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The Dynamics of ������ Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia i
THE DYNAMICS OF FAMILY BUSINESS CONFLICT:THE UNDERLYING FACTORS, PARTIES’ CONFLICT
BEHAVIOR, AND ROLE OF NON-FAMILYEXECUTIVES IN INDONESIA
Komala Inggarwati Efendy
Master of Management, University of Indonesia
Master of Business (Management) (Research), Queensland University of Technology
Submitted in fulfilment of the requirements for the degree of
Doctor of Philosophy (PhD)
School of Management
QUT School of Business
Queensland University of Technology Business School
2018
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The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia iii
Abstract
This thesis investigates the dynamics of family business conflict in Indonesia. It
consists of two studies, which are reported in three independent papers that examine
issues related to conflict escalation and de-escalation, conflict behavior, and third party
involvement within the framework of a conflict process model. Each study makes a
separate contribution to the literature. The first paper compares instances in which
family business conflicts escalate or de-escalate and explores the factors that promote
family business conflict. The second paper focuses on the behavior of family members
in dealing with conflict and how this relates to the escalation and de-escalation of family
business conflicts. The third paper seeks to unveil the role of non-family executives
(NFEs) in family business conflicts.
Both studies were qualitative studies conducted in Indonesia, the fourth largest
country in the world, and a collectivist society. Purposive sampling and snowball
sampling methods were adopted due to the lack of a representative sample frame and
the reluctance of family business owners/members to participate in the study. In-depth
interviews and a critical incident technique were used to collect data. A total of 60
participants from 29 privately-held family businesses were interviewed for the first
study (Paper 1 and Paper 2) and 28 non-family executives of 24 privately-held family
firms participated in the second study (Paper 3).
Analyses for the first paper were conducted at both the incident and dyad levels.
The first analysis was conducted to identify the key elements of the escalation and de-
escalation of a single conflict. The second analysis was undertaken to assess the factors
that promoted the escalation and de-escalation of conflicts resulting from a series of
conflicts experienced by the dyads of the conflicting parties. By comparing the three
different conflict escalation patterns that emerged from the data (escalated, de-
escalated, and non-escalated conflicts), this study identified four key factors: the issues
of the conflict, conflicting parties’ emotional reactions, conflicting parties’ conflict
handling styles, and the involvement of third parties. The results showed that a conflict
is more likely to escalate when it involves personal relationship issues, strong emotional
reactions, competing or avoiding conflict handling styles, and pot-stirrer third parties.
An escalated conflict is more likely to de-escalate when conflicting parties focus on
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resolving their disagreement, are able to regulate their emotions, use a compromising
or accommodating style, or are arbitrated or mediated by family elders. Meanwhile,
conflict is more likely to not escalate if family members are able to focus on the issue
of the conflict; remain calm during the conflict; employ a collaborating, voluntarily
accommodating, or voluntarily compromising style; and include non-family executives
as parts of the decision making process. An analysis of the series of conflicts
experienced by the dyads of family members found that the accumulation of negative
feelings resulting from dissatisfaction of the prior conflict resolutions increased the
intensity of the next conflict.
The second study identified six different behaviors resulting from a combination
of emotional reactions (regulated, unregulated) and conflict handling styles
(competition, cooperation, and avoidance), including assertive-persuasive
(competition-regulated emotion), collaborative (cooperation-regulated emotion),
passive (avoidance-regulated emotion), aggressive (competition-unregulated emotion),
collaborative-aggressive (cooperation-unregulated emotion), and passive-aggressive
(avoidance-unregulated emotion). The analysis documented that family members
behaved differently in a conflict within a generation and across generations. In
intergenerational conflicts, senior family members were more likely to respond
aggressively to conflict with junior family members, whereas most junior members
behaved more assertive-persuasively or aggressively. Meanwhile, family members
were more likely to behave aggressively or collaboratively in intra-generational
conflicts. In both intra- and intergenerational relationships, conflicts were more likely
to escalate when both parties possessed competitive and/or avoidance methods and
showed unregulated emotions (aggressive and passive-aggressive behaviors). The
findings also found that senior family members tended to reciprocate juniors’
aggressive and assertive-persuasive behavior in intergenerational conflicts. Junior
members tended to respond to seniors’ aggressive behavior reciprocally or
complementarily. Meanwhile, family members were most likely to reciprocate the other
party’s conflict behavior in intra-generational conflicts.
The last study found that NFEs were often involved and played various roles in
family business conflicts. NFEs became involved in conflicts because they were invited
by the conflicting parties, affected by the conflicts, or took the initiative to intervene.
The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia v
The results showed that the roles of NFEs in a conflict in the context of family
businesses are to some extent different from those in non-family businesses. Their roles
can be grouped into five categories: avoiders, messengers, peacekeepers, settlement
agents, and yes-men. It appears that the roles played by NFEs are related to the
hierarchical positions of the NFEs. Moreover, the findings also showed that the
effectiveness of NFEs’ roles in resolving conflicts is influenced by the capability and
objectivity of the NFEs.
To this end, this thesis provides some valuable insights that can advance
understanding of the dynamics of family business conflicts and explain why family
business conflicts escalate or de-escalate. The overall findings revealed key factors that
contribute to the escalation and de-escalation of family business conflicts that can be
broadly classified into three groups: issues of the conflict, behaviors of the conflicting
parties, and third party involvement factors.
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Keywords
Behavioral interaction pattern, conflict, conflict behavior, conflict handling style, de-
escalation, emotional regulation, escalation, family business, intra-generational conflict,
intergenerational conflict, non-family executive, third party.
The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia vii
Table of Contents
Abstract .................................................................................................................... iii
Keywords ................................................................................................................. vi
Table of Contents .................................................................................................... vii
List of Tables ............................................................................................................. x
List of Figures ......................................................................................................... xii
Statement of Original Authorship .......................................................................... xiii
Publications and Conference Papers ...................................................................... xiv
Acknowledgements ................................................................................................. xv
Dedication ............................................................................................................. xvii
Chapter 1:Introduction ................................................................................................... 1
1.1 Background ................................................................................................... 1
1.2 Overall Aim of the Thesis and Research Questions ..................................... 2
1.3 Scope and Context of the Study .................................................................... 3
1.4 Significance of the Thesis ............................................................................. 4
1.5 Summary of the Papers ................................................................................. 5
1.5.1 Paper 1 ..................................................................................................... 5
1.5.2 Paper 2 ..................................................................................................... 6
1.5.3 Paper 3 ..................................................................................................... 7
1.6 Thesis Outline ............................................................................................... 9
Chapter 2:Literature Review ....................................................................................... 10
2.1 The Nature of a Family Business ................................................................ 10
2.2 The Nature of Family Business Conflict .................................................... 12
2.3 Research on Family Business Conflict ....................................................... 15
2.4 Conceptual Framework ............................................................................... 17
Chapter 3:Methodological Considerations .................................................................. 21
3.1 Research Design and Methodology ............................................................ 21
3.2 Sample Recruitment .................................................................................... 24
3.3 Data Collection Procedures ........................................................................ 25
3.4 Data Analysis .............................................................................................. 27
3.5 Trustworthiness ........................................................................................... 28
3.6 Ethical Considerations ................................................................................ 29
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Chapter 4:Factor Contributing to the Escalation and De-Escalation of Family
Business Conflict ........................................................................................ 30
4.1 Abstract ....................................................................................................... 30
4.2 Introduction ................................................................................................. 30
4.3 Literature Review ....................................................................................... 32
4.3.1 The Nature of Family Business Conflict ............................................... 32
4.3.2 Conflict Process ..................................................................................... 32
4.3.3 Conflict (De-) Escalation ....................................................................... 33
4.4 Research Method ........................................................................................ 35
4.4.1 Design of the Study ................................................................................ 35
4.4.2 Firms and Participants ............................................................................ 35
4.4.3 Data Collection Procedures .................................................................... 36
4.4.4 Data Analysis ......................................................................................... 37
4.5 Research Findings ....................................................................................... 38
4.5.1 Firms, Participants, and Incidents .......................................................... 38
4.5.2 Incident Level of Analysis ..................................................................... 44
4.5.3 Dyad Level of Analysis-Conflict Series Analysis ................................. 56
4.6 Discussion ................................................................................................... 64
4.7 Theoretical Contributions and Practical Implications ................................. 68
4.8 Limitations and Suggestions for Future Research ...................................... 69
4.9 Conclusion .................................................................................................. 70
Chapter 5:Conflict Behavior and Emotions in the Escalation and De-Escalation of
Intra- and Intergenerational Conflict in Family Business ........................... 72
5.1 Abstract ....................................................................................................... 72
5.2 Introduction ................................................................................................. 73
5.3 Literature Review ....................................................................................... 74
5.3.1 Conflict Escalation and De-Escalation .................................................. 74
5.3.2 Conflict Behavior ................................................................................... 75
5.4 Research Method ........................................................................................ 78
5.4.1 Design of the Study ................................................................................ 78
5.5 Research Findings ....................................................................................... 81
5.6 Discussion ................................................................................................... 95
5.7 Theoretical Contributions and Practical Implications ................................. 99
The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia ix
5.8 Limitations and Recommendations for Further Research ........................ 100
5.9 Conclusion ................................................................................................ 101
Chapter 6:The Roles of Non-Family Executives in Conflicts between Family
Members in Family Firms: An Exploratory Study ................................... 103
6.1 Abstract ..................................................................................................... 103
6.2 Introduction ............................................................................................... 103
6.3 Literature Review ..................................................................................... 105
6.3.1 The Nature of a Family Business Conflict ........................................... 105
6.4 Research Method ...................................................................................... 109
6.4.1 Design .................................................................................................. 109
6.5 Research Findings ..................................................................................... 112
6.5.1 Demographic Information .................................................................... 112
6.5.2 Overview of the Incidents .................................................................... 115
6.6 Discussion ................................................................................................. 132
6.7 Theoretical Contributions and Practical Implications ............................... 135
6.8 Suggestions for Future Research .............................................................. 137
6.9 Conclusion ................................................................................................ 138
Chapter 7:Discussion and Conclusion ....................................................................... 139
7.1 Key Research Outcomes ........................................................................... 139
7.1.1 Escalation and De-escalation Patterns ................................................. 140
7.1.2 Issues of the Conflict ........................................................................... 142
7.1.3 Conflict Behavior ................................................................................. 142
7.1.4 The Involvement of Third Parties ........................................................ 144
7.1.5 The Intensity of Subsequent Conflicts ................................................. 145
7.2 Suggested Propositions ............................................................................. 146
7.3 Practical Implications ............................................................................... 147
7.4 Recommendations for Future Research .................................................... 148
7.5 Concluding Remarks ................................................................................. 149
References .................................................................................................................. 150
Appendices ................................................................................................................. 169
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List of Tables
Table 1.1: Summary of the Papers ................................................................................. 8
Table 2.1: Antecedents of Conflict Intensity ............................................................... 16
Table 3.1: Total Number of Participants and Incidents in Each Study ........................ 25
Table 4.1: Firm, Participant, and Incident Characteristics ........................................... 39
Table 4.2. The Governance Structure of the Participating Firms ................................ 41
Table 4.3: The Contributing Factors to the Escalation or De-escalation of a Single
Conflict ........................................................................................................ 48
Table 4.4: The Intensity of a Series of Conflicts Experienced by a Dyad of Family
Members ...................................................................................................... 58
Table 4.5: The Contributing Factors to the Escalation or De-escalation of a Series of
Conflicts ...................................................................................................... 60
Table 5.1: Data Triangulation ...................................................................................... 81
Table 5.2: Firm, Participant, and Incident Characteristics ........................................... 82
Table 5.3: Key Themes in Conflict Behavior .............................................................. 85
Table 5.4: Typology of Conflict Behavior and its Characteristics .............................. 87
Table 5.5: Senior and Junior Family Members’ Conflict Behavior in Intergenerational
Conflict (n=43) ............................................................................................ 91
Table 5.6: Senior and Junior Family Members’ Conflict Behavior and Conflict
Escalation or De-Escalation ........................................................................ 92
Table 5.7: Family Members’ Conflict Behavior in Intra-Generational Conflict (n=28)
..................................................................................................................... 94
Table 5.8: Family Members’ Conflict Behaviors and the Escalation and De-Escalation
of Intra-Generational Conflict ..................................................................... 94
Table 6.1: Demographic Characteristics of the Companies ....................................... 113
Table 6.2: Demographic Characteristics of the Participants ...................................... 114
Table 6.3: The Types and Issues of Conflict ............................................................. 115
Table 6.4: How NFEs Became Involved in a Conflict-Themes and Representative
Quotes from Participants (n=63) ............................................................... 118
Table 6.5: Roles of NFEs in a Conflict-Themes and Representative Quotes from
Participants (n= 63 incidents) ................................................................... 120
Table 6.6: NFEs’ Managerial Positions and Roles in a Conflict ............................... 128
The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia xi
Table 6.7: NFEs’ Roles and the Nature of a Conflict ................................................ 129
Table 6.8: The Criteria for and the Frequency of Successful and Unsuccessful NFE
Roles .......................................................................................................... 130
Table 6.9: NFEs’ Managerial Positions and Roles in a Conflict: Successful and
Unsuccessful ............................................................................................. 131
xii The Dynamics of ������ Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia
List of Figures
Figure 1: Conceptual Framework ................................................................................ 18
Figure 2: Steps of the Research Processes ................................................................... 23
Figure 3. Indicators of Conflict Escalation .................................................................. 45
Figure 4: Number of Conflict Handling Styles Used in Each Conflict Escalation
Pattern ......................................................................................................... 52
Figure 5: The Escalation and De-escalation Patterns of a Series of Conflicts ............. 64
Figure 6: Escalation and De-escalation Patterns of a Conflict .................................. 140
Figure 7: Escalation and De-escalation Patterns of Subsequent Conflicts ................ 141
The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia xiii
Statement of Original Authorship
The work contained in this thesis has not been previously submitted to meet
requirements for an award at this or any other higher education institution. To the best
of my knowledge and belief, the thesis contains no material previously published or
written by another person except where due reference is made.
Signature:
Komala Inggarwati Efendy
D a t e : September 2018
QUT Verified Signature
xiv The Dynamics of ������ Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia
Publications and Conference Papers
Efendy, K.I., Chang, A., & Zolin, R. (2017). The Roles of Non-Family Executives in
Conflicts between Family Members in Family Firms: An Exploratory Study. Paper
presented at the 2016 ACE Bootcamp, Tangalooma, Australia.
Efendy, K.I., Zolin, R., & Chang, A. (2016). Factor contributing to the escalation and
de-escalation of family business conflict. Paper presented at the ANZAM 2016
Conference. Brisbane, Australia.
Efendy, K.I., Zolin, R., & Chang, A. (2016). Conflict behavior and conflict escalation
in family businesses: A preliminary study. Paper presented at the 2016 Academy of
Management Annual Meeting. Anaheim, California, US.
Efendy, K.I., Zolin, R., & Chang, A. (2013). Escalation of conflict in large privately-
held family businesses: A preliminary study. Paper presented at the 2013 Academy of
Management Annual Meeting. Orlando, Florida, US.
The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia xv
Acknowledgements
First and foremost, I praise my Lord and Savior, Jesus Christ, for providing me
with this opportunity and blessing me with good health, strength, wisdom, and the
capability to undertake this study successfully.
This work would not have been possible without the support, guidance, and
assistance of several people and institutions. I would like to offer my sincere thanks to
all of them.
I express my deepest gratitude to my supervisors, Associate Professor Artemis
Chang, and Professor Roxanne Zolin, for their continual supervisory assistance during
my Master’s and Ph.D. studies. Without their guidance and unwavering assistance, this
thesis would not have been possible. Associate Professor Chang provided me with
encouragement and support to undertake a Ph.D. and valuable guidance at every stage
of my study journey. Her insightful comments and constructive critiques helped me
shape my thesis. Professor Zolin was the one who first expressed interest in my research
work and had a willingness to be my supervisor. She also helped me obtain a
scholarship grant. These contributions allowed me to make my ambitions become a
reality. Her understanding, generous guidance, and support helped me in completing
this thesis.
My appreciation is extended to the Queensland University of Technology , the
Indonesian Ministry of Education Directorate General of Higher Education, and Satya
Wacana Christian University for granting me a scholarship, additional financial
support, and permission to undertake this study. I feel very honored and grateful for the
support that has been provided to me, with numerous learning opportunities,
professional and personal development, and a wealth of new knowledge to share with
my colleagues and students in Indonesia.
I also convey my sincere gratitude to all of my relatives, colleagues, friends, and
others for facilitating access to the research participants. Thank you to all of the
participants of this study who invested their time to participate in the in-depth
interviews to explore their involvement in family business conflicts. Their willingness
xvi The Dynamics of ������ Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia
to disclose and share their perceptions and experiences about this sensitive topic made
this research possible.
I am thankful to Rev. Vivian Soesilo, Rev. Daud Soesilo, and all Indonesian and
Multicultural Church members for their prayers and invaluable good friendships.
My thanks also to professional editor, Kylie Morris, who provided copyediting
and proofreading services, according to university-endorsed guidelines and the
Australian Standards for editing research theses.
I would also like to show my appreciation to the Indonesian Ph.D. students at
QUT Business School, who made my time at campus more enjoyable.
Finally, I would like to acknowledge with gratitude, the prayers, support, and love
of my family—my husband, daughters, parents, siblings, and in-laws. They all kept me
motivated while I was completing my doctoral thesis.
The Dynamics of Family Business Conflict: The Underlying Factors, Parties’ Conflict Behavior, and Role of Non-Family Executives in Indonesia xvii
Dedication
This thesis is dedicated to my loving and supportive husband, Max, and my
beloved daughters Pipin, Tata, and Waya. Thank you for the support and
encouragement that you provided and the sacrifices you made during this journey.
Chapter 1: Introduction 1
Chapter 1: Introduction
1.1 BACKGROUND
This dissertation aims to improve the understanding of the dynamics of conflict
in the context of family businesses. Broadly, this thesis examines the factors that
promote the escalation and de-escalation of conflict, the parties’ conflict behavior, and
the involvement of non-family executives. The motivational relevance for this work
stems from the importance of these issues in family businesses, as “family firms are
fertile fields for conflict” (Harvey & Evans, 1994, p.331). Although conflict is
inevitable in any organization, the potential for conflict in family firms could be greater
than that in non-family firms due to the overlap of family and business systems
(Kellermanns & Eddleston, 2004). Conflict has been identified as one of the main
factors that cause the failure of family businesses (Beckhard & Dyer, 1983; Danes &
Olson, 2003; Harvey, Cosier, & Novicevic, 1998; Merwe & Ellis, 2007), destroy family
relationships, and undermine individual well-being (Amarapurkar & Danes, 2005;
Eddleston & Kellermanns, 2007).
Family business conflicts can be of different natures and intensities. Although
many family businesses do not survive more than three generations (Breton-Miller,
Miller, & Steier, 2004; Glassop, Ho, & Waddell, 2005), there is evidence that many
other family businesses can sustain their firms throughout generations. This leads to the
question that guided this study: Why do some family business conflicts escalate while
others do not?
A limited number of family business studies have investigated the phenomenon
of conflict, although its importance has been highlighted by existing family business
literature (Frank, Kessler, Nosé, & Suchy, 2011; Sharma, 2004). Most of those studies
concentrated on the causes of conflict and its consequences and are quantitative in
nature (Frank et al., 2011). Therefore, little is known about the dynamics of family
business conflict, and particularly, about how and why conflicts escalate or de-escalate
(Frank et al., 2011; Wall & Callister, 1995). For these reasons, examining the dynamics
of family business conflicts and the factors that contribute to these dynamics provides
an opportunity to enhance and deepen one’s knowledge about family business conflict
2 Chapter 1: Introduction
as a basis for preventing destructive conflicts and pursuing effective conflict resolution
(Sharma, 2004).
1.2 OVERALL AIM OF THE THESIS AND RESEARCH QUESTIONS
This thesis aims to improve the understanding of the dynamics of family business
conflicts. Two studies were conducted to achieve this aim. The first study results are
reported as two papers (Paper 1 and Paper 2), and the results of the second study are
reported as Paper 3.
The first paper aims to provide a general understanding of conflict escalation and
de-escalation from a significant number of incidents. This paper was designed to
compare the instances in which family business conflicts escalate or de-escalate and
explore the key factors that may promote this. The paper identifies the issues underlying
conflicts, the factors that influence the dynamics of conflict, and the outcomes of the
conflicts. Specifically, this study was designed to answer the following research
questions:
1. What are the escalation and de-escalation patterns of family business
conflicts?
2. Which factors distinguish conflicts that escalate from those that do not?
The next two papers focused on the core processes of a conflict, which reflect the
dynamics of the conflict and influence the outcomes and intensity of the conflict
(Thomas, 1976), as there are few studies on this topic in family business literature
(Frank et al., 2011). By integrating insights from two theoretical domains: theories of
workplace conflict and the emotional regulation theory, the second research paper was
carried out to identify the links between two conflict behavioral aspects: the ways in
which family members handle their conflict and the ways in which family members
manage their emotions, in addition to examining how their conflict behavior explains
the escalation and de-escalation of the conflicts. This paper aimed to answer the
following research questions:
1. How do family members respond to conflict in intra- and intergenerational
relationships?
Chapter 1: Introduction 3
2. How do family member responses relate to conflict escalation and de-
escalation?
Third-party intervention literature served as the basis for the third paper. Previous
studies have argued that family members involved in the firm are likely to avoid direct
communication and involve third parties when dealing with problems (Hubler, 1999).
The involvement of third parties could influence the dynamics and outcomes of a
conflict (Phillips & Cooney, 2005; Volkema, et al., 1997). Specifically, this paper
attempted to discover the roles of non-family executives (NFEs) in conflicts between
family members. To achieve the purpose of this study, the following research questions
were answered:
1. How do NFEs become involved in a conflict between family members?
2. What roles do NFEs play in a conflict?
3. What are the outcomes of NFEs’ involvement in a conflict and the factors
that may influence them?
This research makes a significant contribution to family business literature and
the study of organizational conflicts by exploring the roles and behaviors of NFEs in
family businesses, and within the Indonesian cultural context.
1.3 SCOPE AND CONTEXT OF THE STUDY
Conflict in family businesses may occur among related family members and/or
among unrelated firm members (Kaye, 1991). This thesis focuses on conflict between
family members working together in a business, because this conflict could have
impacts, not only on individual well-being, but also on family relationships and
business survival. Therefore, except where otherwise stated, family business conflict in
this study refers to conflict that occurs between those who are related by blood,
marriage, or adoption and are working together in their family firm.
All studies were conducted in Indonesia. Hofstede, Hofstede, and Minkov (2010)
indicated that Indonesian people are collectivist and high on power distance. They are
characterized by placing high importance on seniority. Elder status or seniority has a
significant role in the society and community and younger people are expected to
respect and obey their parents or elders without question. By conducting this study in
4 Chapter 1: Introduction
Indonesia, the current study contributes to the existing family business literature, which
has largely focused on developed Western (individualist culture) countries, such as the
USA and other Anglo countries (Pieper, 2010). A review by Gupta and Levenburg
(2010) found that the cultural values of a country/region lead to the diversity of family
firms worldwide. Therefore, it is expected that this study could provide a unique
research context.
1.4 SIGNIFICANCE OF THE THESIS
Family business conflicts are typically more intense than those in other
governance forms. Addressing the dynamics of family business conflicts can be a
beginning stage in dealing with complex family business conflicts. Therefore, the
central aim of this thesis is to better understand the dynamics of family business
conflicts, particularly why conflicts escalate or de-escalate and how the behavior of
conflicting parties and the involvement of informal third parties affect conflict
escalation and de-escalation. This certainly merits further research. These topics of
inquiry have received relatively little attention in family business literature (Frank et
al., 2011; Xi, Kraus, Filser, & Kellermanns, 2015).
The outcomes of this thesis can contribute to the literature in several ways. First,
the findings of this thesis contribute to the literature on family businesses with regard
to providing a better understanding of the dynamics of family business conflicts, which
is limited (Frank et al., 2011; Xi et al., 2015), by: (a) identifying the factors that may
influence conflict escalation and de-escalation, (b) examining family members’ conflict
behavior based on their conflict handling styles and emotional reactions and its
influences on the outcomes of the conflict, and (c) showing that non-family executives
have an important role in resolving or fueling family conflicts.
Second, this thesis also adds to the organizational conflict and conflict
management literature by offering an exemplary qualitative inquiry highlighting the
factors that may escalate or de-escalate conflict, including the behavior of family
members in dealing with their conflict and the involvement of third parties. Although
the existing conflict literature has demonstrated the important role of third parties in
conflict resolution, its main focus is on the role of formal third parties (Haynes, Usdin,
Lee Begler, Kaye, & Kaslow, 1997; Kaye, 1991; Prince, 1990). Empirical research on
Chapter 1: Introduction 5
conflict escalation and de-escalation is rare (Wall & Callister, 1995), this thesis
therefore offers a unique insight by investigating the role of executives and managers
in conflicts between family members; while previous research has focused on
investigating managers’ roles in their subordinate conflicts (e.g., Pinkley, Brittain,
Neale, & Northcraft, 1995) and providing insight into the important roles of informal
third parties in organizational conflicts.
Given the significant contributions of family businesses to economic and social
development, the survival and longevity of family businesses are vital (Ramadani &
Hoy, 2015). Therefore, it is of great interest to gain a deeper understanding of the
dynamics of family business conflicts. This knowledge may provide novel insight into
preventing the escalation of conflict and or de-escalating an escalated conflict, which
are important to support the continuity of family businesses (Gudmunson & Danes,
2013; Rhodes; & Lansky, 2013, p. 3). Conflict studies show that prevention is more
effective than strategies to resolve conflict after the fact (Wall & Callister, 1995).
Successful family businesses can then maintain the stability of the economic system.
1.5 SUMMARY OF THE PAPERS
1.5.1 Paper 1
Family business conflict is inherently complex, because it stems from three
independent but overlapping subsystems—family, business, and ownership. Therefore,
conflict tends to escalate easily and become destructive. However, relatively little is
known about the factors that affect conflict escalation or de-escalation. This study
aimed to explore contributing factors of conflict escalation and de-escalation. The
participants were 60 family business members (48 family and 12 non-family members)
from 29 privately held family businesses in Indonesia. Data was collected through semi-
structured in-depth interviews using the critical incident technique. The data set (71
incidents) was then analyzed at both incident and dyad levels to identify the patterns of
conflict escalation and de-escalation to explore the factors linked to them. It was found
that family business conflicts may escalate, escalate but then de-escalate, or not-
escalated. Four key factors were identified as factors influencing conflict escalation or
de-escalation patterns, including the issues of the conflict, conflict parties’ emotional
reactions, conflict handling styles, and the involvement of third parties. The
6 Chapter 1: Introduction
summarized and edited version of the results of this study was presented at the ANZAM
2016 Conference, Brisbane, Australia from the Efendy, Zolin, and Chang (2016) study
“Factors contributing to the escalation and de-escalation of family business conflict”;
however, the version presented here differs in that the results are described in
considerably more detail.
1.5.2 Paper 2
Conflict literature has revealed that the behavior of conflicting parties can affect
the conflict intensity (escalate or de-escalate). Yet, little conflict research has explored
the behaviors of family members during conflict episodes and how that behavior affects
conflict escalation and de-escalation. The primary goal of this paper was to investigate
the behavioral aspects of family business conflict, including the conflict handling styles
used and emotions expressed and their relationship with conflict escalation and de-
escalation. To achieve the aim of this study, the data collected in Study 1 were further
analyzed, focusing on the behavioral aspects displayed in intra- and intergenerational
conflicts. Based on the combination of family members’ conflict handling styles
(cooperation, competition, and avoidance) and emotional regulation (regulated and
unregulated emotions), this study proposes six conflict behaviors, including assertive-
persuasive (competition-regulated emotions), collaborative-aggressive (cooperation-
unregulated emotions), passive (avoidance-regulated emotions), aggressive
(competition-unregulated emotions), passive-aggressive (avoidance-regulated
emotions), and collaborative (cooperation-regulated emotions). The findings show that
family members behaved differently in intra- and intergenerational conflicts. Senior
family members tended to show aggressive behavior when facing conflict with junior
family members, whereas most junior members were either assertive-persuasive or
aggressive. In intra-generational conflict, family members were more likely to engage
in either aggressive or collaborative attempts. Through examining the behavioral
interaction patterns of family members (reciprocally or complementary), this study
found that conflicts were more likely to escalate when both parties posed aggressive
and/or passive-aggressive behaviors. An earlier version of this study was presented by
Efendy, Zolin, and Chang (2016) at the 2016 Academy of Management Annual
Meeting, Anaheim, California, USA, with the title “Conflict behavior and conflict
escalation in family businesses: A preliminary study”.
Chapter 1: Introduction 7
1.5.3 Paper 3
Third parties are often involved in a conflict and influence the dynamics of the
conflict. Family business literature has acknowledged the importance of third parties in
resolving family business conflicts. However, this has mainly focused on the roles of
formal third parties, such as business consultants and advisers and paid little attention
to the role of informal third parties, such as elders, other family members, and non-
family employees. This third study aimed to uncover the role of non-family executives
(NFE) in family business conflicts. Twenty-eight NFEs from 24 privately held family
businesses in Indonesia participated in this study. They were interviewed using semi-
structured in-depth interviews and a critical incident technique. The results of the study
show that NFEs often became involved in conflicts because they were invited by the
conflicting parties, affected by the conflicts, or took the initiative to help family
members find resolution. They played various roles that can be grouped into five
categories: conflict avoiders, messengers, peacekeepers, settlement agents, and yes-
men. The roles of the NFEs varied according to their hierarchical positions. The
effectiveness of their roles was related to their capability and objectivity. A summary
of the results of this study was presented at the 2016 ACE Bootcamp, Tangalooma,
Australia, with the title “The Roles of Non-Family Executives in Conflicts between
Family Members in Family Firms: An Exploratory Study” (Efendy, Chang, & Zolin,
2017).
Table 1.1 presents a summary of the results of the three papers. This summary
provides a quick guide to the aims, participants involved, methods used, and key
findings of the papers.
8
Chapter 1: Introduction
Table 1.1: Summ
ary of the Papers
Papers A
im
Participants D
ata A
nalysis R
esults
1 To explore the contributing factors of conflict escalation and de-escalation.
60 family and
NFEs from
29 privately held fam
ily businesses in Indonesia.
In-depth interview
s. C
ritical incident techniques. 71 incidents.
Qualitative
content analysis. Tw
o levels of analysis-incident and dyad levels.
Four factors were identified as the m
ost important determ
inants of the escalation or de-escalation of a single conflict-the issues of the conflict, conflicting parties’ em
otional reactions, conflict handling styles, and role of inform
al third parties. A
t the dyad level, the findings showed that the accum
ulation of negative feelings resulting from
dissatisfaction of the outcome of prior
conflicts increased the intensity of subsequent conflicts.
2 To explore the behavioral aspects of fam
ily mem
bers in dealing w
ith conflicts.
60 family and
NFEs from
29 privately held fam
ily businesses in Indonesia.
In-depth interview
s. C
ritical incident techniques. 71 incidents.
Qualitative
content analysis. A
n analysis of intra- and intergenerational conflicts, separately.
Six conflict behaviors were identified: assertive-persuasive,
collaborative, passive, aggressive, collaborative-aggressive, and passive-aggressive. Senior fam
ily mem
bers tended to be aggressive when facing a conflict
with junior fam
ily mem
bers, whereas m
ost junior mem
bers responded to the conflict by behaving either assertive-persuasively or aggressively. In intra-generational conflicts, fam
ily mem
bers were m
ore likely to respond aggressively or collaboratively. In both intra- and intergenerational relationships, conflicts w
ere more
likely to escalate when both parties posed aggressive and passive-
aggressive behaviors.
3 To discover and describe the non-fam
ily executives’ perspectives about their roles in fam
ily business conflicts.
28 NFEs from
24 privately held fam
ily businesses in Indonesia.
In-depth interview
s. C
ritical incident techniques. 63 incidents.
Qualitative
content analysis. N
FEs were often involved in conflicts because they w
ere invited by the conflicting parties, affected by the conflicts, or took the initiative to intervene. V
arious roles of NFEs w
ere identified and grouped into five categories: conflict avoiders, m
essengers, peacekeepers, settlement
agents, and yes-men.
The roles that NFEs played w
ere related to the hierarchical positions of the N
FEs, and their effectiveness was related to the capability and
objectivity of the NFEs.
Chapter 1: Introduction 9
1.6 THESIS OUTLINE
The two studies (three papers) in this thesis share a common theme about the
dynamics and the escalation and de-escalation of family business conflicts. Although a
general introduction and literature review are provided in the first two chapters (Chapter
1 and Chapter 2), each paper has its own introduction and review of the related
literature. The thesis is organized as follows.
Chapter 1 introduces the background and justification for the works presented in
this thesis. The chapter then describes the research aims, scope, context, and a summary
of the three studies.
Chapter 2 provides a literature review encompassing the most relevant insights
into the study of family business conflicts.
Chapter 3 discusses some important methodological issues during the process of
data gathering and analysis.
The first paper is presented in Chapter 4. This paper is a comparative study of the
contributing factors for conflict escalation and de-escalation.
Chapter 5 discusses the second paper, which focuses on the conflicting parties’
behavior and how their behavior relates to conflict escalation and de-escalation in intra-
and intergenerational relationships.
The third paper is presented in Chapter 6, which explores the roles of NFEs in
family business conflicts.
Chapter 7 provides the concluding remarks and some possible avenues for future
research.
Finally, some additional observations are provided in Appendix K to shed light
on the relationship between company and family member characteristics and the
intensity of a conflict, the involvement of informal third parties, and the effectiveness
of NFE involvement.
10 Chapter 2: Literature Review
Chapter 2: Literature Review
This chapter aims to provide an overarching background that connects the themes
appearing in the individual studies. Therefore, it focuses on several notions of relevance
to all of the studies in this thesis only. The issues that are of immediate relevance to
each study are reviewed separately in each paper; thus, this chapter is brief. Since this
thesis focuses on conflict in family firms, the family firm constitutes the context of the
conflict situations under study. Therefore, a brief discussion of the definitions of family
businesses is an apt starting point for this chapter. This is followed by an examination
of several theories that have been used to date in explaining the family business
phenomena. Given that conflict in a family business is different from conflict in other
kinds of businesses, the nature of family business conflict is briefly described in the
following section. The final section outlines previous studies on family business
conflict.
2.1 THE NATURE OF A FAMILY BUSINESS
A review of the body of research on family businesses indicates that, to date, there
is little consensus regarding the definition of a family business (Astrachan, Klein, &
Smyrnios, 2002; Chua, Chrisman, & Sharma, 1999). Previous studies have defined a
family business differently depending on their study purpose (Harms, 2014). For
example, Chua et al. (1999) defined a family business as “a business governed and/or
managed with the intention to shape and pursue the vision of the business held by a
dominant coalition controlled by members of the same family or a small number of
families in a manner that is potentially sustainable across generations of the family or
families” (p.25). In another study, Miller, Le Breton-Miller, Lester, and Cannella
(2007) defined a family business as “a firm in which multiple members of the same
family are involved as major owners or managers, either contemporaneously or over
time” (p.836). Previous reviews of different definitions of a family business showed
that the definitions of a family business mainly focus on family influence over
ownership and strategic control (Bertrand & Schoar, 2006; Le Breton-Miller & Miller,
2009), the involvement of several generations (Brockhaus, 2004), the firm’s intention
to maintain its form as a family firm (Chua et al., 1999), and generational transfer
(Ibrahim & Ellis, 2004, p. 5). The various definitions are classified into two categories:
Chapter 2: Literature Review 11
a family involvement components approach (ownership, control, or management) and
an essence approach (the actual behavior of family members in the business)
(Chrisman, Chua, & Sharma, 2005). With those definitions, it is apparent that family
involvement is a distinguishing factor between family firms and others, in which family
values, ethics, and behavior patterns could influence the dynamics of the firm (Leach,
2011, p. 38), for example, through business decisions and behavior (Steier, Chrisman,
& Chua, 2004, p. 296) and the strategic direction of the business (Nordqvist et al.,
2012).
Family involvement in business has advantages and disadvantages. Several
theoretical approaches have been utilized in analyzing the advantages of the inclusion
of family members in family firms. These approaches include the agency theory (e.g.,
Chrisman, Chua, & Litz, 2004), the stewardship theory (e.g., Davis, Schoorman, &
Donaldson, 1997), the resource-based value (RBV) theory (e.g., Chrisman et al., 2004),
and the socioemotional wealth (SEW) theory (e.g., Berrone, Cruz, &Gomez-Mejia,
2012). Agency theory, which assumes that individuals behave opportunistically to
benefit themselves, suggests that family involvement in ownership and management
could mitigate agency costs due to the reduced use of control mechanisms as a result
of the alignment of ownership and management (Anderson & Reeb, 2003; Chrisman,
Chua, & Litz, 2004; Daily & Dollinger, 1992). In the stewardship perspective,
individual family member behaviors are assumed to be aligned with the objectives of
the firm (Davis, Schoorman, & Donaldson, 1997) and the involvement of the family in
the firm would therefore lead to less divergent goals between the family and the
business, which in turn positively affects firm performance (Miller & Le Breton-Miller,
2006). Another perspective, RBV, posits that family involvement and interactions
result in a set of resources and capabilities, called “familiness”, which creates
sustainable competitive advantages for family firms (Chrisman et al., 2004;
Habbershon & Williams, 1999). Finally, the SEW perspective proposes that the
inclusion of the family in the firm would protect the family’s SEW or even lead to a
greater SEW, which represents the non-financial aspects of the firm that meet the
family’s affective needs, including maintaining family control and influence over the
firm, families’ identification with the firm, families’ social ties from the firm, families’
emotional attachment to the firm, and families’ transgenerational intentions (Berrone,
12 Chapter 2: Literature Review
Cruz, & Gomez-Mejia, 2012; Chua, Chrisman, Steier, & Rau, 2012; Gómez-Mejía,
Haynes, Núñez-Nickel, Kathyrn, & Moyano-Fuentes, 2007).
While the agency, stewardship, RBV, and SEW theories emphasize the benefits
of the involvement of family members in the business, there are also some potential
drawbacks. The inclusion of family members as family managers could also lead to
agency problems, such as issues of self-control, adverse selection, altruism, board or
executive entrenchment, moral hazards, and free riding (Chrisman et al., 2004; Morck
& Yeung, 2003; Schulze, Lubatkin, & Dino, 2003; Schulze, Lubatkin, Dino, &
Buchholtz, 2001). Moreover, specific issues, such as destructive nepotism (Breton-
Miller, Miller, & Steier, 2004; Le Breton-Miller & Miller, 2009; Schulze et al., 2003),
sibling rivalry, the founder’s shadow (Davis & Harveston, 1999), succession (Harvey
& Evans, 1994), and family conflicts (Wakefield & Sebora, 2004) add to typical
business issues faced by family businesses that can lead to business failure.
2.2 THE NATURE OF FAMILY BUSINESS CONFLICT
Researchers have defined conflict in various ways. For example, Rahim (2002)
defined a conflict as “an interactive process manifested in incompatibility,
disagreement, or dissonance within or between social entities” (p. 207). Wall and
Callister (1995) considered a conflict to be “a process in which one party perceives that
its interests are being opposed or negatively affected by another party” (p. 517). The
general characteristics that are common to most definitions of a conflict are a dynamic
process, interdependence, incompatible goals, and the behavior of the opposing sides.
Conflict is inevitable in family businesses. It may certainly appear due to constant
changes in the growth of a company and the increasing number of family stakeholders
as the business passes through the generations (Kets de Vries, 1993). Different
rationales have been posited as to why family members may experience conflict during
their daily work in the family firm and how this conflict may escalate or de-escalate.
For instance, the system theory suggests that interactions between the family,
ownership, and business systems, which have different dynamics, structure, and goals,
are the main sources of conflict (Harvey et al., 1998; Kets de Vries, 1993; Pieper,
Astrachan, & Manners, 2013). According to this theory, the family and the business are
two conflicting systems (Gersick, Davis, Hampton, & Lansberg, 1997). The different
Chapter 2: Literature Review 13
interests of both systems could enhance the risk of a conflict occurring. Conflict may
involve one or more family business subsystems and they often spill over into each
other, which in turn multiplies the effects of the conflict (Danes, Zuiker, Kean, &
Arbuthnot, 1999; Harvey et al., 1998; Pieper, 2010).
Another theory used to explain conflict in family businesses is the upper echelons
theory, which suggests that the top management demographic diversity could influence
the outcomes of the organization (Hambrick & Mason, 1984). Diversity in a team can
be classified into: (1) knowledge diversity, which results from differences in
educational background, expertise, and work experience; (2) social category diversity,
which refers to the differences in social attributes, such as gender and age; and (3) value
diversity, which refers to differences in the values of the group members regarding their
goal or target (Liang, Liu, Lin, & Lin, 2007). In the context of the family business, the
involvement of multi-generations in the family top management team (TMT) increases
the diversity of the team. Based on this theory, Sciascia, Mazzola, and Chirico (2013)
revealed that high levels of generational involvement in the TMT of family firms could
lead to disruptive relationship conflict. Therefore, generational involvement in family
TMTs increases the likelihood of diversity in perspectives, which in turn increases the
chance of more disagreements and conflict.
The agency theory presumes that the separation of ownership from managerial
control could create agency problems. Based on this perspective, scholars have argued
that family firms, in which the managers are also family members, have fewer agency
problems than non-family firms because the welfare of the family is tied to the welfare
of the business (Bartholomeusz & Tanewski, 2006). Familial ties among management
members may reduce information asymmetries between family members and can lead
to an alignment of interests between them (Blanco-Mazagatos, Quevedo-Puente, &
Castrillo, 2007). However, other scholars have argued that family business could face
agency problems (e.g., Herrero, 2011; Schulze et al., 2003). Family businesses often
suffer from family inertia (Chirico & Nordqvist, 2010), asymmetric altruism, and free-
rider problems (Schulze et al., 2003), with different and often conflicting opinions
regarding the strategy and succession of the firm (Gulzar & Wang, 2010), which could
in turn increase the possibility that a conflict will occur.
Family business conflicts differ from conflict in other governance forms (Danes,
Rueter, Kwon, & Doherty, 2002; Kaye, 1991). Family firms often experience greater
14 Chapter 2: Literature Review
and more intense conflicts than other organization forms (Danes et al., 2002; Rhodes;
& Lansky, 2013, p. 3) for several reasons. First, conflict occurs between family
members who have significantly interdependent and continuous relationships, two
factors that differentiate family conflict from other conflict settings (Alderson, 2015;
Harvey & Evans, 1994; Haynes et al., 1997; Rubin, 1985). The dual relationships, long
histories, unspoken agendas, and emotional attachments between family members add
to the complexity of the conflict and often increase the severity of the conflict within a
conflict (Alderson, 2015; Kaye, 2005; Pounder, 2015; Sorenson, 1999; Wakefield &
Sebora, 2004).
