The Bulleye: A Systems Approach to Modeling

Family Firms
Torsten M. Pieper, Sabine B. Klein

The purpose of this article is to develop a model of family business that accounts for the
unique characteristics and diversity of family businesses and addresses the dynamics
among family business subsystems. An open-systems approach serves as the conceptual
foundation of the model. The distinctive features of the proposed model are the multiple
levels of analysis and the dynamics and interdependencies among the subsystems, allowing the integration of mainstream theories. The model can serve to discover and explore
a relevant research question in the context of family business, which may help researchers
advance theory building on family business. Furthermore, the model may help family
business practitioners better understand the particularities of family rms.

Introduction
The family business eld is not only advancing
rapidly but is also constantly gaining relevance
within and beyond the business research eld. As
in any unknown and fast-changing area, navigating without a roadmap results in losing your way.
A guiding framework can help to effectively and
efciently reach the nal destination. In the family
business eld, many useful and important models
have been developed to structure and explain the
complex intersection of the family and the business. However, a holistic model able to illustrate
the interrelations between family business components at various levels of analysis is lacking.
Such a family business research roadmap may
contribute to advancing the family business eld
by enhancing the structure and design of theorybuilding research questions.
So far, models developed to explain family businesses are partial in that they exclude essential
family business dimensions and ignore important
relationships among subsystems that may inuence family business behavior. In addition, most

of these models are illustrated on rather basic

levels of abstraction, which do not allow for feedback loops and reciprocal inuence. The family
business eld is now far enough advanced that we
need a more complex model able to incorporate
the multidimensional nature of the family business. If the eld wants to take further developmental steps, we need a framework able to grasp an
advanced level of abstraction. We will then be able
to understand the properties and behaviors of
family businesses. This is crucial in order to better
determine the emergence, evolution, and survival
of this particular type of rm (Zahra, Klein, &
Astrachan, 2006).
The aim of this article is to develop a model of
family business that accounts for the unique characteristics of family businesses, accommodates the
diversity of family businesses, and addresses the
dynamics among family business subsystems. At
the environmental level,the particular cultural and
economicsettingprovidesthecontextforthefamily
business system and the individual. At the organizational level, the family business consists of
four subsystems: family, business, ownership, and

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Pieper, Klein

management. The four organizational subsystems

consist of groups that,in turn,consist of individuals
(J. G. Miller, 1978; Riordan & Riordan, 1993). Individuals within the family business system can be
members of only one or of several subsystems and
their membership can differ over time.
The model makes several contributions to
family business researchers and practitioners.
Research on family business is fragmented and
noncumulative and lacks a solid theoretical
grounding (Chrisman, Chua, & Sharma, 2005;
Chua, Chrisman, & Steier, 2003; Lubatkin, Schulze,
Ling, & Dino, 2005; Zahra & Sharma, 2004). The
proposed open-systems approach to modeling
family business allows for research progress in
various specialized areas, but within a totalsystems context (Kast & Rosenzweig, 1992). Contextualizing the research in the life and nature of
family rms and accounting for their complexities
and ambitions is paramount for effective theory
building on family business (Zahra, 2007). Furthermore, researchers can use the model as a
framework to discover a research question that
addresses the problems faced by family business
actors in reality (Chrisman et al., 2005). Once the
research question is clear, the systems approach
underlying the model helps the researcher to
explore the question in the functioning of the
whole system (Gharajedaghi & Ackoff, 1984).
The proposed model has several important
implications for family business practitioners. The
model informs family business leaders about the
relevant subsystems that comprise their family
business, how these subsystems interact, and why
changes (e.g., shocks or disturbances) in one subsystem affect the other subsystems and related
individuals. The model thus allows for structuring
complex information and setting it into the right
context. Professional service advisors to family
businesses can use the model to trace potential
problem symptoms back to their origins and
thereby develop sustainable remedies to these
problems. Academics in the area of family business (such as university professors) can use the
model to design family business courses following
the structure of the subsystems. At the same time,
the model helps maintain a holistic view of family

rms. Furthermore, institutions in the area of

family business education (such as family business centers) can use the model to benchmark
competing institutions and thus to distinguish
themselves by specializing in particular family
business subsystems or dynamics (see also
McCann, 2003).
The remainder of this article proceeds as
follows. The next section reviews and classies the
literature on family business models according to
three developmental stages. The second section
describes the advancements and limitations of
each stage and identies remaining gaps. The
review section closes with the identication of the
features that an advanced model of family business should possess. The third section dwells on
open-systems theory and then explains the model
development and functioning. This section
describes each element of the model separately
and then integrates all components with the help
of the open-systems approach. The last section
concludes the article with a critical evaluation of
the proposed model and a presentation of routes
for further research.

