THE DYNAMICS OF FAMILY BUSINESS ONFLICT … Inggarwati...The Dynamics of Family Business Conflict:...

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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, PARTIESCONFLICT BEHAVIOR, AND ROLE OF NON-FAMILY EXECUTIVES 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

Transcript of THE DYNAMICS OF FAMILY BUSINESS ONFLICT … Inggarwati...The Dynamics of Family Business Conflict:...

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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.

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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.

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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

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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

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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

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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

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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

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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.

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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

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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.

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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.

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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

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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?

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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

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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

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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

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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”.

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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.

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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.

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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.

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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:

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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,

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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

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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

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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;

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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

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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)

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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.

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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

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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).

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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).

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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

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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).

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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

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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.

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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

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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

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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).

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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

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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.

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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

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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

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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

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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

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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

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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

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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.

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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.

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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

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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,

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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

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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

-

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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

-

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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.

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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.

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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

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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

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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.

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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).

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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).

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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

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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.

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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

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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

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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

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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).

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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.

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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.

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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

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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)

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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

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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

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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).

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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.

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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

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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

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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.

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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).

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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

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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

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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

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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.

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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.

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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

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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,

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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

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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

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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

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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).

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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,

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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

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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,

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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

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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

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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.

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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).

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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

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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.

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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

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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

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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

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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

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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

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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.

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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

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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 &

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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

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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

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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.

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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

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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–

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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

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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).

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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,

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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:

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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).

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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

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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

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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

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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

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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?

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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).

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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

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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

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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

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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

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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

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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

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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.

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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.

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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).

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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

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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

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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:

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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

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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

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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

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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).

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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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.

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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

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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.

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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

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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.

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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

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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

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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.

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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?

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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?

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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.

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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

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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)

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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)

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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)

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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)

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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)

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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)

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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.

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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)

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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)

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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.

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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.

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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)

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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.

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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)

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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)

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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)

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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)

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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)

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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.

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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).

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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)

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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.

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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)

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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)

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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)

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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)

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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)

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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)

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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)

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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

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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?

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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?

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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.

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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

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208 Appendices

Appendix I (Continued)

Major Themes Emerging-The Roles of NFEs in a Conflict

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Appendices 209

Appendix I (Continued)

Major Themes Emerging-The Roles of NFEs in a Conflict

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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)

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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)

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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)

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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)

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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.

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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.

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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

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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

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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).

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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

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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

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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:

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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.