Second, conflict occurs in a complex and dynamic organizational setting, as it
involves a complex interplay of family, business, and ownership systems (Gersick et
al., 1997). Personal goals are often intermixed with family and business goals. For
example, family rivalries or family frictions often translate into family business
conflicts. Specific issues that are outside of a normal business course, such as family
rivalries, family frictions, transfer of managerial power, nepotism, power struggles,
severance pay disputes, and the founder’s shadow (Harvey & Evans, 1994; Haynes et
al., 1997) often translate into family business conflicts. For these reasons, family firms
may experience greater and more intense conflicts than other organization forms
(Danes et al., 2002; Rhodes & Lansky, 2013, p. 3).
Finally, a conflict may occur between those who have familial relationships or
those who do not, such as between non-family employees (Kaye, 1991, Pounder, 2015).
Conflict between family members, which is the focus of this thesis, may involve family
members of a nuclear family (either intra- or intergenerational conflicts) and/or family
members between family units; it may occur at different levels, including personal,
interpersonal, and group levels; at different intensities (Alderson, 2015; Harvey et al.,
1998; Wakefield & Sebora, 2004); and between external and internal stakeholders
(Harvey & Evans, 1994).
Family business conflict may be functional or dysfunctional. In order to
understand family business conflict, previous studies have differentiated a family
business conflict as a task conflict, which refers to a conflict about differences over
substantive issues and a relationship conflict, which centers on interpersonal
relationships (Davis & Harveston, 1999, 2001; Eddleston & Kellermanns, 2007;
Chapter 2: Literature Review 15
Kellermanns & Eddleston, 2004). Several studies have recognized the potential for
conflict to produce positive outcomes (Kellermanns & Eddleston, 2004, 2007). A
moderate task conflict can improve group efficiency, increase productivity, and
stimulate creativity (Harvey et al., 1998); promote opinions, prevent premature
consensus, and/or increase members’ involvement and positively impact company
performance (Eddleston & Kellermanns, 2007). However, previous research has
indicated the detrimental effects of conflict on individual well-being, family
relationships, and business performance (Amarapurkar & Danes, 2005; Beckhard &
Dyer, 1983; Danes & Olson, 2003; Eddleston & Kellermanns, 2007; Harvey et al.,
1998; Merwe & Ellis, 2007). For example, Amarapurkar and Danes (2005) found that
business tensions were negatively related to wives’ satisfaction with their business-
owning spouse. Other studies have provided evidence that a high level of business
tensions could reduce family and business success levels (Danes & Olson, 2003), and
that relationship conflict is negatively related to business performance (Eddleston &
Kellermanns, 2007).
2.3 RESEARCH ON FAMILY BUSINESS CONFLICT
Conflict has received little attention in the study of family businesses (Frank et
al., 2011; Sharma, 2004). Most of those studies have concentrated on the causes of
conflict and their consequences (Frank et al., 2011). Most studies concerned with the
antecedents of family business conflicts have investigated the factors that influence the
intensity of family business conflict by linking variables such as generation and
generational shadow (Davis & Harveston, 1999), conflict management styles
(Sorenson, 1999), family-level factors (e.g., the composition of family work groups)
(Davis & Harveston, 2001), interpersonal relationships, preparation for succession,
resource scarcity, and the involvement of outsiders (Wakefield & Sebora, 2004); the
familiness level of the top management team (Ensley & Pearson, 2005), altruism and
the concentration of control (Eddleston & Kellermanns, 2007), and the decision-
making process (Eddleston, Otondo, & Kellermanns, 2008). Table 2.1 summarizes the
existing studies on the factors that contribute to the intensity of family business
conflicts.
The findings of these existing studies often conflict, are statistically insignificant,
or opposite in direction to those predicted (e.g., Davis & Harveston, 2001; Eddleston et
16 Chapter 2: Literature Review
al., 2008). For example, family social interactions were posited to be negatively related
to the intensity of conflicts. This hypothesis was supported by a study conducted by
Wakefield and Sebora (2004); however, Davis and Harveston (2001) found a
contradicting result. Furthermore, several variables, such as the educational
background of the incumbents, the number of non-family members on the board of
directors, the number of family members in the business (Wakefield & Sebora, 2004),
and family members’ interactions in the business (Davis & Harveston, 2001; Wakefield
& Sebora, 2004) have either been found to not contribute significantly to the intensity
of conflict or to be significant in the opposite direction. These findings indicate the need
for further research (Frank et al., 2011; Wall & Callister, 1995).
Table 2.1: Antecedents of Conflict Intensity
Antecedents Research Number of generations Davis and Harveston (1999); Eddleston et
al. (2008); Wakefield and Sebora (2004)
Family work group composition Davis and Harveston (2001); Wakefield and Sebora (2004)
Influential family members outside of work Davis and Harveston (2001); Wakefield and Sebora (2004)
Concentration of control Eddleston and Kellermanns (2007)
Generational shadow Davis and Harveston (1999)
Family social interactions Davis and Harveston (2001); Wakefield and Sebora (2004)
Altruism Eddleston and Kellermanns (2007)
Family functioning Holschuh-Houden (2008)
Family communication Holschuh-Houden (2008)
Demographic factors (age, education) Wakefield and Sebora (2004)
Succession antecedents (formal plan, succession preparation)
Wakefield and Sebora (2004)
Resource antecedents (access to capital, reliance upon bank funds, reliance upon family funds)
Wakefield and Sebora (2004)
Outsider antecedents (number of non-family members on the board of directors, number of professional outsiders)
Wakefield and Sebora (2004)
Chapter 2: Literature Review 17
2.4 CONCEPTUAL FRAMEWORK
In order to achieve the objectives of this thesis, this research was conducted
toward three different components of the conflict cycle model (Figure 1) as described
by Wall and Callister (1995). Figure 1 describes a generic model of a conflict process
that consists of three main components: causes (the triggers of the conflict), core
processes (the development of the conflict), and effects (outcomes of the conflict).
Furthermore, Figure 1 illustrates the feedback loop, which proposes that the outcomes
of a conflict will also have an impact on the original causes or generate new ones.
As shown in Figure 1, the first part of this model refers to the causes of a conflict,
which are the antecedent conditions that lead to a conflict. In the context of family
business, Harvey et al. (1998) classified the causes of a conflict into seven categories,
including individual characteristics (i.e., individual personality, value, goals, and
commitment of the organization), behavior patterns (i.e., overlap of business and family
life and intergenerational differences), interpersonal factors (i.e., the family members’
perceptions, norms, and level of trust), communication, structure of relationships (i.e.,
power balances, status differentials, and levels of autonomy), historical patterns of
interactions (i.e., past failures to cooperate, locked-in behaviors, and conflicting
assumptions), and unique family business issues (involved versus non-involved family
members in the business and life style differences between family members).
Meanwhile, Danes et al. (1999) classified the causes of a conflict into five areas: justice
conflict (issues related to compensation and quality treatment, role conflict (confusion
about the roles related to performing a task or making a decision), work/family conflict,
identity conflict (i.e., gender issues and sibling rivalry), and succession conflict.
18 Chapter 2: Literature Review
Figure 1: Conceptual Framework
The core process refers to a development process of conflict. It consists of
interpersonal behavior and expressed emotion (Thomas, 1992; Wall & Callister, 1995).
According to Thomas (1992), the core process of conflict consists of awareness,
thoughts and emotions, intentions, behavior, and other’s reaction, which reflect the
dynamics of the conflict, and which in turn influence on the outcomes and intensity of
the conflict (Thomas, 1976). In responding to a conflict, Thomas (1976) classified
individual’s behavior based on their intentions (cooperativeness and assertiveness) into
five types of conflict handling styles: competing, collaborating, compromising,
avoiding, and accommodating.
Wall and Callister (1995) grouped the effects of conflict into effects on
individuals (e.g., anger, stress, and low job satisfaction) and effects on interpersonal
relationships (e.g., distrust, poor communication, and avoiding each other). In the
context of a family business, research has shown that, in addition to negative
consequences for individual well-being, a destructive conflict could also have a
negative effect on family harmony and business performance (e.g., Amarapurkar &
Parties’ behavior
PAPE
R 1
Causes
Core process
Effects
• Escalation • De-escalation
feedback
Third parties’ involvement
PAPER 3
s
PAPER 2
Chapter 2: Literature Review 19
Danes, 2005; Eddleston & Kellermanns, 2007; Merwe & Ellis, 2007). The negative
effects of a conflict could lead to new conflict with increased intensity (Thomas, 1976).
Furthermore, the role of the third party is incorporated into the model in Figure
1. A third party is often involved in conflict situations (Black & Baumgartner, 1998).
Third party involvement is even more apparent in a collectivistic culture, as in this
culture, conflict is seen as a collective issue and face-giving is valued more than it is in
an individualistic culture (Kazan, 1997). A study by Kozan and Ergin (1998) found that
Turkish subjects preferred to solve their conflict through an intermediary, whereas U.S.
subjects preferred direct negotiation.
Organizational conflict literature has shown that third parties often become
involved in a conflict. Due to their position, managers often play roles as third parties
in their subordinates’ conflicts (e.g., Karambayya & Brett, 1989; Pinkley et al., 1995).
Third-party roles may also be played by peers (Kozan & Ilter, 1994) or organizational
outsiders (Volkema, Bergmann, & Farquhar, 1997). The role of the third party has been
widely acknowledged in family business literature, but mostly focuses on the role of
formal third parties, such as business advisers or management consultants (e.g., Haynes
et al., 1997; Prince, 1990). Although family business literature has indicated the
important role of the informal third party (e.g., family elders) in resolving family
business conflicts (Prince, 1990), limited empirical studies have examined the roles of
non-family executives and their effectiveness in family business conflicts.
Two studies were conducted to better understand the dynamics of family business
conflict. Figure 1 presents the framework that served as a guide in conducting and
presenting the results of the two studies.
The first study used the causes core process effects feedback perspective to: (a)
identify the most important factors that promote conflict escalation and de-escalation
by analyzing the data at incident and dyad levels of analysis (Paper 1); and (b) examine
the core process of conflict in order to understand how parties’ conflict behavior, which
consists of two behavioral aspects: conflict handling styles and emotional regulation,
explains the escalation and de-escalation of conflicts (Paper 2).
20 Chapter 2: Literature Review
The second study explores the roles of informal third parties in the dynamics of
family business conflict. Specifically, this study explores the roles of non-family
executives in family business conflicts (Paper 3).
Chapter 3: Methodological Considerations 21
Chapter 3: Methodological Considerations
This chapter presents the research design and methods used in conducting the
present investigation, which comprised two studies. The two studies conducted in this
thesis were based on a qualitative inquiry, involving the use of in-depth semi-structured
interviews and a critical incident technique to collect data. The steps of the research
processes are illustrated in Figure 2 and described in more detail in the rest of this
chapter. This chapter also considers the issues and strategies related to recruitment,
participation, and interpretation throughout the research processes. The last two
sections of the chapter discuss the trustworthiness and ethical aspects of the study.
3.1 RESEARCH DESIGN AND METHODOLOGY
A qualitative approach was adopted for the studies in this thesis, which aligns
with the purpose of the thesis, as the primary focus was to collect valuable information
about family business members’ experiences, behaviors, and involvement in conflicts
(Corbin & Strauss, 2015; Leedy & Ormrod, 2010). The current studies were also in
response to the call for qualitative methodology to research complex issues drawn from
family business members’ (family and non-family) daily experiences and
interpretations (Evert, Martin, McLeod, & Payne, 2016; Fletcher, Massis, & Nordqvist,
2016; Frank et al., 2011). Qualitative research is an appropriate way to address family
business issues, such as contradictions, tensions, paradoxes, and dualities (Fletcher et
al., 2016). This thesis reveals the advantages of conducting qualitative studies. The
participants of the studies provided their experiences and perceptions of what had
happened during conflict episodes. As a result, this thesis provides rich descriptive
information about the dynamics of family business conflicts, demonstrates their
escalation and de-escalation patterns, as well as identifying the factors that may
contribute to conflict escalation and de-escalation.
Semi-structured in-depth interviews incorporating the critical incident technique
(CIT) were conducted to achieve the overall research objectives of the two studies. This
technique was initially developed by Flanagan (1954), who considered CIT to be a
technique that “consists of a set of procedures for collecting direct observations of
human behavior in such a way as to facilitate their potential usefulness in solving
22 Chapter 3: Methodological Considerations
practical problems and developing broad psychological principles” (pg. 327). Although
the CIT was initially applied in the field of occupational psychology (Butterfield,
Borgen, Amundson, & Maglio, 2005), this method has been effectively applied in
management studies, including organizational behavior, human resources, marketing,
and management information system (Serenko & Turel, 2010). A recent study
examined the potential use of CIT in organization and management research and
demonstrated that the CIT could be used in organizational research in a leadership
context (Bott & Tourish, 2016). It also has been widely used in conflict research
(Kozan, Ergin, & Varoglu, 2014). The critical incident technique was used in this study
because: (a) it is important to anchor participants within a specific incident in order to
explore participants’ experiences and behavior in a conflict and their perspectives of a
conflict, (b) the technique is useful in the early stages of research where the goal is to
explore information and theory or model-building (Woolsey, 1986), (c) it supports a
qualitative research method in obtaining rich or thick data because it enables the
researcher to elicit details of participant experiences and perspectives (Butterfield et al.,
2005; Bott & Tourish, 2016), and (d) family members are more likely to talk about the
conflicts they have experienced and what they did during the conflicts, as opposed to
discussing conflicts they are currently experiencing. The primary disadvantage of this
method is that it relies on self-reporting, which potentially results in subjective or
inaccurate reports. In addition, the use of a semi-structured in-depth interview method
allows the researcher to uncover the issues of the conflict, the behaviors and roles of
family business members (family and non-family executives), and the dynamics of
family business conflict (Hays & Singh, 2012 pg. 239).
Chapter 3: Methodological Considerations 23
Research plan Literature gaps Research questions
Paper 1, Paper 2, Paper 3
Research design
• Qualitative approach
Procedures Data collection
• Semi-structure interviews • Critical incident technique
Recorded data
• Audio recordings • Field notes
Data analysis Transcribe the incidents
Read through the complete transcripts
Code to identify the themes related to the research questions
Refine the categories
Develop categories and
establish an initial codebook
Research literature (Paper 2)
Final categories emerge Reliability check (20-25%
randomly selected incidents)
Explore the relationships
between patterns
Saturated analysis No Additional data collection Yes Reporting Answer the research questions
and provide a theoretical explanation
Figure 2: Steps of the Research Processes
24 Chapter 3: Methodological Considerations
3.2 SAMPLE RECRUITMENT
The recruitment of participants was identified as a challenge due to: (a) a lack of
a representative sampling frame, (b) the reluctance of family members to participate in
a study, and (c) the sensitive issue of this study. Purposive sampling and snowball
sampling were adopted to obtain valuable information relevant to this study. Purposive
sampling was used to target members of family businesses, including owners, family
CEOs, and NFEs who had been working in the business for at least two years.
Participants were purposively selected from family businesses in Indonesia where more
than 51 percent of the shares were owned by members of a single family and were
managed by at least two family members. The eligible family businesses were derived
from personal contacts and workplace, friend, and relative networks. A snowball
sampling technique was also used as a method of recruitment by asking interviewees
to make suggestions about and introduce the researcher to potential participants.
Furthermore, a maximum variation strategy was employed (business sectors,
generations, size, and ages) as a supplement to the snowball approach (Guest & Namey,
2013 pg. 48-51).
The recruitment approach utilized in these studies may have led to a selection
bias. Participants of the studies may not be representative of the universe, but rather of
a selected group or network within a universe. However, in this case, bias through
snowball sampling was less of a concern, as the purpose of the studies was not to
generalize the findings to all family businesses in Indonesia, rather to explore the
dynamics of conflicts experienced by family businesses.
Table 3.1 presents the number of participants and data collected for each study.
The data used in Study 1 contained data from a previous study collected in 2012 and
additional data generated from interviews conducted in 2015. Some participants
participated in both time periods. Ten interviewed participants were excluded from the
analysis because they did not provide sufficient information (7 participants) or had not
experienced a conflict in the last 12 months or even longer (3 participants). In total, 60
participants from 29 family firms participated in Study 1, with 71 reported incidents.
Meanwhile, data for Study 2 was collected from 28 NFEs from 24 family firms in 2016,
including NFEs from family firms who participated in Study 1 and Study 2. Sixty-three
incidents were available for analysis.
Chapter 3: Methodological Considerations 25
Table 3.1: Total Number of Participants and Incidents in Each Study
Study 1 Study 2
2012 2012 &
2015 2015
Total
(2012 + 2015) 2016
Number of participants 20 3 34 60 28
Number of companies 3 3 20 29 24
Number of incidents 27 44 71 63
3.3 DATA COLLECTION PROCEDURES
Data for the first study were collected from owners, family, and non-family
executives. Meanwhile, data for the second study were gathered only from NFEs. For
the data collection, with the help of colleagues, friends, and relatives of the researcher,
potential participants were first contacted by phone or text message to inquire about
their interest in participating. After they agreed to participate, an interview date and
place were set. Finally, the participants were asked at the end of the interview to
nominate other individuals, within or outside their firm, as potential participants. This
recruitment process continued until saturation was achieved.
During the recruitment process, several potential participants refused to
participate, mostly because they were reluctant and because the topic was sensitive.
Two strategies were undertaken to overcome refusal from eligible participants. First,
rather than directly approaching the owners or other family members, the NFEs of the
family businesses (particularly the right-hand person to the owners or family members)
were contacted to ask for their participation in the study. At the end of the interview,
they were asked to provide access to the owners and/or other family members and to
encourage them to be interviewed. It was observed that NFEs were more willing to
participate in the study and eager to help to convince the owners and family members
to participate. Second, the purpose of the study was paraphrased. Rather than saying
the study was about family business conflict escalation and de-escalation, the
participants were told that it was about the successes and challenges of family
businesses. During the interviews, participants were asked about the company’s key
success factors and their challenges, including external and internal
26 Chapter 3: Methodological Considerations
challenges. Discussing the internal challenges was an entry point to ask about the
conflicts in their family business and how they dealt with the conflicts. These strategies
improved the response rate, although the interviews took longer to complete.
A data triangulation process was adopted to minimize individual subjectivity and
to ensure the validity of the data. The intention for Study 1 was to interview at least two
participants from each company. However, because interfamilial conflict is a very
sensitive issue, it was difficult to obtain access to all involved. Multiple participants
were able to be interviewed in 22 (66%) of the total number of the participating
companies.
Each of the participants of Study 1 and 22 out of the 28 participants of Study 2
were interviewed in person. All interviews were performed at a time and location
chosen by the participants for their convenience. Consequently, personal interviews
were conducted in a variety of venues ranging from participants’ offices to participants’
residences and a café. It seemed that the participants were more relaxed if the interview
was conducted in their homes. Interviews in participants’ offices were sometimes met
with distractions from their demanding jobs. Interviews at a café were often distracting
due to people who passed by or because of noise from the café. Six participants of Study
2 were interviewed over the telephone due to the geographical constraints and
difficulties in scheduling an appointment. The researcher observed no clear differences
between responses obtained by telephone and through in-person interviews. The
participants were generally willing to answer all interview questions openly.
Interviews were conducted in Bahasa Indonesia (Indonesian language) and were
transcribed without translation. The transcriptions were read in their original language
(Bahasa Indonesia) and coded in English. The quotes in Bahasa Indonesia were
translated into English by the researcher and checked by an experienced bilingual
proofreader for accuracy.
The interviews began with a brief introduction to explain the study in greater
detail, all potential participants were informed about the right to withdraw from the
study at any stage, the confidentiality of their answers, and given assurances about their
anonymity. Informed consent was obtained from all participants, mostly in the form of
verbal consent. Most participants felt uncomfortable signing written consent (to ensure
Chapter 3: Methodological Considerations 27
the participants’ complete anonymity) and said that verbal consent (by agreeing to be
interviewed) should be sufficient.
Most of the interviews were audio recorded with the verbal permission of the
participants. This might have introduced some bias, because in Study 1, 12 out of the
60 participants refused to be tape-recorded. In this case, the main details of the
conversation were noted during and immediately after the interview. All interviews
from Study 2 were tape-recorded. Furthermore, among those who agreed to be
recorded, some family members felt insecure about being audio-recorded. Many
interviewees spoke more eagerly once the recorder was turned off at the end of the
interview. Therefore, in several interviews, the recorder was intentionally switched off
in the middle of the interview and written notes were taken instead. This might also
raise the risk of bias. The audio recordings were transcribed precisely to minimize the
risk of researcher bias.
Moreover, the one-on-one semi-structured interviews and the critical incident
technique employed in the two studies produced data that was based entirely on the
participants’ perceptions and experiences (including the conflict parties and the third
parties) in dealing with conflict in their firms. Consequently, the participants may not
have been able to accurately recall the incidents they had experienced. Some
participants may have exaggerated or even manipulated their stories, since they may
have felt that they would embarrass themselves or others. This was also the reason why
some participants did not want to be recorded. To address these limitations, an inclusion
of more than one participant per family firm was ideal (Study 1), and elaboration probes
were used during the interviews to keep participants talking and to gather detailed
information about the conflicts.
3.4 DATA ANALYSIS
The steps in the data analysis are shown in Figure 2. This process entailed: (a)
transcribing each incident reported, (b) repeatedly reading the transcripts to obtain an
overall understanding, (c) generating initial themes, (d) categorizing the themes and
developing a code book to be used for analysis, (e) applying theme codes to the
remaining transcripts, and (f) interpreting the data by linking the themes (Bernard &
Ryan, 2010).
28 Chapter 3: Methodological Considerations
A content analysis of the transcriptions of incidents was conducted to identify,
examine, and report patterns (or themes) within the data. A code book was inductively
created (except for Paper 2, where most codes were theory-driven) from the data,
guided by an initial list of codes generated from the research questions and literature
review. The process of coding was carried out according to the circular process of
coding, as described by DeCuir-Gunby, Marshall, and McCulloch (2011). Repeated
patterns of language used, ranging from a single word (e.g., angry, annoyed) to short
phrases that expressed a specific concept, were sought within texts. The codes were
then named accordingly and synthesized into a code book.
Qualitative analysis has the potential for researcher-bias, as the individual
researcher’s values and understandings may influence the interpretation of the data. To
minimize researcher bias, two colleagues for Study 1 and one colleague for Study 2
then independently analyzed several incidents (approximately 20-25%) that were
randomly chosen to confirm the initial list of themes (code book). Overall, there was
little disagreement in the final code book, as the themes were discussed to achieve a
consensus and create a final code book. The final code book was then used to code the
remaining transcripts.
3.5 TRUSTWORTHINESS
Various strategies were undertaken to ensure trustworthiness throughout the
research processes (data collection, data analysis, and data interpretation) based on four
specific criteria, including the credibility of the work, dependability of the findings,
confirmability of the data, and transferability of the work to other settings (Elo et al.,
2014; Hanson, Balmer, & Giardino, 2011). As mentioned above, to ensure credibility,
most interviews were audio-taped and transcribed to gain an accurate and complete
transcription (Guest, Namey, & Mitchell, 2013, p. 157), multiple participants were
recruited to triangulate the data (Study 1 and Study 2), and probes were used to obtain
detailed data to gain a good understanding of the issues addressed in the study (Guest
et al., 2013, pp. 148-149; Hanson et al., 2011).
Several steps were taken to address transferability. Maximum variation sampling
was used to ensure that a range of family businesses were included in this study (Guest
et al., 2013, pp. 48-51). Moreover, detailed descriptions of the sample (companies and
Chapter 3: Methodological Considerations 29
participants) were provided, allowing readers to make judgments about whether or not
the reported results are transferable to another setting (Elo et al., 2014; Hanson et al.,
2011).
To increase the dependability of this study, detailed information regarding data
collection and data analysis procedures was provided, and a member checking process
was undertaken by discussing the insights that were likely to emerge from the data
analysis with the participants (after the interviews were completed) (Hanson et al.,
2011).
To establish confirmability (Elo et al., 2014), two colleagues independently
reviewed the initial list of themes (code book) and any disagreements were then
discussed until consensus was reached. Furthermore, deep descriptions, including
examples of quotations from many participants, have been included in the final report
to help ensure the link between the results and the data.
3.6 ETHICAL CONSIDERATIONS
This study received ethical approval from the QUT Human Research and Ethics
Committee (Approval Number: 1500000279). Several ethical issues were considered
in the studies. The studies asked participants to reveal their personal details and share
their perspectives about and their own experiences with family business conflicts. Most
interviews (Study 1) were conducted with several participants of a firm and audio
recorded. This had the potential to make participants uncomfortable and it was therefore
important to ensure the confidentiality of the participants. At the beginning of each
interview, the participants were informed about the purpose of the study and then asked
for consent to participate (either written or verbal). They were also informed that they
were free to end the interview at any time and to not answer any questions. Furthermore,
the participants were assured that their responses would be treated anonymously and
would be strictly confidential and used for scientific purposes only. All participation in
the study was voluntary and all participants were interviewed only after providing
consent. Any recorded interviews were destroyed as soon as they had been transcribed.
30 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
4.1 ABSTRACT
This study was conducted to examine the escalation and de-escalation patterns of
family business conflicts and the factors that contribute to those patterns. Using a
critical incident technique, 71 incidents were collected from 29 privately-held family
businesses in Indonesia. Three patterns were identified—conflicts that escalate and
keep escalating, escalate but then de-escalate, and do not escalate. Four factors were
identified as the most important determinants of conflict escalation or de-escalation—
the issues of the conflict, conflicting parties’ emotional reactions, conflict handling
styles, and the role of informal third parties. The findings show that the accumulation
of negative feelings resulting from dissatisfaction of the outcome of prior conflicts
increased the intensity of the next conflict.
4.2 INTRODUCTION
One of the biggest challenges faced by family members in running their family
firm is how to deal with conflict between and among themselves. Although conflict can
be constructive (Cosier & Harvey, 1998), family business conflicts have a tendency to
escalate easily. Previous studies have found that destructive intra-familial conflict is
one of the main factors that cause many family businesses to fail to survive (Danes &
Olson, 2003; Harvey et al., 1998; Merwe & Ellis, 2007).
Factors that may influence the intensity of family business conflict have been
empirically examined in only a small number of studies (Benavides-Velasco, Quintana-
García, & Guzmán-Parra, 2013; Danes et al., 1999; Frank et al., 2011). Due to the
limited number of studies and the complex nature of the topic, the results are mixed and
inconclusive. For example, Wakefield and Sebora (2004) revealed that close family
social interaction was negatively related to the intensity of conflict, which is in contrast
to the results of a study by Davis and Harveston (2001). Wakefield and Sebora (2004)
also proposed a contradictory hypothesis regarding the influence of non-employed
family members on conflict, and argued that the greater the number of non-employed
Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 31
family members who influence business decisions, the higher the conflict; however,
Davis and Harveston (2001) argued that this is not the case if family members have
close relationships. In both studies, the affiliation of the family work group was also
hypothesized to be a factor in reducing family business conflicts. Yet, those studies had
very different results. A positive significant relationship between those variables was
revealed in Davis and Harveston’s (2001) study (even though it was in the opposite
direction), while no significant relationship was found in Wakefield and Sebora (2004)
study.
Previous studies have also primarily focused on the structure of the family and
the business; however, no further extensive studies have been conducted to confirm the
findings. These studies did not adequately uncover how the conflict escalation and de-
escalation process actually worked. This may be because most studies have focused on
quantitative outcomes and test results, which are useful, but have not provided an in-
depth opportunity to explore the dynamics of conflict (Frank et al., 2011).
To address this gap, this study undertook in-depth, exploratory empirical research
on the escalation and de-escalation of family business conflicts, focusing on the process
of conflicts experienced by family members, with the aim of comparing the instances
in which family business conflict escalated or de-escalated and to explore the key
factors that promote this. This study addresses one main research question, with two
sub-questions:
1. Why do conflicts in some family businesses escalate and others do not?
a. What are the escalation and de-escalation patterns of family business
conflicts?
b. Which factors distinguish conflicts that escalate from those that do not?
This study contributes to both theory and practice by: (a) expanding insight
regarding the antecedents of the escalation and de-escalation of organizational conflict,
which is understudied (Wall & Callister, 1995), particularly in the context of family
business; (b) enriching and leading to a more generalizable understanding of family
business in multiple contexts—a collectivist and developing country; and (c) pointing
out the factors that can lead to the escalation and de-escalation of conflict.
Understanding the patterns of and the factors that contribute to conflict escalation and
32 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
de-escalation comes prior to being able to develop ways to effectively prevent the
conflict from escalating.
4.3 LITERATURE REVIEW
4.3.1 The Nature of Family Business Conflict
Conflict can be defined as “a dynamic process that occurs between interdependent
parties as they experience negative emotional reactions to perceived disagreements and
interference with the attainment of their goals” (Barki, 2004, p. 216). Conflict in a
family business is unique compared to that in other organizational contexts because it
occurs among related family members, which is different from conflict among
unrelated organization members (Harvey & Evans, 1994; Haynes et al., 1997; Kenneth
Kaye, 1991), it involves tensions between family concerns and business goals (Gersick
et al., 1997), and may involve internal and external stakeholders (Harvey & Evans,
1994). Issues that are outside of a normal business course, such as family rivalries,
family frictions, the transfer of managerial power, nepotism, and so forth are often
translated into family business conflicts. Personal goals are often intermixed with
family and business goals. Moreover, a conflict may involve family members within a
single generation or across generations of a nuclear family and between family units
(Harvey et al., 1998). Therefore, family firms may experience greater and more intense
conflicts than other organization forms.
4.3.2 Conflict Process
Conflict often can be conceptualized as a cycle model of antecedents (causes),
core process, outcomes, and feedback (Wall & Callister, 1995). This model shows how
a conflict develops, starting with the cause, which may include individual
characteristics (e.g., personality, goals, and values), interpersonal factors (e.g.,
communication, behavior, and previous interactions); the nature of the issues (e.g.,
emotional, substantive, and complex); its development; and its outcome, all of which
have influences on future interactions and subsequent conflicts.
Wall and Callister (1995) suggested that the core process of interpersonal conflict
is the behavior of the parties, where conflicting parties oppose their counterpart’s
interests or goals. A conflict process model proposed by Thomas (1976) described the
core process of a conflict, which is influenced by the behavior of conflicting parties
Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 33
toward each other, in more detail. The model suggests that conflicting parties develop
their own conceptualization of the situations during a conflict. Their conceptualization
will strongly determine their reactions to frustration and subsequent behavior. During
this stage, both parties may experience negative emotions, such as anger, annoyance,
or frustration. The parties then decide what actions they are intending to take by
considering others’ concerns or by satisfying his or her own concerns. Based on the
degree of each variable, five different behaviors were defined in a conflict situation,
including competing (high concern for the self and low concern for others),
collaborating (high concern for both the self and others), accommodating (low concern
for the self and high concern for others), avoiding (low concern for both the self and
others), and compromising (moderate levels of concern for both the self and others)
(Thomas, 1976). The actions taken by one party can have an influence on the
subsequent behavior of the other and can escalate or de-escalate conflict situations.
Conflict results in various effects that may be functional or dysfunctional
(Amason, 1996; Rahim, 2011, pp. 6-7). Rahim (2011) summarized that functional
outcomes can lead to innovation, creativity, and change, and improve decision making
processes, individual and group performance, and so forth, while dysfunctional
outcomes could result in feelings of stress, dissatisfaction, damaged relationships, a
climate of distrust, and so forth, (pp. 6-7). Dysfunctional outcomes could also decrease
team members’ satisfaction and organizational commitment (Jehn & Mannix, 2001).
Both conflict models proposed by Thomas (1976) and Wall and Callister (1995)
suggest that the outcome of the conflict, which refers to the decisions taken, agreement
made, and the feelings of the conflicting parties, will determine the entering state of
each conflict party in subsequent conflicts (Thomas, 1976; Wall & Callister, 1995).
This cycle might evolve and promote escalation.
4.3.3 Conflict (De-) Escalation
Conflict escalation refers to an increase in the intensity of the conflict (Wall &
Callister, 1995), where the number of conflict participants increases, the use of coercive
tactics increases, the issues of the conflict become wider, the resources allocated to the
conflict increase, and the goals of the parties change from wanting to win into hurting
the other party (Pruitt & Rubin, 1986). In addition, Janssen and Van de Vliert (1996)
described conflict escalation as a conflict in which the issues are increased and/or the
34 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
relationship of the disputants is worsened. Conversely, conflict de-escalation refers to
a conflict where the issues are reduced and/or the relationship of the disputants is
improved.
Studies about organizational conflict have primarily focused on the conflict
handling styles used by the conflicting parties to explain conflict (de-)escalation. For
example, by undertaking two experimental studies, Janssen and Van de Vliert (1996)
found that: (a) disputants in a cooperative condition have much stronger other-concern
than disputants in a competitive situation; (b) a strong other-concern is more likely to
de-escalate the conflict, whereas weak other-concern is more likely to escalate the
conflict; and (c) a stronger other-concern leads to being more accommodating, more
problem solving/integrating, and less forcing/competing, which in turn results in more
de-escalation of the conflict. In other words, the study shows that concern for the other’s
goals is the main factor that explains the (de-)escalation of conflicts. These findings
were supported by another experimental study conducted by Medina and Benítez
(2011). They also revealed that problem-solving and accommodation behaviors were
effective to de-escalate an escalating conflict.
In the context of family business conflicts, Sorenson (1999) examined conflict
management strategies that had been used by successful family businesses. She found
that families and businesses that achieve positive outcomes use collaboration,
accommodation, and compromise strategies in handling their disagreements.
Meanwhile, a competition strategy is positively associated with the negative outcomes
of the family and the business. In addition, Danes, Leichtentritt, Metz, and Huddleston-
Casas (2000) conducted a study of couples in 206 farm family businesses to examine
the impact of conflict handling styles on the severity of the conflict. Their study found
that conflict resolution styles strongly explained the severity of the conflict, where
aggression was the most important positive predictor in explaining the severity of a
family business conflict.
The conflict cycle perspective was used as the framework in the current study to
explore incidents experienced by family business members. By analyzing the causes-
core process-effects-feedback of each incident, the important factors that promote
conflict escalation or de-escalation were identified
Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 35
4.4 RESEARCH METHOD
4.4.1 Design of the Study
This study adopted a qualitative approach to address the research questions. This
method was deemed suitable to gain an understanding of the complex phenomena from
the perspectives of the participants (Leedy & Ormrod, 2010), because this study focuses
on gaining insights from the patterns that emerged from the data rather than collecting
data to confirm or disconfirm models, hypotheses, or theories (Taylor & Bogdan, 2015,
p. 7). Furthermore, this qualitative method included the use of in-depth, face-to-face,
semi-structured interviews and the critical incident technique (CIT) to collect the data.
In-depth interviews were deemed the most appropriate method for this research because
it sought to explore the perceptions of family business members about conflict in their
firm. The CIT facilitates researchers to relate context, strategy, and outcome to identify
repetitive patterns, and because it can be used across multiple family businesses to
reveal common themes that increase generalizability (Cassell & Symon, 2004, p. 67).
Since the CIT relies on self-reporting, the reports may be subjective and inaccurate. In
order to minimize these disadvantages, multiple informants were interviewed for data
triangulation (Yin, 2009, p. 116) and participants were asked to recall major incidents
that had recently occurred so that they could have good recall (Cassell & Symon, 2004,
p. 67). However, because intra-family conflict is a very sensitive issue, the researcher
was not able to interview multiple participants from all participating firms. Multiple
participants within a firm were only obtained from 22 out of the 29 participating firms
(75.9%). In total, 54 out of 71 incidents (76%) reported by conflict parties were
confirmed by another party, another family member, and/or a non-family executive.
4.4.2 Firms and Participants
Any company where at least 51% of the shares were owned by members of a
single family and were managed by at least two family members was eligible to
participate in this research. However, the generation of representative sample data was
a challenging task for several reasons. First, a database of family businesses in
Indonesia was not available. It was even more difficult to list family businesses that
met the inclusion criteria. Second, family business members, particularly in Indonesia,
tend to be reluctant to participate in a research (Großmann & Schlippe, 2015). They are
even more hesitant to be involved in research about conflict. Any efforts to generate
36 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
reliable and representative data on this subject face a range of obstacles. Therefore,
several methodological approaches and techniques were taken to deal with these
problems: (a) this study employed purposive and snowball sampling methods to obtain
access to potential participants; (b) in order to recover a representative sample of the
diverse population, a variety of categories of family businesses was observed, including
size, generational structure, industry, and location; and (c) the critical incident
technique (CIT) was used under the assumption that family members would be more
willing to share information about conflicts that they had experienced rather than about
on-going conflicts.
4.4.3 Data Collection Procedures
This study employed face-to-face individual interviews to obtain detailed
information about family members’ conflict experiences. Potential participants were
identified from a list of family businesses derived from the researcher’s personal
contacts, as well as friends, relatives, and workplace networks. The researcher then
contacted them via telephone, explained the purpose of the study, and requested their
participation in this research. When a contacted person agreed to participate in the
study, an interview was scheduled at a time and place of his or her choice.
To avoid bias, each participant was advised before the interview that their
responses would be used for research purposes only and would be kept confidential.
They were also informed that their participation was voluntary, and they could stop and
leave the interview at any time. After obtaining their informed consent (either verbal or
written), face-to-face interviews were conducted in the Indonesian language by the
researcher. In each interview, the participants provided demographic data and were
asked to recall major incidents they had recently experienced or they were experiencing
in their family firm. They were requested to answer a set of probing questions, such as
“What was the conflict about?”, “What did you do during the conflict?”, and “Did you
talk about your conflict with others?”. This script was modified when interviewing the
third parties. The interview protocol is presented in Appendix A. The interview sessions
lasted between 60-90 minutes.
At the end of each interview, the participants were asked whether other family
members and/or non-family executives (directors, top and middle managers) would be
interested in participating in the study. If so, they were then contacted individually.
Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 37
They were interviewed to triangulate the information given by the previous participants.
They were interviewed primarily about the conflicts experienced by conflicting parties,
their perceptions of the conflict behaviors displayed by the conflicting parties, and their
roles in that conflict.
All of the interviews were conducted by the researcher in 2012 and 2015. Data
from six family businesses was collected in 2012. In 2015, participants from 26
companies (including three companies that participated in 2012) were interviewed.
Interviews with 48 participants were audio-recorded, while the remaining 12
participants were uncomfortable with audio recording and refused to be audio-recorded.
The participants who reported ongoing conflicts (12 incidents) agreed to answer a text
message sent to them two weeks after the interviews asking about the progress of the
conflicts. After interviewing participants from the 20th company (46 participants), data
was saturated; however, for more validation, interviews were continued with the
agreed-upon participants of 29 companies (60 participants). In total, 71 work-related
incidents provided sufficient information and were available for analysis (43 intra- and
28 intergenerational conflicts). A summary of the incidents is provided in Appendix B.
4.4.4 Data Analysis
Interviews were transcribed verbatim and each participant and company’s name
were replaced with a pseudonym for purposes of confidentiality and anonymity. The
transcripts were analyzed using a content analysis system following DeCuir-Gunby et
al. (2011). The researcher first read each incident several times to become familiar with
the content, which was coded by the level of meaning. The next step was to identify the
themes within the subsamples, and these were then classified under tentative categories
by searching for similarities and differences. The initial codes were refined through
constant comparisons of the transcribed incidents as the data collection proceeded. New
codes were added as other codes emerged during the coding process. A random sample
of incidents (25%) was cross-coded by two colleagues for interrater reliability. The
reliability of the sample was between 79% and 80%, which could be considered
conclusive because it reached more than 70% agreement (Hays & Singh, 2012, p. 308).
The final codebook was established (the codebook is provided in Appendix C) and used
to code the conflicts reported through interviews and critical incidents.
38 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Data analysis was conducted at both incident and dyad levels. The former
addressed escalation and de-escalation patterns of a single conflict. The later assessed
those patterns across a sequence of successive conflicts experienced by a dyad. Each
incident was coded for the presence or absence of codes. The incidents were then
grouped into three summary categories—escalate–intractable, escalate–de-escalate,
and not-escalated conflict to identify the key dimensions that differentiated an escalated
and a de-escalated conflict. Data analysis was then also conducted using pair
longitudinal data. This longitudinal analysis was employed by comparing each
dimension of the conflict across the conflict episodes experienced by each pair of
conflicting parties over time. The escalation or de-escalation of a series of conflicts was
assessed through changes in specific conflict dimensions (e.g., whether a conflict party
became more or less emotional).
4.5 RESEARCH FINDINGS
The findings are presented in three main sections. The first section provides the
demographics of the company, a brief profile of the participants, and a description of
the incidents. The governance structure of the participating family firms and the context
of the relationship in which the conflict occurred are also described in this section. The
second section discusses conflict (de-)escalation at the incident level of analysis, which
is then followed by an analysis of conflict (de-)escalation at the dyad level of analysis.
Each of these two sections consists of two sub-sections, including the escalation or de-
escalation patterns of the conflict, and the contributing factors to each of the observed
patterns. Each section ends with a summary that reviews the major findings discussed.
4.5.1 Firms, Participants, and Incidents
The demographic characteristics of the participating firms and participants are
presented in Appendix D and Appendix E and summarized in Table 4.1. The
participants were from 29 small (n=2), medium (n=10), and large-sized (n=17) firms
from six provinces in Indonesia and from a variety of industries, with firm ages ranging
from five to 73 years. The number of family members in a business ranged from two to
eight people, with an average of 3.6 people. Four of the companies were single
generation firms and the rest were multigenerational family firms. Only 13 out of 29
Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 39
family businesses included non-family members in their top management teams,
ranging from one to three.
Table 4.1: Firm, Participant, and Incident Characteristics
Firms Total Participants Total Incidents Total Size Gender Intra-generational 43 Small 2 Male 46 Intergenerational 28 Medium 10 Female 14 Total 71 Large 17 Total 60 Total 29 Age (years) Firm age (years) ≤ 40 19 ≤ 20 8 41-50 19 21-30 4 51-60 11 31-40 9 > 60 11 41-50 5 Total 60 > 50 3 Total 29 Education High school or under 14 Generations Undergraduate 37 1st 2 Postgraduate 9 2nd 4 Total 60 1st & 2nd 22 2nd & 3rd 1 Tenure (years)
Total 29 ≤ 10 25 11-20 17 Family members 21-30 7
in the business 31-40 8
2 5 > 40 3
3 10 Total 60
4 10
≥ 5 4
Total 29 Non-family in top management team Yes No
13 16
29
The interviews involved 60 participants (48 family members, 12 non-family
members; 46 males, 14 females; mean age, 47.5 years; and mean tenure, 17.3 years).