Family Business Models in

the Literature
Organization of the Literature Review
The aim of this section is to trace the key developmental stages of family business models in
order to (1) identify relevant model components,
(2) evaluate strengths and weaknesses of prevailing models, and (3) identify model criteria
necessary to guide the understanding of family
business. Therefore, the review section does not
describe each model in detail but concentrates on
the major developmental stages. Appendix A provides a summary of the reviewed articles and
a description of how the literature review was
conducted.
The early years of family business research
started with a closed-systems focus (Stage 1).
Later, the process view extended this perspective
(Stage 2). Most recently, complex family business
models for particular research purposes and with

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The Bulleye: A Systems Approach to Modeling Family Firms

an open-systems perspective have emerged (Stage

3). Over the years, each new developmental stage
has improved the limitations of the previous stage.
The following sections present the key components of the models from each developmental
stage and discuss their strengths and weaknesses.
Appendix B provides a summary of the key components of the models from each stage.

Stage 1: The early years of dual-system

thinking. The early years of family business
research identied the family and the business as
the two main building blocks of the family business system (P. Davis, 1983; Kepner, 1983; Whiteside & Herz-Brown, 1991). A few models also
emphasized the other subsystems of ownership
(Lansberg, 1983; Tagiuri & Davis, 1996) and management (Beckhard & Dyer, 1983). The focus on
the individual relied primarily on the role of the
founder caught in the overlap of the family and
the business subsystems (Beckhard & Dyer, 1983;
P. Davis & Stern, 1980; Lansberg, 1983), to the
exclusion of other family business players. Furthermore, the closed-systems perspective mostly
ignored potential interactions of the family business with the environment. P. Davis and Stern
(1980) is a noteworthy exception here.
In summary, the early stage of family business
model development produced mainly prescriptive
knowledge on family business in the form of
how-to guides. Models from the early stage
applied the systems view more as a metaphor than
as a means to address the dynamics and causalities between family business subsystems and the
environment. The models from the next developmental stage attempted to overcome this problem.
Stage 2: Systems and process relevance.
Following the early writings, the models from the
next developmental stage continued to emphasize
the family and the business subsystems as main
building blocks but also integrated both the ownership and the management subsystems in their
observations (Churchill & Hatten, 1987; Donckels
& Frhlich, 1991; Neubauer & Lank, 1998). The
models from this stage adopted a dynamic view

focusing on processes inside the family business

system, such as succession planning (Lansberg,
1988); succession process (Barnes & Hershon,
1976); business strategy formulation (Ward, 1988),
life cycles of the family, ownership, and business
spheres (Gersick, Davis, McCollom, & Lansberg,
1997); and corporate governance (Neubauer &
Lank, 1998). In this stage, the individual is considered in different roles in most models (Barnes &
Hershon, 1976; Churchill & Hatten, 1987; Donckels
& Frhlich, 1991; Ward, 1988), yet only two studies
integrate the environment in their observations
(Donckels & Frhlich, 1991; Lansberg, 1988).
The main weaknesses of the models in this
developmental stage are the one-way causality and
the lack of integrating the environment and mainstream theories, which help explain the dynamics
among the subsystems. The models from the
next stage have attempted to overcome these
limitations.

Stage 3: Complex and specific models. During the last decade, family business academics
have established models of family business that
integrate different mainstream theories and allow
for an analysis of the distinctions between family
and nonfamily rms as well as among family rms
of different types (Chrisman et al., 2005; Sharma,
2004).
A main characteristic of the models from this
stage is the closed-systems approach. The only
exceptions are Carlock and Ward (2001) and Habbershon and Pistrui (2002). Although the earlier
models within this stage ignore the ownership
and the management subsystems (Habbershon &
Williams, 1999; Hollander & Elman, 1988; Hoy &
Verser, 1994; Stafford, Duncan, Danes, & Winter,
1999; Wortman, 1994), the subsequent models
add these two subsystems to their observations
(Carlock & Ward, 2001; Habbershon & Pistrui,
2002; Klein, Astrachan, & Smyrnios, 2005). Only 4
of the 10 complex and specic models integrate
the individual in varying roles (Carlock & Ward,
2001; Habbershon & Williams, 1999; Habbershon,
Williams, & MacMillan, 2003; Hollander & Elman,
1988).
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Pieper, Klein

The following two streams of research emerged

within the third developmental stage: (1) family
inuence models and (2) sustainable family business models. Family inuence models address the
question of the necessary antecedents of family
inuence and whether and how family inuence
provides a rm with a competitive advantage
(Habbershon & Pistrui, 2002; Habbershon & Williams, 1999; Habbershon et al., 2003). The familiness models by Habbershon and colleagues draw
on the resource-based view of the rm (Penrose,
1995; Wernerfelt, 1984). Klein et al. (2005) assess
family inuence in terms of power, experience,
and culture. Yet the design of the model does not
allow for the integration of mainstream theories.
Sustainable family business models have a
slightly different starting point in explaining
family and business interactions. Unlike previous models, sustainable family business models
(Danes, Rueter, Kwon, & Doherty, 2002; Stafford
et al., 1999) put equal emphasis on family and
business and analyze the key features of family
and business in terms of their resources,
constraints, processes, and achievements. The
models explain where disruptions in the interface
between family and business stem from and how
the system parts react to these disruptions. Furthermore, the models apply a dynamic view,
allowing for the integration of multiple theoretical perspectives.

