and the judgment whether his/her firm is a family business and what does it mean to be a family business. There is no definite and positive structural link between collective family involvement in the business and that personal perception to be a family business. The three circle model (Tagiuri & Davis, 1996) has addressed the interrelatedness of family, business, and ownership in family firms. Word “ownership” has generally referred to the economic-institutional dimension of ownership (Westhead & Cowling, 1998; Chua, Chrisman & Sharma, 1999). Recently, however, it has come increasingly obvious that the social psychological aspects of ownership play an important and central role in family businesses. The basic idea of a family business being “a business owned by a family” both illustrates and conceals the essence of familyness in family firms. That is, there is the specific social group - the family - that collectively owns the firm (Habbershon, Williams, & MacMillan, 2003; Kets de Vries, 1996). Yet, it should be noticed that a family consists of individual family members who, through their being and social action, construct the family together. A family, as a single undivided unit, is only the metaphor for describing this social group (cf. Habbershon, Williams, & MacMillan, 2003; Thomas, 2002).
2. Psychological ownership Some fifteen years ago, Etzioni (1991) stated that ownership is a “dual creation, part attitude, part object, part in mind, part real” and thus revealed that it should be studied as a psychological phenomenon also when economic behaviour is considered. Psychological ownership deals with the relation between individual human beings and ownable objects, specifically between individual employees and their organizations. It is important to notice that psychological ownership does not necessitate legal ownership; so even nonowners may consider themselves as (psychological) owners. However there is not yet a single and comprehensive definition or theory of psychological ownership that would illustrate and explain the whole essence of psychological ownership, and especially in relation to other concepts of individual-organization relationship (Pierce, Kostova & Dirks 2001, Pierce, O’Driscoll and Coghlan 2005). The roots of psychological ownership as a research paradigm emerge from the studies of self and nonself region in psychology (e.g. James 1890). The concept of self is strongly linked to the surrounding environment of the individual and to the idea of “mine” (e.g. Sartre, 1973; Dittmar 1992). Psychological processes have been studied in e.g. Furbys studies on the early development of possessive behaviour (1979, 1980), Beggan (1992) and Beggan and Brown (1994) studies on association and Rudmins (1994) study on the meaning on ownership to individual. Belk (1988) studied the concept of extended self in the case of consumer behaviour and Dittmar (1992) brought a wider social psychological perspective to the same subject. Employee ownership has been studied by several scholars (e.g. Buchko, 1992; Bartkus, 1997; Gample, Culpepper and Blubaugh, 2002). Frohlich, Codard, Oppenheimer and Starke (1998) made a comparison between employee- and conventionally owned firms. There are also a growing amount of studies focusing on psychological ownership in organizations. They examine the content and role of psychological ownership in a working place, its positive and negative consequences. There are also notable efforts in theorising psychological ownership (e.g. Pierce, Rubenfeld and Morgan, 1991; VandeWalle, Van Dyne, Kostova, 1995; Dirks, Cumming and Pierce, 1996; Pierce, Kostova and Dirks, 2001, 2003). Pierce, Kostova and Dirks proposed (2001) a frame for a theory of psychological ownership. First they defined the roots of psychological ownership, e.g. the reasons why psychological ownership exist. They summarized the previous research on the subject by stating that psychological ownership emerges because it satisfies both generic and socially generated motives of individual human beings. More specifically these motives are as follows: 1) Efficacy and effectance. This means that it is important for an individual to be in control. The possibility of being in control, being able to do something in regard to the environment and to be able to gain the desirable outcome of actions are important factors in creating psychological ownership. 2) Self-identity. People use ownership as for the purpose of defining, expressing their self-identity to others. 3) Having a place. This motive arises from the need to have a certain own area, “a home”. This includes both actual places and objects. This familiar “area“ of known targets becomes a part of the objects identity.