The participants held positions at the top management level, such as president director,
40 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
director, manager, board member, and so forth. Thirty-seven of the participants had an
undergraduate degree, 14 participants were high school graduates or under, and nine
participants had a postgraduate degree. No participants had specifically taken courses
in conflict management and resolution; however, seven participants said that they had
taken a class in organizational theory and behaviors, which had a section on conflict
management theory.
The governance structure of all of the firms that participated in this study is shown
in Table 4.2. As can be seen, few firms implemented formal governance structures for
the family, ownership, and business subsystems. Although all participating firms
demonstrated a division of labor among family members, only 19 out of 29 firms had
set up a formal organizational structure, and most were large-sized family firms. The
findings indicate that the organizational structure did not represent management
responsibilities. There were many cases in which decision authority was not always
consistent with the hierarchical position. Generally, in parent–child teams, a parent
became the key decision-maker regardless of his or her position in the business. For
example, in Company 4, the father had taken the position of a commissioner and had
appointed his son to be the president director of their company; however, the father
retained the real power. The son had to consult with his father before making a strategic
decision. Likewise, in Company 2 and Company 20 the fathers often annulled decisions
made by their sons/daughters. A father in Company 2 said: “I refused his [son] intention
to implement an internal equitable salary structure and to increase the salary of several
senior managers. I determined managers’ salary based on negotiation. My son is lack
(sic) of experiences in running a business”.
The average size of the TMT within firms with a formal organizational structure
(18 firms) was 5.5 members, ranging from two to nine members. Families had the
largest representation on the TMT, with an average of 3.9 members. The involvement
of non-family members was present in 13 out of the 18 firms. The average size of non-
family members on the TMT was 1.15 members. The most common family institution
used was informal family meetings. Only large and a few medium-sized firms had
formal board meetings. Annual shareholder meetings were found in four firms, in which
shares were owned by siblings. Surprisingly, none of the participating firms had family
Chapter 4: Factor C
ontributing to the Escalation and De-Escalation of Fam
ily Business C
onflict
41 Table 4.2. The G
overnance Structure of the Participating Firms
Com
pany
Size
Age
(in years)
Generations
in the business
Num
ber of fam
ily m
embers in
the business
Division
of labor
Formal
organizational structure
TMT
size TM
T composition
Board
meetings
Informal
family
meetings
Formal
shareholder m
eetings Fam
ily N
on-family
1 Large
21 2
nd 3
X
X
6 3
3 X
X
X
2 Large
35 1
st & 2
nd 6
X
X
9 6
3 X
X
-
3 Large
45 1
st & 2
nd 8
X
X
8 8
0 X
X
-
4 Large
13 1
st & 2
nd 3
X
X
4 3
1 X
X
-
5 Large
23 1
st & 2
nd 4
X
X
6 4
2 X
X
X
6 M
edium
45 1
st & 2
nd 4
X
- 4
4 0
- X
-
7 M
edium
35 1
st & 2
nd 5
X
- -
- -
- X
-
8 Large
33 1
st & 2
nd 3
X
X
4 3
1 X
X
-
9 Large
61 2
nd 2
X
X
4 2
2 X
X
X
10 M
edium
35 1
st & 2
nd 2
X
- -
- -
- X
-
11 M
edium
50 1
st & 2
nd 2
X
- -
- -
- X
-
12 Sm
all 35
1st &
2nd
2 X
-
- -
- -
X
-
13 Large
31 1
st & 2
nd 3
X
X
3 3
0 X
X
-
14 Large
50 1
st & 2
nd 4
X
X
6 4
2 X
X
X
15 Large
33 1
st & 2
nd 4
X
X
7 4
3 X
X
-
16 M
edium
28 1
st & 2
nd 4
X
- -
- -
- X
-
42 C
hapter 4: Factor Contributing to the Escalation and D
e-Escalation of Family B
usiness Conflict
Com
pany
Size
Age
(in years)
Generations
in the business
Num
ber of fam
ily m
embers in
the business
Division
of labor
Formal
organizational structure
TMT
size TM
T composition
Board
meetings
Informal
family
meetings
Formal
shareholder m
eetings Fam
ily N
on-family
17 Large
37 1
st & 2
nd 6
X
X
8 6
2 X
X
-
18 M
edium
35 1
st & 2
nd 3
X
- -
- -
- X
-
19 M
edium
70 2
nd 3
X
- -
- -
- X
-
20 Large
25 1
st & 2
nd 2
X
X
2 2
0 X
X
-
21 Large
50 2
nd 4
X
- 4
4 0
- X
-
22 Sm
all 5
1st &
2nd
3 X
-
- -
- -
X
-
23 Large
72 2
nd & 3rd
6 X
X
7
6 1
X
X
-
24 M
edium
20 1
st & 2
nd 4
X
- -
- -
- X
-
25 M
edium
15 1
st 3
X
X
3 3
0 X
X
-
26 Large
15 1
st & 2
nd 3
X
X
4 3
1 X
X
-
27 Large
14 1
st & 2
nd 3
X
X
4 3
1 X
X
-
28 Large
10 1
st & 2
nd 3
X
X
4 3
1 X
X
-
29 M
edium
14 1
st 4
X
X
4 4
0 X
X
-
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 43
governance institutions, such as family councils, a family constitution, or a written
constitution/estate plan.
In summary, the family firms participating in this study covered many different business
areas, including manufacturing, farming, trading, retailing, and services. The size of the firms
varied from small firms to large corporations, which consisted of several business units. The
participating firms also constituted a large variety of companies in terms of types of age, the
family’s involvement in the company, and their governance structures. Family involvement in
TMT was strongly present in the participating firms. Informal family meetings were the
common institution type used to deal with business matters.
A total of 71 incidents of family business conflicts formed the basis of the analysis of
this study. As can be seen in Appendix B, these incidents were triggered by work-related issues,
such as determining a distribution channel, price, and sales terms, hiring a manager, adding a
new production line, assessing the company’s performance, opening new outlets,
decentralizing administrative tasks, and so forth. Moreover, these conflicts occurred between
42 pairs of family members within and between generations.
The relationship of the conflicting parties in the family and the business and the various
nature of the conflicts are presented in Appendix F. The data shows that most conflicts (38
out of 71 incidents) in the participating firms initially occurred in informal spontaneous
meetings, when a family member came to see another family member to ask about, discuss, or
argue about a particular issue. This occurred not only in small- and medium-sized family firms,
in which organizational structure was not defined, but also in large-sized firms with a formal
organizational structure. This indicates that communication among family members within
their firms tended to be informal.
The analysis was conducted at two different levels of analysis to gain a better
understanding of the escalation or de-escalation of a family business conflict. Section 4.5.2
discusses conflict escalation and de-escalation at the incident level of analysis. Section 4.5.3
examines conflict escalation and de-escalation at the dyad level of analysis.
44 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
4.5.2 Incident Level of Analysis
The coding process
The first step of the analysis was to determine whether or not each of the 71 incidents
escalated or de-escalated based on criteria derived from the conflict literature, including an
increase in the number of conflicting parties, focus or wider issues, heavier or lighter
contentious tactics, more or less intense emotional reactions, and more or less resources (e.g.,
time, energy) being devoted to a conflict. The escalation or de-escalation of a conflict episode
was assessed through the presence or absence of those indicators during the conflict episode.
As can be seen in Figure 3 (derived from Appendix G), most incidents were primarily
characterized by high levels of emotional intensity, including anger, annoyance, irritation, and
frustration (56 incidents). The results show that some family members became defensive and
a heated argument ensued (37 incidents). Almost half of the incidents (25 incidents) involved
verbal aggression, including raised voices, blame, using harsh words (e.g., swearing, calling a
name); and physical aggression, such as banging the table, hitting the wall, and slamming the
door being used by conflicting parties in 10 incidents. Some conflicts (14 incidents) were
prolonged and required a great deal of energy to deal with. Moreover, the escalation of a
conflict can also be identified from the presence of an additional conflict party to the conflict
(six incidents) and the shift of conflict issues from work-related to more personal issues (10
incidents). Meanwhile, the data shows that in 15 incidents, family members tried to resolve
their conflict in positive ways, such as avoiding direct confrontation/heated argumentations
and discussing the issues in respectful and collaborative ways.
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 45
Figure 3. Indicators of Conflict Escalation
The incidents were then grouped accordingly (the last column of Appendix G). The
second step of the analysis was to identify and classify the factors that could be distinguished
between the conflict escalation and de-escalation patterns observed in the analysis. The
codebook is provided in Appendix C.
Patterns of conflict escalation and de-escalation
Three conflict escalation and de-escalation patterns emerged from the data (as shown in
the last column of Appendix G) and were labeled “escalate” conflict (E), (b) “escalate–de-
escalate” conflict (ED), and (c) “not-escalated” conflict (NE). There were 34, 23, and 14
incidents in each group, respectively. The following are descriptions and selected examples for
each category.
Escalate conflict
This pattern refers to a conflict that escalates and its tension remains high, as an
agreement is not reached (either remained unresolved or unilaterally decided). A sibling
conflict between two brothers illustrates this situation. The younger brother wanted to improve
the quality of their product and expand production capacity to supply modern market channels.
The older brother disagreed due to lack of funds. The older brother also rejected the younger
brother’s ideas to add a work shift and work all shifts six days per week, because it would give
56
37
25
14
10
10
6
0 10 20 30 40 50 60
Emotional reactions
Heated arguments/defensiveness
Verbal aggression
Spent a lot of energy
Issues become wider
Physical aggression
Additional conflict party
Number of Incidents
Indi
cato
rs
46 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
him the additional burden of running at full capacity and expanding production. They each
insisted on their own arguments and could not reach agreement. The conflict lasted for years
and has ruined their relationship. The younger brother said:
We have been arguing for years. The conflict became uncertain and protracted. We
realized that we were unable to work productively together. We have been considering
several options to resolve our conflicts. We have to decide whether we totally split the
business into two independent entities, establish a new production line and then
gradually separate it, or create another brand, so one brand is for me and the other brand
is for my brother. We have been considering these options for years, but we have not
come to an agreement. Now, my brother avoids direct conversation with me (P20,
Incident 7).
Most of conflicts in this category ended in a stalemate (21 incidents). In the other
conflicts (13 incidents), decisions were unilaterally taken by one party, generally a senior
family member, in their own interests. As a result, tension between the conflicting parties
remained high, leading to broken communication, frustration, and increased intention to leave
the business. As can be seen in Appendix G, and as summarized later in Table 4.4, among the
42 pairs of conflicting parties, eight sons/daughters decided to leave the business and two
parents stepped back from the business to avoid conflict with their child.
Escalate–de-escalate conflict
This pattern refers to a conflict that initially escalates but its intensity then decreases as
the conflicting parties are able to come to an agreement. Incident 57 below describes a father–
son conflict that escalated but then de-escalated.
I felt annoyed and frustrated [about having] to get approval from my father to
implement my ideas. It often discouraged me from continuing to share thoughts and
ideas, but I did not give up. I kept persuading him. Our relationship had (sic) strained
for a while. However, we tried to calm down and avoid open conflict. It took almost
two years before he approved my plan (P12, Incident 57).
In this incident, the son had initiated a customer reward program by offering their
customers an overseas trip. He believed that providing a reward would motivate customers to
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 47
reach predetermined target sales. His father rejected this idea. He argued that this strategy was
costly and would be ineffective to generate profit. Their disagreement became a long argument.
During their conflicts, the father said that he was annoyed by the conflicts. Similarly, the son
said that he felt “annoyed” and “frustrated”. However, they were finally able to find a
resolution.
Not-escalated conflict
This pattern refers to a conflict that does not escalate during the incident, and where
family members are able to resolve the conflict peacefully. The following incident describes a
father–son disagreement over the replacement of an old production machine, which did not
escalate.
I intended to replace an old machine with a new automatic machine to increase the
production capacity and efficiency. My father did not approve. He argued that the
current machine was still good enough. I did not confront him, but I did not give up. I
kept persuading him and talked to him when he was feeling well. So, we never got into
heated arguments. Finally, after several months, he gave his approval. (P51, Incident
21).
Contributing factors to the conflict patterns
Table 4.3 summarizes a comparison across the three patterns of conflict escalation and
de-escalation and identifies four differentiating factors, including; (a) the reasons for the
conflict, (b) parties’ emotional reactions, (c) parties’ conflict handling styles, and (d) the
involvement of third parties.
Factor 1: The reasons for the conflict
As can be seen in Table 4.3, all reported conflicts were triggered by task-related issues,
such as disagreement over the implementation of a reward and punishment system,
determining marketing strategies, replacing machinery, and so forth. However, participants
who reported an escalated conflict often mentioned personal issues, such as distrust and
different personalities. Examples of incidents demonstrating the reasons for the conflicts in
each pattern are given below.
48 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Table 4.3: The Contributing Factors to the Escalation or De-escalation of a Single Conflict (n=70)
Escalate Escalate–de-escalate Not escalate
Reasons for conflict
• Work-related issues, but
often included elements of personal issues
• Mostly work-related
issues
• Mostly work-related
issues
Parties’ emotional reactions
• Emotions ran high
during the conflict
• Emotions initially rose
but then cooled down
• Remained calm during
the conflict
Parties’ conflict handling styles
• Competing • Avoiding
• Compromise (either
voluntarily or half-heartedly)
• Accommodation (either voluntarily or half-heartedly)
• Voluntarily compromise • Voluntarily
accommodate • Collaborate
Common third party roles
• Other family members
as an additional conflict party
• Non-family executives as a go-between or informant
• Father as an arbitrator • Non-family executives
as a negotiator or mediator
• Non-family executives as a part of the decision-making process
Escalate conflict (E-conflict)
Relationship issues, such as trust, respect, and power were likely to emerge in E-
conflicts. For example, three participants (one conflict party and two NFEs from Company 1)
indicated the presence of relationship issues in sibling conflicts about a backward integration
investment plan (Incident 25) and distribution channel choice (Incident 26). They stated:
I have handled this company for a long time. I involved my siblings to let them see and
learn about the business. I hope we can have functional conflicts, not issues like fear,
distrust, or a lack of vision. In my opinion, my siblings are acting like children (P01,
conflict party, Incident 25).
It is very difficult for them to reach an agreement. They never deal with the basic issue
of their disagreements. They both think of themselves as being the most correct. In my
opinion, they want to show who is the most powerful among them (P03, non-family
executive, Incident 26).
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 49
These brothers have difficulty working together. If one has an opinion, then the other
one will have a much different opinion, and each one insists with one’s own opinion.
It seems that their fundamental problem was (sic) pride (P04, non-family executive,
Incident 26).
Some other incidents indicated that a situation of mutual distrust seemed to be an
important reason for why conflicts escalated. For example, a NFE of Company 5 and a conflict
party from Company 25 said:
His brother [passive shareholder] often raised questions related to [the] company’s
ability to generate sufficient revenue to maintain profitability. He got angry, as he felt
that he was being suspected by his siblings. An argument broke out and exhausted the
anger between them (P19, Incident 5).
I just want a (sic) transparency in handling the money. I often told my sister not to
manipulate financial information. Family members must not have [a] personal interest
in the company (P55, Incident 36).
Escalate–de-escalate (ED-conflicts) and not-escalated conflicts (NE-conflicts)
The data indicated that conflicts in these two conflict categories did not include
interpersonal aspects. Conflicts in these categories reflected that family members stayed
focused on task-related conflicts and resolved their disagreements instead of taking the conflict
personally. For example, a disagreement between in-laws regarding material procurement
plans had caused a material shortage and production disruption. Rather than blaming each
other, they worked together to solve the problem. A conflict party said:
We have different opinions about how many suppliers we should have and which
suppliers we should select. As a result, our production was disrupted due to a lack of
material. However, we did not blame each other. We focused on efforts to ensure that
customers’ orders were delivered on time. We decided to buy the material from a new
supplier, even though it was more expensive (P57, Incident 60).
50 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Factor 2: Parties’ emotional reactions
Table 4.3 shows that unregulated emotions can escalate conflicts, and regulated emotions
can prevent a conflict from escalation or de-escalate an escalated conflict. As previously
described in Figure 3, negative emotions often surfaced during a conflict. Comparison of
incidents in the three conflict patterns indicated that in E-conflicts, conflict parties had
experienced strong negative emotions and were unable to manage them. Family members in
ED-conflicts admitted that they experienced negative emotions at the beginning of the conflict,
but it seems that they were able to regulate their emotions and quickly calm down during the
conflict. Meanwhile, family members in NE-conflicts did not respond to their conflicts with
negative emotions. Rather, they were able to be tolerant and overlook each other’s faults. Some
examples of family members’ emotional reactions that emerged during a conflict are as
follows:
Escalate conflict
A father–son conflict occurred over the father’s investment policies. In this conflict, both
parties became very emotional and the conflict ended with a broken relationship. Two
participants described the conflict:
My younger brother was fired from the company and subsequently kicked out of the
home. At the time they [father and son] were quarrelling, my father broke a chair and
my brother hit the wall (P01, Incident 24).
I am an outspoken person. I will say whatever I want to say. My father did not like my
style. We always debated about [how to run] the company. Finally, he fired me and
made me leave home. We did not talk to each other for a long time (P02, Incident 24).
Escalate–de-escalate conflicts
A sister, who was working with her younger brother, shared her experiences about how
they were able to control their emotions during a conflict. She stated:
Running a business is not easy. A harmonious family still has difficulty in managing
their business. It is even more challenging in an inharmonious family. Therefore,
family members should place the company’s interests over and above their own family
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 51
interests. When we have an argument, and if one of us gets emotional, the other will
step away from the situation by going back to work and let her/him calm down (P27,
Incident 54).
Not-escalated conflicts
The following incident shows how conflicting parties responded to their conflict without
being emotional. One interviewee stated:
We (four siblings) have been working together for more than 30 years after the death
of our father. We are committed to work together and resolve disagreements with
mutual understanding and respect. We do not blame others for mistakes. For example,
my brother accidentally bought fake jewelry, and yes, we lost a lot of money. However,
we were not angry and did not blame him. We knew that he did not do this intentionally.
Therefore, we just said “Be more careful next time” (P47, Incident 20).
Factor 3: Parties’ conflict handling styles
Figure 4 shows the conflict handling styles used by family members in each of those
three conflict patterns. It seems that a competing and avoiding style can lead to conflict
escalation, a compromising and accommodating style can lead to conflict de-escalation, and a
collaborating style can prevent a conflict from escalation. The following incidents are
examples of how family members handled their conflicts in each conflict escalation and de-
escalation pattern.
52 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Figure 4: Number of Conflict Handling Styles Used in Each Conflict Escalation Pattern
Escalate conflict
Family members in the E-conflict group generally used competing (28 incidents) and
avoiding (four incidents) styles in dealing with their conflict. They tended to insist on retaining
their own goals, opinions, or interests. For example, Incident 33 shows that the relationship
between a father and her daughter worsened and the intensity of conflict increased because
they both persisted with their own opinions. The daughter said:
The company was growing and needed to adapt its organizational structure, which
included division of labor. My father strongly opposed my idea. We have long argued
and couldn’t reach an agreement (P41, Incident 33).
Escalate–de-escalate conflict.
The analysis found that in most ED-conflicts, a high intensity conflict de-escalated
because family members chose to compromise or accommodate others’ needs/goals, either
voluntarily or by force, to end the conflict and maintain a peaceful family/work environment.
The following statements given by participants explain this situation.
In my opinion, the only way to resolve [a] conflict with my father is to succumb to all
[of] his orders. What decisions he makes will be up to him, even though other people
may have different opinions. I am dissatisfied with this situation, sometimes. However,
I still try to understand my father (P24, Incidents 45 & 46).
In the following incident, a father finally approved his son’s idea to implement a
computerized management system after arguing for months. The father stated:
I believe that we [senior members] should give others [junior members] opportunities
to implement their ideas. We never know what will happen in the future. They may be
right. If not, do not blame others. It was the best option at the time the decision was
made. (P11, Incident 56)
Not-escalated conflict
An analysis of the data identified the ways family members handled their conflicts in the
NE-conflict group, including the use of a collaborative strategy and voluntarily
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 53
accommodation or compromise. The findings show that some conflicts were resolved through
a collaborative strategy where family members tried to integrate their ideas to find an
acceptable solution. An incident demonstrates how siblings attempted to cooperate with the
other party to resolve their conflict, as follows:
There was a disagreement between my brother and I over a plan to establish a new
production line in another city. In my opinion, it was a great opportunity to expand our
market shares. However, my brother thought that the plan would deplete the company’s
resources and might disrupt the company’s operations. We discussed this matter in
several meetings involving non-family executives in order to make a better decision.
After considering many aspects, we finally decided to conduct a feasibility study for
the plan (P57, Incident 62).
Moreover, some conflicts were resolved because one party voluntarily accommodated
another’s needs or compromised their needs. Senior family members in this group were more
likely to voluntarily accommodate their juniors’ needs by neglecting their own concerns and
giving them approval to implement their plans. The following incident illustrates how a father
voluntarily let his son implement his idea to prevent their disagreement from escalating.
There was a demanding, long-time customer who was firm about paying a specific
price and payment method. Previously, my father [had] always accommodated his
requests, but I had a different approach. I intended to refuse his request by letting him
know that the products were limited and the demand was high. Therefore, if he
wouldn’t pay the asking price and time, I wouldn’t sell my products to him. Of course,
my father disagreed. He gave me suggestions, but he let me do what I believed was
right (P33, Incident 13).
Factor 4: Roles of third parties
The data shows that third parties, either family or non-family, were often involved in a
conflict and played various roles, including as a peacekeeper, go-between, informant,
mediator, arbitrator, and so forth. It is therefore difficult to accurately assess the impact of each
of these multiple third parties on a conflict. However, there was evidence to suggest that certain
54 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
third parties and their roles had particularly significant influences on the escalation and de-
escalation of a family business conflict.
Escalate conflict
The data indicate two roles of third parties that potentially escalated conflicts. First, there
was the involvement of other family members as an additional conflict party. For example, a
non-family executive revealed that the intensity of a sibling conflict between two brothers
increased when their sister became directly involved in the conflict and was allied with the
younger brother. He said:
The younger brother disagreed over a backward integration investment plan proposed
by the older brother. He was questioning the feasibility of the project. The conflict
became more complicated because their sister got involved. She was in favor of the
younger brother, and in my opinion, had her own agenda (P03, Incident 25).
Second, the presence of non-family executives who might receive personal benefit from
a conflict was identified as a factor that tended to escalate the conflict. The potential role of
non-family executives as “pot-stirrers” was mentioned by several participants. Nevertheless,
conflicting parties often did not realize that other people might provoke or receive a benefit
from their conflict. A “pot-stirrer” may not directly involve oneself or intervene in the conflict
but can aggravate tensions between conflict parties. For example, a NFE shared a story about
the role of a pot-stirrer in a sibling conflict between two brothers:
When the older brother [as a president director of the holding company] called me to
discuss the distribution channel options, the younger brother, my immediate boss, was
not in the office. Do you know happened next? Surprisingly, the younger brother called
me right after I left his brother’s room asking the reason why his brother called me and
what we talked about. It was clear that someone was watching us and [had] provided
information to the younger brother (P04, Incident 26).
Escalate–de-escalate conflict
This study identified two roles of third parties that could help to de-escalate the intensity
of a conflict. First, fathers often played a decisive role (arbitrator) in de-escalating their
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 55
children’s sibling conflicts. The following example illustrates how a father took steps to help
his sons resolve their conflict.
As a parent, I listen to both sides, because to some extent, they both can be partly right
and partly wrong. When they did not agree with the idea of implementing a price cut
strategy, I asked them whether we could find a better solution or not. If not, then we
must implement it (P16, Incident 44).
Second, some non-family executives played a key role in de-escalating a tense family
business conflict. They often helped the parties come to resolution by offering solutions to
resolve the conflict and acting as negotiators, mediators, or participants in the decision-making
process. For example, a general manager described his experience in helping family members
find resolution for their conflict:
When other shareholders got involved in the day-to-day operations, conflicts erupted
and became intense. Then I tried to convince Mr. A that we couldn’t have two or more
leaders in any organization because it would destroy the business and divide the family.
He agreed with me and asked me to convince his siblings. Then I approached his
siblings, attempted to convince them, and persuaded them to delegate the management
of the company to Mr. A. Finally, they reached an agreement (P19, Incident 5).
Not-escalated conflict
Family members in several companies (e.g., companies 4, 8, 9, and 26) usually involved
non-family executives in their decision-making process. The data indicated that the
involvement of non-family executives in decision-making processes could prevent family
members’ disagreements from escalating. One conflict party said that they always involved
non-family executives in decision-making processes because they believed that more
perspectives would expand options and result in better decisions. He said:
We always involve our non-family directors (and other family shareholders) in making
strategic decisions. I personally believe that more people make better decisions because
we have more options, perspectives, and considerations (P26, president director,
Incidents 54 and 55).
56 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Section summary
In summary, at the incident level of analysis, these findings show three different patterns
of conflict escalation or de-escalation and identified four factors that contribute to these
differences. The first pattern was an escalate conflict, which occurred when: (a) a conflict
contained elements of personal issues, such as trust, respect, and sibling rivalry; (b) it involved
a high level of emotions that in some cases triggered impulsive behaviors and physical
aggression; (c) both parties used a competing or avoiding conflict handling style; and (d) third
parties were directly involved as conflict parties and/or took personal benefit from the conflict.
The second pattern was an escalate–de-escalate conflict, in which conflicting parties: (a)
were better able to focus on the issue of the conflict; (b) had experienced negative emotions
but were then able to regulate their emotions and quickly calm down during the conflict; (c)
were more likely to compromise or succumb to the others’ demands; and (d) intended to be
mediated/arbitrated.
The third pattern was a not-escalated conflict. This occurred when conflict parties: (a)
focused on resolving the conflict; (b) were able to be tolerant and overlook each other’s faults;
(c) tried to integrate their ideas to find an acceptable solution (collaborative handling style) or
voluntarily accommodated others’ needs or compromised their own needs; and (d) involved
non-family executives in their decision-making process.
4.5.3 Dyad Level of Analysis-Conflict Series Analysis
A dyad level analysis was conducted by chronologically comparing the intensity of
earlier and subsequent incidents experienced by each pair of conflicting parties over time.
Twenty-one dyads, including nine intra-generation and 12 intergeneration dyads, reported
multiple incidents, varying from two to six incidents (Appendix B, pairs of conflict party
numbers 22-42). Seventeen dyads reported two conflicts, two dyads mentioned three conflicts,
one dyad revealed four conflicts, and the final pair reported six conflicts1. The next two
1 It should be noted that these numbers do not necessarily reflect the frequency of conflict in the family business. Some family businesses reported more incidents than others because they were interviewed twice (in 2012 and 2015), or they were more open in describing their conflicts.
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 57
subsections discuss the escalation and de-escalation patterns of a series of conflicts and factors
that may determine the patterns.
Escalation and de-escalation patterns of a series of conflicts
Four conflict escalation and de-escalation patterns emerged from 21 series of conflicts
(labeled as S01-S21) experienced by dyads of family members (Table 4.4). As can be seen in
Table 4.4, dyads who previously experienced E-conflicts were more likely to experience a
higher level of conflict intensity in subsequent conflicts (Pattern I, labeled “continuously
escalated”). In the case of family members who were able to de-escalate their prior conflicts,
most experienced a higher level of conflict intensity in their subsequent conflicts (Pattern II,
labeled “gradually escalated”), whereas some other dyads were able to maintain or even reduce
the intensity of the following conflicts (Pattern III, labeled “gradually de-escalated”). If the
prior conflicts were not-escalated, the next conflicts were more likely to not escalate (Pattern
IV, labeled “not-escalated”). Furthermore, the results of this study show that most of the latest
conflicts in Pattern I and Pattern II ended when one party left home and the firm, they had
broken communication, or family members went their separate ways.
58
Chapter 4: Factor C
ontributing to the Escalation and De-Escalation of Fam
ily Business C
onflict
Table 4.4: The Intensity of a Series of Conflicts Experienced by a D
yad of Family M
embers
Series of conflicts a) Incidents
Conflict patterns
Outcom
es of the conflicts b)
Outcom
es of the last conflict
Intensity of the subsequent conflict
Patterns
S01 22, 23
E, E U
D, U
D
Son left home and the firm
H
igher
Pattern I
S02 24, 25, 26
E, E, E U
D, U
D, U
D
Broken com
munication
Higher
S03 33, 34
E, E U
R, U
R
Daughter intended to leave the
firm
Higher
S04 37, 38
E, E U
D, U
D
Daughter left hom
e H
igher S05
39, 40 E, E
UR
, UR
Tw
o brothers left the firm
Higher
S06 47, 48, 49
E, E, E U
D, U
D, U
R
Son left the firm
Higher
S07 52, 53
E, E U
R, U
R
Daughter w
as frustrated H
igher
S08 27, 28, 29, 30, 31, 32
ED, E, E, E, ED
, E R
, UD
, UD
, UD
, R
, UR
Son left hom
e and the firm
Higher
Pattern II
S09 35, 36
ED, E
R, U
R
Broken com
munication
Higher
S10 41, 42, 43, 44
ED, ED
, ED, ED
R
, R, R
, R
Younger brother often sent a
warning em
ail about bad debts H
igher
S11 45, 46
ED, ED
R
, R
Son intended to leave the firm
Higher
S12 58, 59
ED, E
R, U
D
Father stepped back H
igher S13
66, 67 ED
, E R
, UR
Separated the business
Higher
S14 68, 69
ED, E
R, U
R
Son left the firm
Higher
S15 50, 51
ED, ED
R
, R
Father stepped back Steady/Low
er
Pattern III
S16 54, 55
ED, ED
R
, R
Steady
S17 56, 57
ED, ED
R
, R
Steady
S18 62, 63
ED, ED
R
, R
Developed a new
business for the sister
Steady/Lower
S19 60, 61
NE, N
E R
, R
Steady
Pattern IV
S20 64, 65
NE, N
E R
, R
Steady
S21 70, 71
NE, N
E R
, R
Steady
Note: a) S01 = series of conflicts no. 1; S02 = series of conflicts no. 2, and so forth. b) U
D = U
nilaterally decided; UR
=Unresolved; R
=Resolved
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 59
Contributing factors to the conflict patterns
By examining 21 series of conflicts experienced by dyads of family members, this
study discovered two main interrelated factors that may have influenced the intensity of
the subsequent conflicts: the outcomes of previous conflicts and parties’ responses to the
outcomes of the conflict, as summarized in Table 4.5.
The analysis of conflict series patterns and the factors that may have influenced them
are discussed in the following four subsections.
Pattern I: Continuously escalated conflict series
The analysis found that subsequent conflicts were more likely to escalate when: (a)
the previous conflict was unresolved and another conflict occurred or when the previous
conflicts were unilaterally decided, and (b) the parties were not satisfied with the outcomes
of previous conflicts. The presence of those factors resulted in negative feelings towards
each other (e.g., frustration, anger, distrust) and the accumulation of such negative feelings
and dissatisfaction would affect the intensity of future conflict.
The example below shows a series of conflicts between a father and daughter (S04,
Incidents 37-38) that ended with the daughter leaving the business:
Susan had been working with her father, Dicky, for just three years. Susan was
working in another company when her father asked her to work in his (family)
company. With her previous work experience, Susan wanted to make some
changes in the way the company operated. For example, Susan believed that the
company required a division of labor. Her father rejected this idea, as it would
increase the number of employees, and eventually, salary expenses (P40, Incident
33).
Another incident simultaneously occurred when Susan wanted to replace a tax
consultant who had been working with her father for more than 10 years with
another one. Dicky refused to accept Susan’s plan. They were involved in intense
arguments with raised voices. They were drawn into a prolonged conflict. Finally,
Susan decided to leave the company. (P40, Incident 34)
60 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Table 4.5: The Contributing Factors to the Escalation or De-escalation of a Series of Conflicts
Factors contributing to the intensity of subsequent conflicts
Patterns of a series of conflicts
Pattern I Pattern II Pattern
III Pattern
IV
Outcomes
• Conflicts were unresolved/unilaterally decided.
√√√ √
• Conflicts were resolved. √√ √√√ √√√
• Earlier conflicts have not been resolved yet while later conflicts occurred.
√√ √
Parties’ responses to the outcomes of the conflict
• Conflict parties were happy with the resolution of a previous conflict.
√√√
• Conflict parties were not satisfied with the outcomes of the conflict, as they indicated they kept complaining or opposed the solution.
√√√ √√√
• Family members might not be very happy with the solution, but they did not argue further.
√√ √
Note: √√√ indicated that the factor was observed in (almost) all series of conflicts, √√ = in most series of conflicts (>50%), and √ = in a few (several) series of conflicts (< 50%)
Pattern II: Gradually escalated conflict series
In this pattern, conflict parties were able to resolve or de-escalate the earlier conflict;
however, the intensity of the subsequent conflict may have been higher. The analysis of
the data indicated that the subsequent conflict(s) became more intense, primarily because
the conflicting parties voiced dissatisfaction over the compromised solution or having to
accommodate another party’s interests (e.g., kept complaining or even opposed the
solution). Family members’ dissatisfaction with the outcomes of the conflict could lead to
negative feelings (e.g., annoyed, frustrated, angry), which would in turn intensify future
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 61
conflicts. A series of father–son conflicts (S08) described below best illustrates how
conflicts were resolved and dissatisfaction with the results of previous conflicts had the
potential to escalate future conflict.
Bobby had experienced many conflicts with his father, Jonas. They disagreed over
several issues, such as whether to implement an integrated computerized
management system, recruit managers internally or externally, and run a marketing
campaign or not (Incidents 27-32). Jonas often made decisions based on his own
preferences. For example, when Bobby developed a salary structure and adjusted
the salary of several managers to ensure internal equity, Jonas overrode it (Incident
29). In another conflict, Jonas favored employees who obeyed him rather than
assessing their performance based on specific performance measurements that had
been developed and implemented by Bobby (Incident 30). Bobby initially tried to
understand his father’s perspectives. In the first round of interviews, he (P06)
stated: “At the time of the argument, I was angry and emotional. When the conflict
was over, I tried to forget it. I did not bring up what had happened. So, it was not
until there was a destructive conflict. I tended to keep silent.” However, recurring
conflicts between Jonas and Bobby, first destroyed their communication, and
finally, resulted in Bobby leaving home and the business. A non-family executive
described these conflict situations in the second round of the interviews: “So far,
Bobby was able to keep calm and avoided direct confrontation with his father.
However, in a meeting, three months ago, he could not stand it anymore and got
extremely angry. He banged the table and just left the meeting. A few days later,
he left home and also this firm.” (P08)
Pattern III: Gradually de-escalated conflict series
This pattern indicates a series of conflicts where the intensity of the subsequent
conflicts remained steady or even de-escalated. The family members in these conflicts were
generally able to reach an agreement, and even though they may not have been fully happy
with the solution, they voluntarily accepted it. A participant working with her younger
brother said: “Once we obtained the solution, we were committed to it.” (P27, S16,
Incidents 54-55). In several cases, the intensity of the later conflict was more likely to de-
escalate, mainly because one party voluntarily stepped back from daily business operations
62 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
or family members avoided having further conflict with each other by simply establishing
a new business unit and working separately. For example, a series of father–son conflicts
(S15, Incidents 50-51) de-escalated because the father voluntarily stepped back from the
business operations and let his son run the company, as can be seen from the son’s
statement:
My father and I have different ways in running this business. For example, I
believed that the store layout was important, but my father did not allow me to
change it. My mother always reminded my father to give me a chance to run the
business independently. Now, my father tends to let me do what I want, even if he
thinks it won’t work (P37, Incident 50-51).
Another example shows that after experiencing a series of sibling conflicts (S18,
Incidents 62-63, a brother decided to establish a new business unit for his sister to reduce
opportunities to interact with each other to avoid conflict. He stated: “Up to now, we are
able (sic) to resolve our disagreements. But, in the long term, I am not sure. Therefore, I
am establishing a new business unit for my sister so we can work separately and avoid
conflict.” (P59, Incidents 62-63)
Pattern IV: Not-escalated conflict series
The data also shows that the intensity level of a later conflict did not escalate because
conflicting parties were able to resolve their earlier conflicts collaboratively or were willing
to accept the resolution without questioning it, although the resolution may not have
completely met their goals/interests. For example, pairs of family members in companies
26, 29, and 23 were able to sustain the low intensity of their conflicts by always working
out their disagreements in calm and respectful ways. In one case (Incident 8), the intensity
of a conflict remained high because family members in the conflict did not make an effort
to resolve the issue (avoiding). Another case shows that family members were able to
prevent a later conflict from escalating because they had resolved the earlier conflict
(Incident 16) and accepted the resolution without questioning it, although the resolution
might not have completely satisfied them (Incident 19).
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 63
Section summary.
The findings show that the intensity of a series of incidents experienced by a pair of
family members changed in four distinctive ways (Figure 5). Pattern I showed a series of
conflict episodes that escalated over time. Patterns II and III presented a series of conflicts
where each individual conflict episode escalated but then de-escalated. However, in Pattern
II, a new conflict episode began at a higher level of intensity than the previous episode.
Meanwhile, in Pattern III, the outcome of the prior conflict did not intensify subsequent
conflict episodes. Pattern IV illustrated a series of conflicts that did not escalate over time.
Overall, the findings from this study show that family business conflicts are dynamic,
and conflict escalation or de-escalation is a process. There are several dynamics that
influence the intensity of a family business conflict during a conflict. Based on the findings
of these studies, there were several moments that led to conflict escalation, including family
members’ emotional increase, family members insisting on following through with their
own goals, and third parties becoming involved as a conflict party or pot-stirrer.
Conversely, there were also some turning points that could de-escalate a conflict. These
occurred when one party gave in to the other’s demands, both were willing to compromise,
family members were able to regulate their emotions, or third parties were involved as a
settlement agent (arbitrator, problem solver, mediator, and/or part of decision making
processes). A conflict did not escalate if family members were able to focus on the issues
of the conflict, regulate their emotions, employ a more cooperative style (collaborating,
compromising, accommodating), and involve third parties in decision-making processes.
64 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
Figure 5: The Escalation and De-escalation Patterns of a Series of Conflicts
In the long-term, family members may experience a lot of conflicts. A series of
conflicts are more likely to escalate if the conflicting parties experience strong negative
emotions and notable dissatisfaction regarding the outcomes of earlier conflicts, whether
the conflicts are unresolved, unilaterally decided, or resolved with half-hearted
compromise or accommodation. Whereas, a series of conflicts are not escalated if
conflicting parties intentionally and voluntarily accept the resolutions of the earlier
conflicts, which are generally resolved through collaborating or voluntarily
compromising/accommodating. A series of escalated conflicts can negatively affect a
family member’s well-being, ruin family relationships, create a stressful work
environment, and have the potential to result in business disruption/failure.
4.6 DISCUSSION
This study aimed to investigate the escalation and de-escalation of family conflict
and uncover the factors that contribute to them. At the incident level of analysis, this study
identified three patterns of conflict escalation and de-escalation. Some family business
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 65
conflicts can be resolved before being escalated (not-escalated conflict), some escalate but
are then resolved (escalate–de-escalate conflict), and others escalate and become
destructive (escalate conflict). These findings indicate that the dynamics of family business
conflicts change over time. Four interrelated factors that may explain the dynamics of why
family business conflicts escalate or de-escalate are: the issues of the conflict, the
emotional reactions of conflict parties, the styles of handling a conflict, and the
involvement of third parties.
The identification of these factors provides a broader insight into what contributes to
conflict escalation and de-escalation. First, the findings show that conflicts escalated easily
because they were premised more on personal issues (e.g., distrust, disrespect) than on
task-oriented issues (e.g. cut down price or increase selling price) or became intertwined
with personal issues. These findings confirm what has been recognized in the existing
literature, that “family members rarely fight about what they say they are fighting about”
(Pieper et al., 2013; Rhodes; & Lansky, 2013), and a relationship conflict relates to
negative outcomes (Nosé, Korunka, Frank, & Danes, 2017). For example, a father–son
disagreement over a pricing decision escalated because the father felt that his son was
disrespectful to him by voicing different opinions. Meanwhile, the son felt that his father
doubted his ability to manage the company. This study also found that disagreements
between siblings often occurred due to the struggle to gain recognition and
acknowledgement from their employees. Therefore, they tended to impose their own
opinions upon each other. Conversely, family members who did not have interpersonal
issues were more likely to be able to resolve their conflicts constructively.
Second, individual’s reactions to a conflict seemed to be the significant factors that
contributed to the escalation and de-escalation of a conflict. The results of this study
revealed that most family business conflicts were highly emotionally charged. These
emotions might inhibit conflicting parties from communicating effectively to resolve their
problems (Haynes et al., 1997). However, it was shown that negative emotions did not
necessarily fuel the conflict. It depended on how the conflicting parties managed their
emotions. Some conflict parties may have felt strong negative emotions at the beginning
of the conflict, but were then able to calm down. Some others may not have been able to
66 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
cope with their emotions. This study suggests that if individuals have better abilities to
regulate their emotions, they will be less likely to escalate a conflict. These findings align
with previous results, in that negative emotions have been identified as factors that
influence the dynamics of a family business, including the ability of family members to
identify business opportunities (Boyatzis & Soler, 2012), the intention of family members
to work in their family firm (Brundin & Sharma, 2011), and the way family members work
together (Gonzalo Gómez, Botero, Jose Bernardo Betancourt, & Maria Piedad López,
2014).
Third, the way conflicting parties handle their conflicts is another important factor
that influences the escalation and de-escalation of family business conflicts. Although it
has been widely reported that applying a collaborating style is the most effective way to
deal with a conflict (e.g., Cosier & Harvey, 1998; Sorenson, 1999), surprisingly, it seems
that family members in the current study did not commonly use this style. Instead, they
mostly used competing or avoiding styles, which usually heated the conflict, or they
employed half-hearted compromising or half-hearted accommodating styles, which may
have worked for an individual conflict, but was detrimental in the long-term. Only a limited
number of family members used a more constructive style (collaborating, voluntarily
compromising/accommodating) to resolve their conflicts. These findings supported
Großmann and Schlippe’s (2015) findings that family members are commonly unable to
handle a conflict in an adequate and constructive way.
