The Theory of Social Systems as a Framework for Understanding Family Businesses

• Author: Hermann Frank,Arist von Schlippe
• DOI: http://doi.org/10.1111/fare.12010
• Published date: 01 July 2013
• Date: 01 July 2013

ARIST VON SCHLIPPE Witten/Herdecke University

HERMANN FRANK Vienna University of Economics and Business∗

The Theory of Social Systems as a Framework for

Understanding Family Businesses

There is a long tradition of systemic approaches

in family business research, but recent devel-

opments have been widely ignored. This article

gives a brief overview of these approaches and

models and then introduces the modern theory

of social systems. This theory no longer con-

siders individuals as parts of the system but

assumes that the basic elements of a social sys-

tem are acts of communication. In each system

(family, business, ownership), a specific commu-

nication pattern evolves and each system oper-

ates within a specific functional logic. Families

process relationship communication, businesses

process decision communication, and owner-

ship operates on the basis of legally secured

communication. Each of these three structurally

coupled systems provides a specific context. The

functional logics are context markers and assign

meaning to the communicative acts. To under-

stand how a family business functions, it is

important to understand the concrete functional

logics and the structural coupling of the three

systems.

In addition to principal-agent theory (e.g.,

Schulze, Lubatkin, Dino, & Buchholtz, 2001),

Witten Institute for Family Business (WIFU), Wit-

ten/Herdecke University, Alfred-Herrhausen-Straße 50,

58448 Witten, Germany (schlippe@uni-wh.de).

∗Research Institute for Family Business, Vienna University

of Economics and Business, Augasse 2-6, 1090 Vienna,

Austria.

Key Words: business, family, family business, ownership,

systems theory.

the resource-based view (e.g., Habbershon

& Williams, 1999), and stewardship theory

(e.g., Eddleston & Kellermanns, 2007; for an

overview see Siebels & zu Knyphausen-Aufseß,

2012), systems theory has played an important

role in family business research and teaching

since the early 1980s (Distelberg & Sorenson,

2009; Frank, Lueger, Nos´

e, & Suchy, 2010;

Habbershon, Williams, & MacMillan, 2003;

Pieper & Klein, 2007; Rautiainen, Pihkala, &

Ik¨

avalko, 2012; Simon, 2012; Simon, Wim-

mer, & Groth, 2005; Tagiuri & Davis, 1996;

Wimmer, Domayer, Oswald, & Vater, 2005).

An important reason why systems theory is

attractive is that it promises a comprehensive

understanding of the complexity and specifici-

ties of family businesses, helping to overcome

the fragmentation of the field. Although there is

no one theory of the family firm as yet, family

businesses are usually conceptualized as sys-

tems comprising different subsystems (family,

business, and ownership). This conceptualiza-

tion is broadly accepted (Sharma & Nordqvist,

2008). Approaches employing systems theory

aim at understanding the interactions between

the subsystems and between system and envi-

ronment as well as the dynamics resulting from

these interactions. In addition, different levels of

analysis are distinguished: environment, orga-

nization, group, and individual. Individuals are

seen as the basic level of analysis, and their

mutual interaction is to be analyzed (Pieper &

Klein, 2007).

The term ‘‘system’’ itself is, however,

rarely defined in detail and hardly ever

analyzed critically, resulting in diverse systemic

384 Family Relations 62 (July 2013): 384 – 398

DOI:10.1111/fare.12010