Reflections on Recent Family Business

Model Development
Despite the rapid pace of model development, a
lack of integration of the previously developed
approaches remains. Potential drawbacks of the
recent models pertain to their relatively high
levels of complexity. The positive aspects of the
recent models refer to the solidness of their
approaches. In particular, prevalent models allow
for distinguishing among types of family business
and thereby contribute to a better understanding
of differences among family businesses. Models
tailored to particular research purposes emerge
that allow for the integration of theoreticallybased knowledge. The diversity and focus of each

of these models in this developmental stage might

nevertheless result in a further fragmentation
(Dogan, 1996) in the eld of family business
research.
In light of the above observations, an advanced
model of family business should include all relevant subsystems of family business: the environment, acknowledgment of the interactions among
the subsystems and the environment, application
of a dynamic perspective, and allowance for the
integration of multiple levels of analysis and theories from both family business and mainstream
research. The following sections advance an opensystems model of family business that attempts to
meet these criteria.

Model Building
The Open-Systems Approach
The ultimate goal in family business research is
the development of a distinct theory on family
rms (Chrisman et al., 2005). As the above
summary mentions, an open-systems approach
may be particularly useful in combining the
various elements of a family business, thereby
potentially testing such a theory. The opensystems view (Katz & Kahn, 1978; Rousseau, 1979)
proposes that the organization is a system
composed of numerous subsystems, but the
organization is also a subsystem within a much
broader, complex economic and cultural system
(Naumann & Lincoln, 1989, p. 152).
An open-systems approach allows for the analysis at different subsystem levels (Ashmos & Huber,
1987) and acknowledges interactions among the
subsystems in different directions of inuence,
such as feedback loops. Open systems are therefore especially useful for research designs that
recognize time delays (Woodside, 2006) or cultural differences (Hofstede, 1980). Furthermore,
an open-systems approach integrates the human
element in the analysis (Kast & Rosenzweig, 1992),
which current research on family rms tends to
neglect (Zahra et al., 2006). Unlike closed systems,
open systems incorporate the potential interactions between the organization and the broader

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The Bulleye: A Systems Approach to Modeling Family Firms

Table 1 Definitions and Examples of Family Business Subsystems

Subsystem

Definition of Subsystem

Examples for Subsystem

Frequently Mentioned

Variables

Dimensions

Environment

Large, living system with

Customers, competitors, labor
Country, tax system, location
organizations and lower
organizations, suppliers,
(rural vs. urban).
levels of living systems as
government, and other
subsystems and components
agencies (Kast & Rosenzweig,
(J. G. Miller, 1978).
1992).
Family
A group of persons related by Nuclear family, extended
Enmeshment/disengagement,
blood ties (Rothausen, 1999).
family, kinship group.
state of lifecycle, number
and age of family members,
love, trust, and control.
Business
Organization that processes
Entrepreneurial firm, mid-sized State of lifecycle, performance,
inputs from the environment
firm, large diversified global
relative market position.
and returns some product or
player.
service (Katz & Kahn, 1978;
Thompson, 1967).
Ownership
Ownership of voting rights or
Concentrated, scattered,
Legal form, number of owners,
company capital.
dispersed ownership.
stage of ownership,
governance system.
Management The top management team
Wholly family staffed, partly
Management team, phase of
that runs the business.
nonfamily staffed, wholly
leadership, leadership style.
nonfamily staffed
management team.
Individual
Organized multicellular
Nonactive family business
Characteristics, intentions, and
structure that has single
member, owner-manager,
actions, motivation, identity.
decider (J. G. Miller, 1978).
nonfamily executive.

environment (Ashmos & Huber, 1987; Naumann &

Lincoln, 1989; Rousseau, 1979) and thus allow for
an analysis of their mutual exchanges and inuences. The features of the open-systems approach
benet the development of the family business
model in this section.
The literature review determines the following
key components that an advanced model of family
business should include: The environment, the
family business system, with the family, ownership, management, and business subsystems, and
the individual.1 Table 1 provides the denitions as
well as several examples and dimensions of the
subsystems. Examples and dimensions of the subsystems stem from the extant family business literature (see, e.g., Sharma, 2004).

Appendix B provides an overview of the key components that

previous models emphasized.

The Surrounding Environment

Organizations do not operate as isolated entities,
but within a framework provided by their particular economic and cultural environment (Ashmos
& Huber, 1987; Naumann & Lincoln, 1989; Rousseau, 1979). Thus, the environment encompasses
both the family business system and the individual system. The integration of this perspective
helps to understand how the business and
the environment interact, how these interactions
shape the organizational structure, and how
they affect individuals attitudes and behaviors
(Naumann & Lincoln, 1989). By adding the environment, the model becomes open for international comparisons taking cultural differences
into account, such as, for example, collectivistic
versus individualistic societies or high- versus
low-power distance (Hofstede, 1980) and their
inuence onto, for example, a successors commitment or leadership style in family businesses.
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Pieper, Klein

Examples of environmental variables include the

rms customers, competitors, labor organizations, and suppliers, as well as the government and
other agencies (Kast & Rosenzweig, 1992).
The next level of analysis in the model is the
family business system with the family and business as constituting subsystems and the management and ownership as connecting subsystems.