Finally, the findings show that other family members inside or outside the business,
friends, and in many cases, non-family executives, were often involved in family business
conflicts and played different roles. How this multi-third-party involvement contributes to
the (de-) escalation of conflict is not yet clear (due to the small numbers of incidents),
except that the father’s role was shown to be essential in resolving sibling conflicts (as an
arbitrator) and the non-family executive’s role was important in assisting conflict parties
to resolve their conflict (as a mediator, negotiator, or part of decision making); however,
in some cases, non-family executives might worsen the conflict (as a pot-stirrer). To the
best of the researcher’s knowledge, no extensive study has been conducted to investigate
the roles of non-family executives in family business conflicts.
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 67
At the dyad level of analysis, the results show that the outcomes of prior conflicts
and an accumulation of negative feelings resulting from unsatisfactory conflict resolutions
of prior conflicts influenced the intensity of subsequent conflicts. Some conflicts were
unresolved or ended by one party imposing a solution through her or his authority (e.g., a
father imposing his own decision unilaterally on his son/daughter). This resolution could
cause negative feelings in the party on the receiving side, which could in turn influence the
intensity of future conflicts. These results are aligned with Gayle and Preiss’ (1998) study
of workplace conflicts, which found that unresolved conflicts can be potential seeds for
future conflict. Some other conflicts were ended by one party giving in and letting others
have their needs met (accommodating style) or by finding a middle ground solution
(compromising style). The findings of this study add to the existing literature on conflict
management by demonstrating that the motivation behind the accommodating or
compromising style played an important role in determining conflict parties’ satisfaction.
A half-hearted compromise or accommodating style can result in residues in the form of
dissatisfaction or negative feelings, which can in turn intensify subsequent conflicts. When
conflicts continued to escalate, a conflict party sometimes ultimately decided to leave the
family home and/or the business. On the other hand, this study shows that the willingness
of family members to accept the resolution of earlier conflicts without coercion or feelings
of anger, frustration, or other negative emotions did not increase the intensity of the later
conflicts.
Another interesting finding of this study is that family members believed that the
only mechanism to de-escalate the tension was if one party stepped back from the business
operations or worked in independent separate business units (rather than collaborating and
trying to find a solution that fully satisfied both parties). Although some family members
were able to resolve and prevent their conflicts from escalating, they believed that a
destructive conflict could occur in the long term. This is particularly unfortunate, as family
members can still work together even though disagreements often occur, and there are
advantages to having family cohesion, as family members may be more productive than
non-family employees, and family relationships yield unusual motivation, loyalties, and
trust, and also reduce transaction costs (Habbershon & Williams, 1999).
68 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
4.7 THEORETICAL CONTRIBUTIONS AND PRACTICAL IMPLICATIONS
This study contributes to family business literature by increasing the understanding
of the dynamics of family business conflicts. It provides a detailed picture of the escalation
and de-escalation of family business conflicts by exploring the factors that contribute to
the escalation and de-escalation of conflict in two frames of reference (within a single
conflict and across successive conflicts), which have received little attention in either
organizational conflict literature (Wall & Callister, 1995) or family business literature
(Frank et al., 2011). The present study identifies and explaines four main factors (issues of
the conflict, family members’ emotional reactions, family members’ conflict handling
styles, and the involvement of third parties) that are most likely to affect the escalation and
de-escalation of a conflict. Furthermore, this study provides insights into the escalation and
de-escalation of a successive conflict. It suggests that the accumulation of negative feelings
resulting from the unsatisfactory outcomes of prior conflicts is the escalatory factor of the
subsequent conflict. In addition, where family business literature suggests that governance
institutions could reduce or mitigate family business conflict (e.g., Alderson, 2015), the
results of this study raise the question of whether the presence of family and or business
governance institutions directly relate to the intensity of conflicts. The findings of this
study show that a conflict may escalate, escalate and then de-escalate, or not-escalate
regardless of whether firms have a formal organizational structure, decision making
processes take place when family members meet causally, or families meet in a scheduled
board/shareholder meeting.
The present study also contributes to the conflict management and resolution theory
in two ways. First, while previous studies have generally suggested that three conflict
handling styles that involve cooperation (collaborating, compromising, and
accommodating) are considered to be more effective for resolving conflicts (Danes et al.,
2000; Janssen & Van de Vliert, 1996; Medina & Benítez, 2011; Sorenson, 1999), the
current study highlights the importance of ensuring that conflicting parties, particularly
those with strong relationships, accept the resolution intentionally and voluntarily once it
has been agreed upon, without further excuses. Half-hearted acceptance of the resolution
of a conflict (resulting from a half-hearted accommodating or compromising style) can
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 69
result in residual emotional effects that can fuel subsequent conflicts. Second, it provides
preliminary evidence that informal third parties, including family members and non-family
executives influence the dynamics of family business conflicts. Their involvement can
either escalate or de-escalate a conflict.
The results of this study can help family business owners, family members, non-
family executives, business consultants and advisers, and other stakeholders to gain a better
understanding of the dynamics of family business conflict in order to be better able to
resolve and prevent conflict escalation. Based on the findings of this study, family members
should:
a) be able to address, not just the triggering factors, but also the deep root causes
of a conflict, as understanding and addressing the root causes of a conflict is
crucial to preventing the conflict from escalating and resolving the conflict;
b) be willing to better regulate their emotions, as the ability to remain calm during
a conflict prevents conflict escalation and or de-escalates an escalated conflict;
c) be able to seek a mutual satisfactory resolution (integrating style) or voluntarily
accept the agreed upon resolution, as reaching a solution that is satisfactory to
all parties or showing the willingness of family members to unconditionally
accept the solution is advisable to avoid negative feelings, which can increase
the intensity of subsequent conflicts; and
d) take into account the roles of non-family executives, as formally involving non-
family executives in the decision-making process can enhance collaboration and
create consensus.
4.8 LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH
There are several limitations related to the analysis of this study. As with any
qualitative study, there is a limitation as to the generalizability of the findings. Therefore,
this study is an exploratory study that aims to develop an in-depth exploration of a central
phenomenon and not generalizability to a population. Issues arise with the use of semi-
structured interviews, including the unwillingness of participants to openly share their
70 Chapter 4: Factor Contributing to the Escalation and De-Escalation of Family Business Conflict
conflicts. Probing was used during the interviews to gather rich in-depth data and ensure
the reliability of the data. In addition, the potential for researcher-bias is inherent in the
data analysis process. These limitations were minimized by involving two colleagues to
cross-check and refine the themes in the initial coding.
There are several opportunities for future research that could advance knowledge in
relation to family business conflict. As shown in the findings of this research, emotional
reactions were prevalent and constructive conflict handling styles were rarely used. It is
important for future research to further investigate: (a) which factors elicit emotions in
family business conflicts, (b) the role of emotions and conflict handling styles and their
causal relationships in conflict escalation or de-escalation; and (c) whether family
communication and conflict resolution patterns are factors that can predict how family
members deal with conflicts in their business.
Furthermore, an important avenue for future research is to employ a longitudinal
design, as this could better capture the stages of conflict escalation or de-escalation
processes, which is important to better manage and resolve a conflict. Finally, this study’s
findings suggest that informal third parties, including family and non-family executives,
have an important role in escalating or de-escalating family business conflicts. Future
studies are required to further elucidate the roles of these third parties in family business
conflicts.
4.9 CONCLUSION
Family business conflicts are complex and may occur at many different levels. Some
family businesses experience a lot of conflict but still function well. However, some other
family businesses are likely to suffer from severe conflicts. Destructive conflicts are
marked by gradually escalating the level of conflicts that are caused by multiple factors
related to each other.
Overall, the findings of this study suggest that personal relationship issues, emotional
reactions, conflict handling styles, and the involvement of third parties can shape the
dynamics of family business conflicts. The conflict is more likely to escalate if family
members show strong emotional reactions, insist on meeting their own goals/needs, avoid
Factor Contributing to the Escalation and De-Escalation of Family Business Conflict 71
a conflict or accept the resolution forcefully, tend to get into personal issues, or are
deceived by third parties who take advantage of their conflict. Furthermore, this study
suggests that efforts should be made to resolve each conflict to satisfy all parties involved,
unless the parties voluntarily accept a solution to the conflict. The failure to satisfactorily
resolve each individual conflict episode can result in continuous feelings of anger,
disappointment, and frustration. The accumulation of so many negative feelings can add
fuel to subsequent conflicts.
72 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
5.1 ABSTRACT
Conflict behavior has been proposed as a contributing factor to conflict
escalation. However, there has been little study into the behavior of family members in
dealing with conflict in their family firms. This study examines parties’ conflict
behavior and its implications for conflict escalation and de-escalation in the context of
family businesses. This section reports the results of the analysis of 71 incidents
reported by 60 family and non-family executives from 29 privately-held family
businesses in Indonesia. This study identified six different behaviors resulting from a
combination of emotional reactions (regulated, unregulated) and conflict handling
styles (competition, cooperation, and avoidance). The analysis found that family
members behaved differently in a conflict within a generation and across generations.
Senior family members were more likely to respond to conflict with junior family
members aggressively in intergenerational conflicts, whereas most junior members
behaved more assertive-persuasively or aggressively. Meanwhile, family members
tended to behave aggressively or collaboratively in intra-generational conflicts. In both
intra- and intergenerational relationships, conflicts were more likely to escalate when
both parties possessed competitive and/or avoidance conflict handling styles and
showed unregulated emotions (aggressive and passive-aggressive behaviors). The
results also show that senior family members tended to reciprocate juniors’ aggressive
and assertive-persuasive behavior in intergenerational conflicts. Junior members tended
to respond to seniors’ aggressive behavior reciprocally or complementary. Meanwhile,
family members were most likely to reciprocate the other party’s conflict behavior in
intra-generational conflicts.
Keywords: family business, conflict behavior, conflict escalation, conflict de-escalation,
intra-generational conflict, intergenerational conflict.
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 73
5.2 INTRODUCTION
Family business literature has acknowledged conflict between and among family
members working together in their firms (intra-familial conflict) as one of the main
factors that cause the failure of family businesses (Beckhard & Dyer, 1983; Harvey et
al., 1998; Merwe & Ellis, 2007). Although conflict does not always negatively impact
an organization, it can quickly escalate to a destructive level, which can in turn
negatively impact an individual’s well-being (Amarapurkar & Danes, 2005), family
relationships (Merwe & Ellis, 2007), and business performance (Eddleston &
Kellermanns, 2007; Kellermanns & Eddleston, 2007). A quantitative study conducted
by Olson et al. (2003) found the significant effect of family conflict on business
revenue. It revealed that reducing family tension by 4% would increase the firm’s
annual revenue by US$400.
Conflict researchers believe that how people behave during a conflict influences
the outcomes of the conflict (Davis, Capobianco, & Kraus, 2004; Deutsch, 2014).
Recent work has supported notions that individual’s conflict handling styles may play
an important role in conflict escalation or de-escalation. For example, two studies
(Janssen & Van de Vliert, 1996; Medina & Benítez, 2011) investigated the behavioral
factors that could de-escalate conflicts. Medina and Benítez (2011) found that problem-
solving and accommodation were the most effective behaviors for negotiators to de-
escalate a highly escalating conflict between a superior and subordinate. Similarly,
Janssen and Van de Vliert (1996) suggested that conflict was more likely to de-escalate
when the conflicting parties demonstrated stronger concern for each other’s goals,
which led to a more accommodating, more problem solving, more compromising, and
less forcing approach to conflict.
Another important factor to consider that has not received sufficient attention in
conflict literature is the parties’ emotions (Nair, 2008). For example, a study by Pruitt,
Parker, and Mikolic (1997) found that anger was an individual’s emotional reaction that
could escalate conflict. Although emotions and conflict handling styles are often
displayed in a conflict, only a few studies have addressed how the combination of the
parties’ conflict handling styles and emotional reactions affect the escalation and de-
escalation of conflict. Such studies in the context of family businesses are even more
limited, although family business literature suggests that the way family members
74 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
respond to an ongoing conflict may be different than those in nonfamily firms (Loignon,
Kellermanns, Eddleston, & Kidwell, 2016, p. 350).
To address these limitations, this study employed an inductive qualitative
approach to empirically explore the behaviors of family members in dealing with
conflicts. It was believed that when dealing with a conflict, family member’s behaviors
could either escalate or de-escalate it. The main research questions used to guide this
study were:
1. How do family members respond to conflict in intra- and intergenerational
relationships?
2. How do family member responses relate to conflict escalation and de-
escalation?
To answer these research questions, this study: (a) considered parties’ conflict
behavior to be a combination of emotions and conflict handling styles, as this study
suggests that emotions are inextricably inherent to conflict (Jones, 2000), and together
with conflict handling styles, may contribute to or impede conflict and its resolution
processes; and (b) analyzed the data in two different familial relationships: intra- and
intergenerational relationships.
This study makes several noteworthy contributions to family business literature,
as it adds to the understanding of the dynamics of intra- and intergenerational family
business conflicts and helps to fill an important gap in knowledge about the escalation
and de-escalation of family business conflicts. The findings of this study provide
opportunities for family business practitioners, including owners, family members,
employees, business advisors, and other stakeholders to effectively manage conflict.
5.3 LITERATURE REVIEW
5.3.1 Conflict Escalation and De-Escalation
The intensity of a conflict can increase (escalate) or decrease (de-escalate) over
time (Wall & Callister, 1995). Conflict escalation and de-escalation refer to the
different stages of a conflict (Pruitt, 2009) and observable processes during the conflict.
Conflict escalation refers to the process of an increase in the intensity of a conflict and
the severity of tactics used during the conflict (Medina & Benítez, 2011; Pruitt & Kim,
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 75
2004; Wall & Callister, 1995). Pruitt and Kim (2004) suggested that a conflict is
escalated when more participants are involved in the conflict, more resources are
allocated to the conflict, more issues are added to the conflict, more extreme tactics are
used (e.g., the third party’s tactic change from persuasive arguments to threats or
violence), and/or the parties have more extreme goals (for example, the goal of the third
party changes from winning the conflict to hurting or getting revenge to another).
Conflict is also escalated when the relationship of the disputants is worsened (Janssen
& Van de Vliert, 1996). In workplace settings, conflict escalation can also be viewed
from a variety of aggressive behaviors, such as homicide, theft, sabotage, prosecuting
strikers, work slowdown, hostile comments, negative performance evaluations, and so
forth (Pruitt, 2012). The concept of conflict de-escalation is related to a decrease in one
or more dimensions of conflict escalation, such as the issues are reduced, the
relationship of the disputants is improved, and/or the conflict moves towards a
settlement.
In the context of family businesses, conflict often occurs due to the overlap
between family and business systems, which have contradictory concerns or goals
(Gersick et al., 1997). Family systems are subjective, emotional, and egalitarian, while
business systems are objective and meritocratic (Craig & Moores, 2015; Pieper et al.,
2013). In a recent study, Schlippe and Frank (2016) suggested that the complexity of
family business conflicts is the result of incompatible communication logics, where
communication within the family is attachment-oriented and communication within the
business is decision-oriented. Furthermore, family business scholars suggest that family
business conflicts are likely to escalate due to the interference of emotions and feelings
during conflicts (Fahed-Sreih, 2017, p. 55), which could influence the behavior of the
parties (Thomas, 1992).
5.3.2 Conflict Behavior
Conflict behavior refers to an individual’s reactions to a disagreement. Van der
Vliert (1997) defined conflict behavior as “an individual’s intended or displayed
outward reaction to a conflict issue experienced” (p. 20). This definition marks two
components of behavior, intended and displayed, which are also known as conflict-
resolution approaches and overt conflict (Pondy, 1967). The parties’ behavior is an
important component of a conflict. Recent work has supported the notion that the
76 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
outcomes of a conflict are determined by how the parties respond to the conflict (Davis
et al., 2004; Deutsch, 2014; Thomas, 1976). For example, Thomas (1976) suggested
that the actions taken by one party can influence the subsequent behavior of the other
party, which can in turn escalate or de-escalate the conflict. Similarly, Davis et al.
(2004) proposed that an individual’s responses to a conflict could make the conflict
either better (constructive responses) or worse (destructive responses). His study used
two conflict theories to examine the behavior of family members in a family business
conflict, the conflict management theory and the emotional regulation theory.
Conflict Handling Styles
A review of the organizational conflict literature found that research on conflict
behavior has primarily focused on conflict handling styles, which refer to a conflict
party’s intention to respond to a conflict. The most commonly accepted models of
conflict handling styles are those suggested by Kilmann and Thomas (1977) and Rahim
(2002). The first identifies the dual dimensions of assertiveness, which refers to the
individual’s desire to satisfy his or her own concern, and cooperation, which alludes to
the individual’s desire to satisfy another individual’s need. The latter identifies
strategies based on the degree to which a person attempts to satisfy his or her own
concerns and the concerns of others. The combination of these two dimensions results
in five conflict management styles, including competition/dominating, collaboration,
compromise, accommodation, and withdrawal.
Conflict literature has highlighted the important roles of conflict handling styles
in conflict escalation and de-escalation. For example, a study by Janssen and Van de
Vliert (1996) found that a stronger concern for another individual’s goals approach
would lead to a more accommodating, more problem solving, more compromising, and
less forceful approach to conflict, which can in turn help to de-escalate the conflict.
Conflict studies in the context of the workplace have found that problem-solving and
accommodation are the most effective behaviors for negotiators to de-escalating a
highly escalating superior-subordinate conflict (Medina & Benítez, 2011). Meanwhile,
another study found that only problem solving style could prevent conflict escalation
(Leon-Perez, Medina, Arenas, & Munduate, 2015). In the context of a farm family
business, Danes et al. (2000) examined the relationship between conflict handling styles
and the severity of conflicts, and found that aggression was the most positive important
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 77
predictor of conflict severity. Despite numerous studies on conflict handling styles,
limited empirical research has been conducted into the conflict handling styles used by
family members and their impact on the intensity of conflicts. A study conducted by
Sorenson (1999) examined the impact of conflict management strategies used in family
businesses on business and family outcomes and found that collaboration,
accommodation, and compromise styles lead to better outcomes for both the family and
business than competitive and avoidance styles.
Some scholars have suggested that the five modes of conflict resolution strategies
(conflict handling styles) may not be enough to accurately describe the behaviors of
individuals during a conflict, and considered the concept of conflict behavior to be
different from conflict styles (Davis et al., 2004; Deutsch, 2014; Monroe, Borzi, &
DiSalvo, 1989; Van de Vliert & Euwema, 1994; Van der Vliert, 1997, p. 26). For
example, Davis et al. (2004) argued that the dual-concerns model oversimplified the
wide variety of individual behaviors displayed during a conflict. Robbins and Judge
(2014) argued that conflict styles were non-overt behaviors and referred to individuals’
preferences and intentions in coping with conflict situations. Meanwhile, conflict
behaviors are overt behaviors that reflect specific discrete actions and statements
displayed by individuals during a conflict (Davis et al., 2004; Robbins & Judge, 2014).
Therefore, studies that explore a variety of behaviors that emerge during conflict are
merited.
Emotions and Conflict
Emotions are often present in a conflict and play a central role in conflict
resolution (Nair, 2008). Yet, emotions have not received sufficient attention in conflict
literature (Fisher & Shapiro, 2005; e.g., Jones, 2000; Nair, 2008; Posthuma, 2012; Pruitt
et al., 1997; Thomas, 1976). Emotions, such as anger, frustration, and disappointment
have been identified in either task, process, or relationship conflict (Jehn, 1997).
Previous studies found that negative emotions, such as anger, anxiety, and frustration
often emerged in a conflict (Amason, 1996; Jehn, 1995). Positive emotions could lead
to more satisfactory outcomes in negotiation, and conversely, negative emotions could
make conflicts spiral out of control (Fisher and Shapiro (2005). A study by Pruitt et al.
(1997) found that anger was identified as one of an individual’s emotional reactions
that could escalate conflict. In the specific context of negotiation, a review by Van
78 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
Kleef, De Dreu, Pietroni, and Manstead (2006) found that positive emotions increased
the likelihood that a person would employ cooperative behavior during the negotiation
process, and by contrast, a person who experienced negative emotions was urged to
behave more competitively. Moreover, previous research has also found that having the
ability to regulate emotional expressions decreases physical aggression (Garcia-
Sancho, Salguero, & Fernandez-Berrocal, 2014) and the use of dominating/competing
strategies (Rahim, 2002), which in turn leads to positive outcomes.
Emotions have also been considered an important component in family
businesses (Bee & Neubaum, 2014; Boyatzis & Soler, 2012; Gonzalo Gómez et al.,
2014), including in family business conflicts (Labaki, Michael-Tsabari, & Zachary,
2013). Conflict that involves negative emotions (relationship conflict) is often a
characteristic of family firms and detrimental to family business performance
(Eddleston & Kellermanns, 2007; Gersick et al., 1997; Nosé, Korunka, Frank, & Danes,
2017). However, research into the role of emotions in family business conflicts is
limited (Gonzalo Gómez et al., 2014; Labaki et al., 2013) and has not directly examined
the influence of emotions in managing and resolving family business conflicts.
In summary, a review of existing studies shows that emotions are a part of conflict
resolution and that conflicting parties tend to deal with the conflict differently. This
supports the argument that effective conflict resolution processes are not only
dependent on an individual’s conflict handling styles, but also on an individual’s ability
to manage her/his emotions (Pietersen, 2014).
5.4 RESEARCH METHOD
5.4.1 Design of the Study
This study used a qualitative approach with in-depth interviews, as this study
focused on gaining insights from patterns that emerged from the data rather than
collecting data to confirm or disconfirm models, hypotheses, or theories (Taylor &
Bogdan, 2015, p. 7). A critical incident technique (CIT) was utilized because it
facilitates researchers to relate the context, strategy, and outcome to identify repetitive
patterns, and because it can be used across multiple family businesses to reveal common
themes that increase generalizability (Cassell & Symon, 2004, p. 67).
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 79
Procedure
This study involved family business members, including owners, family CEOs,
and NFEs, who were purposively selected from family businesses in Indonesia where
more than 51 percent of the shares were owned by members of a single family and
managed by at least two family members. The eligible family businesses were derived
from personal contacts and the researcher’s workplace, friend, and relative networks.
Eligible participants were owners, family members, and non-family executives who
had been working in the business for at least two years.
The selection procedure was as follows. A list of eligible family businesses was
first drawn up from the author’s personal contacts, and workplace, friend and relative
networks. Next, the owners, family members, or non-family executives were contacted
and asked if they would be willing to participate in this study. Finally, once they agreed
to participate, a convenient date, time, and place was arranged for the interview.
A purposive sampling method was used in this study because: (a) there is a lack
of family business databases in Indonesia (e.g., Merwe & Ellis, 2007), and (b) family
business members tend to be reluctant to discuss their conflicts, as the word “conflict”
is often perceived as having a negative connotation and raises sensitive issues. A variety
of categories of family businesses were observed to recover a representative sample of
the variety population, including business size, generational structure, industry, and
location (urban/rural).
Face-to-face interviews were conducted in accordance with the agreed times and
places. Interviews began with a brief introduction, including the purpose of the study
and that their participation was voluntary, they could withdraw at any time during the
interview without penalty, and all information they provided would be treated as
confidential. Each of the participants provided either verbal or written informed consent
prior to the interview.
After providing some demographic data, participants were asked to recall at least
two major conflicts they had recently experienced or they were experiencing in their
family firm, with probes to identify the parties’ behavior during the conflict and the
escalation and de-escalation of the conflict. Questions were asked about the conflict,
such as what the conflict was about, what the conflict parties did during the conflict,
80 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
the outcomes of the conflict, and so forth. Probing questions and paraphrasing were
used to clarify and confirm information provided by participants.
The duration of the interviews varied from 60 to 90 minutes. Twelve out of 60
participants refused to be recorded as matter of sensitivity. The participants who
reported ongoing conflicts (12 incidents) agreed to answer a text message sent to them
two weeks after the interviews asking about the progress of the conflict. Data saturation
was achieved after interviews with participants from the 20th company were
undertaken. However, interviews were continued with committed participants to
determine possible new insights and ensure that data saturation was achieved. In total,
71 work-related conflicts provided sufficient information and were available for
analysis.
Furthermore, multiple informants were interviewed for data triangulation (Yin,
2009, p. 116) to minimize individual subjectivity and ensure the validity of the data.
However, because interfamilial conflict is a very sensitive issue, it was hard to obtain
access to all those involved. To minimize response bias, in that participants may not
have felt comfortable discussing their conflicts or may wrongly attribute the behavior
of the other parties, other family business members (family and nonfamily) were also
interviewed to triangulate the data and strengthen the findings. Multiple participants
were able to be interviewed in 22 (66%) of the 29 participant companies. Consequently,
most reported incidents were triangulated with other sources of information (Table 5.1).
Data Analysis
Each incident reported during the interviews was transcribed and each participant
and company’s name were replaced with a pseudonym (initials P01 for participant 1,
P02 for participant 2, and so forth) for purposes of confidentiality and anonymity. The
transcripts were analyzed at the incident level using the content analysis procedures
outlined by DeCuir-Gunby et al. (2011) to generate themes. This involved reading
through the incident descriptions to become familiar with the data set, generating initial
codes, and collating similar codes into themes.
The researcher developed an initial set of codes derived from the literature and
that emerged through multiple readings of several incidents. New codes were added as
other codes emerged during the coding process. The revised codebook was then used
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 81
to code the conflicts reported through interviews and critical incidents. A random
sample of incidents (25%) was cross-coded by two colleagues for interrater reliability.
The reliability of the sample was between 79% and 80%, which could be considered
conclusive, because it reached more than 70% agreement (Hays & Singh, 2012, p. 308).
The themes were then further grouped into categories based on common characteristics.
Table 5.1: Data Triangulation
Source(s) of incident Number of incidents
At least both conflict parties 33 (46.5%)
At least one conflict party and another family business member
21 (29.6%)
Only one conflict party 17 (23.9%) Total 71 (100 %)
5.5 RESEARCH FINDINGS
This study examined family members’ behavior and its implications towards
conflict escalation and de-escalation in the context of family businesses. An analysis
was conducted at the incident level by investigating the reactions of both parties to a
conflict within and between generations. The results section begins with a demographic
profile of the participants, followed by the primary analysis results, which are presented
in six sections. The first section presents the escalation and de-escalation patterns of
conflict. The following section discusses the key themes that emerged from the data
related to conflicting parties’ behaviors in conflict situations. The next two sections
discuss family members’ behavior towards conflict between and within generations.
Examples of incidents and relevant quotes from participants are provided, together with
discussions about the impact of parties’ conflict behavior on conflict escalation and de-
escalation. This chapter concludes with a discussion, implications, and
recommendations for future studies.
Companies and Participants
Table 5.2 shows the demographic characteristics of the firms and participants.
Twenty-nine family businesses in Indonesia, including small (n=2), medium (n=10),
and large-sized (n=17) firms and from a variety of industries, such as food and
beverage, plastic and packaging, property, trading and distribution, and so forth,
82 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
participated in this study. In terms of the age of the firms, more than 70 percent of the
participating firms were 21 years or more. The number of family members in a business
ranged from two to eight people, with an average of 3.6 people.
Table 5.2: Firm, Participant, and Incident Characteristics
Firms Total Participants Total Incidents Total
Size Gender Intra-generational 43
Small 2 Male 46 Intergenerational 28 Medium 10 Female 14 Total 71 Large 17 Total 60 Total 29 Age (years) Firm age (years) ≤ 40 19 ≤ 20 8 41-50 19 21-30 4 51-60 11 31-40 9 > 60 11 41-50 5 Total 60 > 50 3 Total 29 Familial ties Family CEOs 48 Generations Non-family
Executives 12
1st 2 60 2nd 4 Education 1st & 2nd 22 High school or under 14 2nd & 3rd 1 Undergraduate 37 Total 29 Postgraduate 9 Total 60 Family members
in the business Tenure (years) 2 5 ≤ 10 25 3 10 11-20 17 4 10 21-30 7 ≥ 5 4 31-40 8 Total 29 > 40 3 Total 60 Non-family members in the
top management team Yes No
13 16
29
Family businesses managed by family members of the first and second
generations constituted the highest percent (75.9 %). Only 13 out of 29 family
businesses included non-family members in their top management teams. The number
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 83
of non-family executives in the top management level ranged from one to three
executives.
The demographic profile of participants in Table 5.2 shows that 60 participants,
including 48 family and 12 non-family members, participated in this study, and most
were male (n=48). Participants ranged in age from 25 to 71 years old, with an average
of 47.5 years. In term of educational background, 37 out of 60 participants held
bachelor degree, while 14 participants had completed high school or under, and the
remaining nine participants were doctoral degree holders. The average tenure for all
participants was 17.3 years. Most had been in the firms for more than 10 years. No
participants had specifically taken courses in conflict management and resolution;
however, seven participants said that they had taken a class in organizational theory
and behaviors, which included a section on conflict management theory. In addition,
26 junior family members were working with the senior generation. Seven out of the
26 were doctoral degree holders, while the rest were bachelor degree holders, and 15
out of the 26 junior family members had completed their studies overseas.
Conflict Escalation and De-escalation
Three main patterns of conflict escalation and de-escalation emerged from the
reported incidents: (a) “escalate” (E-) conflict (34 incidents), (b) “escalate–de-escalate”
(ED-) conflict (23 incidents), and (c) a “not-escalated” (NE-) conflict (14 incidents).
Below is a description of each of these themes, with supporting examples and quotes
from the interviews.
Escalate conflict
This refers to a conflict in which the intensity increased, and as an agreement was
not reached (either unresolved or unilaterally decided), the intensity remained high.
Some incidents led to a broken relationship and ended with one party leaving the
business and/or the family home. A son who was working with his mother shared his
experience:
I took over the management of our company several years ago. My mother is
responsible for controlling the production processes. I wanted to use our profit
to restructure and pay back the company’s debts, but my mother wanted to use
the money to add to the inventory. I tried to explain to her why we should
84 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
reduce our debt level but she would not understand. We got into intense
arguments and I decided to leave the company (P31, Incident 69).
Escalate–de-escalate conflict
This pattern refers to a conflict that initially escalated but then decreased and the
conflicting parties were able to come to an agreement. A NFE described a conflict
between two brothers that escalated and then de-escalated, as follows:
The older brother, who was the marketing director of the company, intended to
extend credit terms to help a big loyal customer deal with his liquidation
problems. On the other hand, the younger brother, who held the position of
financial director, disagreed as this policy could increase the risk of bad debt.
They both became very emotional and the younger brother left the meeting. In
the following discussion, the younger brother finally agreed, but set several
conditions (P17, Incident 43).
Not-escalated conflict
This refers to a conflict in which the intensity did not increase during the incident
and an agreement was reached. A father–daughter conflict is described below as an
example:
My father often gave special discounted prices to certain customers based on
his personal relationships. I preferred to offer special prices to all customers
based on different quantities purchased. We discussed this issue in a calm way.
He provided me some trade-offs to consider and gave me [the] freedom to make
decisions. (P53, Incident 71).
Behavior of the Parties
Two themes and five sub-themes related to the behavior of the conflicting parties
emerged from the data, including emotional regulation (regulated and unregulated
emotions) and style of handling a conflict (cooperation, competition, and avoidance)
(Table 5.3). Each theme and their interactions are described in the following
subsections, with supporting examples and quotes from the interviews.
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 85
Table 5.3: Key Themes in Conflict Behavior
Categories and Sub-categories
Description Examples of participant quotes
Emotional regulation
The way in which conflicting parties dealt with their emotions or feelings in a conflict situation.
• Able to regulate emotions
One’s emotions are lessened (such as taking time to cool down) and/or they are able to communicate positive emotions (such as remain calm and talk politely).
“When I said that good employees should be entitled to a bonus, my father said that I was presumptuous and he was very angry. I said nothing and went home. I avoided a direct conflict. In the next few days, I met him when he was calm” (P01, incident 1).
“They have many disagreements and arguments about work. However, they still get along well enough and work with one another. As far as I know, they talk politely and the son tends to comply with what his father says.” (P13, incident 56).
• Unable to regulate emotions
One’s emotions are amplified, which often involves verbal and physical aggression.
“At the time of the conflict, my father and my brother were quarrelling. My father broke a chair and my brother hit the wall” (P01, incident 23).
“Adriel rose from his seat and shouted: “It is not your business! What do you want?” (P3, company 1).
Styles of handling conflict
Actions taken by conflicting parties to handle their conflict.
• Competition Parties show a strong intention to achieve one’s own desired outcome.
“They both [brothers] did not wish to listen to any explanation. They often strongly believe that their own ideas are always right and that others’ opinions are wrong” (P04, incident 26).
• Cooperation Parties show a willingness to compromise or collaborate with the other party.
“I involved other shareholders and also non-family executives in the decision-making process in order to make a better decision and to satisfy all shareholders. After considering many aspects, such as the availability of skilled employees and cost implications, we finally delayed the plan” (P26, incident 54).
• Avoidance Parties ignore any issues that expose conflict.
“Perhaps, my brother wanted to warn me, but I didn’t easily accept his comments. We then kept a distance between us and had our own way of doing business” (P09, incident 4).
86 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
Emotional regulation
The first theme relating to parties’ conflict behavior—emotional regulation—
refers to the way in which conflicting parties dealt with their emotions or feelings in a
conflict situation. During the interviews, it was discovered that conflicting parties
tended to experience negative emotions (in 56 out of 60 incidents). At the earlier stage
of the conflict, almost all conflicting parties reported that they were more likely to be
displeased or annoyed when they were criticized and/or unable to voice their opinions.
Two basic emotional reactions were identified from the data: regulated and unregulated
emotions. The former refers to a decrease in negative emotions and/or the ability to
control emotions, and the later refers to an uncontrolled expression of negative
emotions.
The findings identified 14 incidents where one or both parties were able to control
their emotions and communicated positive emotions, such as taking time to cool down,
remaining calm, talking politely, and so forth. In contrast, the results of the analysis
showed that when conflicting parties stuck to their stand, some were unable to control
their emotions. They perceived their counterparts to be selfish, stubborn, and less
cooperative, and they often expressed negative attitudes, such as the use of verbal
aggression (e.g. harsh words, yelling, screaming, the raising of one’s voice), and even
physical aggression (e.g. hitting the wall/a table, breaking a chair). Verbal aggression
was utilized by at least one party in approximately 37 of the incidents. Physical
aggression occurred in 10 out of the 71 incidents.
Styles of handling conflict
Another factor that characterizes conflict behavior is the style of the parties in
dealing with a conflict, which refers to how conflicting parties defend their ideas,
opinions, or interests. During the process of analysis, three main styles used by conflict
parties in handling conflict were observed: (a) competition, (b) cooperation, and (c)
avoidance. The first style was labeled a “competition” style, in which conflict parties
showed strong intentions to achieve or to impose their own goals or needs. They often
ignored the other’s needs. A “cooperation” style was indicated by the willingness of
the parties to compromise or search for integrative solutions. In order to resolve a
conflict, conflict parties were willing to talk openly about their disagreement, give in
to some of their needs, and or to consider the other’s opinions, ideas, or interests. The
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 87
third style identified from the data was “avoidance”. The findings showed some parties
ignored or avoided/withdrew from the conflict by terminating the conversation or
leaving, avoiding each other, or pretending that there was no conflict.
Typology of conflict behavior
This subsection discusses the typology of conflict behavior as a product of
conflict handling style and emotional regulation (Table 5.4). The interaction between
conflict handling style (Table 5.4, columns) and emotional regulation (Table 5.4, rows)
resulted in six types of conflict behaviors: assertive-persuasive (competition-regulated
emotions), collaborative (cooperation-regulated emotions), passive (avoidance-
regulated emotions), aggressive (competition-unregulated emotions), collaborative-
aggressive (cooperation-unregulated emotions), and passive-aggressive (avoidance-
regulated emotions).
Table 5.4: Typology of Conflict Behavior and its Characteristics
Emotional regulation
Conflict handling styles
Competition Cooperation Avoidance
Regulated emotions
Assertive-persuasive
Effort to influence others’ opinions in an acceptable manner (respectful, not easily contentious).
Collaborative
Willing to work together to get the best solution for the company or reach mutually agreeable solutions and keep the relationship positive.
Passive
Desire to please others.
Does not argue.
Wants to maintain long-term relationships.
Unregulated emotions
Aggressive
Pursues own needs/goals.
Verbally and/or physically threatening.
Refuses to cooperate.
Collaborative-Aggressive
Willing to cooperate but more aggressive about their opinions/goals.
Often communicate aggressively (e.g., defensive or angry).
Passive-Aggressive
Does not argue, but shows non-verbal actions with aggression.
Gives an angry look.
88 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
Assertive-persuasive
This refers to the behavior of conflicting parties where the parties insist on
achieving their own goals peacefully by persuading or influencing the other party to
accept or approve their perspectives or ideas. The following incident shows the
assertive-persuasive behavior of a son who insisted on replacing an old machine with a
new one, even though his idea had been refused by his father several times. He spent
months trying to convince his father that the company needed to buy a new machine,
and stated:
I intended to replace an old machine with a new automatic machine to increase
the production capacity and efficiency. My father did not approve it. He argued
that the current machine was still good enough. I did not give up. I avoided
confrontation but kept persuading him. I talked to him when he was calm and
feeling well. Finally, after several months, he gave his approval (P51, Incident
21).
An assertive-persuasive behavior was also clearly shown by a son when handling
a conflict with his father (Incident 1). The son was able to control his emotions and
avoided a frontal confrontation.
When I said that good employees should be entitled to a bonus, my father said
that I was presumptuous and he was very angry. I said nothing and went home.
I avoided direct conflict. In the next few days, I met him when he was calm
and explained the idea of a bonus scheme for managers. After several
discussions, finally we resolved it (P01, Incident 1).
Aggressive
In aggressive behavior, conflicting parties show aggressive efforts to impose their
own desires, accompanied by strong emotions, which often involve verbal and/or
physical aggression. This behavior is also characterized by a win-lose, intimidation, or
adversarial relationship. The two incidents below (Incidents 34 and 35) illustrate how
a father and his daughter demonstrated aggressive behavior during their conflicts. They
pursued their own ideas and lacked control over their emotions.
The daughter was working in another company when her father asked her to
work in his (family) company. With her previous work experience, she wanted
to make some changes in the way the company operated. For example, she
believed that the company required a division of labor. Therefore, she changed
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 89
the organizational structure, created several new divisions, such as an
accounting division and a human resources division, and planned to hire several
administrators. Her father rejected this idea as it would increase the number of
employees and, eventually, salary expenses. He asked his daughter to stop
making changes within the company. He wanted the business to run as usual
(P40, Incident 34).
Another incident simultaneously occurred when the daughter wanted to replace
a tax consultant who had been working with her father for more than 10 years
with another one. Her father refused to accept Susan’s plan. They got involved
in strong arguments where voices were raised. They were drawn into a
prolonged disagreement. Finally, Susan decided to leave the company (P40,
Incident 35).
Collaborative
In this study, collaborative behavior is conceptualized as actions taken by
conflicting parties to work together to find the best solution for the company and
maintain a positive relationship. The following example shows how conflicting parties
held a series of discussions to resolve their disagreement and were able to regulate their
emotions.
There was a disagreement between my sister and I over a plan to relocate our
production lines. I involved other shareholders [passive shareholders] and also
non-family executives in the decision-making process in order to make a better
decision and satisfy all shareholders. After considering many aspects, such as
laborers and cost implications, we finally agreed to delay the plan. (P26,
Incident 54).
Collaborative-aggressive
This refers to the actions taken by conflicting parties to settle a conflict, where
the intention was to get much of what they wanted. Therefore, they often communicated
aggressively, such as being defensive, angry, and disrespectful, as shown in the incident
below.
Hans, one of the founding shareholders, asked his brother, Evan, who was
currently responsible for the business, to employ his eldest son, David, in the
business. Evan was very receptive and gave David a position as a purchasing
manager. However, this did not last long, as David showed a lack of
90 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
commitment and expected flexible working hours, something that was not
usual practice at the company. On the other side, David claimed that he did his
job right. A heated argumentation took place between Evan and David, and
later David was fired from the company. Hans was actively involved in the
disagreement between Evan and David. The conflict between Evan and David
became a conflict between Evan and Hans. After some discussions, they agreed
to resolve their conflict. Evan let David work in his other company, and Hans
accepted it even though it was not what he wanted (P19, Incident 6).
Passive
This behavior refers to responses where conflicting parties pretend that there is
no disagreement or conflict among them or avoid things that they disagree about and
accept it as it is. The following incident shows how four family members who ran a big
jewelry store committed to preventing conflict by ignoring any disagreements that
might arise among them. During the interview, one of them stated:
We [four siblings] have been working together for more than 30 years after the
death of our father. Yes, we have experienced conflicts, but they were in the
beginning years. We prefer to prevent conflict by promoting mutual
understanding and respect. For example, one of us might buy a customer’s
jewelry at the wrong price [too expensive]. Others might disagree with the
decision. But we have committed that each of us has the same authority to make
decisions, and we will not blame each other. So, we [have] laid aside our
disagreements to maintain family harmony.” (P47, Incident 19)
Passive-aggressive
This refers to the behavior of conflicting parties who admit that there is a conflict,
but avoid it and do not want to discuss or resolve it. Conflict parties who show passive-
aggressive behavior usually have intense emotions themselves. The two following
incidents show that some parties demonstrated passive-aggressive behavior by
terminating or leaving a conversation. A family CEO, said, “I wanted to implement an
automatic packaging system. There were constraints but I thought we could handle it.
My brother disagreed with me. I have tried to talk to him several times, but he would
always leave the conversation” (P15, Incident 42). Similarly, another family CEO
revealed his experiences, “When our father told us his succession plan, my brother left
the meeting without responding. I knew he disagreed with it, but he didn’t want to argue
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 91
with his father. After that meeting, my brother avoided to meet (sic) with (sic) and talk
to (sic) my father. He expressed his anger by intentionally not going to work or not
doing his tasks.” (P20, Incident 8)
Conflict Behavior and Escalation and De-escalation of Intergenerational Conflict
This subsection discusses the possible contributions of conflict behavior to the
escalation or de-escalation of an intergenerational family business conflict. There were
43 intergenerational conflicts reported in this study. Most of those incidents (42
incidents) were conflicts between family members of the first and second generations.
Only one incident was a conflict between family members of the second and third
generations. Table 5.5 shows how family members behaved in intergenerational
conflicts (43 incidents). As can be seen, senior members were most likely to behave
aggressively (32 out of 43 conflicts). and were only willing to collaborate in seven
incidents. Furthermore, there were three and one incidents in which senior members
showed passive and passive-aggressive behavior, respectively. In contrast, junior
family members exhibited aggressive behavior during a conflict with their senior
members in 17 out of 43 incidents, while there were 10 incidents in which junior
members behaved assertive-persuasively. Junior members’ collaborative-aggressive,
collaborative, and passive-aggressive behaviors were identified in six, four, and three
incidents, respectively.
