2013 Conference

Other

Family Business 

Financial Services

The importance of the family business in the U.S. economy is greater than usually expected. Notable is a rapid growth of ethnic minority owned businesses alongside the increasing importance of family business in the U.S. economy. Ethnic groups are culture-bearing units since nationality or ethnicity is still the most basic influence in constructing one’s values and attitudes. Acquiring and sharing particular values within family systems can also be represented in their interacting with family business systems. Intermingling resources is one of the representative management styles found in ethnic family businesses. Therefore, the objectives of this study can be identified as follows: 1) to investigate cultural differences of households’ intermingling of financial capital and human capital with their family businesses, focusing on ethnicities; 2) to determine the influence of types of capital in family systems on intermingling; and 3) to examine the influence of other three types of capital such as financial, social, and human capital in family business system on intermingling of resources. The Survey of Consumer Finances (SCF) from 1998 to 2010 will be used for this research. For the analysis, logistic regression will be used to explain the relationship between culture and resource intermingling patterns between households and their family businesses; the dependent variable is whether households have intermingled financial or human capital with their family business, and vice versa. Besides three types of control variable such as socio-demographic characteristics, preferences (planning horizon, risk tolerance), and active management variables, four explanatory variables are included: 1) culture (ethnicity), 2) human capital (education), 3) financial capital (net value of the business), and 4) social capital (age of the business). Two models are estimated: Model 1 focuses on resources within the family system while Model 2 considers resource within the family business system as suggested by the theoretical framework, Sustainable Family Business Theory (SFBT).