The Family Business System

Family and business as constituting subsystems. The difference between an anonymously held company and a family business is the
inuence that a family has on the business. [A]t
the heart of the family business eld [is] the study
of the reciprocal impact of family on business. No
other eld can claim this focus (Astrachan, 2003,
p. 4). This inuence does not imply any stable
hierarchy in a way that the business always dominates the family or vice versa. The interaction
between family and business is rather mutually
inuencing (Danes et al., 2002). The denition of
family depends on the cultural background
of the researcher and the purpose of the research
(Rothausen, 1999). The researcher who uses the
proposed model can dene family as nuclear,
joint, or extended family (for further distinctions,
see Kertzer, 1991, pp. 156159) or as a kinship
group (Stewart, 2003).
An advantage of the model presented here
includes the exibility to address various family
denitions. Another advantage of the model refers
to a better understanding of how the structural
conguration of family affects the performance
of the family business (Leaptrott, 2005). For
instance, the researcher can use the model to
understand how family dynamics in terms of
cohesion (Olson, Russell, & Sprenkle, 1989; Poza,
Hanlon, & Kishida, 2004) and psychological ownership (Pierce, Kostova, & Dirks, 2001) may represent a source of competitive advantage and lead
to improved performance in family business.
Thereby, the model allows for the integration of
theories from other research areas.
The business represents the second main subsystem of the family business system. Researchers

only recently extended their focus from the

dynamics within the family to the business and
started to investigate how a family-inuenced
business is different from other business organizations. Academics from areas such as nance
(e.g., Anderson & Reeb, 2003), strategic management (e.g., Lubatkin et al., 2005), and organizational behavior (e.g., Zahra, Hayton, & Salvato,
2004) started to question how family inuence
alters previously assumed business relationships
and theories. The business remains an important
level of analysis but researchers emphasize that it
is the family that makes a family business unique
(Stafford et al., 1999).
The model presented here is helpful when theories developed for businesses in general build
on the input from other subsystems; an example is
the family subsystem, which management mainstream models often do not consider. For instance,
the strategic choice to pursue cost leadership
(Porter, 1985) with the business requires suitable
behavior from the owning family. Taking into
account that the rms management and employees view the owner-manager and her or his family
as role models, cost leadership and, consequently,
cost savings in the business require the family to
live a modest life. A luxury lifestyle of the family
would counter this strategic choice. Thus, the
model allows for inferences from a particular
business strategy to the owning family and the
individual family member. After integrating and
discussing the family and business subsystems, the next section addresses the ownership
and management subsystems.

Ownership and management as connecting

subsystems. The ownership and/or management subsystems connect the family and the business subsystems of the family business system
(Klein et al., 2005). The family provides the business with funds (through the ownership subsystem) and labor force (through the management
subsystem). The business subsystem, in turn, provides the family with jobs, as well as nancial and
nonnancial returns (Adams, Manners, Astrachan, & Mazzola, 2004). The researcher who uses
the model may decide whether to concentrate on

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The Bulleye: A Systems Approach to Modeling Family Firms

legal ownership (Miller & Le Breton-Miller, 2006)

or on psychological ownership (Pierce et al.,
2001), depending on the particular research focus.
The level of ownership dispersion (Schulze,
Lubatkin, & Dino, 2003) and the design of specic
corporate governance systems for family businesses and their inuence on the family and the
business subsystems (e.g., Lubatkin et al., 2005;
Jaskiewicz & Klein, 2007) represent other areas of
potential interest to the researcher.
Likewise, management could encompass only
top executives (Ensley & Pearson, 2005), or could
also include middle management (Gomez-Mejia,
Larraza-Kintana, & Makri, 2003). The management subsystem in the model allows for the integration of theories from organizational behavior,
such as leadership (Neubert & Taggar, 2004),
adverse selection (Dahlstrom & Ingram, 2003), or
group dynamics (Forsyth, 1990). From a theoretical point of view, the management subsystem also
allows for the integration of alternative theories to
explain system behavior. For instance, Corbetta
and Salvato (2004) argue that the owning family,
depending on the model of man, primarily determines the prevalence of agency relationships
(Jensen & Meckling, 1976; Eisenhardt, 1989) or
stewardship relationships (J. H. Davis, Schoorman, & Donaldson, 1997) among managers and
employees. These two theories exemplify how
the characteristics of the owning family affect the
conguration and behavior of the management
subsystem.
After the discussion and integration of the environment and the family business system with the
family, ownership, management, and business
subsystems, the next section integrates the individual as the last level of analysis in the model.