Secondly Pierce, Kostova and Dirks (2001) defined the routes through which the individual comes to experience ownership. These separately examined but potentially interrelated routes are: 1) Controlling the target. Being able to control an object gives rise to feelings of ownership towards that object and objects that can be controlled become parts of person himself. Objects play the main role in the concept of extended self. 2) Coming intimately to know the target. The more information and the better knowledge an individual has over an object, the deeper the relation between the self and the object and, hence, the stronger the feeling of ownership toward it. 3) Investing self into the target. The investment of an individual’s energy, time, effort, and attention into objects causes the self to become one with the object and develop feelings of psychological ownership toward that object. The literature of small and medium sized enterprises is filled with notions of ownermanagers mentally connecting themselves to the firm; the firm is very important for the owner-manager and a central part of his life and self-identity. In this paper psychological ownership refers to the subject–object relation comprehended by the small business owner-manager. In the context of SMEs, ownership has been rather neglected a concept. The firm is both ends and means; it is partially the result of action, partially a target of actions and also an instrument to reach other targets. Owner-manager's mental connection to the firm is very unique and therefore it could be stated that firms and owner-managers are not transferable. Each owner-manager has his own way to look at his firm. Despite the fact that the theory of psychological ownership in organizations (Pierce et al., 1991; 2001; 2003) includes a collective dimension, a clear distinction between that and the individual dimension of ownership feelings was made only recently. Jussila (2006), introducing a framework for analysing managers’ self-serving and cooperative behaviours, proposed that psychological ownership can be individual-based (that is the feelings that an organization or an organizational target is “MINE”) and/or collectivebased (that is the feeling that an organization an organizational target is OURS). Jussila (2006), building on literature on individualism and collectivism (Triandis, 1995; Parsons & Shills, 1951), and treating individualism-collectivism as a individual difference variable, proposed that there is a positive relationship between individualism and individual-based psychological ownership, as well as, collectivism and collective-based psychological ownership 4. Bringing psychological ownership into SME´s – the contextual model It should be noticed, that Pierce et al (2001) developed their theory for larger organizations and bringing their concepts into SME- context is necessarily somewhat compromising the basic premises of the theory. First of all, the organization is assumed to be there before the employee arrives and the whole setting has been treated as a closed system. In the case of an SME owner-manager the situation is quite opposite: the entrepreneur come in and creates the organization at the first place. Thus the object of ownership is by nature the result of the owner’s action and the owner is likely to know it intimately. However, this situation is likely to prevail only as long as the company stays very small. Secondly, the theory is designed to describe the psychological ownership
experienced by the employee not owning the target in jurisdictional sense. Translated into SME owner-manager research, also this prerequisite needs further consideration. The owner-manager is at the same time the lawful owner and he may feel psychological ownership to the company that he owns. Already in his classical paper Churchill (1983) suggested that the separation between the entrepreneur’s and the company’s goals is needed to make the company growth possible in the next phases. Here, it is important to separate between the owner and his company, even if the distinction in many cases might not be obvious. Recently, we have seen the notion of ownership as a complex multidimensional construct being joined by several researchers of entrepreneurship and family business (Ikävalko, 2000; Mattila & Ikävalko, 2003; Brundin, Melin, & Samuelsson, 2005; Hall, 2005; Ikävalko, Jumpponen, Mirola & Ikävalko, 2005; Ikävalko & Pihkala, 2005; Koiranen, 2006; Hall & Koiranen, 2006). Mattila and Ikävalko (2003) outlined the concept of ownership in a professional organization, basing their argumentation on the psychology of ownership literature (for example Pierce et al., 1991; 2001; Rudmin, 1994; Beggan & Brown, 1994; Dittmar, 1992; Etzioni, 1991) and the philosophic works of Grunebaum (1987) and Sartre (1973). They identified four dimensions of ownership; 1) social, 2) legal, 3) ‘real’, and 4) psychological. Building on the works of Mattila and Ikävalko (2003) and Pierce et al. (2001), the dimensions of ownership have been depicted and the significance of psychological ownership in family firms has been pointed out in several recent works on family business (Brundin, Melin, & Samuelsson, 2005; Hall, 2005; Koiranen, 2006; Hall & Koiranen, 2006). However, the distinction between individual and collective psychological ownership has not gained much interest yet (Ikävalko & Jussila, 2006). In any case, the prerequisites of experiencing psychological ownership prevail as the owner-manager has control over the target, has come intimately to know the target and has invested himself into the target, at least in the start-ups phase of the organization. In this study the social and material “playground” of the owner in terms of psychological