Family firms as an area of research has been plagued by at least one nagging question hampering its growth – what really is a family business? For over half a century scholars have made numerous attempts to take up this conceptual challenge, with a majority establishing dichotomous definitions, by differentiating between family and non-family firms (e.g., Chua, Chrisman, and Sharma, 1999). While homogeneity among family businesses does not exist (Chua, Chrisman, Steier, and Rau, 2012; The Economist, 2015), there has been a tendency to downplay family firm heterogeneity (Nordqvist, Sharma, and Chirico, 2014), even though “a theory of the family firm must be able to differentiate family firms from nonfamily firms as well as explain variations among family businesses” (Chrisman, Chua, Pearson, and Barnett, 2012, p. 267). Responding to a recognition that family firms need to be compared with each other (Massis, Kotlar, Chua, and Chrisman, 2014), important contributions have been made over the last twenty years to establish categories or typologies of family business (e.g., Astrachan, Klein, and Smyrnios, 2002; Dyer, 2006; Shanker and Astrachan, 1996; Westhead and Howorth, 2007).

These classification systems have contributed to bringing greater clarity to the field, and have introduced greater nuances in our understanding of what a family business is. However, for researchers to tap accumulated knowledge and for practitioners to know which of the research findings most apply to them, it is necessary to reflect on the heterogeneity of the family business concept (Chrisman, Sharma, Steier, and Chua, 2013; Chua et al., 2012;). Similarly, it is necessary to identify essential definitional criteria that help scholars to find effective ways to classify these ubiquitous firms (Sharma and Nordqvist, 2008), which also would help theory to advance, by making both the necessary replications (Eden, 2002) and the comparisons among studies easier to perform.

Our research is a response to this growing chorus demanding to cover these needs, and consequently is born with a twofold objective. First, considering that an effective classification system must be based on the characteristics of the entities being classified (Darwin, 1859), our first objective is to identify and comprehensively review extant classification systems of family firms by analyzing whether such systems are based on the characteristics of this type of firms. Secondly, our objective is to study whether such classification systems have been later applied empirically, and to analyze whether they constitute operative and effective ways to classify family firms. To reach these research objectives, first we critically review classification systems found in the literature, and, then, we compare these classifications with major conceptual elements in family firm definition, identified by employing quantitative methods. Such methods enable the aggregation of large amounts of bibliographic data, and are deemed to be objective (Vogel and Güttel, 2013). Finally, considering the results of such comparisons, as well as characteristics and empirical replication of all classification systems identified, we propose that the main elements of the definitional network should be employed to build a family firm taxonomy.

This article makes at least three contributions to the literature. First, our integrative analysis permits a greater reflection on the debate between family business and non-family business, on the one hand, and the categorization of family businesses on the other hand. Second, we review classification systems of family firms as well as definitions which appear in the academic literature, by systematizing the more relevant publications dealing with classifications of family firms. That is, we provide an integrative guide, which may help scholars to quickly identify both the core elements required to define a family firm, and the literature relevant on the classifications of these type of firms. Third, we identify the key attributes or core conceptual elements for developing an optimal classification system and we propose future research lines that enable researchers to reconcile inconsistent and conflicting research findings.

This paper is structured as follows. After this introduction, we briefly explain the evolution of the family firm literature, from a dichotomist view, and we then move towards the recognition of the heterogeneity of family firm. We then proceed to explain the methodology used in selecting the classification systems analyzed, and for extracting the core conceptual elements from more than 250 definitions of family firm. Next, we discuss the main findings of our integrated analysis. The last section presents the main conclusions and summarizes the limitations as well as pointing towards future areas of work.

Since its inception, scholars of the family business field have struggled to define its boundaries and lay out the source of the field's distinctiveness (Zahra and Sharma, 2004). A review of the literature reveals that the field has evolved from an earlier proclivity of comparing family versus non-family firms by emphasizing the commonalities, towards an acceptance that homogeneity among family firms does not exist (Chua et al., 2012). Consequently, we find two strands in the literature, one tending towards the comparison between family and non-family firms, and the other emphasizing the differentiation among types of family firms.

