THE INFLUENCE OF STRATEGIC ASSETS AND MARKET ORIENTATION TO THE PERFORMANCE OF FAMILY BUSINESS IN MAKASSAR CITY, INDONESIA.

Author:Zainal, Henni
 
FREE EXCERPT

INTRODUCTION

Entrepreneurship research traditionally considers individuals and business institutions (companies) not to pay too much attention to the family context, whereas in a modern way that considers business and family as separate institutions have begun to be abandoned. Business and family development is a separate, but related field of inquiry (De Massis et al., 2014; De Massis et al., 2016; Papilaya et al., 2015). There is recognition of the importance of the context of family households in understanding business creation and growth (Welter, 2011). Recent studies have even focused on the underlying role of family households in business growth (Alsos et al., 2014; Carter et al., 2015; Hasan, 2014; Hasyim & Hasan, 2017; Papilaya et al., 2015), so that collectively challenging the idea of separation between business and family.

Alsos et al. (2014), Chrisman et al. (2005), Habbershon et al. (2003) argue that there is a unique value derived from family interaction and a business approach that supports competitive advantage. Habbershon et al. (2003) see the relationship between business and family leads to dynamic capabilities that are unique and can shape the behavior of the company. The relationship between business and family is a priority to achieve a sustainable competitive advantage, and vice versa (Gordon & Nicholson, 2008; Miller et al., 2003). Miller & Le Breton-Miller (2005), Pendrian et al. (2018) argue that family businesses create value for customers by exploring operational excellence and quality improvement based on their unique resources. Papilaya et al. (2015) states that unique resources and family business competencies owned have greater potential to succeed in a changing market environment.

Empirical studies show that family businesses contribute substantially to job creation and increase community income (Faccio & Lang, 2002; Arregle et al., 2007; Astrachan & Shanker, 2003; Berlemann & Jahn, 2016; Bertrand & Schoar, 2006; Bird & Wennberg, 2014; Bjuggren et al., 2011; Block & Spiegel, 2013; Hasan, 2018; Papilaya et al., 2015). However, there are also several empirical studies that state that family businesses carry out business activities inefficiently because they prioritize social goals, such as control and nepotism rather than economic goals, such as profit and growth. Debates about the efficiency of family ownership have been going on for a long time and are still developing today (Bjuggren et al., 2013; Dyer, 2006; Evert et al., 2016; Miller et al., 2003).

Family businesses have several problems and limitations in controlling their resources, market research, and lack of formal planning that leads to the need to invest in developing the resources they have in line with the implementation of strategies and the creation of competitive advantage and performance improvement (Barney, 2001). Also, family businesses face competition from various parties, not only with fellow business people who have the same scale, but also with big entrepreneurs, so that they need to make new market breakthroughs, determine the intended market focus, improve product quality and competitiveness of goods produced (Papilaya et al., 2015).

Based on the background of the problem, the article results of this study explain the effect of strategic assets and market orientation on the performance of the family business in Makassar, Indonesia.

LITERATURE REVIEW

In examining the uniqueness and characteristics of family enterprises, researchers primarily using resource-based views introduce concepts, such as "familiness" (Habbershon et al., 2003), "family capital" (Hoffman et al., 2006), "family effect" (Dyer, 2006), and "family social capital" (Arregle et al., 2007). The resource-based view focuses on efforts to achieve a sustainable competitive advantage over time (Haedar Akib, 2003; Prahalad & Hamel, 2000; Wernerfelt, 1984) and examines the resources of idiosyncratic companies that contribute to maintaining competitive advantage (Barney, 1991:1986). The family's unique family resources come from family and business interactions and are considered complex, dynamic, and intangible (Habbershon et al., 2003). Also, it is stated that the unique characteristics of family enterprise resources can create benefits, and otherwise can also create harm to family enterprises (Sirmon & Hitt, 2003).

In a comparison of the performance of various types of companies (Barney, 2001; Breton-Miller & Miller, 2015; Carmeli, 2004; Daraba et al., 2018; Fahed-Sreih & El-Kassar, 2017; Lu et al., 2013; Papilaya et al., 2015; Pendrian et al., 2018; Prahalad & Hamel, 2000; Sirmon & Hitt, 2003; Wernerfelt, 1984) resource-based views are an important perspective. This theory shows that the level of company performance is mainly due to its resources. This view assumes that resources are distributed asymmetrically between competing companies and do not move perfectly. To provide a sustainable competitive advantage, resources must be valuable, scarce, and not have equal substitutes.

Akib (2003) and Barney (1991) suggest that there are three types of resources, which include physical capital resources, human capital resources, and organizational capital resources. The first category corresponds to a group of tangible resources while human resources and capital are intangible organizations (Michalisin et al., 1997). Tangible resources are concrete and include resources, such as raw materials and land. Intangible resources are non-material and mostly tacit (Carmeli, 2004). It is generally asserted that intangible resources can provide a competitive advantage for the company (Barney, 1991; Michalisin et al., 1997; Prahalad & Hamel, 2000). Meanwhile, tangible resources are flexible and fairly easy to imitate (Carmeli, 2004), intangible resources are difficult to develop or emulate. Both of these resources are part of the organization's "knowledge", tacit knowledge, explicit knowledge, and cultural knowledge (Akib, 2003; Hoffman et al., 2006; Tuomi, 1999) as a source of competitive advantage.

The study of family firms relates to their resources and abilities (Habbershon et al., 2003; Hasan, 2018). The tangible resources of a family business can be compared to a non-family...

To continue reading

FREE SIGN UP