Objectives and the family-firm life cycle at glasshouse holdings in Flanders

In Flanders glasshouse vegetables and ornamental plants are typically produced at family businesses. According to agricultural economics literature at this type of holdings the objectives and long-term firm developments are influenced by the so-called ‘family-firm life cycle’. The objective of the paper is to investigate the impact of the ‘family-firm life cycle’ on the personal and business characteristics and the objectives of the firm manager. The empirical research was performed at 138 glasshouse holdings selected from the Flemish Farm Accountancy Data
Network (FADN), permitting to couple accounting data collected during the period 1996 - 2003 to the results of a questionnaire measuring the importance of several personal and business objectives. Principal component analysis (PCA) of the personal objectives resulted in the dimensions ‘Instrumental objectives’, ‘Expressive objectives’, ‘Familial/social objectives’, ‘Intrinsic objectives’ and ‘General objectives’. For the business objectives the dimensions ‘Financial independence of the firm’, ‘Creativity and innovation’, ‘Growth’, ‘Stabilisation’ and ‘Profitability’ were distinguished. The glasshouse holdings in the different phases of the ‘family-firm life cycle’ show significant differences in age and education level of the firm manager, firm size,
modernity of durable goods, solvency and investment pattern. At many businesses in the growth, consolidation and exit phase the instrumental objective ‘High level of income’ belonged to the top 3 at the start of the business
while at the moment of the interviews ‘Satisfactory income to continue the business’ was a more important objective. The average scores for the ‘Expressive objectives’ are high and show significant differences according
to the phase in the ‘family-firm life cycle’. They are more important at businesses with a long-term perspective. ‘Familial/social objectives’ do have a moderate importance and receive a significantly higher score at holdings with an age of 20 years or older with a successor compared to those in the growth and consolidation phase. ‘Intrinsic objectives’ are important ‘third rank order’ objectives, ranked after the ‘Expressive’ and ‘General’ objectives. The business objective ‘Financial independence’ is important at each stage of the ‘family-firm life cycle’. Firms in the start and growth phase are attaching a higher importance to ‘Productivity’ than firms in the other phases of the ‘family-firm life cycle’. No significant differences among the groups could be detected for the business objective ‘Creativity and innovation’. At many businesses ‘Growth’ belonged to the top 3 at the start of the business, independent of the current phase in the ‘family-firm life cycle’. ‘Survival’ is an important top 3 business objective, especially at the glasshouse holdings in the consolidation and exit phase. At many
glasshouse holdings independent of the phase of the ‘family-firm life cycle’ ‘Profitability’ is classified as one of the three most important business objectives. The insights derived from this research show that the concept of
the ‘family-firm life cycle’ is a useful concept in explaining the objectives and strategic behaviour of small family firms.