Environmental uncertainty and strategic behavior in family firms

Abstract

Despite the prevalence and economic importance of family businesses both in Europe and the US, relatively little research has been performed on how these types of firms remain competitive in today’s dynamic environment. The aim of this research project—conducted among a representative sample of family businesses in Belgium—is to analyze a manager’s perception of environmental uncertainty and to link it to the family firm’s strategic behavior. Results indicate that family firm managers do not perceive their environment as a very hostile one. To attain a competitive advantage, most of them opt for a competitive strategy that combines a cost leadership and differentiation perspective. However, a large group of family firms occupies a ’stuck-in-the-middle-position’. The selection of a strategy is linked to family firm goals and the CEO’s uncertainty perception of some specific issues in the family firm’s environment.