The exploratory case study performed at Interlub was designed to better understand: how a firm devises a competitive strategy, how leaders contribute to this competitive strategy and how strategic orientations interact in order to enhance the company performance.
The identified model tries to capture Interlub’s competitive strategy, based on what Rene Freudenberg labels as market contact. One possible alternative in the identified model is changing market orientation for more specific customer orientation. The concept of market contact is grounded through the specialized technical consultant and currently is the key resource for the company to enhance its performance. Under the RBV theory, the market contact concept can be seen as a source of competitive advantage.
Regarding the question: how competitive is your company in the market? The average number can be considered high (8.69/10) however, the top management is not completely clear on how the competitiveness of the company can be enhanced. This is not the case for the question: how do you evaluate your company performance? The average number reflects a wider opportunity area (7.63/10), but executives have a clearest landscape on how performance can be improved: better internal communication and clearest KPIs. They also detected a lack of role definition that could be improved.
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Regarding strategic orientations, the evidence shows an agreement with Hakala’s (2011) framework and strategic orientations appear as complementary patterns in consistency with the contingency paradigm.
Implications for theory
As we saw in the case of Interlub, the lack of leadership and a good internal communication can cause problems in the family and in the company. For this reason, preventive measures must be taken to avoid or minimize these problems.
The problem in the family business is that many things can be assumed; there are many rules that are not written and many ideas that the founder has but they are never shared.
For example, when one of the second generation members lets the family know about going to work for a different company, as in Interlub, the father reacts saying: “And why don’t you join our company?” and the answer is: “Because you never told me that you wanted me to work there”.
For this reason, it is important to have an “employment agreement”. This is a document that establishes the conditions for the entry and exit of the family in the company. First at all, the founder must make clear his intention of offering employment to his children in the company, but without forcing the option; at the end the participation is voluntary (a very attractive career must be designed in order to attract the youngest members without being forced). It must also be cleared that the fact of being accepted in the company does not guarantee an executive position in the future, this will depend on the performance. This is a basic part if the company wants to be professionalized: avoid nepotism in any decision. The family can define the professional requirements that the members need in order to be part of the business or be promoted once they are part of the company. For example;
one of the requirements is that the family members must have external experience or a bachelor degree. All these specifications are covered in the employment agreement.
The employment agreement must be redacted before the youngest family members join the company and the opportunities must be described clearly in a way that even the children can understand. Not
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all the children and cousins can be directors; thus it must be clear that the highest positions will be assigned by performance, and not by last name.
This agreement is as important as a contract; it is the tranquility between the current and future employees of the family business. And like any other agreement, it can be modified before the corresponding corporate governance and always under the family consensus. The “employment agreement” can be included in a family protocol, which highlights the rules and minimum requirements to participate in the company.
Implications for practice
Considering the results of this case analysis, some conclusions can be derived for management practice. As we noticed in the results of the interviews, Interlub suffers a lack of role definition which can be an opportunity to improve its competitiveness and performance if this problem is solved.
The definition of roles is a process more than an isolated activity. The definition of profiles goes along with the description of positions; they are two processes that we prefer calling “living processes”, they will allow the constant renewal and updating of the family business. These “living processes” are connected naturally with the creation of organizational charts during different stages of the family business. For example, the first organizational charts will be the ones that integrate the first family members to the company, however, when they integrate the family members it is very common not to describe each one of them, thus it is recommended that before incorporating family members or not family members to the next stage of the family business it is important to make an organizational chart and delimitate the functions that these new members will have in the business.
One of the main and potential benefits of the definition of roles is the prevention of conflicts that can damage the company and the family.
The company must be presented as a place with many challenges and growth opportunities; the children must know about the business possibilities in a globalized world. At home the family must talk about the joy and achievements in the company. This is important and sometimes we read that several authors “forbid” the company owners to talk about business issues at home, but this is not
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appropriate; what it cannot be done is to take problems to home, this must be restricted to the labor space, but definitely the successes must be shared during family meals and toast for them (non-alcoholic beverages) with the purpose of sharing that energy and plenitude that will help the family communication.