the study of family business, the proposed model

places the individual as the basis of observation.
Within the family business system, the values,
intentions, motivations, and skills of the individual determine the actions and behaviors of the
individual solely or as part of a larger group
(Connor & Becker, 1975). For instance, the values
of those individuals involved in the decisionmaking process inuence decision making by the
group (Connor & Becker, 1975). Each individual,
whether he or she is a family member, a nonfamily
manager, an entrepreneur, a next-generation
owner, or a business unit manager, inuences
the family business subsystems in a particular
manner (Riordan & Riordan, 1993). The proposed
model is exible enough to accommodate individuals with different roles and to describe the
interactions of each individual with the other
subsystems.
Individuals may belong to several subsystems at
the same time. The owner-manager, for instance, is
a member of the ownership subsystem in his or her
role as shareholder, at the same time, he or she is a
member of the management subsystem in his or
her role as CEO, and he or she is a member
of the family subsystem in his or her role as
daughter, son, mother, or father. Integrating, for
example, a business founder with his or her particular values, intentions, and actions allows for
an integration of theories from entrepreneurship (e.g., Welter & Smallbone, 2006) and psychology (e.g., Fishbein & Ajzen, 1975) into the family
business system. The integration of several individuals allows for drawing differences, interactions, and conicts between them as well as
possible implications for the other subsystems in
the model.

The Individual as a Basis of the Model

Integrating the Parts Into a

Whole Model

Any of the subsystems at the group or organizational level consists of individuals (Riordan &
Riordan, 1993). Thus, the individual represents the
basic level of analysis (Kast & Rosenzweig, 1992).
Yet too often research on family business omits the
human element. Since the individual is pivotal to

The open-systems approach confronts us with a

major problem, namely, how to display the four
levels of analysis (the individual, the subsystems,
the family business, and the environment) and
their interactions in an appropriate yet comprehensive way. We decided for reasons of readability
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Pieper, Klein

Level of Analysis

Environment

Family Business
Family System
Ownership
System

Subsystem

Family System
Management
System

Ownership
System

Business
System

Management
System
Business
System

Individual
Figure 1 The Multiple Levels of Analysis of the Open-Systems Family Business Approach.

to deal with one problem at a time. We therefore

rst present the levels of analysis in Figure 1.
The open-systems approach applied in this
article is rooted in a scientic view of the world
(e.g., biology or chemistry) where each body or
element consists of different cells. The cells at the
lowest level of analysis form the next level through
relations and interactions, for example, several
cells form an organ and others form muscles, and
so forth, which then form a body on the higher
level. Likewise, several individuals (the cells of
a family business) form the ownership group;
others (and sometimes overlapping) form the
management team. On the next level of analysis,
the four subsystems form the family business itself
as a unit of analysis, which then acts within its
environment, which is the highest level of the
analysis in the open-systems family business
approach.

Second, we present a simplied twodimensional overview of the family business and

its subsystems imbedded in its environment (see
Figure 2). We put the individual graphically in
the center, although, as shown in the previous
paragraph, we are dealing with several individuals being members of the subsystems displayed.
Why is it this way? For some analyses, the interactions and causal dynamics between an individual and the subsystems are crucial. Thinking
of the disposition of the incumbent to step down,
we would not only need to analyze the incumbents personal values, intentions, and needs, but
the family system he or she is embedded in as
well, for example, the management system. As a
second example, the intervention of the ownermanager at the ownership-system level might
well affect the way he or she is viewed by his or
her children.

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The Bulleye: A Systems Approach to Modeling Family Firms

Family Business
System

Family
System

Individual

Management
System

Ownership
System

Environmental
System

Business
System

Figure 2 The Bulleye: Two-Dimensional Onlook Onto

the Three-Dimensional Open-System Approach.

Wherever it is possible to stay on only one level

of analysis the researcher will obviously do so,
both for reasons of comprehensiveness and for
reasons of complexity reduction. Oversimplication, though, leads to loss of relevant information.
Where complex interactions across various levels
of analysis inuence each other, and where theories concerning different levels of analysis are
needed to explain a phenomenon, thenand only
thenwill there be a need to apply the opensystems approach: the bulleye.

Conclusion
According to Chrisman et al., the ultimate goal of
family business research is the development of a
theory of the family rm: A starting point for
achieving this objective is to examine whether and
how current theories of the rm can be applied
and combined to study family businesses (2005,
pp. 566567). The proposed model attempts to
guide research in this direction. The openness
and exibility of the systems approach allow the
researcher to integrate multiple mainstream theories that t to the particular research context. The

benet of this procedure is that mainstream theories can explain family business phenomena (and,
in the long run, help develop a distinct theory of
the family rm). At the same time, the model
allows to give back to mainstream theories (Zahra
& Sharma, 2004) by investigating their validity in
the research context of family businesses and,
hence, extending their applicability (Chrisman
et al., 2005).
By looking at theories that explain parts of the
phenomenon under question and by integrating
evidence from eld observations, the researcher
can use the model for nding an interesting and
relevant research question. By clarifying the different levels and units of analysis, the model also
helps the researcher to keep the level of analysis constant in further empirical and theoretical
explorations. In addition, the model acknowledges
the nonparallel development of the subsystems.
On the theoretical side, the model contributes
to a more unied and holistic view of the family
business eld (Zahra et al., 2006). It helps to
further improve the strength of the eld through
the integration of the necessary but large variety
of concepts that are relevant for a better understanding of family businesses. The application of
the model can assist the researcher in integrating
these different concepts in a coherent way and
help him or her to better describe and explain
family business reality. Family business practitioners and advisors can use the model to analyze the
interactions in order to disentangle complex situations and, in turn, nd and inuence the antecedents of either wanted or unwanted outcomes.
Family business teachers could apply the model
in order to structure courses and integrate
colleagues from related elds in order to grasp the
full potential of their classes.
Like previous models, the model proposed here
has some limitations that, at the same time, indicate promising routes for further research. The
proposed model needs further evaluation and
application in order to fully develop its capabilities. One of the dangers associated with the model
is the rising level of complexity. Due to a lack of
experience from applying it, no suggestions are
possible regarding the optimal number of theories
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Pieper, Klein