ownership has been broadened also to the outside world of the company. Thus the relativity of knowing, controlling or investing self into the company becomes a measurable variable. But as the original theory by Pierce, Kostova and Dirks (2001) was embedded into a closed kind of system, in the case of small firm owner-managers, psychological ownership is potentially operationalized when we also take the context into account. The firm does not exist in a contextual vacuum. The basic model of ownership can be described as follows: the owner (subject), the ownable object (object) and the relationship between them (ownership). Ontologically legal ownership has often been regarded as a form of social reality and structures, but there are some rational bases to make the distinction when operationalizing the research. This basic model of ownership can be expanded into a contextual one by increasing the number of subjects, objects and relationships between them. That is there are more than one subject as potential owner, more than one object as potentially ownable object and respectively more potential relationships between all the parties (Mattila & Ikävalko, 2003; Ikävalko, Jumpponen, Mirola & Ikävalko, 2005; Ikävalko & Pihkala, 2005). As a
picture it can be illustrated as follows: Subject n
Object n
Subject 2
Object 2
Subject 1
Object 1
Social
Action
Objective
dimension
dimension
dimension
Figure 1 - the contextual setting of psychological ownership
This setting also enables the researcher to operationalize the contextuality in psychological ownership in the case of owner-managers. As the original theory frame by Pierce, Kostova and Dirks (2001) operates with the organization as a closed system, this contextual setting locates the existence of an ownership relationship to its environment. Getting to know, controlling and investing self into the target get the meaning and importance as themselves but also in regard to environment. This setting also implies that ownership has social dimension, action/power dimension and subjective dimension. Even if the looks of the contextual setting of psychological ownership would lead to expectation of never ending relativism where “everything depends” the setting and comparative nature of it actually provides tools to explore the most important elements and relationship linked to owner /object relationship from the owner-managers point of view. 5. Empirical research This paper introduces some preliminary results of a survey among 150 small business owners in South-East Finland. The questionnaire was formed basing on the theoretical perspectives discussed above. The survey was conducted together with the local small business organisation, with which also the questionnaire was thoroughly discussed to improve the validity of the measures. The questionnaire was out to 700 small business managers, of whom 150 succeeded in replying, making thus the response rate of 20%. In the table below the respondent characteristics as well as the company profiles are depicted. The respondents are relatively old, a majority belonging to the group 50 – 64 years. The number of young entrepreneurs seems to be remarkably low, with only four respondents. Correspondingly, the respondents show extensive experience in managing their companies, with 91 respondents having more than 10 years experience. Majority or roughly 55% of the respondents are entrepreneurs in the sense that they have started their company themselves. The second largest group were those owner-managers, who have bought their
business and the data includes only 22 of those owner-managers that have inherited their company. A rather large share of the owner-managers is exploiting their experience also in other businesses – a total of 38% of the respondents reported owning more than one company. Table 1 - Respondent and company profiles
n Total Age, years
Experience as an owner, years
Route to ownership
Owns also other companies
The age of the company, years
Company turnover, thousand euros
No of employees
%
150
100
16 – 30
4
2,7%
31 – 50
56
38,1%
50 – 64
87
59,2%
0-9
52
36,4%
10-19
62
43,3%
20- 40
29
20,3%
founded
79
54,5%
Inherited
22
14,7%
Bought
35
23,3%
Promoted
4
2,7%
Other
5
3,3%
Yes
58
38%
No
88
58,8%
3 – 10
26
17,6%
10 – 30
80
54%
31-64
31
19,6%
65- 100
13
8,8%
0 – 299
17
11,8%
300 – 599
28
18,9%
600 – 1199
35
23,6%
1200 – 2499
23
15,5%
2500 -
41
27,7%
0–9
67
46,2%
10 – 49
66
45,5%
50- 200
12
8,3%
10000
Correspondingly with the experience of their owners, the companies are rather old. They are, however, characteristically small and medium sized businesses in terms of the
number of employees and the amount of turnover. More than two thirds of the companies involved employ less than 30 people and have less than 2,5 million euros in turnover. 6. Results The descriptive statistics of the psychological ownership variables are depicted below. Table 2 suggests that the instrumental values of the company seem to rate highest in the analysis. Three of the first items all are related to goals or achievements that having the company could bring outside the company. In a way, the attitude seems rather straightforward and simple, and has close resemblance to that of an employed person working to raise the money. Interestingly, the items that most reflect the egocentric perspective to ownership seem to rate lowest in the analysis. The item ‘the company has great mental value for me’ received the lowest value and this suggests that for the respondents ownership is no love affair, nor do the owner-managers think of themselves as omnipotent about their company and those things that need to be done there. Table 2 - The descriptive statistics of ownership variables, range 1–7 (n 136)
mean
sd.