Table 5.5: Senior and Junior Family Members’ Conflict Behavior in Intergenerational Conflict (n=43)
Junior To
tal
Assertive-persuasive Collaborative Aggressive Collaborative-
aggressive Passive-
aggressive
Seni
or
Collaborative 3 2 2 7
Passive 2 1 3
Aggressive 10 13 6 3 32
Passive-aggressive 1 1
Total 13 4 17 6 3 43
Conflicting parties’ behavior and conflict escalation and de-escalation are
presented in Table 5.6. From the results, the majority of the behavior was shown by
92 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
family members in intergenerational conflicts, in which seniors tended to respond
aggressively and juniors were more likely to behave aggressively and assertive-
persuasively. Thus, the data presented in Table 5.6 shows that when both senior and
junior parties demonstrated aggressive behavior (in all 13 incidents), an
intergenerational conflict was most likely to escalate.
Table 5.6: Senior and Junior Family Members’ Conflict Behavior and Conflict Escalation or De-Escalation
Junior
Tota
l
Assertive- persuasive
Collaborative Aggressive Collaborative-aggressive
Passive-aggressive
Seni
or
Collaborative NE=1 ED=2
NE=2 NE=2 7
Passive E=2 E=2 3
Aggressive E=1 NE=2 ED=7
ED=2 E=4
E=3 32
Passive-aggressive
1
Total 13 4 4 6 3 43
This behavior included aggressive efforts to impose their own desires
accompanied by strong emotions, such as anger, frustration, and so forth. This behavior
was also characterized by threats to others through verbal and physical aggression, such
as raised voices, the use of harsh words, hitting the wall, and so forth, which in turn led
to an adversarial relationship (e.g., refusing to talk, leaving a meeting without
explanation, and avoiding direct communication). Incidents 34 and 35, described in the
subsection above, were examples of escalated conflicts, where conflicting parties
(father and daughter) insisted on pursuing their own goals and lost control of their
emotions. Their conflicts continuously escalated until the daughter decided to stop
working in the family firm. Conflicts also escalated when senior and junior members
displayed aggressive and passive-aggressive behaviors (e.g., Incidents 8 and 42
described above) or passive (e.g., Incident 19 described above) and collaborative
behaviors (e.g., Incident 54 described above).
Conversely, the findings indicate that when junior members behaved assertive-
persuasively in dealing with aggressive senior members (nine out of 10 incidents), an
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 93
intergenerational conflict was more likely to de-escalate or not-escalated. This can be
seen from Incidents 1 (father–son conflict in company 1) and 21 (father–son conflict in
company 23) described above. In those conflicts, the sons tried to influence their
fathers, who handled their conflicts aggressively and persuasively. In both incidents,
the sons intended to implement ideas that were refused by their fathers. Instead of
confronting their fathers directly, they tried to persuade and convince their fathers that
their plans needed to be implemented. Although the conflicts initially escalated, those
parties were able to resolve their conflicts peacefully. Moreover, it seemed that the
likelihood of intergenerational conflicts would not escalate or de-escalate when one or
both parties were able to manage their emotions.
Conflict Behavior and Escalation and De-escalation of Intra-Generational Conflict
There were 28 intra-generational conflicts reported in this study, with six of these
incidents occurring between family members of the first generation and the rest (22
incidents) between those of the second generation. Table 5.7 shows that, in most
incidents (20 out of 28 incidents), family members exhibited similar behavior, such as
collaborative vs collaborative (nine incidents), aggressive vs aggressive (eight
incidents), passive vs passive (two incidents) and passive-aggressive vs passive-
aggressive (one incident).
Table 5.8 shows the behavior of the conflicting parties and the intensity of the
conflict. The number of incidents was insufficient to indicate the relationship between
each combination of conflict behavior and conflict escalation or de-escalation.
However, by giving attention to the more frequent conflict behavior, it seemed that
when both parties were aggressive, intra-generational conflicts were more likely to
escalate (all eight incidents). Moreover, the results show that when the conflict was
handled collaboratively, the likelihood of an intra-generational conflict to not escalate
or de-escalate increased.
94 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
Table 5.7: Family Members’ Conflict Behavior in Intra-Generational Conflict (n=28)
Party 1
Collaborative Passive Aggressive
Collaborative-aggressive
Passive-aggressive
Party
2
Collaborative 9 6 1
Passive 2
Aggressive 8 1
Collaborative-
aggressive
Passive-aggressive
1
Note: no results were recorded for Assertive/persuasive with any other combination of conflict behavior and conflict escalation or de-escalation
Table 5.8: Family Members’ Conflict Behaviors and the Escalation and De-Escalation of Intra-Generational Conflict
Party 1
Collaborative Passive Aggressive Collaborative-
aggressive Passive-
aggressive
Party
2
Collaborative ED=3
NE=6
ED=6 E=1
Passive NE=2
Aggressive E=8 E=1
Collaborative-
aggressive
Passive-aggressive
E=1
Note: ED = “escalate–de-escalate”; NE = “not-escalated”; E = “escalate”
In summary, the intensity of a family business conflict may escalate, escalate but
then de-escalate, or not-escalated. The findings indicate that, to some extent, the
escalation or de-escalation of a conflict was influenced by the conflict behavior of both
parties, which varied according to the emotional regulation and conflict handling styles
of the parties. The first refers to the ability of conflicting parties to manage their
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 95
emotions during a conflict (regulated and unregulated). The second explains the way
parties handled a conflict (cooperation, competition, and avoidance). A combination of
the party’s emotional regulation and conflict handling styles was conceptualized to
result in the following behaviors: (a) assertive-persuasive, (b) collaborative, (c) passive,
(d) aggressive, (e) collaborative-aggressive, and (f) passive-aggressive. The findings
also indicate that conflicting parties behaved differently in intra- and intergenerational
conflicts, and the escalation or de-escalation of a family business conflict was
influenced by the conflict behaviors exhibited by both parties.
5.6 DISCUSSION
This study was conducted to gain a deeper understanding of the dynamics of
family business conflict, particularly in the conflict behaviors of individuals in family
businesses and their effects on conflict escalation. This study assumed that conflict
escalation and de-escalation were influenced by the conflicting parties’ behavior, in
which conflict handling styles and emotional regulations interact. The analysis of the
data (71 incidents) found three consistent patterns related to the escalation and de-
escalation of a conflict: (a) escalated to a destructive level, (b) escalated but then de-
escalated, and (c) a not-escalated conflict. These indicated that not all family business
conflicts escalate. An escalated conflict is not necessarily destructive, because it can
de-escalate. This study observed that conflict escalation and de-escalation are related
to the behavior of the conflicting parties in responding to their conflict, which consists
of two dimensions: emotional regulation (regulated and unregulated) and conflict
handling styles (competition, cooperation, and avoidance). The findings of the current
study suggest that conflict handling styles should be implemented in conjunction with
emotional regulation.
A benefit of this study is that it makes conflict behavior more understandable by
analyzing the interactions between two conflict behavioral dimensions (emotional
regulation and conflict handling style) and categorizing them into six conflict
behaviors. The findings of this study suggest that, in dealing with conflict, family
members may behave either assertive-persuasive, collaborative, passive, aggressive,
collaborative-aggressive, or passive-aggressive. To some extent, this typology is quite
similar to that described in the conflict literature, such as four personal responses to
conflict, including aggressive, assertive, passive, and passive-aggressive (Doherty &
96 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
Guyler, 2008, pp. 147-149), as well as five conflict handling styles, including
collaborating, accommodating, compromising, competing, and avoiding (Rahim,
2002). However, by considering the parties’ emotional reactions and conflict handling
styles, this study found that the competing style could involve various forms of
aggressive (verbal and physical) and persuasive approaches. In the current study, these
behaviors were identified as independent responses and labeled as aggressive
(competing style with aggressive approaches) and assertive-persuasive (competing
style with persuasive approaches). Similarly, some family members may also express
negative emotions (communicate aggressively and are more insistent about their own
opinions) while working with one another to find a solution. This behavior was labeled
collaborative-aggressive, which is different from collaborative behavior. As discussed
above, the current findings show that these behaviors have different impacts on conflict
escalation or de-escalation.
The current study found that family members tend to behave differently in inter-
and intra-generational conflicts and the behavior of family members could lead to
conflict escalation or de-escalation. In intergenerational conflict, senior family
members (mostly parents) are likely to be aggressive when facing a disagreement with
junior family members (mostly sons or daughters). This could be understood in the
context of Indonesian culture, which is a collectivist culture that emphasizes values
such as respect and obedience to the elderly. Children are expected to be respectful to
their parents and obey them without question. Therefore, when junior family members
demonstrate different ideas, they are viewed as disrespectful against their parents’ will,
and could easily incite their seniors’ anger. Consequently, as shown in the findings
previously presented, aggressive responses of junior family members (competition and
unregulated emotions) were more likely to escalate a conflict. Conversely, an assertive-
persuasive approach seemed to be more effective in dealing with a conflict with senior
family members. An assertive-persuasive approach could persuade senior members to
approve or accept junior members’ opinions or goals without being offensive.
It is somewhat surprising that were a significant number of juniors who displayed
aggressive behavior in conflicts with their senior family members. The findings indicate
that junior members felt their seniors did not recognize or appreciate their work. For
example, a father cancelled remuneration schemes implemented by his son or overrode
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 97
the outcomes of a meeting conducted by his daughter. Moreover, junior members’
aggressive behavior may also indicate a shift in values among junior family members
that may be a result of their higher levels of and Western-oriented education. Juniors
may want to be treated as equal partners in decision making processes, whereas total
parental authority is a characteristic of Indonesian culture.
In an intra-generational conflict, family members are more likely to be
collaborative, aggressive, or collaborative-aggressive in their behavior. Intra-
generational conflicts are more likely to escalate when both parties are aggressive or
passive-aggressive. The findings of this study support and extend the results of previous
studies (e.g. Janssen & Van de Vliert, 1996; Medina & Benítez, 2011) suggesting that
a conflict is more likely to escalate when conflicting parties are more self-concerned
and show lower concern for others (competing/forceful styles). Accommodating,
compromising, and avoiding styles could be a shortcut to ending the conflict and
avoiding a prolonged conflict. These styles may produce an acceptable, if not agreeable,
resolution. However, the present results show that although conflicting parties insisted
on pursuing their own goals (competing style), a conflict could have positive outcomes
if they pursued their goals persuasively.
Regardless of the small amount of data, it seems that the combination of passive-
aggressive behavior and any other conflict behaviors, in both intra- and
intergenerational conflicts, resulted in conflict escalation. As noted earlier, a passive-
aggressive individual tends avoid conflict or avoid directly discussing the issues at hand
but continues to have negative emotional feelings, which often creates hostility toward
others and fuels the conflict. This finding may help explain why the avoidance conflict
handling style is related to relatively negative business and family outcomes (Sorenson,
1999).
This study produced results consistent with the ideas of Thomas (1992), who
suggested that the behavior of conflicting parties influences each other. One of the
interesting findings is the tendency of how family members responded to each others’
behavior. Previous studies identified two response patterns in interpersonal interaction-
reciprocal and complementary (Butt, Choi, & Jaeger, 2005). A reciprocal response
refers to a response where individuals respond to the other party in similar ways. A
complementary response is when one party elicits different behavior to maintain
98 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
interactions. In this study, it seemed that senior family members tended to reciprocate
juniors’ aggressive and assertive-persuasive responses. Senior members tended to
respond to juniors’ aggressive behavior with more aggressive actions (e.g., raised
voices, throwing something) and responded to juniors’ persuasive behavior with a more
supportive behavior (e.g., approved the son’s plans). These present findings seem
consistent with research conducted on family conflict that found that parents tend to
respond to children’s adaptive emotions regulated with more supportive emotional
responses and children’s maladaptive emotions regulated with more unsupportive
emotional responses (Morelen & Suveg, 2012). Meanwhile, some junior members
tended to react more reciprocally, and others reacted more complementary (by behaving
assertively-persuasively) to aggressive senior members. Meanwhile, in intra-
generational conflicts, the findings showed reciprocal patterns of interactions between
siblings. In this type of conflict, family members tended to respond to the other party
by demonstrating similar behavior, such as collaborative behavior being met with
collaborative responses, aggressive behavior being met with aggressive responses, and
collaborative-aggressive behavior being met with collaborative-aggressive responses.
This reciprocal behavior was probably because family members within a generation
have relatively equal power.
Furthermore, the results of this study highlight the important influences of
emotions on conflict escalation. Previous studies have suggested that emotions are
intertwined with conflict (e.g. Brundin & Sharma, 2011; Nair, 2008) and affect family
business dynamics, which in turn influences the ability of family members to identify
business opportunities (Boyatzis & Soler, 2012), family business strategies and
decision making (Bee & Neubaum, 2014), how family members work together
(Gonzalo Gómez et al., 2014), and family members’ intention to work in their firm
(Brundin & Sharma, 2011). The results of this study provide initial empirical support
for the idea that unregulated emotion is a key factor that can lead to the escalation of
family business conflicts, which can in turn damage family relationships and ruin the
business.
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 99
5.7 THEORETICAL CONTRIBUTIONS AND PRACTICAL IMPLICATIONS
These findings add to the literature, which contains little investigation into the
escalation and de-escalation of family business conflict (Benavides-Velasco et al.,
2013; Frank et al., 2011). In addition to a gap in understanding how family members
behave during a conflict, existing studies on the dynamics of intra- and
intergenerational conflicts are also scarce. This study fills some of the gaps and
provides original findings about family members’ conflict behavior and contributes to
family business and conflict management literature in several ways.
First, it shows that family members behave differently in intra- and
intergenerational conflicts. In intergenerational conflicts, the results of this study
highlight the important role that junior family members play in soliciting seniors’
responses. Meanwhile, in intra-generational conflicts, family members tended to
reciprocate the other parties’ behavior. The findings of this study also show that the
escalation or de-escalation of a conflict is the result of the conflict behavior of both
parties.
Second, this study shows that the conflict resolution process involves both
rational and emotional factors. While most studies have emphasized conflict resolution
methods as a rational process (Montes-Berges & Augusto, 2007; Nair, 2008), this study
highlights the significant role of emotion in conflict. The findings confirm that a person
may display both emotional reactions and conflict handling styles in conflict situations,
and the combinations of those two factors can promote specific conflict resolution
behaviors that can have different impacts on the escalation and de-escalation of family
business conflicts.
Finally, by studying family businesses in Indonesia, this study also contributes to
knowledge about both family business and conflict research in a collectivist culture and
developing countries, which is rare (Kozan & Ergin, 1999). It also focuses on East
Asian countries (e,g., Kim & Meyers, 2012). The findings expand the understanding of
how family members behave in dealing with conflict in their family firm in this context
and how their behavior may escalate or de-escalate the conflict more generally.
As conflict is inevitable and can potentially harm individual well-being, family
relationships, and the future of the business, it is important for family members to find
100 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
a way to prevent their conflicts from escalating or to de-escalate an escalated conflict.
The findings from this study suggest that, since the actions taken by a family member
in responding to a conflict play an important role in influencing whether or not the
conflict escalates, family members need to learn how to deal with a conflict more
effectively. First, they should be able to regulate their emotions, and then work
cooperatively through the disagreement to reach a mutually accepted solution. Family
members may improve their skills by gaining mutual understanding and managing their
strong emotions. Second, junior family members should be aware that aggressive
behavior may lead to a negative spiral of reciprocal interactions, which can escalate a
conflict to become destructive. Junior members with a more assertive-persuasive
behavior may be able to diminish the aggressive behavior of senior members, de-
escalate the situation, and resolve the conflict. Third, family members should exhibit a
more cooperative style with more regulated emotions in dealing with intra-generational
conflicts, as other parties may reciprocate this positive behavior.
5.8 LIMITATIONS AND RECOMMENDATIONS FOR FURTHER RESEARCH
This qualitative study has identified phenomena that may exist in privately-held
family businesses in Indonesia. However, the results cannot be generalized to the
population due to the sample being small and non-random. This study may also be
limited in its generalizability to other cultural contexts because it was conducted in
Indonesia, where family ties are strong, the father is usually dominant, and being of a
senior generation in the family, respected. This may be different from Western patterns
of relationships, as well as from some other Eastern countries.
This study used CIT and asked participants to talk about their experiences with
conflict in their family firms. This allowed participants to freely express their feelings
and talk subjectively. As the findings are reported based on the participants’ stories, the
results of this study may in some sense be argued to be biased towards a certain
perspective. Participants may have different feelings about escalated, unresolved, or
well-managed conflicts.
The use of a different methodology, such as a network analysis, a longitudinal
study, or employing a different level of analysis, may increase the understanding of
conflict in family firms. Previous research has mainly focused on father–son or father–
Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business 101
daughter dyad conflicts (Haberman & Danes, 2007) and has not paid much attention to
the interpersonal relationships between team members. As family top management
teams have a complex pattern of interactions, communication, and informal behaviors,
it may be important to expand the unit of analysis from a dyad to a triad or a network
to allow for a more accurate diagnosis of family business conflict, where better conflict
management strategies can be developed.
Future research using a larger sample size is also recommended to confirm and
expand the results of this study and to uncover a more comprehensive picture of family
business conflicts, such as the differences in characteristics of inter- and intra-
generational conflicts at various levels of involvement, and in multi- and single-
generational family businesses. A longitudinal design could yield information to assess
how the association between emotional reactions and conflict handling styles unfold
over time.
Previous studies have identified the factors that influence an individual’s
conflict behavior, such as the counterparts’ previous behavior and an individual’s
power position relative to the counterparts (de Reuver, 2006). Further studies are
required to further explore the factors that may determine the family members’ behavior
patterns in intra- and intergenerational conflicts, such as why some junior members
reciprocate senior members’ aggressive behavior and others show complementary
behavior. In addition, further research may also focus on examining the role of
emotions and conflict handling styles in family business conflict, such as: What is the
causal relationship between emotions and conflict handling styles? Does the quality of
family relationships affect the emotional reactions in business conflicts? Can family
cultures or individual values, characteristics, and personalities be factors that influence
the way family members manage conflicts? How can collective emotions (de-)escalate
family business conflict?
5.9 CONCLUSION
This study explored a less-understood topic, conflict escalation and de-escalation,
in the context of family businesses from the perspective of conflicting parties’ behavior.
This study provides preliminary evidence to suggest that the conflict behavior that a
family member might exhibit can be related to the escalation or de-escalation of a
102 Chapter 5: Conflict Behavior and Emotions in the Escalation and De-Escalation of Intra- and Intergenerational Conflict in Family Business
conflict. The majority of senior family members demonstrated aggressive behavior in
conflicts with junior members. Meanwhile, aggressive and assertive-persuasive were
the most frequently displayed behaviors by junior members in responding to an
intergenerational conflict. An intergenerational conflict was more likely to escalate
when junior members responded to aggressive senior members with more aggressive
actions (aggressive and passive-aggressive) and de-escalate when junior members
behaved more assertive-persuasively.
Family members tended to behave reciprocally in intra-generational conflicts.
Their major behaviors were collaborative, aggressive, and collaborative-aggressive.
Given the available data, an intra-generational conflict is more likely to escalate when
both parties are aggressive or passive-aggressive. Conversely, a conflict is more likely
to de-escalate when family members behave more collaboratively (collaborative or
collaborative-aggressive).
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 103
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
6.1 ABSTRACT
Little is known about the role of non-family executives (NFEs) in family business
conflicts. This qualitative study was performed to explore NFEs’ roles in and their
impacts on family business conflicts. By analyzing 63 unique and detailed incidents
reported by 28 NFEs of 24 privately-held family firms in Indonesia, this study identified
the various roles of NFEs and grouped them into five categories: conflict avoiders,
messengers, peacekeepers, settlement agents, and yes-men. The findings indicate that
the roles played by NFEs were related to their hierarchical positions. The capability and
objectivity of the NFEs were identified as two main factors that influence the
effectiveness of NFEs’ roles in resolving conflicts.
Keywords: non-family executive, family business conflict, third party
6.2 INTRODUCTION
Conflict is natural in any organization; however, a family conflict in a family firm
is unique, as it often contains specific problems outside of a normal business course,
such as family rivalries, family frictions, the transfer of managerial power, a family’s
divergent voices that need to be heard, nepotism, and so forth to (Eddleston &
Kellermanns, 2007; Kellermanns & Eddleston, 2004; Sorenson, 1999). Consequently,
a conflict tends to escalate easily to a level that often destroys individual relationships
and threatens the survival of the business and the harmony of the family (Haynes et al.,
1997; Frank et al., 2011; Schlippe & Frank, 2016). Understanding the dynamics of
intra-family conflicts in family businesses is an important step to helping to prevent a
conflict from escalating.
Third parties often become involved in a conflict, change the dynamics of a
conflict, and influence the intensity of a conflict. Family business scholars and
practitioners have acknowledged the important role of the third party in resolving
family business conflicts (Harvey et al., 1998; Haynes et al., 1997; Merwe & Ellis,
104 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
2007; Pieper & Klein, 2007). Yet, they have greatly emphasized the role of official or
formal third parties and professionals hired especially to help the conflicting parties
resolve their conflicts, such as a family business advisor, management consultant, and
so forth (e.g., Haynes et al., 1997; Kaye, 1991; Prince, 1990). However, family
businesses do not often utilize formal mediation to handle conflicts (Alderson, 2015),
particularly in a collectivistic culture. In this type of culture, family members tend to
keep problems private, and the involvement of an informal third party is therefore more
prevalent (Dialdin & Wall, 1999; Wall, Sohn, Cleeton, & Jian Jin, 1995; Yum, 1988).
Empirical studies into the role of informal third parties in family business
conflicts are limited. However, family business literature has noted the existence and
potential influence of informal third parties, such as family elders (Prince, 1990) and
non-family executives (Efendy, 2013) in a family business conflict. Regarding the role
of non-family executives (NFEs) in family business conflicts, several studies suggest
that NFEs may be hired in order to avoid interpersonal conflicts in a family firm
(Waldkirch, Nordqvist, & Melin, 2017), help prevent opportunism (Songini, 2006, p.
274), and bring objectivity to emotional family issues in decision-making processes
(Ibrahim, Soufani, & Lam, 2001). However, their presence is negatively related to the
occurrence of a conflict (Sonfield & Lussier, 2009). In contrast, some studies have
found that the presence of NFEs in a top management team might increase conflict
within the managerial team (Schulze et al., 2003; Schulze et al., 2001), and that NFEs
might play roles in shaping conflict situations (Efendy, 2013). These previous studies
show that the current literature on family business conflict requires more empirical
evidence to provide academia and practitioners with a better understanding of the role
of NFEs in conflicts between family members.
This paper addresses this gap in the literature by empirically examining the role
of NFEs and their impact on conflicts. Understanding the involvement of NFEs is
critical because, as members of the top management team, NFEs have a key strategic
role in achieving the company’s objectives (Blumentritt, Keyt, & Astrachan, 2007) and
influencing the organizational behavior, structures, and processes (Klein & Bell, 2007).
Therefore, they have the potential to influence the dynamics of conflicts and to change
conflict situations. To achieve the purpose of this study, the following research
questions were proposed:
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 105
1. How do NFEs become involved in a conflict between family members?
2. What role do NFEs play in a conflict?
3. What are the outcomes of NFEs’ involvement in a conflict and the factors
that may influence them?
This study contributes to the development of the field of organizational conflict
and family businesses in several ways. First, it expands knowledge about the role of
informal third parties in conflicts and their impact on the conflicts, which is
understudied (Botes, 2003; Eaton & Sanders, 2012). Second, this study also expands
the literature on organizational conflict, which has primarily focused on the role of
managers as informal third parties in conflicts between subordinates (e.g., Pinkley et
al., 1995) by exploring the roles of NFEs, including directors and managers, as informal
third parties in conflicts between family members. Third, for the first time this study
explores the role of NFEs to understand the dynamics of family business conflicts.
These results can have important implications for family business practitioners. This
research may help owners and family CEOs to be aware of the possible impacts
(positive and negative) of the involvement of NFEs in their conflicts and help NFEs to
understand how they can constructively contribute to help family members resolve their
conflicts.
6.3 LITERATURE REVIEW
6.3.1 The Nature of a Family Business Conflict
A conflict is “a dynamic process that occurs between interdependent parties as
they experience negative emotional reactions to perceived disagreements and
interference with the attainment of their goals” (Barki, 2004, p. 216). In the context of
family businesses, a conflict may occur among related family members and/or among
unrelated firm members (Kenneth Kaye, 1991). This study focuses on conflicts between
family members actively involved in the business operations. They may be either from
different generations (intergenerational conflict) or from the same generation (intra-
generational conflict). Familial relationships between conflicting parties (either related
by blood, marriage, or adoption) and their ability to influence the strategic direction of
the firm often add to the complexity of a conflict (Gagne, Sharma, & De Massis, 2014).
106 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
Previous studies have defined family business conflicts as two main types of a
conflict: task and relationship conflicts (Eddleston & Kellermanns, 2007; Eddleston et
al., 2008). A task conflict refers to disagreements or incompatibilities in the content of
tasks being performed, and a relationship conflict refers to disagreements or
incompatibilities over interpersonal issues (Jehn, 1995). Some studies suggest that
relationship conflicts are negatively related to family firm performance (e.g., Eddleston
& Kellermanns, 2007; Gersick et al., 1997).
The Role of NFEs in Family Businesses
Family business literature has explored the roles of NFEs as board members
and/or managers in family firms (e.g., Blumentritt et al., 2007) and shows that they can
improve firm performance (Caselli & Di Giuli, 2010; Kang & Kim, 2016), contribute
to the growth and long-term survival of family firms through their involvement in
strategic decision making (Chua, Chrisman, & Steier, 2003; Ensley & Pearson, 2005;
Klein & Bell, 2007), and balance family and business activities (Brenes, Madrigal, &
Requena, 2011). From the perspective of the stewardship theory, managers are assumed
to act to maximize the interests of the company and not be self-serving (Hiebl, 2012).
However, some scholars have argued that the inclusion of NFEs in a management team
has a number of drawbacks. First, based on the agency theory perspective, which
assumes that managers (agents) are self-interested, the inclusion of NFEs could raise
agency problems, as NFEs may have different goals from the family (Gallo & Vilaseca,
1998), possibly act opportunistically, and might decrease economic performance (Fang,
Randolph, Memili, & Chrisman, 2016). Second, the socioemotional wealth (SEW)
perspective argues that the presence of NFEs could reduce the SEW of the family
(Berrone et al., 2012), as family members may lose some influence and control (Gallo
& Vilaseca, 1998), and NFEs may not be willing to pursue the non-economic goals of
family owners who create SEW (Fang et al., 2016).
Therefore, by understanding the role of NFEs, much can be understood about the
dynamics of family business conflicts. For the purpose of this study, NFEs’ roles are
identified based on the primary intentions of their involvement in a conflict.
The Roles of a Third Party in Different Contexts
Third parties are broadly defined as “all individuals or groups who intervene in
any way in an on-going conflict” (Black & Baumgartner, 1998, p. 96). A third party
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 107
can become involved in a conflict voluntarily (by their own accord), by being invited
by one or both conflict parties, by virtue of a formal assignment (Kozan & Ergin, 1998),
or because of their accessibility and availability (Kolb, 1992, p. 66). Conflict literature
recognizes many different roles of third parties in interpersonal conflicts in different
contexts, and a number of typologies have been proposed based on many different
dimensions (e.g., Black & Baumgartner, 1998; Klein & Milardo, 2000; Phillips &
Cooney, 2005; Van De Vliert, 1981; Vuchinich, Emery, & Cassidy, 1988). For
example, in a social conflict, Black and Baumgartner (1998) suggested that third parties
may perform support roles (as an informer, adviser, advocate, ally, surrogate),
settlement roles (as a friendly peacemaker, mediator, arbitrator, judge, repressive
peacemaker), negotiator roles, and healer roles. Moreover, some researchers have
classified third parties’ responses more simply into only three basic categories (Emery,
1992, p. 286; Phillips & Cooney, 2005): (a) to form a partisanship/alliance with one
party against the other, (b) to use inaction or avoid being involved in the conflict, or (c)
to seek a neutral settlement/intervention in the conflict to resolve the conflict.
In the context of organizational conflict, it seems that researchers have focused
on the role of managers in subordinate conflicts (e.g., Karambayya & Brett, 1989;
Pinkley et al., 1995). Most studies have classified the roles of managers based on two
dimensions of control: control of the process and control over the outcome of the
conflict (Elangovan, 1995; Karambayya & Brett, 1989; Sheppard, 1983, 1984). Based
on these two dimensions, Sheppard (1983, 1984) proposed four managerial intervention
strategies: inquisitorial, mediational, adjudicative, and providing impetus. Inquisitorial
reflects the strategy in which a third party has control over both the process and the
settlement. A mediational role gives third parties control over the process. In the
adjudicative role, third parties have more control over the outcome. In the providing
impetus strategy, third parties have a responsibility to ensure disputants end the conflict,
but do not have control over the process or outcome. Another study by Karambayya
and Brett (1989) confirmed three out of four strategies proposed by Sheppard (1983,
1984)—inquisitorial, mediational, adjudicative—and added a strategy, labelled as
“procedural marshal”, in which managers provide procedures for handling conflicts to
be followed, impose these procedures, and prevent the parties from interrupting each
other. Despite the remarkable amount of research into managers’ roles in subordinate
108 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
conflicts, to date, no studies have been conducted on the role of non-family executives
in family conflicts in the context of family firms.
This study argues that NFEs may also have specific roles in conflicts in a unique
family business setting for two reasons. The first is that family business conflicts are
different from conflicts in other organizational settings because they occur between
family members who have significantly interdependent and continuous relationships—
two factors that differentiate family conflicts from other conflict settings (Rubin, 1985).
Consequently, disputants are “locked” into their firms and cannot easily walk away
from the conflict (Benavides-Velasco et al., 2013; Kenneth Kaye, 1991). The conflict
also occurs in a complex and dynamic organizational setting, as it involves a complex
interplay of family, business, and ownership systems (Gersick et al., 1997; Schlippe &
Frank, 2016b). Each system has different purposes, needs, and processes. The family
system mainly focuses on nurturing and developing members’ self-esteem (Ransburg,
Sage-Hayward, & Schuman, 2016, p. 23) and is generally governed by equality,
inclusiveness, and care (Kenyon-Rouvinez & Ward, 2004, p. 4). The business system
primarily aims to pursue operational effectiveness and profits (Ransburg et al., 2016, p.
23) and is governed by meritocracy, selectivity, and critical analysis (Kenyon-Rouvinez
& Ward, 2004, p. 4). The purpose of the ownership system is on the viability of the
firm and return on investment (Ransburg et al., 2016, p. 23). Moreover, each system
and its intersecting systems also has its own members, who have their own perspectives,
needs, and interests. The interactions between those three systems and between
individuals in each system create multiple and complex relationships, which often
overlap and contradict one another and frequently lead to a conflict. For example,
family shareholders who work in a certain business may have different perspectives
about the level of dividends than those who are outside the business. Consequently,
mediating family business conflicts is a challenge for NFEs.
The second reason is that the positions of NFEs as informal third parties in family
business conflicts differ significantly from those in non-family business settings. In the
case of non-family businesses, a CEO or manager may be involved in an interpersonal
conflict between unrelated parties. In contrast, in a family business, the conflicting
parties are members of a family or related parties. In many cases, the kinship ties
between family members cause NFEs to have less or no power in the decision-making
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 109
processes relative to the family members. Several studies have indicated that decision-
making powers are centralized in the hands of family members (e.g., Alderson, 2011,
pp. 47-48; Gallo & Vilaseca, 1998). This specific situation may put NFEs under
pressure to choose one side (Van De Vliert, 1981) and influence the reactions NFEs
have towards a conflict (Botes, 2003).
6.4 RESEARCH METHOD
6.4.1 Design
This in-depth exploration of NFEs’ experiences and perceptions of their
involvement in family business conflicts required a qualitative research design, which
was adjusted to explore the participants’ experiences and present common themes from
these experiences (Corbin & Strauss, 2015). A phenomenological type of qualitative
research was utilized in this study. This enables researchers to describe “the common
meaning of several individuals of their lived experiences of a concept of a
phenomenon” (Creswell, 2013, p. 76). This approach was selected because this study
intended to accurately describe the “essence” of the phenomenon (NFEs’ “lived”
experiences in a conflict between family members) and to delve into what NFEs may
have in common in their involvement in a conflict. Understanding these common
experiences is important to develop a deeper understanding about family business
conflicts.
Participants
A non-probability network sampling was employed to select participants from a
target population of key informants. Interviewees were selected based on three criteria:
first, they had to be executives of a privately-held family firm, in which more than 50%
of its shares were owned by individuals of a single family and that were managed by at
least two family members. Second, they could not have a familial relationship (either
by blood, marriage, or adoption) with the owning family. Third, in order to be included
in the study, participants must have been working in the company for at least two years
and been engaged in at least one conflict between family members to ensure that they
had experience in dealing with a family business conflict (Creswell, 2013, p. 79). A
range of executives (from middle managers to corporate directors and CEOs) were
110 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
included in this study. The number of participants interviewed continued until data
saturation was achieved.
Data Collection Procedures
Potential participants were identified through colleagues, friends, family
members, and personal connections. They were initially contacted by telephone to
explain the purpose of the study and invite them to participate. Once potential
participants agreed to participate, interviews were scheduled according to the
participants’ convenience in regards to place and time. This study employed semi-
structured interviews using a critical incident technique (CIT) developed by Flanagan
(1954). CIT is defined as “a set of procedures for collecting direct observations of
human behavior in such a way as to facilitate their potential usefulness in solving
practical problems” (Flanagan, 1954, p. 327). This method offers a step-by-step
approach to collecting and analyzing information about human behaviors and their
significance for those involved and has been widely used in conflict research (Kozan,
Ergin, & Varoglu, 2014). Moreover, as this study intended to explore the roles of NFEs
in conflicts, it was important to anchor participants to a specific incident.
The primary objective for the data collection was to represent the subjective
viewpoints of NFEs regarding their experiences and perceptions of their involvement
in a family business conflict. After obtaining their informed consent, the participants
were asked to reflect back on “family business dramas” that had recently occurred or
they remembered most and recall the roles they played. Every participant was asked to
provide two incidents, one when they had failed and one when they had succeeded in
helping family members resolve their conflicts. However, the number of incidents
reported by the participants varied between one and five incidents, depending on the
frequency of conflict in the family firms, as well as the participants’ openness. Once a
conflict was identified, participants were asked to describe the incident and their role
in detail. The interview protocol (Appendix H) was developed with reference to the
research questions and Flanagan’s (1954) critical incident technique. The central
questions for this study were:
a) What was the conflict about?
b) Who were the conflicting parties?
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 111
c) Why and how did you get involved in the conflict?
d) Can you please chronologically explain in detail what you did or said during
the conflict?
e) Did the intensity of the conflict change during the conflict episode?
f) How did the conflicting parties respond to your approach?
g) What was the outcome of the conflict?
Probing and clarification questions followed as required.
Interview sessions were conducted both face-to-face (n=22) and by telephone
(n=6) by the researcher. Telephone interviews were used due to the geographic
distances and participants’ busyness. The participants were informed that the interviews
would be audio-recorded to assure the accuracy and completeness of the data and would
be deleted once transcribed. They were also informed that their anonymity would be
guaranteed. In presenting the pseudonym names, P01 was used for participant 1, P02
was used for participant 2, and so forth.
The interview guide was originally written in English and translated into Bahasa
Indonesia by a bilingual translator. Interviews lasted 60-90 minutes. Data collection
was suspended after 28 interviews (63 incidents) because no new information emerged.
Data Analysis and Interpretation
In the present study, 63 incidents were elicited from 28 participants. The unit of
analysis was the incident itself (labeled as Incident 01, Incident 02, and so forth). The
data was analyzed through an inductive content analysis, in which patterns, categories,
and themes were generated directly and inductively from the raw data (Creswell, 2013,
p. 45) through careful examination and constant comparisons of the 63 incidents
reported by the participants.
Each incident was initially transcribed in detail. Data were analyzed through
several steps. First, each incident was read repeatedly to obtain an overall sense of the
incident and coded individually. Second, the codes were refined through comparisons
between incidents. This process ensured that all relevant information was captured.
Third, the codes were then collapsed into emerging themes by arranging the codes into
patterned responses that would be used to answer the research questions (Appendix I).
112 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
Various strategies were undertaken to ensure internal validity throughout the
research process. Interviews were audio-taped and transcribed to gain an accurate and
complete transcription to ensure credibility (Guest et al., 2013, p. 157), and probes were
used to obtain detailed data to gain a good understanding of the issues addressed in this
study (Guest et al., 2013, pp. 148-149; Hanson et al., 2011). Detailed descriptions of
the sample (companies and participants) were provided to address transferability,
allowing readers to make judgments about whether or not the reported results could be
transferable to another setting (Elo et al., 2014; Hanson et al., 2011). Detailed
information regarding data collection and data analysis procedures was provided to
increase the dependability of this study, and a member checking process was
undertaken by discussing the insights that were likely to emerge from the data analysis
with the participants (after the interviews were completed) (Hanson et al., 2011). To
establish confirmability (Elo et al., 2014), a colleague independently reviewed the
initial list of themes (codebook) and any disagreements were then discussed until
consensus was reached. During this process, the second coder could propose new
categories. However, in this case, the second coder did not add any new categories;
therefore, the saturation point was deemed to have been reached.
6.5 RESEARCH FINDINGS
The presentation of the results begins with a brief description of some
demographic information and an overview of the incidents reported. The emerging
themes associated with the research questions are then described, illustrated, and
discussed.
6.5.1 Demographic Information
This study included 28 NFEs from 24 privately held family businesses in
Indonesia. As can be seen in Table 6.1, the represented firms ranged from a single-line
business (n=17, 71%) to a multiple-business corporation (n=7, 29%). The types of
businesses represented were diverse, including manufacturing (n=9, 37.5%), financial
services (n=4, 16.7%), multiple-business corporations (n=7, 29%), property (n=3,
12.5%), and trading (n=1, 5.2%). Four out of the 24 firms were medium-scale firms
(annual revenue ranging from about US$192,300 to US$3,846,000) and the remaining
21 firms were large-scale firms (annual revenue more than US$3,846,000). The ages of
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 113
the companies ranged from 10 to 73 years (an average of 30.7 years). The number of
family members directly involved in the businesses ranged from two to six (an average
of 3.25) family members.
Table 6.1: Demographic Characteristics of the Companies
Com
pany
Business sector Size Age (in
years)
Generations in the business
Number of family members in the
business
01 Multiple-business corporation Large 10 1st & 2nd 4
02 Trading Large 13 1st & 2nd 3
03 Financial services Large 26 1st & 2nd 3
04 Multiple-business corporation Large 57 2nd 4
05 Financial services Medium 13 1st 3
06 Multiple-business corporation Large 25 1st & 2nd 3
07 Property Large 35 1st & 2nd 3
08 Multiple-business corporation Large 36 1st & 2nd 6
09 Manufacturing Large 24 1st & 2nd 6
10 Manufacturing Large 36 1st & 2nd 2
11 Multiple-business corporation Large 19 1st & 2nd 2
12 Multiple-business corporation Large 35 2nd 3
13 Manufacturing Large 22 1st & 2nd 3
14 Property Large 34 1st & 2nd 2
15 Manufacturing Large 34 1st & 2nd 3
16 Multiple-business corporation Large 42 2nd 4
17 Manufacturing Large 14 2nd & 3rd 4
18 Manufacturing Large 73 1st & 2nd 2
19 Financial services Medium 26 2nd 2
20 Property Large 18 1st & 2nd 2
21 Financial services Medium 47 1st & 2nd 3
22 Manufacturing Large 21 2nd 3
23 Manufacturing Large 62 2nd & 3rd 6
24 Manufacturing Medium 15 1st & 2nd 2
The demographic information of the participants (Table 6.2) indicates that the
sample met the desired criteria, as all of the participants were members of top
management and had been working at the firm for at least two years. Half of the
participants were top-level managers in a company, a quarter (25%) were directors or
114 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
Table 6.2: Demographic Characteristics of the Participants
Participant Company Position
Age
(in
years)
Gender
Tenure
(in
years)
Educational
background
P01 Company 01 Director 49 Male 5 Undergraduate
P02 Company 02 Controller 47 Male 10 Undergraduate
P03 Company 03 Director 51 Male 16 Undergraduate
P04 Company 04 Operating manager 53 Male 21 Undergraduate
P05 Company 05 Finance manager 53 Male 8 Undergraduate
P06 Company 06 Finance manager 50 Male 7 Master
P07 Company 07 Asset manager 53 Male 32 Undergraduate
P08 Company 08 Accounting manager 53 Male 19 Undergraduate
P09 Company 08 Finance manager 41 Male 21 Undergraduate
P10 Company 09 Director 48 Male 25 Doctorate
P11 Company 08 Vice manager 47 Male 24 Undergraduate
P12 Company 10 Operating manager 47 Male 5 Undergraduate
P13 Company 11 Operating manager 62 Male 15 Undergraduate
P14 Company 08 Finance manager 49 Female 17 Undergraduate
P15 Company 12 Human resource 49 Male 16 Undergraduate
P16 Company 13 Director 52 Male 18 Master
P17 Company 14 Director 61 Male 33 Undergraduate
P18 Company 15 Finance manager 60 Male 9 Master
P19 Company 16 Director 45 Male 12 Master
P20 Company 12 Vice manager 42 Male 16 Undergraduate
P21 Company 17 Vice manager 38 Female 18 Undergraduate
P22 Company 18 Marketing manager 42 Male 5 Undergraduate
P23 Company 19 Director 54 Male 9 Doctorate
P24 Company 20 Project manager 49 Male 19 Undergraduate
P25 Company 21 Accounting manager 47 Female 19 Undergraduate
P26 Company 22 Marketing director 53 Male 17 Undergraduate
P27 Company 23 Director 54 Male 18 Undergraduate
P28 Company 24 Marketing manager 36 Male 6 Undergraduate
managers in a holding company (multi- business corporation), and the remaining 25%
of the participants were directors in a company. Their tenure ranged from five to 33
years (an average of 15.7 years). Four of the participants were female and 24 were male.