to integrate in the model. Nevertheless, a logical

assumption is that integrating too many theoretical perspectives may lead to confusion rather than
to greater insight. Further research that applies
the model needs to add to a better understanding of how many theoretical perspectives it can
accommodate without creating confusion. By
applying the model to differing research settings,
scholars can help further rene the model, test its
usefulness, and outline related shortcomings.
The second main limitation of the model is
inherent to all systems approaches: The loss of
relevant information due to the reduction of complexity in practice (Hollander & Elman, 1988). To
permit an understanding of a system, a particular
perspective always reduces complexity. The two
accepted paths toward efciently subdividing
work have traditionally been reductionism and
functionalism (Fowler, 2003). The consequence is
a decrease in complexity between the reality of the
initial environment and the understanding of the

system. The reduction of complexity permits a

better management of the relevant relationships.
However, the mandatory selection might cause a
risk of unforeseen system behavior and the
impossibility to react adequately to external inuences. Subsequent research should concentrate on
the optimum level of reduction and on specic
selection strategies to account for the problems
that unforeseen behaviors may cause in the
system.
Working with the bulleye will ideally result in
new insights into both old and new phenomenon in the family business area. Zahra and
Sharma (2004, p. 337) note that family rm
research has come far, but has a long way to
go before it can impact public policy decisions,
improve managerial practices, or even enrich the
scholarly literature. The bulleye model presented
here provides an indication of where the development of a distinctive theory of the family rm may
start from.

Appendix A: Summary of Articles Included in the Literature Review

Author(s)

Model Components Key Audience

Content of the Study

Barnes and
Family, business,
Hershon (1976) individuals (family
managers,
employees,
relatives,
outsiders)

Academics, service Authors present a 2 2-matrix to classify pressures

providers
and interests according to individual roles (i.e., inside
or outside) and spheres (i.e., business or family) in
family business. According to the model, these
perspectives are important during both
intergenerational family transitions and business
growth as well as management style transitions.
Transferring power in the family business is most
productive when the two transitions simultaneously
occur.

Beckhard and
Dyer (1983)

Academics, service Authors concern with managing continuity and

providers
model family firms as a complex system consisting of
four separate interacting subsystems: family, business,
founder, and linking organizations (e.g., the board of
directors). The aim behind the model is to show how
firm conditions, business environment, and family
dynamics affect decision-making and planning across
the subsystems. Therefore, the authors suggest a
systems view of the family firm in order to effectively
manage continuity.

Family, business,
founder, linking
organizations
(e.g., board of
directors), business
environment

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The Bulleye: A Systems Approach to Modeling Family Firms

Appendix A: (continued)
Author(s)

Model Components Key Audience

Content of the Study

Carlock and
Ward (2001)

Family,
organization,
management,
ownership,
industry, market,
individual,
environment

Service providers,
family members

Two models for strategic planning illustrate how life

cycles and the external environment influence the
family business. In the first model, authors elaborate
on Gersick et al.s (1997) developmental model by
considering the life cycle forces of the industry, the
individual as well as of the organization, ownership,
and family. The second model explains environmental
influences by including general forces (economic,
physical, political-legal, technological and social) and
adding market considerations alongside industry
factors.

Churchill and
Hatten (1987)

Family, business,
ownership,
management,
individual

Academics

Authors present a two-dimensional research

framework, anchored in succession, for studying
family businesses. Their model is based on the
individuals influence on the business and on four
stages of family firm development: owner-managed,
training and development of next generation,
generational partnership, and transfer of power.
Their model aims at providing both an organized
investigation approach and the ability to link each
section of the model to research in other disciplines.

Danes et al.
(2002)

Family, business

Academics, service Study applies and tests three elements of the FIRO
providers
model in the family firm context, namely inclusion,
control, and integration. Inclusion refers to who is
included in the family firm, the connectedness of
the members, and the shared meaning of how the
members perceive themselves in relation to the
outside world. Control means the family interactions
in terms of exerting power and influence during
conflict. Integration concerns the interactions of
family members when working together to achieve
the family business goals. The authors find that a
sense of inclusion and a collaborative control management style positively influence family business
integration.

Davis (1983)

Family, business

Academics

Author discusses the family firm as a joint system

that is task-oriented but influenced by emotional
family issues. Developed from a social systems
perspective, a 2x2-matrix illustrates an achievement
orientation typology of family businesses. The
degree of proficiency (high or low capability to
perform task) and the degree of intentionality
(high or low commitment to achievement) create
four types of systems: high-achievement, stymied,
survival, and failing. Depending on their orientation, family firms have the potential to maintain
vitality.