Company success helps me fulfil other dreams in life
6,01
1,033
Family respects me because of the company
5,61
1,239
Others are interested of the success
5,37
1,320
I could easily be employed outside the company
5,16
1,613
Proud about the company
5,12
1,465
I could sell my company
5,08
2,049
My behaviour affects the way others think of me
5,02
1,683
I use the accountant as a partner in decision making
4,89
1,934
My owner-status is important to me
4,87
1,759
People know me because of owning the company
4,76
1,743
The company as the largest effort
4,70
1,945
I have the best knowledge of people
4,49
1,831
Valuable things in the company to pass on
4,24
1,931
Duty to the next generation
3,53
2,062
No influence of outsiders
3,34
1,708
I have the best knowledge of equipment
3,25
1,853
I have the best knowledge of work
3,16
1,836
The company has great mental value to me
2,56
1,548
To understand the structuring of psychological ownership more thoroughly, we ran a principal components analysis with Varimax-rotation to uncover the underlying common nominators between the measures. The analysis produced six factors above eigenvalue of 1, and managed to capture about 65% of the total variance. Table 3 - The principal components analysis of ownership
1
2
3
4
5
6
comm.
I have the best knowledge of work
,84
,725
I have the best knowledge of people
,78
,626
I have the best knowledge of equipment
,75
,665
No influence of outsiders
,63
,473
Duty to the next generation
,87
,810
Valuable things in the company to pass on
,83
,765
The company has great mental value to me
,65
,593
The company as the largest effort
,80
,695
Others are interested of the success
,68
,553
Proud about the company
,67
,719
People know me because of owning the company
,57
,538
My behaviour affects the way others think of me
,76
,630
My owner-status is important to me
,70
,634
I could easily be employed outside the company
,53
,514
I could sell my company
,79
,735
I use the accountant as a partner in decisionmaking
,78
,679
Company success helps me fulfil other dreams in life
,84
,742
Family respects me because of the company
,62
,563
Eigenvalue
3,99
2,30
1,61
1,41
1,28
1,07
Percent
22,17 12,78 8,94
7,84
7,12
5,92
Cumulative
22,17 34,95 43,86 51,73 58,85 64,77
KMO measure of sampling adequacy .710 (results exceeding .50 acceptable)
The analysis above in table 6 brings out a wide array of interesting insights of small business managers’ ownership structures. The first factor (Cronbach alpha ,775) received four main loadings: 1 No one knows all the operational and managerial work in the company as good as I do 2 No one knows the people of the company (department) as good as I do 3 No one knows the equipment of the company as good as I do
4
The influence of the other people to company is very small
Together they reflect, first of all, the extended self linked to the things taking place in the company. However, the more interesting thing is that the factor is clearly about the internal logics of the company operations, that is, the targets of knowing are within the company. The company is a place that someone could know best. This component comes very close to the findings of Pierce, Kostova and Dirks, who labeled one motivation behind psychological ownership as having a place. These certain objects of owning, in psychological sense, are extensions of owner’s personality. The second factor (Cronbach alpha ,754) received three loadings: 1 It is my duty to pass over the company to the next generation 2 There are a lot of things in the company that I want to pass on to the next generation 3 The location and the equipment of the company have great mental value to me These items suggest responsibility to others, broader control and longer perspective of time. As in the first factor, also in this component the things take place inside the company. The manager’s job consists of taking care of things to deliver them to the next generation. The role of making money is in secondary place, the main target is to continue of having the company. In the terms of Pierce, Kostova and Dirks, the factor is clearly an element of having control over the company.
