A recent peer-reviewed study published in a top management journal found that family businesses are more supportive environments for female CEOs than businesses not owned by families.
The empirical study — by Remedios Hernández-Linares of the Universidad de Extremadura in Spain, María Concepción López-Fernández of Universidad de Cantabria in Spain, Kimberly Eddleston of Northeastern University and Franz Kellermanns of UNC Charlotte — was published Oct. 31, 2023, in Strategic Management Journal (2023;17:971–1001). The paper is titled, “Learning to be entrepreneurial: Do family firms gain more from female leadership than nonfamily firms?”
The researchers conducted regression analysis on survey data from 322 Spanish small and medium-sized enterprises (SMEs).
The study builds on prior research showing that a business culture that emphasizes learning fosters entrepreneurship, which leads to innovation and growth of the business. To measure entrepreneurial orientation (EO), the researchers asked CEOs to rank their companies' risk taking, innovation, proactiveness, competitiveness and autonomy. To measure learning orientation, they assessed the businesses' commitment to learning, shared vision and open-mindedness, applying a scale commonly used in the field.
“Our study suggests that while women have an advantage in leading family SMEs, gender biases hamper female leaders' ability to transform learning into greater EO in nonfamily SMEs,” the authors concluded.
Research findings
“In order to encourage entrepreneurship, you have to have an organizational culture that supports learning — the willingness to change,” says Eddleston, the Schulze Distinguished Professor of Entrepreneurship and a professor of entrepreneurship and innovation at Northeastern University's D'Amore-McKim School of Business.
The researchers found a correlation between a company's learning orientation and its entrepreneurship. They also found that while entrepreneurial orientation did not vary according to the gender of the CEO, there were significant differences based on the CEO's gender and whether the company was a family business.
“Female-led family SMEs had the strongest positive relationship between open-mindedness and EO, and their positive relationship between commitment to learning and EO was only slightly weaker than that of male-led family SMEs,” the research paper reports. “In contrast, our results suggest that female leaders of nonfamily SMEs experience difficulties in transforming their firm’s commitment to learning and open-mindedness into greater EO; their SMEs had the weakest positive relationship between these learning orientation dimensions and EO.”
“Women in family businesses had the absolute strongest ability to capitalize on open-mindedness — challenging the status quo, challenging biases, open-mindedness to [the notion that] there might be something new, there might be something better, as opposed to just wanting to do things the old way, ‘how we have always done it,'” Eddleston says.
While the women-led businesses that were not family-owned had a learning orientation similar to that of their family-owned counterparts, “they weren't able to capitalize on the learning to foster entrepreneurship,” Eddleston says.
The findings of this study of Spanish businesses apply to U.S. companies as well, Eddleston says. “The cultures of our businesses and how they operate, and their views on entrepreneurship, are similar. Gender stereotypes and roles are very similar in the U.S. and in Europe.”
Culture change
Jennifer Edney, fourth-generation president/CEO of Edney Distributing Co. Inc., says the study results are in line with her experience. Edney Distributing, based in Lakeville, Minn., is a wholesale equipment distributor focusing on the agricultural, lawn and turf maintenance, forestry and light industrial markets.
“I see in my female colleagues more of a focus on vulnerability and on creating psychological safety. I think being able to model those and create those spaces within organizations is really powerful and really important and necessary to creating learning culture,” Edney says.
“If people don't have psychological safety within an organization, they cover up their mistakes; they blame them on other people. They also don't have the security to be a learner and to make mistakes or to try new things. If we don't accept a certain amount of failure, we can't learn. We stay stuck. I think a lot of my female colleagues are really talented and able to create those spaces in a different way than maybe our male colleagues approach that topic.”
Edney does not want employees to view the vision for the future of Edney Distributing as “just Jenni's idea.”
“Previous generations of my family ran the business in a way that was pretty close to the vest,” she says. “The leaders of our company made all the decisions and did not share a lot about results or goals or vision.
“They laid a really strong foundation. But as we continue to grow — adding locations, adding people, adding partners, adding customers — we just outgrew that being an effective way to grow the business. When I was vice president of the company, I looked at the way my dad was running things and really felt like I couldn't be effective managing our business that way.”
Edney says becoming obsolete is one of her biggest fears.
“So I work hard to make sure our processes, our tools, our communication, the products, the way we're selling them, is always changing.
“Within our business, we make sure that we are allowing employees to participate in communities of practice, belong to associations where they can receive continuing education and support from peers. We pay for them to take courses. We make time for them to research topics that are interesting. Our people are so talented, and they come from so many backgrounds and perspectives, that I love to hear what they're thinking about and what they are dreaming about and what their ideas are. It just makes us such a richer organization.”
When twin sisters Katie Rucker and Jenny Dinnen took over their family business, MacKenzie Corp., in 2013, they changed the business model from tactical market research to strategic consulting, adding more clients and expanding the firm's services.
Rucker, MacKenzie's president of operations, says the sisters have established a collaborative culture at the Orange County, Calif.-based firm, which was founded by their father.
“I don't know if that’s a difference between masculine or feminine personality traits, or just who we are as individuals,” Rucker says. “We truly believe in creating an organization where people can show up authentically as themselves, and that comes from the leadership. Jenny and I believed that in order to honor the legacy that our dad had built, we needed to be able to feel truly authentic in our own way of leading this company.
“Our dad was definitely very much on the tactical side of research production. As the market was changing, we were more adaptive to what the market needed, and we lean a lot more heavily now on the strategy side of things, being able to really integrate research into marketing efforts.”
Dinnen, MacKenzie's president of sales and marketing, says the sisters instituted team meetings at the company “from the minute we came in.” That was new to the employees, who tended to keep to themselves — “head-down, doing their work,” as Dinnen puts it.
“I don’t have any problem with going out and saying, ‘I don't know; let's figure this out. Let’s learn together,' ” Dinnen says. “Dad was, ‘Nobody can play in my sandbox.’ Katie and I are, ‘How do we find partners?' And I think the world is moving that way.”
The learning culture the sisters have established at MacKenzie centers on “active listening to what's happening with our clients' needs, what the market needs are and those types of things,” Dinnen says.
Rucker and Dinnen have launched a new venture, Next Gen Collaborative, which provides coaching and personal development services to rising-generation family business members.
“So now we've turned into being a family enterprise as opposed to a family business. And that, I think is an exciting piece,” Dinnen says. “We're ‘intrapreneurs’ at MacKenzie and we're entrepreneurs in launching new businesses. And I hope that family businesses go that direction in the future, turning into family enterprises.”
The family business advantage
The research report posits that women family business CEOs are effective at translating organizational learning into entrepreneurship because family firms “offer an environment that is more conducive to supporting women leaders.”
“The results of our study are important given that they challenge the depiction of entrepreneurship as a male preserve whereby men are assumed to lead more entrepreneurial businesses than women,” the authors write. “Our results also contribute to the literature on women's entrepreneurship by showing how the family firm context provides an environment where women can leverage their strengths, thereby extending research that has found female leaders to have an advantage over their male counterparts in capitalizing on family resources and creating synergies between their family and business.”
“I feel very confident in the results,” Eddleston says. She hopes the paper inspires other investigators to study how women lead family businesses.
“This is just one study showing that the social context of family businesses seems to be really supportive of women leaders. And women leaders can shine there.”