Top Ten Family Business Facts | Fact #2: The Cluster Model Helps Capture the Evolution of Your Family Business Over Time

cluster-modelTraditionally, family businesses are described as constituent of three overlapping circles:

1) the family,

2) the business, and

3) the ownership (Gersick, Davis, McCollom Hampton, & Lansberg, 1997; Tagiuri & Davis, 1996).

Recently, Michael-Tsabari, Labaki, & Zachary (2014) suggested the Cluster Model to update the two and three-circle models by providing a more detailed picture of the circles’ evolution over time.

While the original bivalent two-circle model appropriately describes a family that owns a firm (Tagiuri & Davis, 1996), Michael-Tsabari et al. (2014)’s study addresses the inaccuracies of the circle models when it comes to describing a family that owns more than one firm and suggests a more detailed perspective allowing to include in the analysis the different firms that the family owns to different extents.

Lesson #2: Putting on the lenses of the Cluster Model might help you better capture the evolution of your family business over time both in terms of the descendants driving this evolution and its outcomes.

Wondering what the Cluster Model means for you and your family business? Do you need some guidance on seeing your family business through this lens? Contact a Family Business Matters consultant today. Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of all shapes and sizes.

This post is the second in a series by Rania Labaki highlighting the Top Ten Family Business Facts. To view the previous post in this series, follow this link. To review the full Top Ten Family Business Facts and to access a list of original resources, please visit our Family Business Facts page.


Rania Labaki – Author Bio

Rania Labaki

Top Ten Family Business Facts | Fact #1: Economies Around the World Depend on Family Businesses

Economies around the world depend on family businessesDid you know that the success and growth of your family business matters to many people? In fact, your country’s economy may depend on it.

Statistics show that family businesses are predominant throughout the world (López de Silanes, La Porta, & Shleifer, 1999) and contribute the most to the growth of worldwide economies. For more details, read Family Firm Institute’s Global Data Points article.

A recent study by Memili et al. (2015) examines the impact of the prevalence of Family Small and Medium-Sized Enterprises (SMEs) on economic growth at the state level in the USA. It suggests that the proportion of Family Small and Medium-Sized Enterprises (SMEs) will have an inverted U-shaped relationship with economic growth. Stated differently, there is an optimum level of Family Small and Medium-Sized Enterprises (SMEs) in a local economy. Up to that point, which is about 42.8 % of the Small and Medium-Sized Enterprises (SMEs) population, an increasing proportion of family firms have a positive influence on economic growth. However, beyond that point, more and more family firms in the economy appear to reduce economic growth.

Lesson #1: A balanced combination of family and non-family Small and Medium-Sized Enterprises (SMEs) is more conducive for maximizing economic growth than either type of business. Therefore, your family business plays an active part in promoting your country’s economy.

To review the full Top Ten Family Business Facts by Rania Labaki and to access a list of original resources, please visit our Family Business Facts page.

Does Your Family Business Need Guidance?

Through conferences, continuing education programs, family business retreats, speaking engagements and private family business consulting services, Family Business Matters has assisted more than 450 family-owned businesses around the world chart their way through family business issues of […]

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