1 2 3 4
The third factor (Cronbach alpha ,710) captured four main loadings: The company is the biggest effort of my life so far I have noticed that people in general are very interested in the success on my firm I am very proud of everything in my company People know me only because I am a business owner (manager)
Together these issues reflect the success and its results as higher outside social status in the society, in and around the company. The factor relates clearly to the high need for achievement and the way, in which the small business manager enjoys good performance. In some sense this factor could be seen as showing off. Following Pierce, Kostova and Dirks, the factor is related to the dimension of self-identity. The manager has invested himself into the company and a major output of the success can be seen as an improved personal achievement. In the fourth factor (Cronbach alpha ,510), three main loadings were identified. 1 My way of managing has influence on what other people think about me 2 My social status as an owner (manager) is very important for me 3 I could easily find a job for myself outside the company This factor is mostly about power and social status within the company. The manager is there to be the leader and he is aware of the influence he has on other people. An interesting thing here is that the dimension of free will is involved – the manager is an owner at will, he thinks he could find a job outside the company should he wants to. It is also interesting that despite the task of leading and managing takes place within the
company the importance of this social role is not necessarily bounded to a specific company and as such this element of psychological ownership could be taken as a job as leader. The fifth factor reflects the independence and ability to do anything to the company at will. The factor received two main loadings; 1 I could easily sell the company for a proper price 2 The accountant is a very valuable partner for me in decision making Together these factors reflect the owner-manager’s responsibility only to himself. The factor includes no references to the local social system, and the focus is on increasing one’s earning possibilities. As a manager’s job the posture has close resemblance to the one of an investor. The interpretation of ownership is ‘Having the company in order to make money’. This dimension of psychological ownership seems to represent the opposite of the first factor. The firm is important for its monetary value and potentiality, not as an elementary part of individual’s entrepreneurial history. Financial matters are more familiar to the owner than tasks and objects within the company. Finally, the sixth factor received two main loadings: 1 Success of my firm enables me to fulfill my other dreams in the life 2 My family respects me because of my working results The factor is clearly about success that is related to ownership and hard work. In terms of ownership, the company is a tool of receiving those things that the manager wants – the other dreams in life and the family respect. Thus, the perspective seems to be outward from the company – the world where the manager would like to spend time is outside the company. Obviously owner’s “extended self” is more based on matters outside the company.
Status within the company
Taking care
Extended self
Social dimension ----------------- Action dimension -------------Object dimension Higher outside social status
Freedom
Tool of receiving things
Figure 2 - The factor analysis results and three dimension of psychological ownership
A closer look at the results of the analysis suggests that the three dimensions of ownership (social, action, and object) can be identified in the factor structure. (See figure 2.) Thus, the social dimension was captured with two factors reflecting the social status within and outside the company. The action dimension was represented with two
interesting patterns, the factors of 'taking care' and personal freedom over the company. Finally, the extended self- and the tool of receiving things -factors highlight the object dimension of psychological ownership. Next, the analysis was continued by comparing the family businesses with non-family businesses in respect with the sum measures of the factor analysis. The results are depicted in table 4. The analysis suggests that family firms and non-family firms do not behave homogeneously in regard to psychological ownership. In contrary, it is notable, that all but the factor of independence score higher among the family businesses. In addition, the ANOVA-test suggests that the scores of the factor of 'taking care' are significantly higher than in non-family firms. In a similar vein, for family businesses the company is more likely to be a tool for other goals in life than for non-family businesses. The familyness seemed to produce also other differences in the mean scores between the family firms and the non-family firms. The scores of extended self seem to be higher for family firms than for non-family firms, and even if only moderately significant, also the social status receives higher means among the family businesses. The two other factors, status within the company and independence, do not differ statistically between family businesses and non-family businesses. Overall, these findings are consistent with the current thinking over family businesses.
Table 4 - ANOVA analysis of ownership scales within family firms and non-family firms
Scale
Family f.
Non-family
F
sig.
Extended self
3,73
3,22
4,45
,037
Taking care
3,74
2,89
10,86
,001
Social status
5,12
4,73
3,57
,061
Status in firm
5,09
4,90
,807
,371
Independence
4,90
5,13
,66
,419
Tool for goals
5,95
5,53
6,93
,009
As we suggested earlier, the individual approach to family business seems to take the owner-manager's perception on the familyness of their business as a generalisable fact. We continue our analysis by studying the relationship between psychological ownership and the owner-managers' subjective perceptions of the familyness of their companies. Thus, the results of a basic solution of the stepwise discriminant analysis with a constant are depicted in tables 5 and 6.
