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IntroductionThe purpose of this paper is to begin developinga theoretical basis for the exposition of the rela-tionships among individual family firm behav-iors, the advantages of being family-controlled,and their distinctive performance capabilities.The paper is based on research underway at theFamily-Controlled Corporation Program at theWharton School of the University of Pennsyl-vania, conducted in collaboration with WhartonsSnider Entrepreneurial Research Center. Priorstudies conducted at the Snider EntrepreneurialResearch Center developed a research model thatlinks indicators of future competitive advantageat the firm level to behaviors at individual andgroup levels (Levinthal & Myatt, 1994; McGrath,Tsai, Venkataraman, & MacMillan, 1996;McGrath, MacMillan, & Venkatraman, 1995).The Family-Controlled Corporation Program isnow applying similar research models to theanalysis of medium and large family businessesto better understand their unique potential forcompetitive advantage and how this relates tosubsequent performance.

As the research program got underway it

became clear that there was no theory on whichto base the research. After considerable investi-gation we turned to the strategy arena and theResource-Based View of the Firm (RBV) for ex-plaining sources of advantage for family-con-trolled corporations. In this paper we explicateour approach, in the hope that it will establish adirection for others studying the performance ca-pabilities of family firms. Progress in this direc-tion would create a theoretical foundation forconducting firm-level performance research inthe future. It would also provide a disciplinaryframework for analyzing the competitive advan-tage claims currently found in the family busi-ness literature and would open a door into thestrategy arena for researchers from the field offamily business.

As Wortman (1994) pointed out, there is nounifying paradigm for research and practice inthe field of family business studies. Scholarstrained in psychology, sociology, law, account-ing, economics, organizational behavior, strate-gic management, entrepreneurship, and numer-ous other disciplines have conducted some re-search on family firms. The varied approaches

A Resource-Based Framework forAssessing the Strategic Advantages ofFamily Firms

Timothy G. Habbershon, Mary L. Williams

The Resource-Based View (RBV) of competitive advantage provides a theoretical framework fromthe field of strategic management for assessing the competitive advantages of family firms. TheRBV isolates idiosyncratic resources that are complex, intangible, and dynamic within a particularfirm. The bundle of resources that are distinctive to a firm as a result of family involvement areidentified as the familiness of the firm. This approach provides a research and practice methodfor assessing the specific behavioral and social phenomena within a firm that provide an advantage.Using a familiness model for assessing competitive advantage overcomes many of the problemsassociated with the generic claim that family companies have an advantage over nonfamily compa-nies. It also provides a unified systems perspective of family firm performance.

FAMILY BUSINESS REVIEW, vol. XII, no. 1, March 1999 Family Firm Institute, Inc.

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used to analyze family businesses are the resultof this diversity among disciplines, as well as thediversity that exists within the disciplines. Whilethis multidisciplinary effort has added breadthto the field as a whole, the lack of a cohesive struc-ture and unified methodology has hinderedprogress in more deeply understanding familyfirms.

This limited progress is particularly evidentwhen examining the family business performanceor advantage literature. The literature is repletewith largely anecdotal descriptions of the uniquecharacteristics and processes of family firms andclaims of how this uniqueness can lead to a com-petitive advantage. But, with few exceptions (As-trachan & Kolenko, 1994), these claims do notdirectly link the descriptive attributes of family-controlled firms to specific firm performancevariables. Conversely, those studies that have uti-lized performance variables and found that a de-fined category of family firms has an advantage

(McConaughy, Walker, Henderson, & Mishra,1995) have not linked those advantages to action-able antecedents (i.e., the descriptive attributesmentioned in other studies).

Wortman (1994) presented a research typol-ogy for the field of family business, outlining thepotential relationships among the macro- andmicro-environments, organizational contexts,and content issues. He delineated major topicalareas appropriate for study within the field offamily business, including our current researchinterest firm performance. Although Wortmansefforts have advanced the field of family businessto the point of having a suggested research ty-pology, they nevertheless fell short of suggestingan organizational framework on which to ana-lyze the uniqueness of family firms and their per-formance in the economic arena. There is a richvein of performance literature in which to searchfor an organizing approach (industrial organiza-tional models, neoclassical economics, transac-

Author(s)

Barney, 1986

Erez, Earley, and Hulin, 1985

Koch and McGrath, 1996

Levinthal and Myatt, 1994

Luo, 1997

McGrath et al., 1996

Miller and Shamsie, 1996

Knez and Camerer, 1994

Table 1. Research Connecting Organizational Processes toFirm Performance

Process/Asset

A firms organizational culture

Participative goal setting and individual goalacceptance

Process by which human resources are managed

Relational factors such as the duration and intensityof ongoing alliances

The process and criteria used for partner selectionin international joint ventures

Innovation processes used by new ventures

Ownership of knowledge-based resources and theirenvironments

Ability to take advantage of superior decision-making skills and their relationship to the sharedbeliefs structure of individuals within the firm

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tion and agency theory, organizational theory,organizational behavior, strategic management),but the RBV uniquely synthesizes many of theother approaches and provides a framework in-tended to link firm-level antecedents to perfor-mance outcomes.

The RBV of competitive advantage appliesthe lens of analysis to the firm or business unitand isolates specific resources that are complex,intangible, and dynamic. Because family firmshave been described as unusually complex, dy-namic, and rich in intangible resources, the RBVgives researchers in the field of family businessan appropriate means to analyze them. Likewise,family firm advantages are most often describedas specific to a given family and business. In theRBV, the bundle of resources that holds the po-tential for performance advantage is identifiedas idiosyncratic to a particular firm in a particu-lar environment. Additionally, many of the ad-vantages family firms are said to possess arefound in their family and organizational pro-cesses. Numerous research examples within theRBV literature find linkages between firm pro-cesses and firm performance. Table 1 provides asampling of the literature with specific organiza-tional processes or firm assets that have beenlinked to firm performance.

In short, the RBV provides an establishedtheoretical model to analyze the relationshipsamong firm-level processes, assets, strategy, per-formance, and sustainable competitive advantagefor the family firm. It becomes a framework forevaluating the multidisciplinary performance andadvantage literature already in the field and al-lows for the inclusion of all potentially idiosyn-cratic firm-level characteristics and capabilitiesin the analysis. Because the RBV is found withinthe demonstrated discipline of strategic manage-ment, the framework provides the field of familybusiness with a disciplinary approach to familyfirm performance and advantage. It also createsan opportunity for strategy researchers to fur-ther investigate the unique essence of the familystructure of business organization as a distinctform of enterprise and for family business re-searchers to publish in the field of strategy.

This article will, therefore, demonstrate howthe RBV is a proper framework for understand-ing the competitive advantages of family firms.After a review of the literature on family firmperformance capabilities, we outline problemswith the current approach and then describe theRBV from the strategic management literatureand compare its assumptions to other models.This section is intended to lay a foundationalunderstanding of the RBV so that the frameworkcan then be applied to the study of family firmadvantage. We conclude with implications forfamily firm research and practice and interactwith the work currently being conducted atWhartons Family-Controlled Corporation Pro-gram using the RBV framework.

Performance Capabilities ofFamily FirmsOver the past 15 years, the field of family busi-ness studies has evolved significantly in under-standing how family firms are different fromother businesses in both their organizationalcomposition and performance capabilities. No-table contributions have been made in identify-ing the systemic nature of family firm behavior(Davis & Stern, 1980; Lansberg, 1983; Whiteside& Brown, 1991), in describing the psychologicaland process aspects of systems interactions(Ackoff, 1994a, 1994b), in delineating the dualch