The ‘family-firm life’ cycle and its impact on sustainable development in glasshouse horticulture.

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 personal and business characteristics, objectives and sustainable development of the glasshouse holdings. As sustainable horticulture integrates the three P’s (People, Planet, Profit), special attention is paid to the environmental, social and economic aspects.
The empirical research was performed at 138 glasshouse holdings selected from the Flemish Farm Accountancy Data Network (FADN), permitting to couple accounting data to the results of a questionnaire measuring the importance of several objectives and management aspects by the firm manager. 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 hypothesis that the life cycle of the firm manager parallels the life cycle of the family firm can be confirmed by the results. 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.
The results indicate that the emphasis on various objectives is changing during the firm manager’s life time. At the start of the business the firm managers place a high priority on ‘high level of income’ and ‘growth’. During the exit phase these objectives are replaced by the less ambitious objective ‘survival’. Most of the expressive objectives such as ‘job satisfaction’, ‘self-fulfilment’ and ‘personal independence’ are more important at businesses with a long term perspective. In general, intrinsic objectives, covering the aspects of craftsmanship, receive a high average score, although at the older businesses they seem to be more important. Firms in the start and growth phase are attaching a higher importance to ‘productivity’ than in the other phases. No significant differences among the groups could be detected for the business objectives ‘creativity and innovation’ and ‘profitability’. At the holdings in the later stages of the family-firm life cycle the availability of a successor has an important influence.
With regard to the environmental aspects the results show that the phase of the ‘family-firm life cycle’ has a significant influence on the quality of environmental management aspects, such as external comparison of the use of energy, fertilizers and pesticides. Human resource management (HRM) is an important aspect of the social dimension of sustainable development. Firm managers in the start phase declare to attach a higher importance to HRM, have more performance interviews with the personnel, a better rewarding policy and are more concerned about improving the labour conditions than those in the other phases of the ‘family-firm life cycle’. However involvement of personnel in decision making is still low, independent of the phase in the ‘family-firm life cycle’. With regard to the economic aspects no significant influence of the phase in the ‘family- firm life cycle’ on the income obtained per familial labour unit could be observed.
The insights derived from this research have important implications both for research and practice. They can enable glasshouse growers and advisers to take and/or support correct decisions and may help policy makers to differentiate on the base of the family-firm life cycle.