Table 5 - Stepwise discriminant analysis
Classification F to
Wilks’
function coefficient
Subscale
remove
Lambda
sig.
Family firm Non-family.
Step 1: taking care
9,80
,934
,002
1,203
,863
Step 2: tool for goals
6,62
,891
,000
7,628
7,085
-25,78
-21,53
(constant)
The results in table 5 suggest that only two factors of psychological ownership are able to predict the familyness of a business. The factors 'taking care' and 'tool for goals' seem to have predictive value for identifying family businesses. Thus, the responsibility associated with the ownership in terms of a duty to the next generation as well as the mental value of work the owner-manager has done for his/her business seem to characterize the operational predictor of the familyness of a company. In addition, the company's instrumental value for the owner-manager in terms of gaining opportunities to enjoy other goals and gaining the family's respect work as well as predictors of familyness. On the other hand, interestingly, the rest of the factors failed to distinguish between family firms and non-family firms. This finding suggests that, for example, the company's character of the extended self - even if it is an important dimension of psychological ownership - is not something that characterizes family businesses, nor are the factors relating to the social dimension.
Table 6 - Classification results from discrimination analysis
Predicted group Group
no. of cases
family firm
non-family firm
Family firm
96
63 (65%)
33 (34%)
Non-Family firm
50
18 (35%)
32 (64%)
Percent of cases correctly classified 65%
Even if the discriminant analysis should suggest that two factors are statistically able to distinguish between family firms and non-family firms, the actual classification results are needed to see, if the classification tool would make a difference. In this case, the tool should classify the company better than 50% to go beyond the basic guessing or flipping the coin. As table 6 suggests, these two factors can together classify 65% of the cases correctly, that is, two thirds of the cases could be identified as family firms or nonfamily-firms by studying directly their psychological ownership profile of 'taking care' and 'tool for goals'.
6. Conclusions One reason for the increasing interest on family firm ownership has been the desire to understand and theoretically master the social dimension - the ‘familyness’ - of family business. In this paper we have presented the dimensions of psychological ownership and suggested that the phenomenon could be divided into three strands: the social, the action and the object dimension. The analysis of the owner-managers' psychological ownership profiles and the discriminant analysis between family firms and non-family firms suggest that as such, the social dimension is not directly related to the character of family business. Instead, the action dimension and the object dimension become important elements in distinguishing family businesses (see figure 3).
(Status within the company)
Taking care
(Extended self)
(Social dimension)----------------- Action dimension -------------Object dimension (Higher outside social status)
(Freedom)
Tool of receiving things
Figure 3 - The dimensions of psychological ownership and family business characteristics Our study shows, that the subjective perceptions of owner-managers perception of the familyness of the businesses are not completely groundless. However, due to the character of family business is a collective per se, it should be studied more as such. In that sense, our measure of psychological ownership seems to capture some important insights of the family-character but it should be nevertheless developed further to meet the challenge of collective psychological ownership. In overall, our study has a number of significant implications. First of all, the ANOVA-analysis suggests that almost all dimensions of psychological ownership are stronger loaded among the family businesses compared to the non-family businesses. This could mean that the familyness sharpens the meaning of ownership as such within the company. In other words, even if individual ownership is latent in most cases, the character of collective ownership does not stay unnoticed from the individual respondents. This notion supports to some extend the contemporary discussion of the element of responsibility within the behavior of family businesses. Secondly, in the factor analysis all the other factors but 'independence' are consistent with the concept of continuity. This allows us to conclude that in a family business an individual considers his/her own independence less important and continuity (in terms of family's natural longevity due to the presence of many generations within the same unit)
as more important. Further research should be directed to the question, whether this conception could be present within the whole owning family. In other words, does the family regards themselves owning something together thus limiting their freedom of ownership? Correspondingly, further studies should be pointed towards identifying the distinction between individual and collective ownership especially within the context of family businesses. Should there be differences between these relationships, there would be a possibility to develop a measure of familyness basing on the contextual psychological ownership.
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