In the first strand, some scholars have defined family businesses based on a single criterion, while others employed two or more criteria. In the former, albeit with certain nuances, two main definitional dimensions emerge: “ownership” and “management”. Among scholars who have gone beyond the mono-criterion definitions, a number of them have also suggesting combining “ownership” and “management” dimensions (e.g., Choi, Zahra, Yoshikawa, and Han, 2015). However some have relied on, or added on to, other criteria, such as the number of generations of family owners (e.g., Kellermanns, Eddleston, Sarathy, and Murphy, 2012); intentions to transfer the business to the next generation (e.g., Miller and Le Breton-Miller, 2003); employment of family members in the business (e.g., Westhead and Howorth, 2006); or the self-perception of the company as a family business (Casillas, Moreno, and Barbero, 2010).

Scholars employing multiple criteria for distinguishing family from non-family businesses, explicitly or implicitly acknowledge the existence of heterogeneity among family enterprises. Variety necessitates a way of classifying the objects of study (Davis, 2009) and finding ways to distinguish between different categories of family firms remains an important research gap (Chrisman and Patel, 2012; Chrisman, Sharma, and Taggar, 2007). It is precisely the need to embrace such heterogeneity that has led to the creation of different classification systems in the literature (e.g., Astrachan et al., 2002; Dyer, 2006; Shanker and Astrachan, 1996; Westhead and Howorth, 2007). Therefore, a review of the main findings of this research stream becomes necessary in order to answer the three research questions: Are the existing classification systems based on the main characteristics of the family firms? Have previous classification systems of family firms been replicated in order to accumulate evidence? Are the existing classification systems operative and effective ways to classify family firms? To be able to answer these research questions we first identify the main classification systems developed in academic literature, including not only taxonomies or classification schemes that categorize family firms in mutually exclusive and exhaustive sets (Chrisman, Hofer, and Boulton, 1988; Doty and Glick, 1994), but any typology or classification system developed for capturing the heterogeneity of family firms. Then we proceed to identify the conceptual elements in the family firm definition and we compare the classification systems identified with the conceptual element extracted. Finally we discuss the three questions above.

Using the above multi-stage methodology, we finally identify 15 classifications systems (typologies, taxonomies, classification schemes or any other classification systems included), summarized in Table 2. These classifications have been grouped into two groups. The first includes those works that have proposed a continuous index for reflecting the heterogeneity of family firms (Astrachan et al., 2002; Uhlaner, 2005). These are multidimensional classifications that can be utilized without necessarily using an explicit definition of family firm, with the scale itself used to demonstrate the degree to which a family is involved in or influences the business. The second group comprises all classification systems that have categorized family firms, with the number of categories ranging from three (Basco and Pérez, 2009; Birley, Ng, and Godfrey, 1999; Labaki, Michael-Tsabari, and Zachary, 2013; Shanker and Astrachan, 1996) to thirty-two categories (García-Castro and Sharma, 2011).