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Pieper, Klein

Appendix A: (continued)
Author(s)

Model Components Key Audience

Davis and Stern Family, business,

(1980)
technology,
marketplace

Content of the Study

Academics, service Paper presents an adaptation, survival and growth

providers
model of the family business based on organizational
and systems theory. The business task structure, the
legitimizing structure of norms and values, and the
familys behavior within the organization determine
success. In order to survive and grow, the family
business system must adapt to the environment in
terms of technology and market demands, the
intergenerational process, and the family
interrelationship system.

Donckels and
Frhlich (1991)

Family, business,
Academics
founder-ownermanager,
management,
equity, family
business-culture,
environment-culture

Gersick et al.
(1997)

Family, business,
ownership,
developmental
axes

Academics, service Model draws on the three-circle model (Tagiuri &

providers, family
Davis, 1996) and offers a dynamic perspective by
members
introducing developmental stages along the family,
business, and ownership axes. The authors describe
issues arising along this development and suggest
solutions to potential conflicts.

Habbershon
and Pistrui
(2002)

Family, business,
leadership,
ownership

Academics

Paper discusses the entrepreneurial potential of a

family business in creating trans-generational wealth.
Using the ownership mind-set of the family and the
strategic methods of the business as key constructs, a
2 2-matrix identifies an enterprising family
domain that is responsible for sustaining
family-influenced trans-generational wealth creation.
Enterprising families are not simply families in
business as the other domains suggest, but are
instead a particular type of family that has a
family-as-investor mind-set and use
entrepreneurial-strategy methods to create wealth.

Habbershon
and Williams
(1999)

Family, business,
individual,
familiness

Academics

Authors discuss the strategic competitive advantages

of the family firm. Drawing on the resource-based
view of the firm, they discuss the concept of
familiness as the distinct set of resources resulting
from the interaction of the family, the individual
family members, and the business. Familiness creates
a potential competitive advantage for family firms
and acts as the foundation for a unified systems
perspective of family firm performance.

Study compares family and non-family businesses in

terms of values and attitudes, objectives, and
strategic behavior. As a conceptual frame of
reference to help guide the study, the authors
develop a holistic model of the family business and
the environment, including the owner-manager in
the center surrounded by four sub-systems: Family,
business, management, and equity. The results show
that family firms are inwardly directed closed
systems, have more conservative strategic behavior
and are seen as more stable factors in the economy
than non-family firms.

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The Bulleye: A Systems Approach to Modeling Family Firms

Appendix A: (continued)
Author(s)

Model Components Key Audience

Content of the Study

Habbershon
et al. (2003)

Family, business,
individual,
familiness

Academics

Authors create a unified systems performance model

describing the relationship between familiness and
advantage-based rents. The resources and capabilities
created by the family unit, the individual members,
and the business entity act as potential advantages
for enterprising families pursuing trans-generational
wealth creation.

Hollander and
Elman (1988)

Family, business,
individual,
environment

Academics

Authors review and discuss four main perspectives

apparent in the development of a family business
paradigm: the rational or excising-family-from-the
business approach, the focus on the founder, the
phase and stage concepts, and the systems approach.
The study provides an open systems model viewing
the family business as a total unit comprising of the
individual, family, business, and environment
components.

Hoy and Verser Family, business,

(1994)
ownership

Academics

Authors examine the relationship between

entrepreneurship and family business by considering
six key strategic management issues stemming from
the unique overlap of the two fields. They relate the
key issues to the three-circle family business model
(Tagiuri & Davis, 1996). The authors demonstrate
that the model has limitations in capturing the
interdisciplinary complexities of family firms due to
the ignorance of interacting dynamics. Due to this
limitation, the study proposes a more focused
research agenda using Gartners (1990) eight
entrepreneurship principles to discuss the
commonalities between the two fields.

Kepner (1983)

Family, business

Academics

Conceptual article focusing on transforming the dual

systems view into a total systems perspective of
family business. The author emphasizes the
importance of understanding the family system in
order to discuss the ecology of the family firm as a
whole.

Klein et al.
(2005) and
Astrachan
et al. (2002)

Power, experience,
culture

Academics, service In the 2002 article the authors determine in their

providers
F-PEC scale three distinct channels through which a
family can influence a business: Power (P) (in terms
of ownership and leadership positions held by family
members), experience (E) (in terms of lessons learned
and rules installed with each generational transition),
and culture (C) (in terms of the overlap of family
values and business values as well as the familys
commitment to the business). In the 2005 paper the
authors validate the F-PEC scale, providing a reliable
tool to determine the overall strength of a familys
influence on a business.

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Pieper, Klein

Appendix A: (continued)
Author(s)

Model Components Key Audience

Content of the Study

Lansberg
(1983)

Family, business,
founder ownership

Academics

Author addresses human resource management in

family firms. Using institutional theory, the author
presents a model to show how the family and
business are separate overlapping social institutions
with their own set of values, norms and principles.
Since the family and business fundamentally exist for
diverse reasons, the founder is captured in the centre
of conflicting goals, which in turn can interfere with
effective human resource management.

