The Moderating Effect of Unfairness and Short-term Strategy on Thai Family Business: Conceptual Framework

Maetha Preedawiphat
(University of the Thai Chamber of Commerce (UTCC), Bangkok 10400 , Thailand)

Abstract: It is extensively known that global economics are driven by family businesses. However, only 5% can survive until the third generation. The recent researches focus on effects of size of family firms, conflicts, family values, leadership in family firms, and number of non-family members in the family companies and ignore to figure out how family firms can sustain their business in long term. The knowledge to achieve the sustainable business performance of family businesses is therefore becoming the interesting topic. This paper aims to contribute the academic understanding of factors that make family businesses fail to sustain in the dynamic competitive world. According to the literature gaps, most family firms fail to transfer their ownership to the next generation because they always apply short-term strategy. In addition, the characteristic of family businesses inherently causes a lot of unfairness within the firms which can decrease their competitiveness. They have less cautious that they are inherited by unfairness and short-term strategy. Therefore, they always face with the difficulties to survive in long term. Nevertheless, family businesses have the uniqueness which allows the companies to overcome the weaknesses and can protect their enterprises. It is widespread perceived that competitive advantage of the family business is the commitment of the owner. The commitment has been studying by several researchers. It is believed that commitment is caused by managerial trust. Accordingly, the conceptual framework is generated to study how family business can survive in long term. There are two main objectives of the proposed conceptual framework. First, the relationship between managerial trust and commitment and the relationship between commitment and business performance will be verified. Second, the impact of moderating effect of unfairness and short-term strategy will be examined. Furthermore, the four hypotheses are developed and tested by using regression analysis to examine the relationships between five constructs. The data were obtained through the pilot test with 30 owners of family business in Thailand. The samples are from different industries which are chosen randomly from Department of Business Development Ministry of Commerce (DBD). The findings demonstrate that the measures of each construct have the strong reliability and validity. Next, the conceptual framework will be used to conduct the empirical study with the companies which the contacts are provided by DBD. The results will benefit the practitioners and academia in family business in several ways which lead to the knowledge of how family business can survive sustainably.

Key words: family business; trust; commitment; unfairness; strategy

JEL code: M100