Six of the participants indicated they had worked in another family business before
joining their current company. None of the participants acknowledged that they had
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 115
ever received specific conflict management or resolution training. The average age of
the participants was 49.5 years, ranging from 36 to 62 years. Most of the participants
(22 or 79%) held a bachelor’s degree and six (21%) of the participants had a post-
graduate degree.
6.5.2 Overview of the Incidents
Conflicts occurred for many reasons, such as a disagreement over pricing
policies, investment decisions, marketing programs, performance measurements,
business priorities, and so forth (Appendix J). Incidents were then classified into three
groups based on their types (intra- or intergenerational conflict) and into four groups
related to the main conflict issues (task-related or relationship-related conflict) of the
conflicts. Table 6.3 shows the types and issues of incidents reported by participants. A
total of 28 out of 63 incidents were intergenerational conflicts. These consisted of
father–son conflicts (n=24), father–daughter conflicts (n=3), and uncle–nephew
conflicts (n=1). Twenty-nine of the incidents were intra-generational conflicts; and all
of these incidents were sibling conflicts. Six conflicts occurred between more than two
family members within and between generations. The data also shows that most of the
incidents involved emotions and or personal issues. Relationship conflicts were present
in 48 of the 63 incidents, being either a task conflict that spilled over into a relationship
conflict (n=27), a relationship conflict that triggered a task conflict (n=10), or a “pure
relationship” conflict (n=10). Meanwhile, 15 of the incidents were “pure task”
conflicts. Table 6.3 presents several examples of incidents that demonstrate each of the
conflict categories.
Table 6.3: The Types and Issues of Conflict
Type of conflict Issue of conflict
Task Task / relationship conflict (T/R)
Relationship / Task conflict (R/T)
Relationship conflict
Total
Intergenerational conflicts 4 18 4 2 28 Intra-generational conflicts
11 8 5 5 29
Both inter and intra-generational conflicts 0 1 2 3 6
Total 15 27 11 10 63
116 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
Task conflict.
Incident 60 is an example of a task-related conflict that occurred between siblings
in Company 22. As described by the marketing director (P26) below, both conflicting
parties were able to focus on the issue and tried to determine which options would be
best for the company:
There was a conflict between a brother and a sister regarding plant relocation
plans. The brother intended to build a new bigger plant with extended
production capacities a few kilometers from the current location to anticipate
future growth. His sister did not agree with him. She argued that they could
optimize the use of existing space and therefore minimize the expenditures,
such as moving costs, investment costs, capital costs, and so forth. They
conducted a series of meetings to make a decision. They involved all members
of the board of directors and key managers. They also asked [for] and
considered the views of their siblings [passive shareholders] (Incident 60, P26).
Task-relationship conflict.
Incident 47 is an example of how a task-related conflict transforms into a
relationship conflict. A conflict began over which investment options should be taken.
As the parties insisted on pursuing their own ideas, the conflict turned into a more
personal battle that involved verbal and physical aggression. A financial manager (P18)
of the holding company (Company 15) shared:
A conflict occurred between the first and the second siblings when they
disagreed over two big investment options… Investment A was proposed by
the first brother and investment B was the second brother’s proposal… each
investment plan was a large investment project and external sources of funds
were needed to finance the investments and the company had to make a choice
between the two options. Unfortunately, the two brothers insisted that their own
ideas were the better one. Both of them then took steps to implement their own
plans… As the eldest brother and chair of the holding company, the first
brother felt disrespected when he discovered that his brother kept executing his
own plan and ignored his objection, bought land in his own name, built a new
factory, and raised finance without even consulting him. He exploded: “Who
is he [second brother]? I am the president director of this company. I am the
one who had paid his tuition bills. I also grew this company from nothing to
become a large national enterprise. Now, what he has been doing to me? He
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 117
goes behind my back to get the family signatures on the loan.” Later, this
conflict turned into a legal battle (Incident 47, P19).
Relationship-task conflict.
Incident 50 was told by a vice manager of a business unit (Company 12). There
was an indication that conflict arose because the two brothers disliked one another and
competed to control the firm. As a result, conflict often occurred because they tended
to refuse ideas that contradicted their own or intentionally express opposing opinions
just to show who was more powerful. The following incident reflects how personal
clashes between family members can influence work issues to develop into conflict:
This company was managed by three siblings (two brothers and one sister) of
the second generation. The sister lived in another city and rarely came to the
office. The relationships among [the] siblings were poor. The communication
between the two brothers was broken. They communicated with each other
through third parties [mainly their managers]. Once, they needed to determine
the distribution channel that [was] best suited to business unit A’s products,
which was managed by the younger brother. The older brother intended to
distribute their products through distributors or wholesalers. Meanwhile, the
younger brother wanted to establish their own outlets. These different opinions
quickly came into open conflict because they refused each other’s opinions,
believed that their own ideas were the right, and talked more about the other’s
personalities than about [the] decision being made. In my opinion, these
brothers are difficult to work together (sic). If the one has an opinion, then the
other will have a much different opinion and each of them insists on their own
opinion. It seems that their fundamental problem was pride. (Incident 50, P20)
Relationship conflict.
Incident 3 described below illustrates a relationship conflict that occurred
between mother–son and nephew–cousin. It seems that the conflict was among the
individual interests of the family members. They each perceived the other to be taking
advantage of the company with a hidden motive:
The company was established by a sibling of two brothers, A and B. In the last
five years, A’s son, C, join the company and held a position of a marketing
director. Meanwhile, B’s son, D, was studying overseas. Conflict started when
A and B passed away, D entered the company. C was much more capable than
118 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
D and therefore, D’s mother, M, became involved in the company to back up
her son’s tasks. This caused dual leadership and increased tensions. The
communication between C and D became blocked. They started to make use
of the company’s money for their own advantages. For example, D has bought
some private assets using the company’s money and marked up the price
(Incident 3, P02).
Research Question 1: How do NFEs become involved in a conflict between family members?
The data shows that NFEs became directly involved in a family business conflict
in three different ways: invited by one or both parties, affected by a conflict, or took
the initiative to intervene. Among the three categories, being invited by conflicting
parties was the most frequent (37 out of 63 incidents). NFEs sometimes became
involved because one or the other conflicting party turned to them by telling them about
the problematic situation, asked them to deliver a message or provide advice to the
other party, or asked them for support and assistance in dealing with the conflict. Other
NFEs (n=15) became involved in a conflict because they were likely to be affected by
the conflict. For example, an NFE might not have been able to accomplish their task
because of the conflict between family members. Moreover, some other NFEs (n=10)
were involved in a family business conflict because they took the initiative to intervene.
The themes regarding how NFEs became involved in the conflicts are presented below,
along with representative quotes in Table 6.4.
Research Question 2: What are the roles of NFEs in family business conflicts?
One of the objectives of the recent study was to identify the roles played by NFEs
while dealing with an intra-family conflict. After transcribing, coding, and analyzing
the responses, this study found that NFEs, particularly those who had a close personal
relationship with family members, often became involved in family business conflicts
and played various roles. A participant might perform different roles in different
conflicts. They might also change roles during the conflict (e.g., from a peacekeeper to
an avoider). For this analysis, NFEs’ roles were grouped by their observable immediate
intentions.
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 119
Table 6.4: How NFEs Became Involved in a Conflict-Themes and Representative Quotes from Participants (n=63)
Themes and categories Examples of quotes from participants
Invited by one or both parties to (n=37):
- deliver messages (n=5)
- provide opinions (n=13)
- advise another party (n=3) - mediate (n=8) - have an informal
discussion (n=9)
“The elder brother said to me; tell him [his younger brother] to change the distribution channel” (Incident 50, P20).
“A conflict between the father and his son arose out of different opinions over pricing policy. They asked [for] my views” (Incident 40, P16).
“The father often asked me to talk to his son for him to make his son understand his point of view” (Incident 32, P12),
“The son came to me and asked me to help him convince his father” (Incident 17, P07).
“The son often talked with me and asked for my thoughts regarding his conflicts with his father” (Incident 29, P11).
Affected by the conflict (n=15):
- related to their job (n=2)
- in there when a conflict
arose (n=9)
- involved in the decision-making process (n=4)
“I should report the new shareholder composition [after the father/owner passed away] to the Indonesia Financial Service Authority. But the heirs (four siblings) still have a disagreement over how to divide their father’s inheritance” (Incident 8, P04).
“The father [founder and owner] invited me to attend a family meeting to discuss an issue. The meeting grew heated and emotional” (Incident 20, P09).
“They usually involved us [two NFEs] in making a decision” (Incident 62, P28)’
Take an initiative to intervene (n=10)
“I came and talked to them one by one” (Incident 5, P03).
Five major themes were identified (see Appendix C) and labelled as (presented
in alphabetical order and not by the frequency of the role): (a) avoiders (n=11), (b)
messengers (n=3), (c) peacekeepers (n=19), (d) settlement agents (n=27), or (e) yes-
men (n=3). These indicate that most participants intended to maintain peaceful family
relationships and/or to help settle a conflict between family members. The following
section analyzes these roles independently. A description of the five main themes is
provided in Table 6.5.
120
C
hapter 6: The Roles of N
on-Family Executives in C
onflicts between Fam
ily Mem
bers in Family Firm
s: An Exploratory Study
Table 6.5: Roles of N
FEs in a Conflict-Them
es and Representative Q
uotes from Participants (n= 63 incidents)
Themes and
categories K
ey features Exam
ples of quotes from participants
Avoider
(n=11) R
efuses to get involved in the conflict
“I was just an em
ployee; I won’t (sic) get involved in fam
ily conflicts” (Incident 50, P20). “I w
ouldn’t get involved in their conflict; it was their fam
ily matter” (Incident 18, P08).
Messenger
(n=3)
Conveys m
essages from one party to
another. “H
e asked me to convey m
essages to his father” (Incident 12, P06). “Their [tw
o siblings] comm
unication was blocked. They com
municated through us
[NFEs/em
ployees]” (Incident 37, P15). Peacekeeper (n=19)
Helps to m
aintain peaceful situations or prevent a conflict from
escalating, by providing advice, filtering or refram
ing information,
or dragging the conflict parties off each other.
“I told the son to understand his father and to interpret [that] his father’s anger was for
him to becom
e successful” (Incident 16, P07) “I persuaded them
to accomm
odate the interests of the other party for the good of the com
pany” (Incident 8, P04).
Settlement agent
(n=27)
Makes an effort to help fam
ily m
embers to solve a conflict and to
find solutions to their problems.
They may act as a m
ediator, negotiator, or problem
solver.
“I was involved in m
ediating their disagreement” (Incident 40, P16).
“I proposed the terms and conditions [in relation to an agreem
ent the NFEs proposed to
the family m
embers] and convinced other shareholders to approve them
” (Incident 24, P10).
Yes-m
an (n=3)
Alw
ays supports one party’s views
“I followed w
hat the father said to do, since he was still the ow
ner of this company and
had the authority to make any decisions” (Incident 34, P14).
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 121
Table 6.5 shows that participants took an active role in assisting family members
to find a solution (settlement agent) in 27 out of the 63 incidents and to prevent a
conflict from escalating (peacekeeper) in 19 incidents. There were 11 incidents in
which participants avoided or refused to be involved in the conflict (avoiders). In the
remaining incidents, participants played a role as a messenger or a yes-man (three
incidents each). This indicated that NFEs intended to maintain peaceful family
relationships and/or to help settle a conflict between family members. The following
section analyzes these roles independently.
Avoider
An avoider refers to NFEs who refused to be drawn into and engaged in family
business conflicts. They took some steps to avoid becoming involved because they
perceived that the conflict was a family affair, in which they should not intervene. They
also believed that they might experience trouble if they were involved in the conflict.
A senior financial manager spoke of his experience:
Four siblings with an equal proportion of shares of a rural bank [had]
experienced a serious conflict over the ownership of the bank since the
Indonesia Financial Services Authority released a new regulation that requires
rural banks to increase their equity. Consequently, each shareholder needed to
deposit at least US$58,000 to maintain the proportion of his or her ownership.
The problem was that only one shareholder could fulfill the requirement.
Meanwhile, the three others would not let him become a controlling
shareholder. They felt their brother was very arrogant and selfish. They wanted
to sell the bank to outsiders instead of selling it to their sibling. I would not get
involved in their conflict. When they asked for my opinion, I just said that the
problem should be resolved within the family (Incident 9, P05).
Moreover, there was a case in which an NFE decided to leave the company to
avoid getting involved in the father-daughter conflicts, he stated:
Conflicts often erupted between them [father and daughter]. I could not bear to
see the father always blaming his daughter and repeatedly saying that his
daughter was unable to manage the company. He did that in meetings and even
in the front of employees. I thought it was better to resign (Incident 52, P15).
In both instances, the NFEs tended to ignore the conflicts and let family members
resolve their own conflicts. They resisted providing any comment and even left the
122 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
company because they worried that their response might imply they were taking the
side of one or the other conflicting party, draw them into a private matter, or shape the
conflict situation.
Messenger
A messenger refers to an NFE’s role in conveying messages from one party to
another. Many family members often asked NFEs to be messengers to keep their
distance from and avoid having a conflict with other family members. In these
incidents, NFEs became the go-betweens who conveyed information, either verbally or
in writing, between conflicting parties. For example, during a father–son conflict, an
accounting manager, who had been working for the firm for more than 19 years, often
conveyed both parties’ concerns to each other. She said:
The communication between the father and his son was poor. I often delivered
messages from the son to the father, and vice versa. For example, they often
had different policies in determining the amount of foreign currencies to be
purchased. The son would ask me to inform his father the amount he would
buy and I would communicate his father’s policies to him (Incident 58, P25).
Another important finding regarding the role of an NCF as a messenger is the
potential for a misunderstanding and further conflict. The following incident was told
by a human resource manager, who handled a conflict between two brothers (who had
broken communication) caused by misleading information given by another NFE:
A younger brother bought a sports car with his own money. His elder brother
wanted to buy a similar car under the company’s name. He went to a car dealer,
made a decision to buy a car, and paid a certain amount of deposit. He then
signed a check and asked the finance manager to pay it off. The finance
manager could not proceed with the payment without approval from the
younger brother. Nevertheless, she [the finance manager] ordered her staff to
send the check to the car dealer and said to the elder brother that the car would
be available in two days. Unexpectedly, the younger brother did not give his
approval and became upset when he knew that the check was cashed. A conflict
between the two brothers could not be avoided (Incident 37, P15).
These results indicate that in many incidents, conflicting parties did not talk
directly to each other, particularly during a conflict, but rather communicated through
a go-between. The intention of NFEs was primarily to deliver messages from one party
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 123
to another and vice versa. However, although they might filter or reframe the messages
to prevent a conflict from escalating, they might also increase the chances of
miscommunication and escalate the conflict.
Peacekeeper
NFEs also acted as peacekeepers in 19 incidents, demonstrating efforts to prevent
conflicts between family members from escalating. This role included delivering
messages (similar to a messenger); however, this was different from the role of a
messenger in that it focused on the efforts to prevent a conflict from escalating or to
reduce the tensions between conflicting parties. However, peacekeepers did not indicate
specific efforts or directions to resolve the conflict. This study identified three different
techniques used by NFEs in acting as peacekeepers, including filtering or reframing
information (n=5), providing advice (n=13), and physically separating the conflicting
parties (n=1). It was apparent that NFEs tended to provide advice to conflicting parties
regardless of the sources of the conflict.
First, NFEs filtered or reframed information to prevent or de-escalate a conflict.
The following example was shared by a participant to demonstrate how he determined
the kind of information he would provide to another party to prevent a more intense
conflict:
A disagreement between the father and the son emerged when the son wanted
to settle a legal issue on a plot of land bought by the father years ago. The father
disagreed because he had tried it before and failed. According to the father, any
effort would be time and money consuming while the results were uncertain.
However, the son kept his idea. He hired a well-known lawyer, who was an
expensive lawyer, to handle the case. The father often asked me about the
progress of this issue. I only said: “We are trying to find a solution or the
process is still ongoing”. I did not tell him about the lawyer, for example,
because it would make him very angry (Incident 1, P01).
Another NFE (P11) stated that a father often used harsh words when talking about
his son (Incident 30). When talking to the son, P11 did not convey any bad words stated
by his father; he reframed the father’s statements to avoid making the son angry, he
said:
124 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
For sure, I would not convey any harsh words. I often explained his father’s
will to the son, and vice versa, with my own words. For example, the father
said that his son was lazy and irresponsible because he often arrived late to the
office. The father’s philosophy of success is hard work, whereas the son
thought that they had already established information systems that support
business operations. Rather than saying what his father said about him, I told
the son that he could be a good role model for employees by arriving at the
office on time. He would get very angry if I told him that it was his father’s
message (Incident 30, P11).
Second, NFEs might attempt to cool down or end a conflict by giving advice to
one or both conflicting parties, such as to advise the conflicting parties to keep calm
and cool, understand one another’s views, respect each other, yield, and so forth, for
example:
A conflict between four siblings, now in their 60s, revolved around the issue
of inheritance—a conglomerate family business of several business divisions.
Three siblings chose to divide the company’s shares equally (25% for each of
them) according to Indonesia law. However, the youngest brother had a
different opinion. He wanted to divide their parents’ inheritance according to
Islamic law, in which a male got a portion of that equal to two females. Hence,
the breakdown of the distribution would be son 1 (28.57%), son 2 (28.57%),
daughter (14.85%), and son 3 (28.57%). The conflict disrupted business
operations. Business expansion, for example, was obstructed because one of
the heirs refused to sign a consent document. I talked to each of them. I
persuaded them to accommodate the interests of the other parties for the good
of the company (Incident 8, P04).
Third, when a conflict becomes very emotional NFEs might have to physically
separate the conflicting parties to avoid physical harm, as explained by one financial
manager, “When the conflict grew into a heated debate, they started yelling, swearing,
throwing things, and so forth. I then pulled one of them out of the room before the
conflict became a physical fight.” (Incident 39, P15).
Settlement agent
Some NFEs took active actions to resolve the conflicts and/or reconcile the
conflicting parties. As a settlement agent, NFEs sometimes did what a go-between or a
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 125
peacekeeper does (e.g., deliver messages or reframe the issues); however, they also
promoted possible solutions and encouraged dialogue, and compromised on both sides,
with the underlying intention being to resolve the conflict. The results show that the
most common roles in settling a family business conflict were as a mediator (n=19),
followed by a negotiator (n=3), and a problem solver (n=1). There were some incidents
(n=4) showing the contributions of NFEs in preventing potential disagreements
between family members and/or resolving family business conflicts through their
involvement in decision-making processes. Below are examples for each role.
First, as mediators, NFEs sometimes aimed to help conflicting parties to find a
mutually-acceptable resolution. For example, a NFE who had been working with three
family members (a father with his daughter and son) in a large multi-financial services
company for more than 15 years opened a discussion with the two siblings to resolve
their disagreement. He revealed the following incident:
In running the business, the father acted as the commissionaire. His daughter
was the financial director, and his son held the position as the marketing
director. Sibling conflicts often occurred. For example, the sister felt that this
brother was too aggressive in delivering credit to clients. Meanwhile, the
brother was very confident in what he did. I suggested to them to focus on their
own responsibilities. The sister should not intervene in her brother’s work and
let him do his job. She could monitor her brother’s performance through the
company’s cash flow. Meanwhile, I told the brother to prove that he was right,
be responsible, and be willing to be evaluated. They agreed and the conflict
was ended (Incident 5, P03).
Second, NFEs acted as negotiators. This role involved drafting and negotiating
an agreement. They usually represented one party to negotiate to reach one solution
using give and take. The incident presented below shows how an NFE negotiated an
agreement with a son on a father’s behalf to close down a business unit under the son’s
responsibility.
This company had several business units. One business unit, which was fully
managed by the son, [had] reported a significant loss in the last four years. His
father intended to shut down the business unit, but he [the son] insisted on
continuing the business. I talked to the son about the current and future
conditions of the business unit and encouraged him to think that liquidation
126 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
might be the best option. I also talked to the father to secure a position for his
son in the holding company. It took the son about six months to agree on the
liquidation plan (Incident 7, P03).
Third, this study identified one role that NFEs sometimes played—problem
solver—where they took actions to eliminate the causes of the conflict to make the
situation better. For example, a non-family director who had been working for the firm
for more than 25 years talked about his efforts to eliminate the source of conflict:
This company was managed by four siblings. Conflicts often occurred,
particularly between the first and the second brothers, because their thoughts
about work were different. The elder brother gave much attention to details,
such as recalculating interest from the bank savings account, whereas the
younger brother focused more on strategic issues. As a result, a mountain of
papers piled up on the older brother’s desk that needed to be done. This often
triggered conflicts between the two brothers, as many important decisions were
held up waiting for approval from the elder brother. I tried to fix this situation
by appointing two administration staff workers to assist the elder brother in
performing his duties (Incident 24, P10).
Fourth, the involvement of NFEs in the decision-making process could help
family members to prevent a task-related disagreement from escalating into a more
severe conflict, or even resolve it, as told by an NFE who had been involved in several
conflicts:
Intense conflicts often occurred between the father and his son. The father was
very dominant. He often ignored others’ opinions and annulled his son’s
decisions [Incident 28]. He only listened to those who were “apple polishers”.
A serious conflict erupted. His son and several NFEs left the company. Then
the company was struggling to avoid bankruptcy. The father asked two ex-
CEOs to rejoin the company and help him to cope with bankruptcy. Then, the
NFEs persuaded the son to come back. After that, the top management team,
involving the family and NFEs, made decisions collectively. This mechanism
has prevented the reoccurrence of father–son conflicts (P09).
Yes-man
The data collected during the study indicates that NFEs sometimes played a role
in family members’ conflicts by being one party’s “yes-man”. Although this theme
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 127
represented only a small portion of overall incidents (n=3), it was decided that this role
was significant and it was categorized independently. NFEs might be the yes-men to
their direct boss (whomever was closest) or to the most powerful person (e.g., founder
or owner). While they seemed to be indirectly involved in a conflict, a yes-man may
have often fostered dissent, given false hope about an idea, or constantly say that one
party’s ideas were always good. One participant revealed one such conflict situation
that occurred in his workplace:
In my opinion, the role of NFEs in a family business is very significant. They
may help the business grow, but they could potentially ruin the business. In a
conflict between family members there are professionals [NFEs] who become
the yes-men to a family member. For example, when the company was having
terrible financial problems (illiquid and insolvent), the father wanted to get a
loan to buy additional machinery. He believed it was the only way to increase
the company’s revenue. The son, who was responsible for the business unit,
did not agree, as the market was already saturated and an additional
loan/investment would make their financial problems even worse. I knew that
some managers agreed with the son. Nevertheless, they refrained from
expressing their opinions. They agreed with what the father said and ignored
the facts. This fueled the father–son conflict and led the business unit to
collapse (Incident 29, P11).
In summary, the findings show that NFEs responded to family business conflicts
in five ways: avoider, messenger, peacekeeper, settlement agent, and yes-man. A
further analysis of these responses indicates that the roles played by NFEs differed on
the basis of their positions in the business hierarchy and the generational relationship
of the conflicting parties, but not on the basis of the issues of the conflict (task or
relationship conflict). Table 6.6 shows that most board members (directors) generally
took an active role as a settlement agent, either through mediation, negotiation, problem
solving, or their participation in the decision-making process. Top-level managers
tended to either act as peacekeepers, settlement agents, or avoiders. However, middle-
level managers had a tendency to either avoid conflict or to act as messengers.
Moreover, the results show that NFEs were more likely to act as settlement agents in
intra-generational conflicts and as peacekeepers in intergenerational conflicts (Table
6.7).
128
C
hapter 6: The Roles of N
on-Family Executives in C
onflicts between Fam
ily Mem
bers in Family Firm
s: An Exploratory Study
Table 6.6: NFEs’ M
anagerial Positions and Roles in a C
onflict
Non-fam
ily executives A
verage
age (years)
Average
tenure
(years)
Num
ber of
incidents
Roles in a conflict
Position N
umber of
participants
Avoider
Messenger
Peacekeeper Settlem
ent Y
es-man
Board of directors
9 53.9
16.7 22
0 0
5 17
0
Top managem
ent 16
48.5 15.5
36 8
1 14
10 3
Middle m
anagement
3 42.3
14 5
3 2
0 0
0
Total 28
63 11
3 19
27 3
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 129
Table 6.7: NFEs’ Roles and the Nature of a Conflict
Roles in a conflict
Nature of a Conflict
Intra-generational
Intergenerational Multigenerational Total
Avoider 6 4 1 11 Messenger 0 3 0 3 Peacekeeper 6 11 2 19 Settlement 16 8 3 27 Yes-man 1 2 0 3 Total 29 28 6 63
Research Question 3: What is the outcome of NFE involvement in a conflict and the factors that may influence it?
This section analyzes the outcomes of NFE involvement in intra-family conflicts
and the factors that may influence them. In this study, the influence of an avoider and
a messenger role on the outcome of a conflict was difficult to observe because NFEs
did not intend to intervene in the conflict, and the dynamics or the outcomes of the
conflict might be dominantly influenced by the involvement of other third parties, such
as other family members. However, the findings indicate that when yes-men
surrounded each family member a conflict might spread and affect other NFEs, who
split into groups, worsening the conflict. Five participants from two companies shared
similar stories about what happened in their companies. One participant said:
NFEs can worsen or improve a conflict situation. They might become a yes-
man, particularly to his/her closest boss. If family members were surrounded
by yes-men, their conflict would escalate and generate friction among
NFEs/employees. People could easily identify that this person was on one’s
side and that person was on another’s side. It made our work environment
become more stressful (P15).
The next analysis focused on the roles of NFEs as peacekeepers (19 incidents)
and settlement agents (27 incidents), in which NFEs demonstrated active actions to
prevent a conflict from getting worse and/or to help conflicting parties to resolve a
conflict. Table 6.8 depicts the criteria for and the frequency of NFEs being successful
and unsuccessful in these roles. As can be seen, of the 46 incidents included in the
analysis, 31 were able to be prevented from escalating or resolved. This would indicate
130 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
that more efforts taken by NFEs, either as a peacekeeper or settlement agent, succeeded
than failed.
Table 6.8: The Criteria for and the Frequency of Successful and Unsuccessful NFE Roles
NFEs’ roles and
outcomes
Description Frequency
Peacekeeper
- Successful NFEs were able to influence the behaviors of conflicting
parties (e.g., to be calm, respect the others, and so forth),
and therefore, cool down the situation of a conflict and
prevent the conflict from getting worse.
11
- Unsuccessful NFEs might be able to temporarily cool down a situation
but then the conflict erupted again and became much worse
than before (e.g., conflicting parties refused to talk to each
other, quit the business, and/or left home).
8
Settlement agent
- Successful A mutually acceptable solution to a conflict was reached. 20
- Unsuccessful Conflicting parties failed to reach an agreement. 7
A more detailed analysis of the data suggests that NFEs who held a position as a
company director were more likely to succeed in most conflicts than those who were in
top-level management (Table 6.9) regardless of the nature of the conflicts (task,
relationship, task/relationship, and relationship/task conflict) and the approach taken by
NFEs (peacekeeper or settlement agent). The analysis also identified two characteristics
of NFEs related to the likelihood that their efforts in preventing or resolving conflicts
would result in conflict de-escalation, an agreement, or a resolution: capability and
objectivity.
Chapter 6: The R
oles of Non-Fam
ily Executives in Conflicts betw
een Family M
embers in Fam
ily Firms: A
n Exploratory Study
131
Table 6.9: NFEs’ M
anagerial Positions and Roles in a C
onflict: Successful and Unsuccessful
Position R
oles
Successful
Unsuccessful
Kinds of roles
Num
ber of incidents
Types of conflict
Num
ber of incidents
Types of conflict
Num
ber of incidents
Board
Settlement agent
17
Relationship
2
Task 10
Task/R
elationship 1
Task/Relationship
4
Total
16
Total 1
Peacekeeper 5
Task
1
-
Task/Relationship
4
Total 5
Top level Peacekeeper
14
Relationship
1
Relationship
1
Relationship/Task
1
Relationship/Task
2
Task/Relationship
4
Task/Relationship
5
Total 6
8
Settlement agent
10
Task 2
R
elationship 3
Task/Relationship
2
Task/Relationship
3
Total 4
Total
6
132 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
Capability NFEs who succeeded in assisting family members in resolving their conflict were
those who were the mainstay of the company—those who had assisted the company
through a serious crisis and/or provided valuable contributions to the company’s growth
or survival (e.g., assisted the company to avoid bankruptcy, resolve liquidity issues,
recover from adversity, or successfully grew the revenue of the company), and those
on whom the company was dependent. This was proven by the statements such as:
This company was one of the 20 multi-finance companies that survived the
monetary crisis in 1998 [...] I was hired to handle this company in 2000. In
three years, the financial problems were resolved and the revenue continuously
grew significantly (P03).
[...] Under my control, I was able to acquire new big enterprise customers, the
revenue of the company steadily increased, the bad receivables decreased, and
it gained profit in the following years (P18)
Objectivity The findings show that NFEs were valued for their objectivity in dealing with
conflicts. The results show that most NFEs who succeeded in acting as settlement
agents in a family business conflict were those who had maintained their objectivity by
consistently providing independent objective opinions or thoughts based on data and
what they believed to be the best for the company. In describing their objectivity when
they were involved in a conflict, two participants said:
I have my own considerations in response to a conflict situation […] I might
agree with the opinions of one party, but I developed my arguments based on
actual data and presented it to all conflict parties (Incident 40, P16).
“I just said what I thought was right. I did not have any other motivation but
for the good of the company (Incident 31, P12).
6.6 DISCUSSION
The primary purpose of this study was to explore the roles of NFEs in intra-family
conflicts and their impacts on the outcomes of conflicts. From the findings, it is
apparent that NFEs almost always became involved in conflicts among and between
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 133
family members through their daily interactions. Although the conflicts reported in this
study were mostly about work-related issues, in some ways those conflicts also
contained relationship issues. The findings show that a task conflict often led to a
relationship conflict, and conversely, a relationship conflict could also trigger a task
conflict. These findings indicate that relationship and task conflicts often co-occur. This
is consistent with previous research, which has shown that task and relationship
conflicts are correlated (e.g., Jehn, 1995; Wit, Greer, & Jehn, 2012). While most
previous studies have suggested that a task conflict often leads to a relationship conflict
(Jehn, 1997; Simons & Peterson, 2000), later research indicates that a relationship
conflict could lead to a task conflict (Choi & Cho, 2011; Tidd, McIntyre, & Friedman,
2004). In the context of a family business, family members have long-term relationships
before they work together in their family firms. Therefore, personal issues might be
translated into business-related (task) issues. These may explain why a task conflict is
harmful (De Dreu & Weingart, 2003).
The findings indicate that most NFEs became involved because they were invited
by one or both conflict parties. Others were drawn into a conflict situation because the
issues of the conflict were related to their jobs. NFEs sometimes also got involved in a
conflict because they took a proactive role to intervene in a conflict. These findings
support previous studies showing that family members tend to turn to informal
mediation to resolve their conflicts (Dialdin & Wall, 1999; Wall et al., 1995), and third
parties become involved in a conflict in a variety of ways (Kolb, 1992; Kozan & Ergin,
1998). These findings are also consistent with the findings of previous cross-cultural
studies, which show that, in Asia, indirect communication or informal intermediaries
are very common (Harvey et al., 1998; Kozan & Ergin, 1998). Furthermore, the current
findings show that the involvement of NFEs in a conflict can possibly change the
dynamics of the conflict, such as reducing a confrontational environment, resolving the
conflict, or even worsening it.
Regardless of how NFEs become involved in a conflict, NFEs play various roles
in family business conflicts. Some NFEs choose to avoid being involved in a conflict
and let family members find their own solution, or take a more passive role (messenger
or yes-man) and just deliver messages to each other because they are asked to. They
commonly perceive a family business conflict to be a family conflict, and since they
134 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
are just employees, feel they should not become involved. This is consistent with
previous research indicating that NFEs often feel like outsiders (Poza, Alfred, &
Maheshwari, 1997), and therefore believe that they should not become involved in
family member conflicts.
However, the results of this study show that many NFEs took a more active role
in a greater number of conflicts. They attempted to maintain a peaceful situation and/or
resolve a conflict. NFEs who were more concerned with the relationship between
family members than solving their problem played a peacekeeper role. They filtered or
reframed information, and advised parties to cool down and understand each other’s
views, and so forth. Those who played a settlement role were more concerned with how
family members resolved their conflict through mediation, negotiation, or problem
solving. These findings indicate that NFEs are more likely to be motivated to behave
as stewards, as they are inclined to maintain the family’s harmony and serve the good
of the firm. The NFE stewardship behaviors observed here are consistent with the work
of a previous study, which found that the relationship between the family owner and
NFEs is a principal-steward relationship (Vallejo-Martos & Puentes-Poyatos, 2014).
Regardless of the issue of the conflict (task or relationship conflict), it appears
that the hierarchical position of an NFE is associated with the roles they play and the
success or failure of their efforts. First, non-family board members are more likely to
attempt to resolve conflicts. Top-level managers tend to act as peacekeepers, settlement
agents, or avoiders, while middle managers are more likely to try to avoid personally
being involved in conflict situations. These findings add further support to the body of
knowledge focusing on corporate governance in family firms, especially in board
composition, which suggests that non-family board members often serve as advisors
and arbitrators for the company and the family (Brenes et al., 2011).
Second, efforts taken by directors are more likely to succeed than those by top-
and middle-level managers. The results from this study identified two key factors that
determine the effectiveness of NFEs’ roles in resolving conflicts—the capability and
objectivity of the NFEs. Non-family board members or managers who have shown their
capability to deal with critical situations faced by the firms and their objectivity in
providing opinions gain respect from family members and have opinions that are given
considerable weight. It seems that the capability and objectivity of an NFE could create
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 135
trust from family members, and as a result, the NFE could have a stronger influence on
the family members. These results basically support previous research that suggests that
trust and competency are required factors that enable NFEs to be accepted in family
business management (Eddleston, Chrisman, Steier, & Chua, 2010; Gubitta &
Gianecchini, 2002) and factors that make for successful NFEs (Blumentritt et al., 2007).
These studies found that successful NFEs were those that were competent (contribute
to the business performance) and able to manage their relationships with all family
members.
The results of this study indicate that the roles played by NFEs were not related
to whether the conflict was a task or relationship conflict. This may partly be explained
by the following reasons. First, identifying the root causes of conflicts is challenging
because they are often deeper than the surface (Pieper et al., 2013; Rhodes; & Lansky,
2013). The incidents told by the study participants might not be sufficient to address
the root of the conflicts. Second, task and relationship conflicts often co-occur (Jehn,
1995; Wit et al., 2012). Therefore, accurately classifying the main issue of the conflict
may be problematic. Third, this may relate to the tendency of people in collectivist
societies to respond to a conflict. In these societies, third parties are more inclined to
intervene in a conflict because they believe that a conflict is not an individual problem;
rather, a collective issue (Dialdin & Wall, 1999; Kozan & Ergin, 1999). Therefore,
NFEs, particularly members of the board and top management team, are more likely to
play an active role in a family business conflict, regardless of the issues of the conflict.
6.7 THEORETICAL CONTRIBUTIONS AND PRACTICAL IMPLICATIONS
This study’s theoretical contributions are to both organizational conflict and
family business literature. This study contributes to the organizational conflict
literature, which has focused on the role of managers in conflicts between subordinates
(e.g., Pinkley et al., 1995) and on the role of formal third parties, in two ways. First,
this study examined the role of NFEs as informal, unofficial third parties in the context
of family businesses. The findings show the important role of informal third parties in
the dynamics of organizational conflicts. Second, it provides insight into the roles
played by third parties, who are outsiders to the conflicting parties, have less or no
power relative to the conflicting parties, and are often unskilled in conflict management
136 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
and resolution in conflicts between those whom they work for, and who have familial
relationships. Third, by conducting this research in Indonesia, which has a collectivist
culture, this study is expected to enrich the knowledge of conflict
management/resolution. In particular, the findings of this study can provide a better
understanding of third party roles in conflict resolution within a collectivistic culture,
which is understudied in conflict literature (Kozan & Ergin, 1999).
In contributing to family business literature, this study provides a more detailed
understanding of the roles of NFEs in family businesses, which is also understudied
(Chua et al., 2003), by focusing on their roles in family business conflicts and the
outcome of their involvement in a conflict. It shows that NFEs have important roles in
increasing or reducing the intensity of a conflict. The present findings also contribute
to the increasing debate about whether NFEs behave as agents or stewards (Davis et al.,
1997). This study provides preliminary support for the stewardship theory in the field
of family owner and NFE relationships by showing that NFEs, mainly those who are
members of the board and top management team, often act as stewards serving the
interests of the family and the business. Therefore, this study suggests that the
stewardship perspective might also be a valuable approach to analyze the roles of NFEs
in family conflicts. Furthermore, the results also add to the SEW perspective in the
study of family businesses, by suggesting that the inclusion of NFEs in the top
management team does not necessarily decrease the family’s socioemotional wealth.
NFEs may help family members to prevent conflict escalation or even to resolve their
conflict, thereby maintaining family harmony, which can in turn help to preserve the
SEW of the family.
The results presented in this study have important implications for family
business practitioners. First, this research may help owners and family CEOs to be
aware of the possible impacts of the involvement of NFEs in their conflicts. The results
of this study promote the advantages of involving NFEs in decision-making processes.
The presence of NFEs in decision-making processes can potentially reduce the
likelihood of disagreements between family members turning into personal debates. In
contrast, there is a risk that NFEs may pit family members against one another,
benefiting from the conflict. Second, because NFEs are often involved in family
business conflicts, this study suggests that NFEs may need specific training in conflict
Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study 137
management and resolution to improve their knowledge and skills. This would enable
NFEs to not only find effective solutions to conflicts but also take a more proactive
approach to identify, prevent, and help family members to better deal with future
conflicts by, for example, developing a family constitution.
6.8 SUGGESTIONS FOR FUTURE RESEARCH
This study has limitations in relation to the research design that must be taken
into account. This study was conducted only in Indonesia, which is a collectivist
culture. This limits the generalizability of the current findings to other family firm
populations (e.g., in an individualistic culture). Another limitation is the subjective
nature of the CIT. This includes the choice of incidents reported by the NFEs, the
openness of the participants, and how the incidents were categorized by the researcher.
The results are based solely on NFEs’ perceptions of their involvement in conflicts.
Given the sensitive nature of the research topic, it is possible that the participants did
not feel comfortable sharing their experiences, even though confidentiality was assured.
In addition, the length of time between the incident and the interviews may have been
a barrier to participants’ memories, therefore hindering the collection of accurate
information by the researcher. The lack of data from other company members, such as
family CEOs, other non-family executives, and other stakeholders may also be of
concern, as a family business conflict often involves many more parties, including the
main conflicting parties and other third parties (family and non-family third parties).
These limitations provide opportunities for future research. For example, a longitudinal
study would better capture the effect of NFEs’ involvement and that of other informal
third parties on the dynamics of family business conflicts.
More research is therefore required to continue to explore the roles of NFEs in
family business conflicts. Future studies could examine the antecedents of stewardship
behavior in NFEs. It is also important that future studies include family members’
perceptions of the roles of NFEs in their conflicts. More broadly, research is
additionally required to investigate how senior and junior generation family members
perceive the trustworthiness of an NFE. Future studies could also further explore the
impacts of family business conflicts on NFEs’ well-being. Finally, as family firms vary
in their governance structures, ownership, and number of generations involved, there is
138 Chapter 6: The Roles of Non-Family Executives in Conflicts between Family Members in Family Firms: An Exploratory Study
clearly a need for more specific studies on NFEs’ roles, while taking into account the
differences in governance structures and generational relationships of family firms.
6.9 CONCLUSION
The existence of a third party in a conflict has been widely acknowledged as an
essential element of conflict management. Their involvement has a chance to change
the dynamics of the conflict, such as reduce the confrontational environment, resolve
the conflict, or even worsen it. In the context of family business conflicts, the literature
has mainly focused on the role of formal third parties. This study has attempted to
uncover the roles of NFEs, who are often caught in the middle of a conflict among or
between family members working together in their family firms.
The findings of this study offer much insight into NFEs’ perceptions of their roles
when confronted with family member conflicts. Some NFEs choose to avoid becoming
involved in or withdraw from a conflict situation, while others behave as yes-men.
However, although generally not professionally trained, many are often involved as
intermediaries, helping to convey messages (as messengers), cool down a conflict (as
peacekeepers), or even resolve a conflict (as settlement agents). NFEs, particularly
members of the board and top management team, are more likely to play an active role
in a family business conflict, either as a peacekeeper or a settlement agent. Moreover,
the findings show that the capability and objectivity of a NFE has an important and
distinct impact on the effectiveness of their role.
Chapter 7: Discussion and Conclusion 139
Chapter 7: Discussion and Conclusion
As family business conflicts can easily escalate into a destructive level that may
cause business failures, a better understanding of the dynamics of family business
conflicts is crucial to support family business performance and survival. Identifying the
factors that contribute to the escalation and de-escalation of family business conflicts
is required to assist family business practitioners to prevent conflicts from escalating
and enable them to better manage conflicts. The research presented in this thesis
responds to this need by exploring family owner, family CEO, and NFEs’ perspectives
and experiences in dealing with conflicts in their day-to-day running of the business.
The two studies that form this thesis collectively explored the factors that explain
the dynamics of family business conflicts, and have been reported as three independent
papers. Each paper described a different part of the conceptual framework, which depict
the dynamics of conflicts. The first paper (presented in Chapter 4) examined the factors
that may contribute to conflict escalation and de-escalation. The second paper
(presented in Chapter 5) focused on the behavior of conflicting parties and how their
behavior is related to the escalation and de-escalation of the conflict. The last paper
(presented in Chapter 6) explored the roles of NFEs in family business conflicts.
This chapter provides a general discussion of the findings from the three papers.
After presenting a summary of the key findings and their theoretical contributions, a
consideration of the practical implications is presented, followed by the limitations of
the study, and some recommendations for future research. The chapter concludes with
a discussion of methodological considerations and concluding remarks.
7.1 KEY RESEARCH OUTCOMES
Overall, the research conducted for this thesis has led to some important findings
relevant to better understanding the escalation and de-escalation patterns of family
business conflicts and the factors that might cause them. When integrating the main
findings of this thesis, several common areas were identified, which are discussed under
the following headings: escalation and de-escalation patterns, issues of conflict, conflict
behavior, the involvement of third parties, and the intensity of subsequent conflicts. The
140 Chapter 7: Discussion and Conclusion
theoretical contributions are discussed and a number of propositions are drawn under
each heading, followed by some recommendations for future studies.