Lansberg
(1988)

Family, business,
founder,
managers, owners,
environment

Academics, service Author focuses on succession and continuity in family

providers
firms. He identifies five main protagonists
influencing the development of a succession plan:
the founder, family, managers, owners, and
environment. Using a systemic approach, structures
such as a family council, board of directors, and a
succession task force aid in constructively managing
resistance to planning, thereby encouraging family
business continuity.

Neubauer and
Lank (1998)

Family, business
(management and
employees), board
of directors, owner

Academics, service Authors are concerned with effective governance

providers, family
structures enhancing family firm sustainability. Using
members
a variation of Tagiuri and Daviss (1996) three circle
concept, the authors develop a three circle and tie
model including the owner, the business, and the
board of directors, as well as an intersecting family
element. The overlap defines 15 possible roles in a
typical family corporation.

Stafford et al.
(1999)

Family, business,
environment

Academics

Authors propose a research model for sustainable

family businesses as a general framework for guiding
research in the field. The model is grounded in
systems theory and focuses on the interface between
the family and business systems, and their interaction
with the environment. The model allows for the
integration of alternative disciplines, incorporating
both the single and dual systems perspectives, and
puts equal emphasis on the business and family
systems.

Tagiuri and
Davis (1996)

Family, (business),
management,
ownership

Service providers,
family members

Authors present a conceptual three-circle model to

help explain family firm relationships through family,
management and ownership characteristics. These
three spheres overlap in a way that produces seven
unique bivalent attributes representing both
advantages and disadvantages in a family business.

Ward (1988,
1991) in
Neubauer and
Lank (1998,
p. 37)

Family, business,
business owner,
ownership,
management

Academics, service Author provides a model of the family, business, and

providers, family
business-owner life cycles and outlines three
members
evolutionary stages (early, middle, and late) occurring
during the business life cycle of the family firm. The
author identifies various management and
ownership issues occurring throughout the
evolutionary stages.

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The Bulleye: A Systems Approach to Modeling Family Firms

Appendix A: (continued)
Author(s)

Model Components Key Audience

Content of the Study

Whiteside and
Herz-Brown
(1991)

Family, business

Academics

Authors advocate a single system approach rather

than a dual-systems view. They argue that subsystem
stereotyping, inconsistent and inadequate analysis of
interpersonal dynamics and exaggerated boundaries
of the family and business systems prevent a
thorough examination of the family firm. The single
system approach focuses on describing the new
organization that develops from the integration of
the parts. Paper proposes a global conceptual
paradigm for family-owned businesses based on a
research typology drawing from neighboring
disciplines.

Wortman
(1994)

Family, business,
environment

Academics

Emphasis is on the family business systems

interaction with the macro (i.e., global and national)
and micro (i.e., international, government, and
business) environments. Business attributes include
philosophy, strategy, strategic process, structure and
behavior.

The literature review was conducted as follows. We first ran an analysis of several key words (family business, family
firm, privately held firm combined with model, scheme) at a literature databank comprising more than 35,581
recent (19902007) articles from journals important to the family business field (FBR, ET&P, JSBM, JBV) and
mainstream journals (AMJ, AMR, ASQ, SMJ a.o.). From the retrieved papers that discuss or employ models, we
tracked the quoted literature that was not already included in our list.

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Year
1980
1982
1983
1983
1983
1983
1991
1976
1987
1988
1988
1991
1991
1997
1998
1988
1994
1994
1999
1999
2001
2002
2002
2003
2005

Type of models

System relevance

System and process

relevance

Complex and specific

Hollander and Elman

Hoy and Verser
Wortman
Habbershon and Williams
Stafford et al.
Carlock and Ward
Danes et al.
Habbershon and Pistrui
Habbershon et al.
Klein et al.
This paper

Barnes and Hershon

Churchill and Hatten
Lansberg
Ward
Ward
Donckels and Frhlich
Gersick et al.
Neubauer and Lank

Davis and Stern

Tagiuri and Davis
Beckhard and Dyer
Davis
Lansberg
Kepner
Whiteside and Brown

Author(s)

Family

Business

316

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Management

Ownership

Individual

Environment

Systems

Appendix B: Overview of the Key Components Emphasized by Previous Family Business

Models

Pieper, Klein

The Bulleye: A Systems Approach to Modeling Family Firms

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Torsten M. Pieper, Kennesaw State University, Cox

Family Business Center, Atlanta, GA.
Sabine B. Klein, Chair of Strategy and Family
Business, European Family Business Center, European Business School, International University,
Schloss Reichartshausen, 65375 Oestrich-Winkel,
Germany; tel: +49 (0)611 36018 700; fax: +49
(0)611 36018 702; sabine.klein@ebs.edu.
This study beneted from the nancial support of
the German EQUA Foundation whose assistance
is gratefully acknowledged. The authors thank two
anonymous reviewers for their helpful comments
and recommendations and Niki Kux-Kados and
Sanjay Goei for their continuous support in developing this article.

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