Family Members & Family Business Activities: A Psychological Contract?

Abstract

Family businesses seem to be flooding the market. Small, medium-sized, and large businesses appear to have some kind of connections to each other, which likely to form groups of businesses. There are chances that the structures of family may contribute to the successful mixture between family members and their family business activities.

The initial perspective uses the entrepreneurial theory of the firm. The psychological contract of the well-known ownership theory is also explored to provide a foundation toward building a case surrounding the mixtures of family members and family business activities. Since psychological contracts imply only intangible bonds, this model is leaning toward unwritten or illusive agreements among family members. This includes emotion, feeling, or attitudes of certain family members toward the business activities, rather than relying on the written agreements among family members.

This study gathers the necessary data from numerous smaller-scaled organizations in Bandung and Jakarta. It is expected that such studies reveal the complexities in mixing family members into the family business operations. It is also expected that family members, who do not have direct controls over the family business operations, have only psychological contracts in their mind. This psychological contract influences their behaviors toward family business management.