This second group adopted very different approaches. First, there are two works (Shanker and Astrachan, 1996; Westhead and Cowling, 1998) that, by employing different definitions of family business, empirically research the impact of different definitions employed by scholars on the statistics related to the family business contribution to economy, in turn leading towards the reflection of the heterogeneity of this type of firms. Second, considering that performance is a central theme in business and management studies (Kim and Gao, 2013), numerous scholars have researched if family firms and non-family firms perform differently, finding that there are no significant differences in business performance between both types of firms (Carney, Van Essen, Gedajlovic, and Heugens, 2015). Instead, this meta-analysis confirmed that family firms behave different from non-family firms in terms of fewer RandD investment, lower level of debt or less international diversification and they suggest that family firms are able to compensate these deficiencies by a more efficient transformation of inputs in outputs (Carney et al., 2015). In this line, Dyer (2006) had suggested that the question about whether family businesses perform better, must be replaced by another question: what type of family business leads to higher performance? To answer this question, different classification systems have been proposed in the literature (Basco and Pérez, 2009; Diéguez-Soto, López-Delgado, and Rojo-Ramírez, 2015; Dyer, 2006; García-Castro and Sharma, 2011; Miller, Minichilli, and Corbetta, 2013). Within this second approach, the pioneering work is that of Dyer (2006), who based his study on agency theories and a resource-based view to explore the relationships between family and firm performance. He concluded that there are several different types of family firms, and that some of them have unique assets that allow them to compete successfully, while others incur in significant agency cost, which may cause them to falter in the marketplace. Three of the five research outputs included in this second approach have classified family firms exclusively, whereas Diéguez-Soto, López-Delgado, and Rojo-Ramírez (2015), and García-Castro and Sharma (2011) classified both family and non-family firms. Third, we find a group of authors (Basco and Pérez, 2009; Birley et al., 1999; Labaki et al., 2013) that includes in their classification systems emotional or affective factors. Fourth, Dekker, Lybaert, Steijvers, Depaire and Mercken (2012), and Nordqvist et al. (2014) established their classification systems in order to study the professionalization construct, rendering its application difficult with other research aims. Finally, Corbetta (1995) employs his classification of Italian family firms to analyze its development.

An analysis from the definitions retrieved from the literature yields eight conceptual elements, which help in defining a firm as being family: continuity, culture, employ, governance, management, ownership, self-definition, and strategy. Given that any workable taxonomy or classification system should be built with the fewest number of taxa without sacrificing the essential classification attributes (Chrisman et al., 1988), and that most scholars have to work with surveys, we consider that the inclusion of eight conceptual elements would imply inclusion of a significant number of items in the questionnaire to classify family firms, requiring the inclusion of many firms in the sample. That is, the inclusion of these eight conceptual elements would add an unnecessary complexity, rendering any taxonomy difficult to apply.

Fig. 1 reveals the network structure of the definition of the family business concept and Table 3 orders all conceptual elements according to their centrality index. Considering that in Fig. 1, the size and variation in the vertex colour are related to the position in the network (darker colours imply a higher degree of centrality), we identify three conceptual elements that can be considered as the basis for the creation and the rise of the theoretical corpus of the family business field or as core conceptual elements, namely “ownership”, “management”, and “continuity”. In addition, these core conceptual elements have the maximum centrality within the network (Table 3), confirming that, overall, researchers consider these three core conceptual elements as necessary conditions to define a business as family. To employ “ownership”, “management”, and “continuity” to distinguish between family and non-family firms allows scholars to include in their family firm definition elements of both the involvement approach and the essence approach (Chrisman, Chua, & Sharma, 2005).

Figure 1.

Structure of the definition of the family business concept.

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Comparing these core conceptual elements with the extant typologies (see Table 4), we can answer our first question: Are the existing classification systems based on the main characteristics of the family firms? Six of the fifteen classification systems (Astrachan et al., 2002; Birley et al., 1999; García-Castro and Sharma, 2011; Shanker and Astrachan, 1996; Uhlaner, 2005; Westhead and Cowling, 1998) jointly included, at least, the three core conceptual elements that have maximum centrality in the definitional network (“ownership”, “management” and “continuity”). But in all these cases, authors include more criteria for establishing their classifications systems, adding complexity For instance, Astrachan et al. (2002) and Uhlaner (2005) added to the three central core conceptual elements, “strategy” as a fourth definitional criteria. Furthermore, “ownership” and “management” were the only two central core conceptual elements included in other four works (Corbetta, 1995; Diéguez-Soto et al., 2015; Nordqvist et al., 2014; Westhead and Howorth, 2007). While Dekker and colleagues’ classification (2012), and Basco and Perez’ (2009) study employ only a central core conceptual element: “management” and “continuity” respectively.