7.1.1 Escalation and De-escalation Patterns
The findings of the current studies revealed that varying levels of conflict occur
when families are running a business. Figure 6 shows the conflict escalation and de-
escalation patterns identified in the study. Study 1 found that family business conflict
has a tendency to escalate, as the majority of conflicts are characterized by high levels
of emotional intensity. Family members often become angry, annoyed, irritated, and
frustrated, which can involve verbal and physical aggression. Some conflicts involve
an additional party to the conflict and a shift of conflict issues from work-related to
more personal issues. Most of the escalated conflicts are prolonged and remain
unresolved (Pattern 1). However, some of the escalated conflicts de-escalate and an
agreement is reached (Pattern 2). Moreover, there are some reported conflicts that do
not escalate and are resolved (Pattern 3). There are three noticeable factors that are
salient to different patterns of conflict escalation or de-escalation (issues of the conflict,
behavior of conflict parties, and the involvement of third parties). These factors are
presented in the next three sections.
Remain intense Pattern 1
Escalate
Conflict De-escalate Pattern 2
Not-escalated Pattern 3
Figure 6: Escalation and De-escalation Patterns of a Conflict
At the dyad level of analysis, the results of this study identified four main patterns
of conflict escalation and de-escalation (Figure 7). If the previous conflict escalates and
remains intense or unresolved, then the subsequent conflicts are more likely to escalate
(Pattern I). Meanwhile, if the prior conflict does not escalate, the subsequent conflicts
are more likely to not escalate (Pattern IV). The findings also show that even though a
prior conflict de-escalates, the intensity of subsequent conflicts may be higher or
Chapter 7: Discussion and Conclusion 141
escalate (Pattern II) or lower or de-escalate (Pattern III). Factors that may contribute to
the escalation or de-escalation of subsequent conflicts are described in a later section.
These results appear to contradict the traditional view of conflict, which assumes
that conflicts are bad and should be avoided (Robbins & Judge, 2014, p. 447). The
findings indicate that family business conflicts do not necessarily escalate into
destruction. A conflict can be resolved without being escalated, and an escalated
conflict can de-escalate and be resolved. However, the literature acknowledges that the
area of conflict in family business seems to be under-studied (Frank et al., 2011), and
factors that lead to conflict escalation and de-escalation remain unclear (Wall &
Callister, 1995). Therefore, the studies conducted in this thesis contribute to the
literature by uncovering the hidden dynamics of family business conflicts that lead to
escalation and de-escalation. Moreover, the results show the evolution of family
business conflict through cumulative unsatisfactory conflict outcomes. The
accumulation of unsatisfactory outcomes led to family members’ negative emotions
that accumulated overtime.
Conflict n Conflict n+1
Remain intense
Escalate Pattern I
Escalate
Gradually escalate
Pattern II
De-escalate
Gradually de-escalate
Pattern III
Not-escalated
Not-escalated Pattern IV
Figure 7: Escalation and De-escalation Patterns of Subsequent Conflicts
142 Chapter 7: Discussion and Conclusion
7.1.2 Issues of the Conflict
This thesis examined the dynamics of family business conflicts that occur
between family members when running their family firm. Although conflicts were
generally triggered by task-related issues, such as whether or not to replace an existing
machine with a new one, implementing a marketing reward program, or developing a
new production line, relationship issues (e.g., trust, respect, sibling rivalry) were often
present during the conflict (Study 1 and Study 3). In many cases, a task conflict led to
a relationship conflict, or a relationship conflict triggered a task conflict, and these
findings are consistent with findings of previous studies showing that a task conflict
can trigger a relationship conflict (Jehn, 1995), and a relationship conflict can turn into
a task conflict (Simons & Peterson, 2000; Tidd et al., 2004). By comparing three
conflict escalation and de-escalation patterns, the findings of Study 1 show that a
conflict is more likely to escalate when it involves relationship issues and is more likely
to not escalate when it does not involve personal aspects. These findings are in line with
previous studies suggesting that relationship conflicts have more destructive effects
(Nosé et al., 2017), and issues involved in a conflict need to be addressed in order to
avoid a destructive escalation (Yasmi, Schanz, & Salim, 2006).
7.1.3 Conflict Behavior
One of the important finding of this thesis is that rational and emotional aspects
play important roles in dealing with a conflict (Study 2). While past research has
focused on the rational process of handling a conflict and examined emotions as an
antecedent to conflict handling styles (Montes- Berges & Augusto, 2007) (Morrison,
2008; Rahim, 2002; Van Kleef et al., 2006), the current findings show that the way
family members handle conflict (the rational aspect—cooperation, competition, or
avoidance) and the way family members manage their emotions (the emotional
aspect—regulated or unregulated) interact and manifest in six types of behaviors:
assertive-persuasive, collaborative, passive, aggressive, collaborative-aggressive, and
passive-aggressive.
Family members respond differently to conflict in intra- compared to
intergenerational relationships. This research found that senior family members were
more likely to behave aggressively in a conflict with junior family members. Junior
members were more likely to respond to seniors’ responses in a reciprocating (e.g.
Chapter 7: Discussion and Conclusion 143
aggressive) or complementary (e.g. assertive persuasive) manner. Furthermore, senior
members tended to reciprocate juniors’ aggressive and assertive-persuasive behavior.
Junior members’ aggressive responses to aggressive behavior exhibited by senior
members led to a negative spiral of reciprocal interactions and conflict escalation. As
was discussed in the findings of Study 2, reciprocal aggressive interactions between
senior and junior family members might occur because senior members feel
disrespected or junior members feel non-recognition. Hubler (1999) suggested that a
lack of feeling appreciated and recognized are the main factors that underlie many
family business problems. Conversely, junior members’ assertive-persuasive responses
can encourage senior members to respond to a conflict with less aggressive behavior,
which in turn de-escalates and resolves the conflict. Family members are likely to
reciprocate and enact similar behavior in intra-generational conflicts. In addition to
being aggressive in intra-generational conflicts, family members also tend to exhibit
collaborative and collaborative-aggressive behavior.
Although family members behave differently in intra- and intergenerational
conflicts, the findings of this study indicate that a conflict is more likely to escalate
when both parties exhibit aggressive (competition and unregulated emotions) or
passive-aggressive behaviors (avoidance and unregulated emotions). Meanwhile,
collaborative-aggressive behavior may prevent a conflict from escalating in the short-
term, but may not be effective in the long-term, which may affect the outcomes of the
conflict. Collaborative-aggressive behavior may result in an unsatisfactory conflict
resolution (e.g., half-hearted compromise/accommodate resolutions), which can
increase the intensity of subsequent conflicts (Study 1).
These findings contribute to the literature and enhance understanding of the
dynamics of family business conflicts by addressing both rational and emotional
aspects of conflict behavior and proposing a conflict behavior typology that integrates
those two aspects which, in the researcher’s view, better explains the behavior of family
members in dealing with conflict. Six conflict behaviors that family members may
exhibit, how family members reciprocate others’ conflict behavior, and how their
behavior promotes conflict escalation or de-escalation have been reported in this thesis.
Furthermore, this thesis also provides a fresh insight by demonstrating reciprocal and
144 Chapter 7: Discussion and Conclusion
complementary parent-child and sibling interaction patterns and shows how these
behavior patterns influence the outcomes of the conflict.
7.1.4 The Involvement of Third Parties
These studies found that informal third parties influenced the dynamics of family
business conflicts. The mother was often involved in father–son conflicts, the father
usually became involved in sibling conflicts, and NFEs were often drawn into conflicts
among family members (Study 1). These findings show that those third parties played
various roles and could influence the escalation and de-escalation of conflicts (Study 1
and Study 3). For example, the mother generally played a role as a peacekeeper in
father–son conflicts, and the father usually acted as an arbitrator in his children’s
conflicts. An extensive study that explored the involvement of NFEs in family business
conflicts (Study 3) found that NFEs are not merely third parties, but could also be
important actors in influencing the outcome of family business conflicts. They entered
family business conflicts for a variety of reasons, including being invited by the
conflicting parties, being affected by the conflicts, or taking steps to intervene. They
played five roles in a conflict: conflict avoider, messenger, peacekeeper, settlement
agent, and yes-man.
Moreover, the results indicate that the involvement of NFEs in a conflict has the
potential to escalate or de-escalate the conflict. In cases where family members had
broken relationships and poor communication, the involvement of NFEs as messengers
may have increased the chances of a misunderstanding, and as a result, escalated the
conflict. Similarly, a conflict was more likely to escalate if family members were
surrounded by “yes-men”, because NFEs might become split into groups that would
worsen the conflict. In contrast, involving NFEs in decision-making processes could
also reduce the likelihood of conflicts being escalated (Studies 1 & 3). This may be
because the inclusion of NFEs in decision-making processes helps to promote more
balanced points of views and maintain discussions focused on resolving a conflict
(Astrachan, Klein, & Smyrnios, 2002). Involving NFEs in the decision-making process
may also mean that conflicting parties are more likely to be open to others’ opinions
and willing to cooperate, and therefore decrease the likelihood that a conflict will
escalate.
Chapter 7: Discussion and Conclusion 145
These results contribute to organizational conflict management and family
business literature. Previous studies have mainly addressed the important roles of
formal third parties (Harvey et al., 1998) and overlooked the roles of NFEs in family
business conflicts (Chua et al., 2003). The present findings show that: (a) informal third
parties can influence the dynamics of a conflict, (b) NFEs are often involved and play
various roles in family business conflicts, (c) to some extent, the roles of executives in
a conflict between family members differ from their roles in subordinate conflicts, and
(d) the involvement of NFEs has the potential to escalate or de-escalate a conflict.
7.1.5 The Intensity of Subsequent Conflicts
Family members may experience a series of conflicts with each other. At the
dyad level of analysis, it seems that the outcomes of previous conflicts influence the
intensity of the subsequent conflicts. Study 1 identified seven possible outcomes of a
conflict, including unresolved, unilaterally decided, half-hearted compromise, half-
hearted accommodation, voluntarily compromise, voluntarily accommodation, and
collaboration. The first four outcomes (unresolved, unilaterally decided, half-hearted
compromise, and half-hearted accommodation) resulted in dissatisfaction, and the last
three outcomes (voluntarily compromise, voluntarily accommodation, and
collaboration) resulted in neutral feelings (with the exception of the resolution of a
conflict without coercion or feeling overwhelmed with negative emotions) or
satisfaction. When family members were dissatisfied, the likelihood of the subsequent
conflict escalating increased. Conversely, when family members were neutral or
satisfied, the likelihood of the subsequent conflict escalating decreased. These results
are in agreement with Thomas’ (1976) conflict process model, which suggests that the
decisions, agreements, and feelings of the conflicting parties result from a previous
conflict to determine the entering state of each conflict party in subsequent conflicts.
These findings also confirm that unresolved conflicts can be seeds for future conflict
(Gayle & Preiss, 1998).
It is interesting to note that although agreement has been reached, it does not
necessarily mean that the conflict is completely resolved. This depends on how the
parties accept the solution. Study 1 observed situations where conflicting parties gave
only half-hearted support to achieve a solution or half-heartedly accommodated others’
opinions in order to stop the conflict and maintain family harmony. This may have left
146 Chapter 7: Discussion and Conclusion
conflicting parties with negative feelings, such as dissatisfaction and anger, which may
have then increased the intensity of the subsequent conflicts. If this happened
repeatedly, the later conflict could become very destructive. In some cases in this study,
a conflict ended with one of the conflicting parties leaving the family home and/or
business. In contrast, a compromise or accommodation mode of handling a conflict
could reduce the likelihood of subsequent conflicts escalating when conflicting parties
voluntarily accepted an agreement or voluntarily gave in to what others wanted.
Destructive conflicts that may harm the family and business are the result of a
series of conflicts and a long-term processes and development. Future research may
turn to the longitudinal level of conflict development by conducting a longitudinal case
study. This approach could capture the continuous process of conflict escalation and
provide better insight into the dynamics of destructive family business conflicts.
7.2 SUGGESTED PROPOSITIONS
From the findings of the studies, several major propositions can be drawn:
a) Conflicts are more likely to escalate when they contain interpersonal issues.
b) An accumulation of negative feelings resulting from unsatisfactory conflict
resolutions of the prior conflicts can increase the intensity of the next
conflict.
c) Family members’ behaviors in dealing with conflicts are marked by a
combination of emotion regulators and conflict handling styles.
d) Senior members are more likely to respond to conflicts with junior members
aggressively.
e) In dealing with intergenerational conflicts, senior members are likely to
reciprocate juniors’ responses. Therefore, intergenerational conflicts are
more likely to escalate when junior members reciprocate seniors’ aggressive
behavior and are more likely to de-escalate when junior members respond
complementarily.
Chapter 7: Discussion and Conclusion 147
f) Family members are likely to reciprocate the other party’s behavior in
dealing with intra-generational conflicts. Intra-generational conflicts are
more likely to escalate when family members exhibit aggressive and/or
passive-aggressive behavior.
g) In a conflict between family members with blocked communication,
involving NFEs as messengers or yes-men can increase the likelihood that a
conflict will escalate due to potential communication bias and/or the
possibility that NFEs might provide misleading information.
h) Involving NFEs in decision-making processes can reduce the likelihood that
a conflict will escalate.
7.3 PRACTICAL IMPLICATIONS
The preceding findings provide insights that may assist family business
practitioners, including owners, family members in and outside of the business, non-
family executives, business consultants and advisors, and other stakeholders in dealing
with the inevitable conflicts that arise in family businesses. As long as family members
are engaging with one another, conflict between them is unavoidable. Therefore, when
a conflict arises, it is important to handle it constructively before it escalates.
The results of this thesis show that resolving a family business conflict is more
than just attempting to align family members’ incompatible goals. There are several
factors that can change and should be taken into consideration. Those working with
conflicting family members might first consider that exploring the root issues of a
conflict is important for conflict resolution. The presence of interpersonal issues can
influence the dynamics of a conflict. For example, assessing the firm’s performance
could easily evolve into a destructive conflict if one party feels they are being
personally attacked by the other party or choosing a certain type of distribution channel
could be very difficult and turn into a prolonged conflict if it involves sibling rivalry
issues, such as who has the greatest power and influence in their firm. Understanding
and addressing the root causes of a conflict could successfully resolve the conflict.
Second, parties’ conflict behavior might need to be altered to resolve a conflict.
For example, instead of being aggressive, the son or daughter could behave assertive-
persuasively in response to a disagreement with their father or mother. Meanwhile, as
148 Chapter 7: Discussion and Conclusion
family members tend to reciprocate the other party’s behavior in intra-generational
conflicts, more cooperative and better regulated emotion (collaborative behavior)
seems to be the most effective response to resolve a conflict, particularly in the long-
term.
Third, resolving each conflict satisfactorily is important to maintain a long
working relationship. Leaving conflicts unresolved, imposing a solution unilaterally,
or half-heartedly accepting the resolution of a conflict could result in residual emotional
effects (negative feelings) that may disrupt future interactions and lead to a higher
intensity of conflict.
Lastly, family members may empower NFEs in the decision-making processes
and should be aware that, to some extent, the involvement of NFEs may have the
potential to worsen the conflict.
7.4 RECOMMENDATIONS FOR FUTURE RESEARCH
The findings of the thesis have revealed the need to conduct research within two
main areas. First, family members’ behavior and their interaction patterns in conflict
situations need to be investigated. The current findings demonstrate that family
members’ behavior and interaction patterns in conflict situations strongly influence the
dynamics of the conflicts. Future studies are required to: (a) confirm the conflict
behavior typology proposed in this thesis, (b) develop a new scale to measure conflict
behavior that includes the emotional and behavioral aspects of conflict, and (c) use the
newly constructed typology to assess family members’ conflict behavior. Furthermore,
future research should expand knowledge about family members’ conflict behavior by
investigating the factors that may influence it, such as whether family communication
patterns can predict family members’ behavioral interaction patterns in dealing with
conflict in their family firm.
Second, the roles of NFEs need to be examined. While the findings of this thesis
are compelling, this study raises a number of questions that could be explored in future
studies by examining the motivations behind NFEs’ roles, factors that may influence
NFEs’ behavior (e.g., power disparity between family members), factors that may affect
the effectiveness of NFEs’ roles, and the impact of NFEs’ involvement in a family
business conflict on, among others, their well-being, job satisfaction, and intention to
Chapter 7: Discussion and Conclusion 149
leave. Further studies could also examine the perceptions of family members about the
roles of NFEs in resolving their conflict and how the relationships between family
member and NFEs influence the roles that NFEs play.
7.5 CONCLUDING REMARKS
Conflict in family business is a complex phenomenon. Dealing with family
business conflicts can be challenging for those involved. The exploratory studies in this
thesis offer valuable insights into the dynamic of family business conflicts and factors
that could escalate or de-escalate a conflict. First, as was suggested by the first study of
this thesis, the escalation and de-escalation of family business conflict is a process
influenced by four interrelated main factors, including the issues of the conflict, the
parties’ emotional reactions, the parties’ conflict handling styles, and the involvement
of third parties. Second, in line with the second study, family members’ emotional
reactions and conflict handling styles interact and result in six conflict behaviors. The
analysis through an intra- or intergenerational lens uncovered the behavioral interaction
patterns of family members (reciprocally or complementary) and exemplified why
conflicts escalate, de-escalate, or do not escalate. Third, as was found in the third study,
NFEs are often drawn into family business conflicts and play various roles. Their
involvement has the potential to escalate or de-escalate conflicts.
Overall, the findings of these studies provide a better understanding of the
dynamics of family business conflicts and may assist family members and those
involved to better manage and resolve their conflicts.
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Appendices 169
Appendices
Appendix A
Interview Guide
(Conflict Party)
Thanks for participating in this study.
This study is being conducted in partial fulfilment of a PhD research program at
Queensland University of Technology. The main purpose is to understand how family
businesses in Indonesia handle their conflicts.
Please answer the following questions. Your answers will be treated confidentially and
anonymously and will be used for research and academic purposes only. There are no
good or bad, right or wrong answers, so please answer the questions openly and
honestly.
Part 1: Characteristics of the business
1. Type of business: ……………………………………………..
2. Age of the business: ............ years …………. months
3. The number of employees: ……………………………….
4. The founder of this firm is:
5. The number of family members (other than you) working in the
business: …………..….
No. Familial relationships with you: wife, son, daughter, sister, brother, mother, father, cousin, nephew, uncle, aunt, son/daughter/father/ mother in-law, other (please indicate)
Age (years)
Tenure (years)
Position in the business
1.
2.
3.
4.
170 Appendices
Part 2: Participant data
6. What is your age? : ………………………………...…………...
7. Participant’s gender : Male/Female .………………...…………...
8. What is your position in the
business?
: ………………………………...…………...
9. How long have you been in the
business?
: ……………… years …………...…months
10. What is the highest degree of school you have completed?
11. Have you ever taken any conflict management courses? If yes, when did you take
it and how long was the course?
Part 3: Conflict
Conflict refers to a disagreement, incompatibility, or dissonance that occurs between or
among parties in their views or opinions, or in attaining their goals or interests. Conflict
is a natural part of any organization, including family businesses. Please think about a
conflict that is currently happening or a major conflict that has occurred between you
and a family member in your firm. By referring to the conflict you have identified above,
please answer the following questions:
12. What was the conflict about?
13. How long has the conflict been going on/ended? .................. weeks/months/years.
14. Who did you have the conflict with?
15. How long have you been working together in this business? ……… years ………….
months
16. Please indicate the intensity of the conflict when it initially happened (very high,
high, moderate, low, very low)
17. Did the intensity of the conflict change during the conflict episode?
18. Did the relationship between both of you worsen?
19. Do you think the conflict issue became harder to solve?
20. Do you think both sides started to show threatening behaviors toward each other?
Appendices 171
21. Did the conflict involve an exchange of harsh words (shouting, raised voices,
cursing, threats, among others)?
22. Did the conflict impact you emotionally, either negatively or positively?
23. Can you please chronologically explain in detail what you and your counterpart did
during the conflict?
24. Did the conflict involve physical aggression (pointing of fingers, hitting against the
wall/table, throwing objects, among others)?
25. When your counterpart behaved negatively (for example, expressed anger or yelled
at you), did you naturally respond to it negatively (for example, responded with
anger or other negative emotions)?
26. What did you and your counterpart do to resolve the conflict?
27. How was the conflict resolved?
28. How satisfied were you with the resolution of the conflict?
29. What do your counterpart do in dealing with the conflict?
30. Did you talk about the conflict to other people? If yes, please indicate the person
that you talked most with (mother, father, non-family employee, friend, among
others)? ………………………………………………………………………...
31. Is he or she directly involved in the operation of the business?
32. How did he or she respond to what you said about your conflict?
33. Do you think that he/she aligned/provided strong partisanship to one side?
34. Do you think that his/her response influenced the way you handled the conflict?
Interview Guide
(Third Party)
A family member…(name) … (disputant A) told me that she/he has been or is in a
conflict with her/his…………. (disputant B). The conflict was about … (the description
of the conflict). She/he has informed me that you knew about or got involved in the
conflict as a third party. Referring to the conflict mentioned before, please answer the
following questions:
1. What is your age?
2. Participant’s gender: male/female
3. What is your educational background?
172 Appendices
4. Have you ever taken any conflict management courses? If yes, when did you take
it and how long was the course?
5. Are you working in the business? If yes, what is your position in the business?
6. What is your relationship with disputant A?
7. What is your relationship with disputant B?
8. How long have you known disputant A?
9. How long have you known disputant B?
10. How did you get involved in the conflict?
Probe: Did you get involved through your own initiative/voluntarily? Did you get
invited by a disputant(s) or by someone else? If yes, who?
11. Can you please chronologically explain in detail what you did during the conflict?
Probe: Did you get involved in a tense argument with the disputant(s)? Did you
keep a distance to avoid being involved? Did you give comments or advice? What
did you exactly say? Did you talk to both parties?
12. Do you think that your reactions influenced the disputant(s)?
Probe: If yes, in what way? If no, why?
13. Do you think that the initial conflict was escalated or de-escalated and why?
Probe: Did the relationship between the disputants worsen? When did the conflict
get more serious or resolved? Why do you think the conflict issue became harder
or easier to solve? Why do you think both sides started to show threatening or
cooperative behaviors toward each other?
14. Do you think that your involvement had a stake in resolving or fueling the conflict?
Probe: If “yes”, please explain how? If “no”, please explain why?
15. To what extent did your involvement influence the disputant(s) in handling the
conflict?
16. Did you favor one party?
Probe: If so, whose side were you on and what effect did this have on the conflict
and the disputants’ behaviors? How confident were you in your position? Please
provide details to support your opinion.
Appendices 173
A short message to follow up the interview
Dear…… (name),
I would like to have more information regarding the conflict that you are currently
experiencing: please rate the current intensity of the conflict that you are experiencing
(scale 1: very low to 5: very high). What was the ultimate outcome of the conflict?
Thank you
174 Appendices
Appendix B
Summary of Incidents In
cide
nt
num
ber
Con
flict
ing
parti
es
iden
tifie
r Conflict parties Reasons for conflict
1 1 Father–son The son paid a bonus to managers to appreciate and motivate them, but the father disagreed.
2 2 Father–daughter The father and the daughter had different views about measuring business performance.
3 3 Father–son-in-law The father in-law asked his son in-law to monitor the daily business operations. The son-in-law refused and argued that he could monitor the business through accounting and financial reports.
4 4 Siblings The brother commented on the sister’s manager’s performance, but his sister thought that her brother had interfered her business.
5 5 Siblings A brother [active shareholder] presented the company’s annual reports to his siblings [passive shareholders]. The siblings questioned some financial information in the report. The brother felt his siblings were suspicious of him.
6 6 Uncle–nephew The uncle asked his nephew to work in accordance with the company’s working hours. The nephew argued that he could do his job away from the office.
7 7 Siblings The younger brother proposed an additional production line to expand production capacity to supply modern market channels. The older brother disagreed.
8
8 Father–son The father made a succession plan, in which he wanted to pass the existing business to his younger son. The elder son was disappointed with the plan.
9 9 Father–son The father expected his son to do business his way. The father was a very detailed person. The son felt his father was slow in reaching a decision.
10 10 Father–daughter The daughter intended to tear their first department store down and build a new modern building to attract new business tenants. Her father intended to restore the old building.
11 11 Siblings The brother was aggressively opening new outlets. The older sister intended to expand the existing unprofitable outlets.
(continued)
Appendices 175
Appendix B (continued)
Summary of Incidents
Inci
dent
nu
mbe
r
Con
flict
ing
parti
es
iden
tifie
r
Conflict parties Reasons for conflict
12 12 Siblings The older sister thought that her younger sister should delegate administrative tasks to the staff, but her younger sister had different opinions.
13 13 Father–son In dealing with a difficult customer, the son would not serve a demanding customer the same way that his father previously did.
14 14 Siblings The older brother evaluated the performance of a business unit managed by his younger brother. However, the younger brother felt offended and got angry.
15 15 Father–sons The sons intended to establish a new business, but their father refused it.
16 16 Siblings A disagreement occurred in determining eligible customers for receiving credit sales.
17 17 Siblings The older brother intended to establish a new production line, but he was not supported by his sibling.
18 18 Father–sons The father intended to take over a company that was not in line with the company’s existing core business.
19 19 Siblings The brother bought overpriced or untrendy jewelry.
20 20 Siblings The brother bought counterfeit items that resulted in much financial loss.
21 21 Father–son The son intended to replace an old machine with a new one to improve efficiency and increase production capacity, but the father wanted to keep the old machine.
22 22 Father–son The father wanted the business unit managed by his eldest son to be the biggest company in Indonesia and even Southeast Asia.
23 22 The son complained to his father because his father allocated most of the company resources to support a business unit managed by his brother that inhibited the growth of his business unit.
24 23 Siblings There were conflicting business priorities. The older brother wanted to expand business unit A, but the younger brother intended to grow business unit B.
(continued)
176 Appendices
Appendix B (continued)
Summary of Incidents In
cide
nt
num
ber
Con
flict
ing
parti
es
iden
tifie
r Conflict parties Reasons of conflict
25 23 Siblings The older brother intended to continue the backward integration investment initiated by their father, but the younger brother disagreed.
26 23 There was a disagreement over distribution channel choices. The older brother intended to distribute their products through distributors or wholesalers, but the younger brother established his own outlets.
27 24 Father–son The son intended to implement a computerized management system, which was refused by his father.
28 24 The son developed an internal recruitment system. The father disregarded it.
29 24 The son developed an internal equitable salary structure and adjusted the salary of several managers to equate the salary with other managers. The father cancelled this policy.
30 24 The son assessed the employees’ performance based on specific performance measurements. The father favored employees who obeyed him.
31 24 The son proposed a marketing campaign program to strengthen the company’s brand in the national marketplace.
32 24 The father complained about the sales and marketing team’s efforts led by his son. The son argued that the impact of marketing efforts was not instant.
33 25 Father–daughter
The daughter believed that the company required a division of labor. Her father rejected this idea as it would increase the number of employees and, eventually, salary expenses.
34 25 The daughter wanted to replace a tax consultant who had been working with her father for more than 10 years with another one. Her father refused the plan.
(continued)
Appendices 177
Appendix B (continued)
Summary of Incidents
Inci
dent
nu
mbe
r
Con
flict
ing
parti
es
iden
tifie
r
Conflict parties Reasons of conflict
35 26 Siblings The older sister wanted to have more raw material to anticipate seasonal fluctuations. The younger sister disagreed because the price was quite high.
36 26 The younger sister kept questioning her sister’s transparency in spending the company’s money.
37 27 Father–daughter The father asked his daughter to lead a meeting to determine sales goals and tactics, but then annulled all the decisions made in the meeting.
38 27 The father wanted his daughter to evaluate the managers’ performance in staff meetings. The daughter preferred to talk to the managers personally.
39 28 Siblings This was related to the financial statement reporting system. The brother thought that his brothers manipulated financial and accounting data.
40 28 There was a disagreement among siblings regarding financial management policies (how the company’s funds and resources were allocated).
41 29 Siblings There were different opinions regarding purchasing raw material decisions due to exchange rate fluctuations. The younger brother wanted to buy raw material, but the older brother wanted to postpone the purchase.
42 29 The older brother intended to replace an old machine. The younger brother thought that the old one was still in good working order.
43 29 The older brother intended to extend credit terms to help a big loyal customer who faced a liquidation problem. His brother did not agree because it could increase the risk of bad debt.
44 29 The older brother intended to use price cut strategies to penetrate new big customers. His brother did not agree as it could start a price war and reduce the company’s profit.
(continued)
178 Appendices
Appendix B (continued)
Summary of Incidents In
cide
nt
num
ber
Con
flict
ing
parti
es
iden
tifie
r
Conflict parties Reasons for conflict
45 30 Father–son There was a sales price adjustment due to an increase or decrease in raw material costs. The father increased the sales price significantly to increase their margin. The son preferred a gradual increase.
46 30 There were different ways of treating loyal customers. The father provided special prices to certain customers. The son did not agree. He believed that all customers should be treated equally.
47 31 Mother–son The mother changed the administration system established by her son.
48 31 The son recruited some new highly-skilled employees. His mother thought that it was a waste of money (to pay more for the new employees).
49 31 The son implemented a reward and punishment system that was opposed by his mother.
50 32 Father–son The son intended to offer a lower price on a selected few products to attract customers and charge a higher price for premium products. The father disagreed and wanted his son to continue to run the business how he had run it.
51 32 The son intended to renovate their store front, but his father disagreed.
52 33 Mother–daughter There was a disagreement over the restaurant menu. The daughter wanted to focus on specific food items, while the mother continuously added random new menu items to attract more customers.
53 33 There was excess inventory at the restaurant because the mother kept buying food ingredients for inventory without monitoring the inventory level.
(continued)
Appendices 179
Appendix B (continued)
Summary of Incidents
Inci
dent
nu
mbe
r
Con
flict
ing
parti
es
iden
tifie
r
Conflict parties Reasons for conflict
54 34 Siblings The brother wanted to relocate the company’s production lines. The sister disagreed.
55 34 The brother wanted to hire a business consultant, but his sister thought it was not the right time.
56 35 Father–son The son intended to implement a computerized management system. The father disagreed.
57 35 The son intended to offer a marketing incentive program to their customers, but the father refused it.
58 36 Father–son The father wanted to pool their chicken farms in one location, but the son preferred to distribute them to different locations to reduce the risk of being exposed to disease.
59 36 The son intended to replace some old trucks with new trucks to reduce maintenance costs. The father refused to spend money on fixed assets.
60 37 Brothers-in-law The company faced a raw material shortage and production disruption due to miscommunication and a disagreement over suppliers’ choices.
61 37 The son wanted to establish a new production line to increase production capacity. His brother in-law disagreed and wanted to maximize the use of the existing production capacity.
62 38 Siblings The brother intended to build a new plant in another city, but his sister thought that the plant was very ambitious.
63 38 The sister often criticized her brother for his way of doing business.
64 39 Siblings The brother made several investments by opening more showrooms, but his sibling felt that he was too aggressive in making investments.
(continued)
180 Appendices
Appendix B (continued)
Summary of Incidents In
cide
nt
num
ber
Con
flict
ing
parti
es
iden
tifie
r Conflict parties Reasons for conflict
65
39 There were different opinions regarding cash flow management including cash reserves, investments, and dividend policies.
66 40 Mother–daughter-in-law
They sold different products but at the same store. Problems occurred when they divided profits because they did not feel comfortable discussing those issues.
67 40 The daughter-in-law changed the layout of their store unbeknownst to her mother in-law.
68 41 Mother–son To increase the inventory turnover and to reduce working capital, the son decided to stop supplying underperforming retailers. His mother did not agree because of her personal relationships with the retailers.
69 41 The son intended to restructure and reduce the company’s debt, but the mother wanted to use the money to add inventory.
70 42 Father–daughter
The father thought that his daughter needed patience and an ability to deal with demanding customers. The daughter disliked taking on demanding customers.
71 42 The father often gave special discounted prices to certain customers (based on personal relationships). The daughter wanted to offer special prices based on different purchase quantities.
Appendices 181
Appendix C
Code book: Categories and sub-categories that emerged from the data
Categories Sub-categories Description
Conflict escalation/ de-escalation
Escalate (the intensity of conflict increases)
When individuals, initially not in the conflict, get involved in the conflict.
Conflict parties do not focus on the issues that cause the conflict. Issues become more general and may involve interpersonal issue elements.
Being aggressive (verbally and/or physically) or confrontational, being disrespectful, causing embarrassment, blaming.
Becomes more negative in an emotional tone, which can often be accompanied with verbal and/or physical aggression.
The amount of time, energy, and other resources spent during efforts to resolve the conflict.
Conflict de-escalation
The intensity of the conflict is reduced or eliminated.
Not escalate The intensity of the conflict does not increase.
Reasons for conflict
Work-oriented issues
Disagreements related to a certain task, such as disagreements over business policies and procedures, the distribution of resources, and the content of their decisions.
Interpersonal-oriented issues
A conflict that includes a perception of interpersonal incompatibility.
Respond to conflict
Negative emotional reactions
When a conflict causes an individual to become negative in response to the conflict.
Calm, cool down Be able to regulate their emotions (calm, persuasive, discuss disagreements in a polite way).
Conflict handling styles
Competing Conflicting parties insisting on getting what they want.
Avoiding A conflict party withdraws from the conflict.
(continued)
Appendix C (continued)
182 Appendices
Categories and sub-categories that emerged from the data
Categories Sub-categories Description
Collaborating Conflicting parties working together to come to an agreed upon resolution.
Half-hearted accommodating
One conflict party tries to satisfy the other party but keeps complaining.
Half-hearted compromising
Conflicting parties are willing to accept middle ground solutions under conditions.
Voluntarily accommodating
A conflict party tries to satisfy the other party to maintain a peaceful family/work environment.
Voluntarily compromising
Conflicting parties are willing to accept middle ground solutions without questioning.
Outcomes Unilaterally decided A decision is made by one party without considering the other’s concern.
Unresolved No decisions/resolutions have been made.
Intractable conflict A prolonged, intense, destructive, or deadlocked conflict.
Resolved An agreement has been reached to end the conflict.
Negative effects
Individual’s well-being
Negative feelings, such as angry, annoyed, irritated, frustrated.
Family relationships Family relationships are characterized by poor or blocked communication, emotional reactions to each other.
Business operations/working environment
Business operations or non-family employees were affected by the negative environment of the conflict.
Third party roles
Go-between A third party who delivers messages from one party to the other.
Adviser A third party who provides advice on how to respond to the conflict.
A part of the decision making process
A third party who participates in the decision-making process.
(continued)
Appendix C (continued)
Appendices 183
Categories and sub-categories that emerged from the data
Categories Sub-categories Description
Peacekeeper A third party who tries to create peace without trying to resolve the conflict.
Arbitrator A third party who makes the termination decision.
Pot-stirrer A third party who is an instigator or who benefits from the conflict.
Mediator A third party who helps the conflict parties to resolve their conflict.
184 Appendices
Appendix D
Demographic Characteristics of the Companies C
ompa
ny
Business sector Size2 Age (in
years)
Generations in the
business
Number of family
members in the business
1 Multiple-business corporation Large 21 2nd 3 2 Multiple-business corporation Large 35 1st & 2nd 6 3 Trading Large 45 1st & 2nd 8 4 Manufacturing Large 13 1st & 2nd 3 5 Manufacturing Large 23 1st & 2nd 4 6 Manufacturing Medium 45 1st & 2nd 4 7 Trading Medium 35 1st & 2nd 5 8 Manufacturing Large 33 1st & 2nd 3 9 Manufacturing Large 61 2nd 2 10 Farming Medium 35 1st & 2nd 2 11 Retailer Medium 50 1st & 2nd 2 12 Manufacturing Small 35 1st & 2nd 2 13 Trading Large 31 1st & 2nd 3 14 Manufacturing Large 50 1st & 2nd 4 15 Retail Large 33 1st & 2nd 4 16 Trading Medium 28 1st & 2nd 4 17 Manufacturing Large 37 1st & 2nd 6 18 Trading Medium 35 1st & 2nd 3 19 Manufacturing Medium 70 2nd 3 20 Manufacturing Large 25 1st & 2nd 2 21 Trading Large 50 2nd 4 22 Services Small 5 1st & 2nd 3 23 Manufacturing Large 72 2nd & 3rd 6 24 Trading Medium 20 1st & 2nd 4 25 Manufacturing Medium 15 1st 3 26 Manufacturing Large 15 1st & 2nd 3 27 Manufacturing Large 14 1st & 2nd 3 28 Manufacturing Large 10 1st & 2nd 3 29 Manufacturing Medium 14 1st 4
2 According to the Republic of Indonesia Regulation No. 20/2008, medium enterprises are defined as enterprises with net assets from approximately $38,200 to $763,500 (land and building excluded) and with total monthly sales from approximately $16,000 to $318,100.
Appendices 185
Appendix E
Demographic Characteristics of the Participants
No. Name
Com
pany
Family
Con
flict
Pa
rty
Age
Gen
der
Tenu
re a
t co
mpa
ny
(in y
ears
)
Titles1
Educ
atio
n
1 P01 1 Yes Yes 44 M 18 President director UG
2 P02 1 Yes Yes 38 M 15 Director UG 3 P03 1 No No 49 M 12 Human resource development UG 4 P04 1 No No 42 M 15 General manager division 1 UG 5 P05 2 Yes Yes 60 M 28 President director HS 6 P06 2 Yes Yes 30 M 8 General manager division 2 UG 7 P07 2 No No 50 F 17 Financial & audit manager UG
8 P08 2 No No 39 M 8 Marketing manager division 2 UG
9 P09 2 Yes Yes 33 F 10 Managing director division 3 UG
10 P10 2 Yes Yes 33 M 10 Vice managing director division 3 UG
11 P11 3 Yes Yes 68 M 45 Executive director HS
12 P12 3 Yes Yes 35 M 11 Marketing manager for distributors UG
13 P13 3 No No 58 F 33 Accounting and payroll manager UG
14 P14 4 Yes Yes 34 M 11 President and marketing director UG
15 P15 4 Yes Yes 32 M 9 Director of finance and production UG
16 P16 4 Yes No 65 M 13 Commissioner HS 17 P17 4 No No 59 M 8 Executive director PG 18 P18 5 Yes Yes 63 M 28 Director JHS 19 P19 5 No No 46 M 25 General manager PG 20 P20 6 Yes Yes 43 M 15 Marketing manager UG 21 P21 6 Yes No 71 M 45 Director JHS
22 P22 7 Yes No 66 M 35 President director UG 23 P23 7 Yes Yes 42 F 20 Head of administration UG 24 P24 8 Yes Yes 40 M 9 President director PG 25 P25 8 No No 52 M 15 Director PG 26 P26 9 Yes Yes 54 M 28 President director UG 27 P27 9 Yes Yes 63 F 34 Director of finance UG 28 P28 10 Yes Yes 70 M 35 Commissioner PS 29 P29 10 Yes Yes 43 M 17 Director UG 30 P30 11 Yes Yes 48 F 25 Manager UG 31 P31 12 Yes Yes 38 M 4 Marketing manager PG
(continued)
186 Appendices
Appendix E (continued)
Demographic Characteristics of the Participants
No. Name
Com
pany
Family
Con
flict
Pa
rty
Age
Gen
der
Tenu
re a
t co
mpa
ny
(in y
ears
)
Titles3
Educ
atio
n
32 P32 13 Yes Yes 33 M 9 Director UG 33 P33 13 Yes Yes 66 M 33 Commissioner HS 34 P34 14 Yes Yes 50 M 26 Director PG 35 P35 15 No No 60 M 33 Director UG 36 P36 15 Yes Yes 42 F 7 Assistant president director PG 37 P37 16 Yes Yes 25 M 3 Manager UG 38 P38 17 Yes Yes 37 M 9 President director PG 39 P39 17 Yes Yes 32 M 7 Director HS 40 P40 18 Yes Yes 70 M 35 President Director PS 41 P41 18 Yes Yes 35 F 3 Director UG 42 P42 19 Yes Yes 57 F 10 Director of finance HS 43 P43 19 Yes No 59 F 10 Assistant director of finance HS 44 P44 20 Yes Yes 65 M 25 President director HS 45 P45 20 Yes Yes 33 F 8 Marketing manager UG 46 P46 20 No No 42 M 3 Supervisor UG 47 P47 21 Yes No 60 F 33 Director HS 48 P48 22 Yes Yes 41 F 5 Managing director UG 49 P49 22 Yes No 42 M 0 Not in the business UG 50 P50 23 Yes Yes 67 M 47 Commissioner HS 51 P51 23 Yes Yes 41 M 18 President director PG 52 P52 23 No No 54 M 18 Marketing manager UG 53 P53 24 Yes Yes 35 F 3 Managing director UG 54 P54 24 Yes Yes 36 M 3 Operating director UG 55 P55 25 Yes Yes 53 M 15 President director UG 56 P56 25 No No 45 M 9 Marketing manager UG 57 P57 26 Yes Yes 31 M 6 Managing director UG 58 P58 27 Yes Yes 45 M 14 President director UG 59 P59 28 Yes Yes 43 M 10 President director UG 60 P60 29 Yes Yes 41 M 14 President director UG
Notes: PS = Primary school; JHS = Junior high school; HS = High school; UG = Undergraduate; PS = Postgraduate
3 There are two board structures that have generally been adopted by companies in Indonesia: board of commissioners and board of directors. The board of commissioners has a supervisory function and does not take part in the daily management of the company. The board of directors has managerial or daily operational responsibilities. However, some family businesses that participated in this study lacked a formal organizational structure. Many of the participants’ business titles were labelled by the researcher based on their roles, as identified from the interviews.
