This study examined leadership practices in family owned businesses in the United States. The research problem is developed in this chapter, and related ancillary information is presented.
Aronoff and Ward (1991, p. 1) held that "more than 95 percent of all businesses in the United States are family owned." Dumas (1992, p. 41) placed the level at "more than 90 percent." Dumas (1992, p. 41) added that these family owned firms "account for about one half of all the country's jobs and a significant percentage (about 40%) of the gross national product." While family owned business firms are found on the "Fortune 500" list of the largest companies in the country, the statistics cited by Aronoff and Ward (1991, p. 1) and Dumas (1992, p. 41) indicate that the classification of family owned businesses is strikingly parallel to the small business classification in the United States.
The 1980 White House Conference on Small Business defined a small business as one with 500 or fewer employees (United States Small Business Administration, 1980, p. 3). This definition covers almost all business enterprises in the United States 99.7 percent in 1993 (United States Small Business Administration, 1994, p. 14). Business enterprises included in this definition accounted for 47.8 percent of non government and non farm employment, 42 percent of sales revenues, and 38 percent
of the country's gross national product. These proportions indicate that small business plays an important role in the American economy, but not the dominant role often attributed to it. These proportions also demonstrate that family owned business and small business are highly comparable classifications.
There are both advantages and disadvantages associated with family owned businesses for both the family owners and for the economy. Perhaps the major disadvantage for both the family owners and the economy is the high mortality rate of these firms during th...