Appendices
187
Appendix F
Conflicts and the Parties’ R
ole in the Family and the B
usiness
PairParties’ role in the fam
ily Parties' role in the business
Incident C
onflict issues Place of conflict
1Father–son
Com
missioner -President director
1 H
uman resource
development
Board m
eeting
2Father–daughter
President director–Managing director division
3 2
Business perform
ance B
oard meeting
3Father–son-in-law
President director–V
ice managing director
division 3 3
Operational issue
Informal spontaneous m
eeting
4Siblings
Managing director division 3–G
eneral m
anager division 2 4
Hum
an resource developm
ent Inform
al spontaneous meeting
5Siblings
President director–Passive shareholder 5
Business perform
ance A
nnual shareholder meeting
6U
ncle–nephew
President director–Purchasing manager
6 O
perational issue Inform
al spontaneous meeting
7Siblings
Marketing m
anager–Production manager*
7 Investm
ent decision Inform
al spontaneous meeting
8Father–son
Director–Production m
anager* 8
Others
Family gathering
9Father–son
President director–Managing director division
1
9 O
perational issue B
oard meeting
10Father–daughter
President director–Assistant president director
10 Investm
ent decision B
oard meeting
(continued)
188 A
ppendices
Appendix F (continued)
Conflicts and the Parties’ R
ole in the Family and the B
usiness
PairParties’ role in the fam
ily Parties' role in the business
Incident C
onflict issues Place of conflict
11Siblings
Head of adm
inistration–Sales representative
division 1*
11 M
arketing policy Inform
al spontaneous meeting
12Siblings
Head of adm
inistration–Sales representative
division 2* 12
Operational issue
Informal spontaneous m
eeting
13Father–son
Com
missioner–D
irector* 13
Marketing policy
Informal spontaneous m
eeting
14Siblings
Director–M
anaging director division 1 14
Business perform
ance A
nnual report meeting
15Father–sons
Com
missioner–D
irectors 15
Investment decision
Family gathering
16Siblings
Executive director –Marketing director
16 M
arketing policy B
oard meeting
17Siblings
President director–Finance director 17
Investment decision
Board m
eeting
18Father–sons
Com
missioner–D
irectors 18
Investment decision
Family gathering
19Siblings
President director–Managing director*
19 Purchasing decision
Informal spontaneous m
eeting
20Siblings
Finance director–Managing director*
20 Purchasing decision
Informal spontaneous m
eeting
21Father–son
Com
missioner–President director
21 Investm
ent decision B
oard meeting
22Father–son
Com
missioner–D
irector 22
Resources allocation
Informal spontaneous m
eeting
23
Resources allocation
Informal spontaneous m
eeting
(continued)
Appendices
189
Appendix F (continued)
Conflicts and the Parties’ R
ole in the Family and the B
usiness
PairParties’ role in the fam
ily Parties’ role in the business
Incident C
onflict issues Place of conflict
23Siblings
President director–Director
24 R
esources allocation Inform
al spontaneous meeting
25
Investment decision
Informal spontaneous m
eeting
26
Marketing policy
Board m
eeting
24Father–son
President director–General M
anager Business
Unit 2
27 O
perational issue B
oard meeting
28
Hum
an resource
development
Informal spontaneous m
eeting
29
Hum
an resource
development
Informal spontaneous m
eeting
30
Hum
an resource
development
Informal spontaneous m
eeting
31
Marketing program
B
oard meeting
32
Hum
an resource
development
Staff meeting
25Father–daughter
President director–Director*
33 Tax planning
Informal spontaneous m
eeting
34
Hum
an resource
development
Informal spontaneous m
eeting
(continued)
190 A
ppendices
Appendix F (continued)
Conflicts and the Parties’ R
ole in the Family and the B
usiness
PairParties’ role in the fam
ily Parties' role in the business
Incident C
onflict issues Place of conflict
26Siblings
Director–Finance director*
35 Purchasing decision
Informal spontaneous m
eeting
36
Financial issue Inform
al spontaneous meeting
27Father–daughter
President director–Marketing m
anager 37
Marketing program
Staff m
eeting
38
Operational issue
Informal spontaneous m
eeting
28Siblings
President director–Finance director 39
Financial issue B
oard meeting
40
Financial issue Fam
ily gathering
29Siblings
President and Marketing director–Finance and
Production director 41
Purchasing decision Inform
al spontaneous meeting
42
Investment decision
Board m
eeting
43
Marketing policy
Staff meeting
44
Marketing policy
Staff meeting
30Father–son
President director–Director
45 M
arketing policy B
oard meeting
46
Marketing policy
Informal spontaneous m
eeting
(continued)
Appendices
191
Appendix F (continued)
Conflicts and the Parties’ R
ole in the Family and the B
usiness
PairParties’ role in the fam
ily Parties' role in the business
Incident C
onflict issues Place of conflict
31M
other–son C
omm
issioner–Director*
47 O
perational issue Inform
al spontaneous meeting
48
Hum
an resource
development
Informal spontaneous m
eeting
49
Operational issue
Informal spontaneous m
eeting
32Father–son
Director–O
perations manager*
50 M
arketing program
Informal spontaneous m
eeting
51
Operational issue
Informal spontaneous m
eeting
33M
other–daughter C
omm
issioner–Managing director*
52 O
perational issue Inform
al spontaneous meeting
53
Operational issue
Informal spontaneous m
eeting
34Siblings
President director–Finance director 54
Investment decision
Scheduled shareholder meeting
55
Operational issue
Staff meeting
35Father–son
Executive director–Marketing m
anager 56
Operational issue
Staff meeting
57
Marketing program
B
oard meeting
36Father–son
Com
missioner–D
irector* 58
Investment decision
Informal spontaneous m
eeting
59
Investment decision
Informal spontaneous m
eeting
(continued)
192 A
ppendices
Appendix F (continued)
Conflicts and the Parties’ R
ole in the Family and the B
usiness
PairParties’ role in the fam
ily Parties' role in the business
Incident C
onflict issues Place of conflict
37B
rothers-in-law
Managing director–Production director
60 O
perational issue Staff m
eeting
61
Investment decision
Informal spontaneous m
eeting
38Siblings
President director–Finance manager
62 Investm
ent decision B
oard meeting
63
Operational issue
Informal spontaneous m
eeting
39Siblings
President director–Marketing director
64 Investm
ent decision B
oard meeting
65
Financial policy Fam
ily gathering
40M
other – daughter-in-law
Com
missioner–M
anager* 66
Financial policy Inform
al spontaneous meeting
67
Operational issue
Informal spontaneous m
eeting
41M
other–son Production and Finance m
anager–Marketing
manager*
68 Financial policy
Informal spontaneous m
eeting
69
Marketing policy
Informal spontaneous m
eeting
42Father–daughter
Com
missioner–M
anaging director * 70
Marketing policy
Family gathering
71
Marketing policy
Family gathering
Notes: *) A
s the family firm
s did not have a formal organizational structure, the role of the participants in their firm
was defined by researcher based on the division
of labor.
Appendices
193
Appendix G
Conflict Escalation and D
e-Escalation Pattern
Incident number Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category 4)
1 1
Father–son A
ngry, raised voices, harsh words,
heated arguments.
Avoid direct
confrontation, persuasion.
The son yielded; the father felt fine.
ED
2 2
Father–daughter R
aised voices, irritated, annoyed, heated argum
ents.
It ended w
ithout a resolution. E
3 3
Father-in-law–
son-in-law
Heated argum
ents.
There w
as no solution. The son-in-law
pretended to agree to calm
the situation. The father-in-law
was frustrated.
E
4 4
Siblings A
ngry, defensiveness, heated argum
ents, personal issues.
They both just left the argum
ent in anger.
E
5 5
Siblings A
ngry, raised voices, heated argum
ents, personal issues
There w
as a stalemate. They
ended the meeting w
ithout reaching an agreem
ent. Both felt
angry.
E
6 6
Uncle–nephew
A
dditional conflict participant, heated argum
ents, angry. W
illing to com
promise.
(continued)
The uncle gave the nephew
a job in another com
pany. ED
4 N
E refers to a conflict that does not escalate; ED refers to a conflict that initially escalates but then de-escalates (resolved); E refers to a conflict that escalates and
remains intense (unresolved/unilaterally decided).
194 A
ppendices
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern
Incident number Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
7 7
Siblings H
eated arguments, becom
e em
otional, raised voices, spent m
uch energy to resolve it.
There was a stalem
ate. No
decision or action was m
ade. E
8 8
Father–son Irritated, refused to discuss the plan, and spent m
uch energy to resolve it.
There was a stalem
ate. No
decision or action was m
ade. E
9 9
Father–son H
eated arguments, angry, raise
voice, frustrated, spent much
energy to resolve it.
The son left the firm.
E
10 10
Father–daughter Frustrated, angry, defensiveness.
Persuasion, avoid
direct argumentation.
The father approved the daughter’s plan.
ED
11 11
Siblings D
efensiveness, raise voice, additional participant, heated argum
ents.
There was no agreem
ent betw
een both parties. There was
broken comm
unication.
E
12 12
Siblings D
efensiveness, annoyed, frustrated, im
passe.
There w
as no agreement
between both parties. There w
as broken com
munication.
E
13 13
Father–son
D
iscussed in a calm
way.
The father let the son make
decisions. N
E
(continued)
Appendices
195
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
14 14
Siblings A
ngry, raised voices, slam door,
defensiveness, personal issues.
The younger brother left the firm
. E
15 15
Father–sons
Persuasion, avoid direct argum
entation.
The sons yielded. N
E
18 18
Father–sons
Persuasion, avoid direct argum
entation.
The father agreed to cancel his investm
ent plan. N
E
19 19
Siblings
R
espect other’s choices.
Both felt fine.
NE
20 20
Siblings
R
eminded each
other to be careful, no blam
ing.
Both felt fine.
NE
21 21
Father–son
Persuasion, avoid direct argum
entation.
The father approved the son’s idea.
NE
22 22
Father–son5
Angry, raised voices, harsh
words, heated argum
ents, irritated.
The father made all the
decisions without considering
his youngest son’s opinions.
E
(continued)
5 Incidents 22, 23, and 24 occurred betw
een this pair of parties.
196 A
ppendices
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
23
A
ngry, raised voices, harsh w
ords, heated arguments, spent
much energy fighting the other’s
opinions.
The father made all decisions
without considering his son’s
opinions.
E
24
A
ngry, harsh words, heated
arguments, hit the w
all, banged the table, personal issues, frustrated, irritated, spent m
uch energy to resolve it.
The son left home and the
firm.
E
25 23
Siblings R
aised voices, harsh words,
heated arguments, additional
conflict participant, personal issues, avoided face-to-face interactions, irritated, spent m
uch energy fighting the other’s opinions.
The older brother made a
decision on his own w
ithout considering his brother’s opinions. There w
as broken com
munication.
E
26
R
aised voices, harsh words,
heated arguments, additional
conflict participant, personal issues, avoided face-to-face interactions, irritated.
The younger brother made
decisions on his own w
ithout considering his brother’s opinions.
E
(continued)
Appendices
197
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
27 24
Father–son Spent m
uch energy fighting the other’s opinions, annoyed, irritated.
The father gave in to end conflict.
The father approved his son’s proposal to end the conflict.
ED
28
H
eated arguments, angry,
annoyed.
The father disregarded the system
developed by his son. E
30
A
ngry, irritated, defensiveness, raised voices, harsh w
ords, personal issues.
The father cancelled the son’s decisions.
E
31
H
eated arguments, spent m
uch energy debating this issue, em
otional.
The father gave in to end the conflict.
The father finally approved his son’s proposal.
ED
32
B
lamed, frustrated, em
otional, defensiveness, harsh w
ords, banged table.
The son left home and the
firm.
E
33 25
Father–daughter D
efensiveness, heated arguments,
raised voices, angry, annoyed.
There w
as a stalemate. B
oth insisted on their ow
n opinions.
E
34
D
efensiveness, heated arguments,
raised voices, angry, annoyed, frustrated, spent m
uch energy debating this issue.
There was a stalem
ate. The daughter left the firm
. E
(continued)
198 A
ppendices
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
35 26
Siblings H
eated arguments, annoyed.
They agreed to settle on a m
iddle ground.
They found a middle w
ay-purchased only a certain am
ount.
ED
36
A
nnoyed, emotional, personal
issues, avoided face-to-face interactions.
It was unresolved. This
problem has been going on
for several years.
E
37 27
Father–daughter A
ngry, harsh words, shouted,
irritated.
The father cancelled the daughter’s m
arketing plans. E
38
Frustrated, raised voices, irritated, harsh w
ords, blaming,
spent much energy debating this
issue.
This problem has been going
on for several years. The daughter w
ants to leave the firm
.
E
39 28
Siblings A
ngry, defensiveness, raised voices, additional conflict participant, personal issues.
It was unresolved. This
problem has been going on
for several years.
E
40
A
ngry, defensiveness, raised voices, additional conflict participant, personal issues.
Two brothers left the
company and established a
new com
pany.
E
41 29
Siblings A
nnoyed, heated arguments.
Calm
down.
The com
pany lost a lot of m
oney. The older brother rem
inded his younger brother to be m
ore aware of the risks
of exchange rate fluctuations.
ED
(continued)
Appendices
199
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
42
A
nnoyed It w
as discussed in a calm
way.
They both agreed to postpone the plan.
ED
43
A
nnoyed, emotional, left
meeting/discussion.
The younger brother finally agreed, but w
ith some conditions.
It w
as resolved. ED
44
A
nnoyed, emotional, heated
arguments, left
meeting/discussion.
The younger brother finally agreed, but w
ith some conditions
It w
as resolved. ED
45 30
Father–son A
ngry, annoyed, heated argum
ents, harsh words, raised
voices.
It was m
ediated by a non-fam
ily executive.
It was resolved.
ED
46
A
ngry, annoyed, heated argum
ents, harsh words, raised
voices.
It was m
ediated by a non-fam
ily executive.
It was resolved.
ED
47 31
Mother–son
Angry, irritated, raised voices,
long arguments, spent m
uch energy debating this issue.
The mother overrode her
son’s decisions. E
48
A
ngry, raised voices, blaming.
The son insisted on recruiting som
e new em
ployees. The m
other kept complaining
E
(continued)
200 A
ppendices
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
49
H
eated arguments, angry, raised
voices, frustrated.
The son refused to w
ork (left the com
pany). E
50 32
Father–son A
nnoyed, angry. Through persuasion, the father gave in.
The father approved the son’s plan.
ED
51
A
nnoyed, angry. Through persuasion, the father gave in.
The father approved the son’s plan.
ED
52 33
Mother–daughter
Annoyed, spent m
uch energy to resolve it.
There was no agreem
ent betw
een both parties. E
53
A
nnoyed.
There w
as no agreement
between both parties. The
daughter was frustrated.
E
54 34
Siblings H
eated arguments, annoyed.
Cooling dow
n. Involve others in decision m
aking.
It w
as resolved. An agreem
ent w
as reached. ED
55
A
ngry, raised voices. C
ooling down.
Involve others in decision m
aking.
It w
as resolved. An agreem
ent w
as reached. ED
56 35
Father–son Spent m
uch energy to resolve it, annoyed, irritated, frustrated.
Persuasion, avoid direct confrontation.
A
n agreement w
as reached. ED
(continued)
Appendices
201
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
57
A
nnoyed. Persuasion, discussed the issues in a respectful w
ay.
A
n agreement w
as reached. ED
58 36
Father–son H
eated argument.
The son proved that his decisions w
ere correct. ED
59
A
ngry, heated arguments, raised
voices, annoyed.
The son m
ade a decision on his ow
n and disregarded his father’s suggestions.
E
60 37
Brothers-
in-law
Open discussion,
focused on problem
solving.
They bought from other
suppliers that were even
more expensive.
NE
61
D
iscussed the issues in a calm
and respectful w
ays.
They left the decisions up to their father/father in-law
. N
E
62 38
Siblings H
eated argument, annoyed.
Cooling dow
n. Involve others in decision m
aking.
They postponed the expansion until they had adequate hum
an and financial resources.
ED
(continued)
202 A
ppendices
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
63
A
nnoyed. A
void direct confrontation.
They developed a new
business for the sister.
ED
64 39
Siblings
D
iscussed in a calm
way.
They conducted a feasibility study for future investm
ents. N
E
65
D
iscussed in a calm
way.
They implem
ented a monthly
audit. N
E
66 40
Mother–daughter-
in-law
Annoyed, heated argum
ents. A
greed to settle on a m
iddle ground.
They divided the revenue based on the products sold.
ED
67
A
nnoyed, did not talk to each other for several days.
The mother stepped back
from the business.
E
68 41
Mother–son
Heated argum
entations, became
emotional.
The mother focused on
production and handed over other business functions to her son.
The son yielded. The m
other felt fine.
ED
69
H
eated argumentations, becam
e em
otional.
The son left the firm
for several w
eeks. E
(continued)
Appendices
203
Appendix G
(continued)
Conflict Escalation and D
e-Escalation Pattern
Incident number
Conflicting parties identifier
Relationships
Escalation indicators D
e-escalation indicators
Not escalate /
constant End of conflict
Category
70
42 Father–daughter
Discussed the
issue in a calm
way.
The daughter let her father handle the custom
er. N
E
71
D
iscussed the issue in a calm
w
ay.
The father provided advice and let the daughter m
ake the decision.
NE
204 Appendices
Appendix H
Interview Guide
Demographic questions:
1. Age:
2. Gender:
3. Tenure:
4. Education:
5. What is the title of your position? :
6. How long have you held this position?:
7. Please describe your main job/duties.:
8. Have you ever received any formal training/education in conflict
management/resolution? If yes, when and how long?
9. Can you please give a brief description of your company in terms of:
a. The number of family members working in the company, their gender, age,
educational background, familial relationships, tenure, and positions.
b. The number of non-family executives in the top management team, their
gender, age, educational background, tenure, and positions.
10. Please indicate the frequency of intra-family conflict in your workplace (very high,
high, moderate, low, very low)
11. Please indicate the intensity of intra-family conflict in your workplace (very high,
high, moderate, low, very low)
12. How did you feel about the conflict in this family business? Did the conflict affect
you? Why? How?
Involvement in family business conflict:
13. Please tell me one successful conflict resolution you have been part of.
Referring to the conflict you have identified above, please answer the following
questions:
14. What was the conflict about? What do you see as the main issue or the central focus
of the conflict?
15. Who were the conflicting parties? Did other people get involved in the conflict?
Appendices 205
16. How long has the conflict been going on/ended? .................. weeks/months/years.
17. Did the intensity of the conflict change during the conflict episode? How do you
describe the intensity of the conflict in the beginning, middle, and end of the conflict?
18. Why and how did you get involved in the conflict?
19. Under what circumstances might you choose to avoid or help to resolve a conflict?
20. Can you please chronologically explain in detail what you did during the conflict?
21. What was the outcome of the conflict? Why do you think you succeeded?
22. What specifically did you say or do to conflict parties to resolve the conflict?
23. How did the conflicting parties respond to your approach?
24. Was your response to the conflicting parties influenced by their status/position in
the company (e.g. parent, children, immediate superior, etc.)? Why?
25. Did you favor with one party?
Probe: If so, why? Whose side were you on and what effect did this have on the
conflict and the disputants’ behaviors. How confident were you in your position?
Please provide details to support your opinion.
26. Have you ever attempted to resolve a conflict and seen it fail?
If yes, please answer the following questions:
27. What was the conflict about? What did you see as the main issue or the central focus
of the conflict?
28. Who were the conflicting parties? Did other people get involved in the conflict?
29. How long has the conflict been going on/ended? .................. weeks/months/years.
30. Did the intensity of the conflict change during the conflict episode? How did you
describe the intensity of the conflict in the beginning, middle, and end of the conflict?
31. Why and how did you get involved in the conflict?
32. Can you please chronologically explain in detail what you did during the conflict?
33. What was the outcome of the conflict? Why do you think you failed?
34. What specifically did you say or do to the conflicting parties to resolve the conflict?
35. How did the conflicting parties respond to your approach?
36. Was your response to the conflicting parties influenced by their status/position in
the company (e.g. parent, children, immediate superior, etc.)? Why?
37. Did you favor with one party?
206 Appendices
Probe: If so, why? Whose side were you on and what effect did this have on the
conflict and the disputants’ behaviors. How confident are you in your position?
Please provide details to support your opinion.
Appendices 207
Appendix I
Major Themes Emerging-The Roles of NFEs in a Conflict
First-order concepts Second-order
themes
Aggregate
dimensions
• I wouldn’t get involved, that was their family problem.
• I did not give any comment about their disagreement.
• I refused to [get] involved, I was just a paid employee.
Refuse to participate in a conflict
Avoiders
• I resigned from the company because I don’t want to get into trouble.
• I could not bear to see the father always blaming his daughter. I [thought it would be] better [if I] resigned.
• Conflicts made working at the company so unpleasant. So I decided to resign.
Withdraw from the conflict
• He asked me to convey messages to his father.
• They communicate through us [NFCs]
• I am just an employee, all I could do was to convey messages to each other.
Convey information
Messengers
• I followed what the father said. • I did what the father instructed. • The father always won. So, [I] just
do (sic) what he said.
Always support one’s ideas or
opinions
Yes-men
208 Appendices
Appendix I (Continued)
Major Themes Emerging-The Roles of NFEs in a Conflict
Appendices 209
Appendix I (Continued)
Major Themes Emerging-The Roles of NFEs in a Conflict
210 Appendices
Appendix J
Summary of Incidents
Incident Conflict parties Reason for conflict
01 Father–son The son hired a famous [expensive] lawyer to deal with a contested plot of land the father bought a few years ago. The father disagreed.
02 Siblings A brother wanted to build a very large project including a hotel, retail, commercial space, and housing, and his siblings disagreed because of the potential risks of the project.
03 Mother & son – nephew
There was dual leadership and misuse of the company’s money.
04 Siblings There was a disagreement over credit policies. The sister felt her brother was too aggressive in providing lending.
05 Siblings There was a disagreement in determining their annual lending target.
06 Father–son The father approved loans to customers mostly based on his feelings. The son wanted to do it in the same way, but this led to an increase in bad credit rates.
07 Father–son There was a disagreement over business continuation. The father wanted to liquidate a business unit managed by his son because it had experienced loss for several years. The son confronted him.
08 Siblings Three siblings wanted to divide their parent’s inheritance equally according to Indonesia’s law, but one brother wanted to divide it according to Islamic law (a male gets a portion of that of two females).
09 Siblings Four siblings held an equal proportion of shares of a rural bank. The Indonesian Financial Services Authority released a new regulation that requires rural banks to increase their equity. Only one was able to fulfill the new requirements. Instead of letting one sibling become a dominant shareholder, three siblings wanted to sell the bank to outsiders.
10 Siblings There was a disagreement over the sales target for the coming year and strategies to achieve it. The younger brother was considering doubling the sales by doubling their equity. The older brother argued that the increase in equity did not automatically mean an increase in sales.
11 Siblings The older brother made an investment decision without asking his brother.
12 Father–son They had different ways of doing business. The father was very conservative, and his son was very progressive. The decision making process often resulted in conflict.
(continued)
Appendices 211
Appendix J (continued)
Summary of Incidents
Incident Conflict parties Reason for conflict
13 Father–son There was a disagreement regarding the company’s marketing programs. The son preferred to advertise in the local newspaper, whereas his father preferred to showcase their products [houses and offices] in a property exhibition.
14 Father–son The son used the company’s resources to establish his own new business unit without approval from his father.
15 Father–son The son hired a broker [his friend] to lease available space in the property and to represent the company to negotiate lease terms and make an agreement with the tenant. Unfortunately, the broker ran away with the company’s money.
16 Father–son The father wanted to maintain the focus of an existing business unit-lease and manage commercial real estate that consisted of stores, offices, and parking. The son intended to utilize the building as a supermall that sold high-end brands.
17 Father–son The son wanted to establish a holding company, change the financial reporting system, and hire a more capable accountant, but his ideas was refused by his father.
18 Father–son The son wanted to develop computerized management systems [inventory system; payroll system]. His father did not approve.
19 Father & siblings The father wanted to take over a small factory to increase their production capacity, but his sons did not agree because it could lead to liquidity problems.
20 Father & siblings Two sons confronted their father over an underperforming sister and her husband [the business unit under the sister and her husband’s control almost collapsed].
21 Father & siblings Two sons confronted their father over marketing programs developed by their sister and her husband.
22 Siblings The sister boasted about the achievement of her operating manager. Her siblings had different opinions.
23 Uncle–nephew The uncle asked his nephew to work in accordance with the company’s working hours. The nephew argued that he could do his job away from the office.
24 Siblings A brother [active shareholder] presented the company’s annual reports to his siblings [passive shareholders]. The siblings questioned some financial information in the report. The brother felt his siblings suspected him of wrongdoing.
(continued)
212 Appendices
Appendix J (continued)
Summary of Incidents
Incident Conflict parties Reason for conflict
25 Siblings A brother wanted to expand the production capacity. The siblings wanted him to focus on improving the existing business processes.
26 Siblings– nephew/son
The older brother [as a passive shareholder] wanted to employ his son in the company managed by his younger brother. The younger brother refused because his nephew would not work by his rules.
27 Father–son The son developed an internal recruitment system. The father disobeyed it and recruited.
28 Father–son The son developed an internal equitable salary structure and adjusted the salary of several managers to equate the salary with other managers.
29 Father & siblings
The father, supported by his daughter, wanted to expand market shares by opening new markets in several regions. His son did not agree and wanted to focus on the existing market as the company had suffered losses for several years.
30 Father–son The father was complaining about the sales and marketing team’s efforts led by his son. The son argued that the impact of the marketing efforts was not instant.
31 Father–son The son made decisions [e.g., inventory level] based on financial data [accounting reports]. The father made decisions based on his intuitions.
32 Father–son The father hired managers, determined their salaries, and increased their salaries on his own without considering the company’s standards. His son did the same thing.
33 Father–son The father asked senior managers to supervise his son. However, the son fired senior managers who were not in line with him.
34 Father–son The son assessed the employees’ performance based on specific performance measurements. The father favored employees who obeyed him.
35 Father–son The father got mad at his son for spending a lot of money to pay celebrities to endorse their brand.
36 Siblings The sister assumed that her brother had failed in running a business. Sales were made but tied up in receivables and, therefore, could not be used to fund operations.
37 Siblings The older brother made an agreement with a salesperson to buy a new sports car, but his brother refused to authorize the payment requested by the company’s cashier.
(continued)
Appendices 213
Appendix J (continued)
Summary of Incidents
Incident Conflict parties
Reason for conflict
38 Father–son The son complained to his father because his father allocated most of the company resources to support a business unit managed by his brother that inhibited the growth of his business unit.
39 Siblings The younger brother got mad because his brother utilized his late father’s office.
40 Father–son There was a sales price adjustment due to an increase or decrease in raw material costs. The father increased the sales price significantly to increase their margin. The son preferred a gradual increase.
41 Father–son They had different ways of treating loyal customers. The father provided special prices to certain customers. The son did not agree. He believed that all customers should be treated equally.
42 Father–son The father expected his son to do business his way. The father was a very detailed person. The son felt that his father was slow in coming to a decision.
43 Father–daughter
The daughter intended to tear their first department store down and build a new modern building to attract new business tenants. Her father intended to restore the old building.
44 Siblings The older brother intended to extend credit terms to help a big loyal customer who faced a liquidation problem. His brother did not agree because it could increase the risk of bad debt.
45 Siblings The older brother intended to use price cut strategies to penetrate new big customers. His brother did not agree, as it could start a price war and reduce the company’s profit.
46 Siblings The older brother wanted to implement a “dedicated assets strategy” by locating machines at customers’ sites to keep transportation and inventory costs low and increase customers’ competitive advantages. His brother did not agree because it increased the long-term capital investment.
47 Siblings There was a disagreement over two big investment options. The older brother intended to establish a cement industry, but his brother chose to revitalize the existing glass production lines.
48 Siblings The company’s production machines needed a major periodic overhaul. The older brother wanted to replace the machines with a new, more efficient machine, but his brother did not agree as it would require a lot of money.
49 Siblings They had conflicting business priorities. The older brother wanted to expand business unit A, but the younger brother intended to develop business unit B.
(continued)
214 Appendices
Appendix J (continued)
Summary of Incidents
Incident Conflict parties Reason for conflict
50 Siblings There was a disagreement over distribution channel choices.
The older brother intended to distribute their products through distributors or wholesalers, but the younger brother established his own outlets.
51 Siblings The older brother wanted to expand the existing storehouse, but his brother preferred to establish another storehouse in a separate location.
52 Father–daughter
The father asked his daughter to lead a meeting of the company’s marketing team to determine sales goals and strategies to achieve them. The father overrode all of the decisions that resulted from the meeting.
53 Father–daughter
They had different ways of evaluating supervisors. The father preferred to do it in an evaluation meeting, while the daughter preferred to talk to the supervisors personally.
54 Siblings The brothers were arguing about the performance of a manager. The older brother wanted to fire the manager, but his brother wanted to keep him.
55 Siblings The younger brother proposed incentive plans for the marketing team that were refused by his brother.
56 Siblings Siblings argued about how to monitor and control ongoing projects.
57 Siblings There was a disagreement over business development priorities. The younger brother wanted to focus on building houses, but his older brother wanted to build a high-rise apartment.
58 Father–son There was a disagreement over an approach to determine the retail foreign exchange rate. The father used his feelings [based on his experiences], while the son determined a minimum margin to set the rate.
59 Father–son There was a disagreement over the currencies that should be held to meet the demand.
60 Siblings There was a disagreement over a plant relocation. The brother wanted to relocate their plant but his sister did not agree.
61 Siblings The brother wanted to hire a business consultant, but his sister thought it was not the right time.
62 Siblings The older brother intended to establish a new production line in another region, while his brother did not agree because he thought the project was too ambitious.
63 Siblings There was a disagreement over which suppliers should be chosen and how many raw materials should be purchased.
Appendices 215
Appendix K
Additional Observations
A further analysis was conducted to explore: (a) whether or not firm and
participants’ demographic factors determined conflict escalation and de-escalation
patterns (Study 1), (b) the effects of conflict (Study 1), (c) whether or not types of
conflict related to conflict behavior (Study 1), and (d) if there were any impacts
experienced by NFEs due to their involvement in conflicts (Study 2). While not
reported within Chapters 4, 5, or 6 of this thesis, these four additional observations
merit discussion.
First, it seems that company and participants’ demographic characteristics (e.g.,
the age of the business, participants’ tenure, the business size, the number of family
members in the business, and so forth) were not related to the intensity of the conflicts
experienced by family businesses. Table A1 indicates that any conflict escalation and
de-escalation patterns could occur in any kinds of family firms and between any pairs
of family members. This finding may cast some light on why previous studies have
yielded inconsistent evidence regarding the effects of family and business structures on
the intensity of conflicts (e.g., Davis & Harveston, 2001; Wakefield & Sebora, 2004).
The findings of this thesis suggest that regardless of the characteristics of the family
businesses, the escalation and de-escalation of a conflict are mainly influenced by the
issues of the conflict, the behavior of the conflicting parties, and the involvement of
third parties. These findings further support the suggestion that emotions rather than
governance issues are factors that differentiate family from non-family firms and affect
decision-making processes (Bee & Neubaum, 2014).
Second, the analysis of the data from Study 1 also indicates that the three
conflict categories had different effects on individual parties during and after the
conflict (Table A2). In the E-conflict category, both parties were more likely to
experience negative feelings (NF), such as anger, annoyance, irritation and frustration
both during and at the end of the conflict. In the ED-conflict group, the negative
emotions of family members increased during the conflict, but were then more likely
to decrease at the end of conflict (F), as they could reach an accepted resolution. Most
family members in the NE-conflict group were less likely to experience negative
emotions during and at the end of a conflict.
216 Appendices
Table A1: Conflict Patterns and Demographic Characteristics of the Firms and
Participants
Pattern of
conflict
Series of
conflicts Si
ze
Firm
’s a
ge
(yea
rs)
Length of
working together (years)
Number of family in
the business
Generations in the
business
Intra- or inter-
generations
Con
tinuo
usly
es
cala
ted
S01 L 21 15 3 2nd Intra S02 L 21 15 3 1st & 2nd Inter S03 M 35 3 3 1st & 2nd Inter S04 L 25 8 2 1st & 2nd Inter S05 M 15 9 3 1st Inter S06 L 31 9 3 1st & 2nd Inter S07 S 5 5 3 1st & 2nd Inter
Average 21.86 9.14 2.86
Gra
dual
ly
esca
late
d
S08 L 35 8 6 1st & 2nd Inter S09 M 70 10 3 2nd Intra S10 L 13 9 3 1st & 2nd Intra S11 L 33 9 3 1st & 2nd Inter S12 M 35 17 2 1st & 2nd Inter S13 M 50 25 2 1st & 2nd Inter S14 S 35 4 2 1st & 2nd Inter
Average 38.71 11.71 3.00
Gra
dual
ly
de-
esca
late
d S15 M 28 3 4 1st & 2nd Inter S16 L 61 28 2 2nd Intra S17 L 45 11 8 1st & 2nd Inter S18 L 10 10 3 1st & 2nd Intra
Average 36 13 4.25
Not
escalated
S19 L 15 6 3 1st & 2nd Intra S20 M 14 14 4 1st Intra S21 M 20 3 4 1st & 2nd Inter
Average 16.33 7.67 3.67
Interestingly, these findings indicated that, in some incidents, the conflicting
parties’ negative feelings remained, even when agreement was achieved and the
intensity of the conflict decreased (refers to the ED column of Table A2). It seems that
the continuing negative feelings were due to dissatisfaction with the outcomes of the
conflict that related to the conflict handling styles they used. Below is the cross
tabulation between the conflict handling styles used to reach an agreement and the
Appendices 217
feelings experienced by the conflicting parties after the conflict (Table A3). The data
shows that conflict parties who half-heartedly accepted the decisions taken to resolve
the conflict were more likely to experience negative feelings after the conflict had been
resolved (highlighted in bold). Conflict parties were less likely to experience negative
feelings after resolving the conflict if they willingly accepted the middle ground
solutions or other’s concerns.
Table A2: The Effects of Conflict on Individual Family Members
Escalate–intractable Escalate–de-escalate Not escalate
After the conflict After the conflict After the conflict
Bot
h N
F
Bot
h F
One
NF(
F)
Bot
h N
F
Bot
h F
One
NF(
F)
Bot
h N
F
Bot
h F
One
NF(
F)
Dur
ing
the
conf
lict
Both
NF 29 0 3
Dur
ing
the
conf
lict
Both
NF 7 13 4
Dur
ing
the
conf
lict
Both
NF 0 4 0
Both
F 0 0 0
Both
F 0 0 0
Both
F 0 10 0
One
NF/
F
0 0 0
One
NF/
F
0 0 0
One
NF/
F
0 0 1
Note: NF= negative feelings; F= fine
Table A3: Conflict Handling Styles and Feelings after Conflict
Conflict handling styles
Feel
ings
af
ter
conf
lict
Half-hearted accommodate
Half-hearted compromise
Voluntarily accommodate
Voluntarily compromise
Total incidents
Both NF 4 3 0 0 7
Both F 0 0 7 6 13
One NF(F) 4 0 0 0 4
Note: NF= negative feelings; F= fine
In addition to the negative feelings experienced by the conflict parties, the
escalation of a series of conflicts between a pair of family members also negatively
impacted family relationships and work environment. Communication between
conflicting parties deteriorated and even broke down. Moreover, most conflicts caused
218 Appendices
conflict parties in five family businesses to leave the family house and or the businesses,
while some others intended to leave. A daughter, who had been working with her father
for eight years, said:
My father does not believe in me. He could not accept any different ideas.
Whatever I did, it was looked as incorrect. I actually suffered from this
condition and want to leave this company, but I am afraid of my father’s anger.”
(P45, Company 20)
Furthermore, the escalated conflicts also ruined business operations and
working environments. The negative impacts of conflict on non-family employees,
especially non-family executives were also mentioned. Conflicts splintered non-family
staff into groups in which each group hid behind the conflicting parties. This caused
some key managers to resign and disrupted the business operations. These situations
were shown by the following examples:
In this company, some managers and supervisors took the side of Adriel and
some other managers and supervisors [took the side] of Robby. Even worse,
they often hide behind the boss. For example, if Adriel asks a supervisor why
he/she did not do the job, then he/she will say that Robby asked him/her not to
do it. (P04, Company 1)
I am the third person [in the top management team] that quit from the company.
Conflicts between the owners have made the working environment very
stressful. They often give us an (sic) opposite instructions. For example, one of
them told us to replace the five-year old copy machine, but another one told us
to keep using that machine. If we do what one requested, another one will be
very angry and have suspicions that we take sides against him (P03, Company
1).
The father often embarrassed her daughter in front of the employees. In a
meeting, for example, the father asked her daughter to lead a staff meeting to
develop sales strategies. However, the decisions made at the meeting were then
annulled by the father. He said that his daughter was not capable of identifying
market opportunities, determining the appropriate strategies, and so forth. I
could not bear to see it and looked for another job (P46, Company 20).
Appendices 219
Moreover, although conflict may not be the only reason for the failure of the
business, three participating companies were struggling and in financial distress
(Companies 1, 2, and 25), in which two of them were being shut down or taken over.
One family business was considering splitting into two separate businesses, with some
key managers joining one conflict party and some other managers joining the other
conflict party (Company 25).
Third, previous studies have identified two types of interpersonal conflict-task
and relationship conflict (Jehn, 1995) and showed the relationship between these two
types of conflict and conflict handling styles can be used to resolve the conflict
(Tjosvold, Law, & Sun, 2006). In their study, Tjosvold et al. (2006) argued that a
relationship conflict has a positive relationship to competitive behavior and a negative
relationship with cooperative behavior, and conversely, a task conflict is negatively
related to competitive behavior and positively related to cooperative behavior. However,
they found that both relationship and task conflicts were positively related to a
competitive approach and negatively related to a cooperative approach. The findings of
Study 1 found a complex relationship between the types of conflict and conflict
behavior, which is different for intra- and intergenerational conflicts. Table A4 shows
the behavior of senior and junior family members in relationship and task conflicts.
Senior members were likely to be aggressive in a conflict with junior members,
regardless of the type of the conflict. Meanwhile, junior members showed various
behavior in response to either a relationship or task intergenerational conflict. There
may be two reasons for this: (a) in Indonesian (collectivist) culture, there is a great
respect for the elderly. Therefore, whether they have interpersonal issues or not, openly
disagreeing with senior members is often considered disrespectful and could trigger
seniors’ anger and aggressive responses; (b) in many incidents, junior members, despite
anger and disappointment, kept acting collaboratively or collaborative-aggressively. It
seems that the junior members realized that they should try to understand their fathers’
conflict behavior from their fathers’ point of view and did not challenge their fathers’
authority.
In intra-generational conflicts (Table A5), a clear pattern, which is in line with
the argumentations put forward by Tjosvold et al. (2006), was identified. Within a
generation, family members tended to act aggressively when the conflict contained
220 Appendices
interpersonal issues, such as pride and distrust. Conversely, family members were more
likely to choose collaborative or collaborative-aggressive responses when the focus of
the conflict was about task rather than relationship issues.
Table A4: Types of Conflict and Family Members’ Behavior in Intergenerational
Conflicts
Types of conflict
Conflict behavior Number of incidents Senior Junior
Relationship Aggressive Aggressive 5 Collaborative 1 Collaborative-aggressive 6 Passive-aggressive 2 Assertive-persuasive 1
Task Aggressive Aggressive 8 Passive-aggressive 1 Assertive-persuasive 9 Collaborative Aggressive 1 Collaborative 2 Assertive-persuasive 3
Passive Aggressive 1 Collaborative 2 Passive-aggressive Aggressive 1
Table A5: Types of Conflict and Family Members’ Behavior in Intra-generational
Conflicts
Types of conflict
Conflict behavior Number of incidents Party 1 Party 2
Relationship Aggressive Aggressive 8 Passive 1 Collaborative Passive-aggressive 1 Passive-aggressive Passive-aggressive 1
Task Collaborative Collaborative 9 Collaborative-aggressive Collaborative-aggressive 6 Passive Passive 2
Finally, the findings of Study 3 also identified the negative effects of being
involved in family business conflicts. Some NFEs who succeeded in acting as a
settlement agent in a family business conflict stated that they consistently provided
independent objective opinions or thoughts based on data and what they believed to be
Appendices 221
the best for the company. For example, in describing their objectivity when they were
involved in a conflict, two participants said:
As a CEO, I am neutral in the conflict between family members. It means that
I have my own considerations in response to a conflict situation. In this case [a
disagreement among siblings over an investment plan], I thought that the plan
was too risky and potentially spoiled the company’s existing resources and its
sustainability. Therefore, I might agree with the opinions of one party, but I
developed my arguments based on actual data and presented it to all conflict
parties (Incident 2, P01).
I often have different opinions with the owner [father and founder of the
business]. Once, I was opposed to his plan to expand the unprofitable business
unit [in this case, the participant agreed with the son’s opinions]. He believed
that business expansion would increase the company’s revenue. I had a
different thought. The business unit was insolvent and incurring additional debt
to finance business expansion, which could endanger the solvency of the
company. I just said what I thought was right. I did not have any other
motivation but for the good of the company. I finally resigned, but then the
owner hired me again two years ago to assist him to save the company from
collapse. He knew that I was right at that time (Incident 29, P11).
The examples presented above show that NFEs might have opposing opinions
or thoughts to one party and similar opinions to the other party. Although NFEs
perceived themselves as neutral and based their thoughts on purely objective
considerations, there was a case in which an NFE was perceived as being biased in
favor of one party after having similar opinions to the other party in several conflicts.
In such situations, the NFEs became intensely disliked by some family members and
even encountered conflicts with one party. The data showed that three out of eight NFEs
played the role of peacekeepers in the 19 incidents encountered in conflicts with one or
more family members, and two of them became frustrated and left the company.
Similarly, out of 14 NFEs who acted as settlement agents, one participant was involved
in a conflict with one party and decided to leave the company. A non-family executive
described his frustration at being accused of negatively influencing a family member.
He stated:
222 Appendices
The father was dominant. He made decisions based on his own beliefs. His son,
who was general manager of a business unit and my direct boss, often talked
to me and asked for my suggestions. Fortunately, we had similar thoughts.
However, his parents felt that I had influenced his (sic) son so badly, and
therefore, his son’s opinions were actually my opinions. A family member
accused me of controlling his son. Although I supported my opinions with data,
they did not believe me. I finally resigned from the company [the father later
asked him to rejoin the company to help the company avoid bankruptcy.] (P11).
Another incident demonstrates how an asset manager of a large property
company, who had been working for 32 years, got into a conflict with the owner’s son.
The son felt that the NFE always supported his father against him. The NFE told her
experiences in a father–son conflict as follows:
Father–son conflicts [have] often occurred since the son joined the company
nine years ago. The son, who lacked experience, took over the operations of
the company and managed the company in his own way. On the other side, the
father doubted his son’s ability. He always asked my opinion before he made
any decision. For example, when the son wanted to build a five-star hotel, I
actually tried to be neutral. I gave my suggestions for the good of the company.
However, in many cases, I did not agree with the son. As a result, the son felt
that I inhibited him from achieving his goals. Now, I am not allowed to talk
directly to the father [at the time of the interview, the father had been sick for
seven months and stayed at home.] (P07).
In addition, two participants who acted as settlement agents had resigned
because the conflict escalated to a destructive level (e.g., the conflict turned into a legal
dispute), and two other NFEs reported their intention to leave their company. Moreover,
one participant stated that almost 80% of NFEs in his company had resigned due to a
family business conflict (P20). Similar situations also occurred in two other companies.