Others conceptual elements broadly considered by the classification systems of family firms are “strategy” (Basco and Pérez, 2009; Dekker, Lybaert, Steijvers, Depaire, and Mercken, 2012; Shanker and Astrachan, 1996; Uhlaner, 2005; Westhead and Howorth, 2007) and “governance” (Astrachan et al., 2002; Basco and Pérez, 2009; Corbetta, 1995; Dekker et al., 2012; García-Castro and Sharma, 2011), two elements that can be considered as expression of the family control on the company. The rest of the elements included in the network (Fig. 1) have only been included or considered in a testimonial way. In fact, we find two taxonomies that do not employ any of the eight conceptual elements identified from the analyses of definitions, and instead focus on emotional aspects linked to the family (Dyer, 2006; Labaki et al., 2013), components of the tandem “family-firm” that have been scantly researched, perhaps due to many scholars of the field having a background in business or management.

In short, the three core conceptual elements with a higher degree of centrality within the definitional network have been the more used criteria for classifying family firms. However, there are two highly used criteria with a lower level of centrality, (“governance” and “strategy”), which means that researchers proposing classification systems have decided that they are relevant for many reasons that range from the availability of data to relevance as long as they reflect effective power/control of the company. The three remaining conceptual elements (“employ”, “self-definition, and “culture”) have been only residually employed by the classifications reviewed. The scant presence of “self-definition” is especially curious since this criterion has an important role in definitions as long as it reflects the heterogeneity of feelings, vision, or familiness of family firms collected by the “essence approach” in defining family firms. The scant presence of “self-definition” (only a 10% of classification systems identified have taken into account this criteria), a criterion with an important role in definitions as long as it reflects the heterogeneity of feelings, vision, or familiness of family firms collected by the “essence approach” may be explained because is more oriented towards the identification of family firms vs non-family firms, but it is considered less appropriate for addressing its heterogeneity.

Once we have studied the criteria or dimensions considered by the extant classification systems and considering that “replication is a key criterion by which to judge the robustness of an instrument” (Klein, Astrachan, and Smyrnios, 2005, p. 323), we investigated which of the extant classification systems have been applied by other scholars, thus, addressing our second question. After a review of those articles that cited each taxonomy, it seems clear that the classification system most employed by scholars is the F-PEC scale (Astrachan et al., 2002), which has been validated by several researchers (e.g., Holt, Rutherford, and Kuratko, 2010; Klein et al., 2005; Rutherford, Kuratko, and Holt, 2008), but mostly with the main purpose of examining the validity and reliability of the F-PEC scale, and not for analyzing other issues. The F-PEC scale is a multidimensional construct that has been validated and used in studies, allowing “the establishment of more nuanced differences at the cost of added complexity” (Wright and Kellermanns, 2011, p. 188). It also avoids the use of a Boolean yes/no type definition of the family firm by developing a series of instruments allowing researchers to position firms according to three key variables: power, experience and culture (Anderson, Jack, and Dood, 2005). However, the F-PEC scale also has some weaknesses. On the one hand, there appear to be ambiguous items in the culture subscale that could be omitted (Cliff and Jennings, 2005). On the other hand, the F-PEC scale fails to capture the essence of family businesses (Rutherford et al., 2008). Finally, while some scholars (Anderson et al., 2005) affirm that the F-PEC scale permits robust comparisons across studies and samples. In contrast to these scholars, we consider, in line with Chrisman et al. (1988, p. 417), that one guiding principle that has to follow any typology to become a good classification is parsimony, where “researchers are able to group similar entities and differentiate them from dissimilar entities with the fewest number of taxa possible without undue sacrifice of other essential classification attributes”. Therefore, we consider that the F-PEC scale, as well as the other continuous scale (Uhlaner, 2005), does not respect the parsimony principle, rendering comparisons across studies difficult.

Others scales have been empirically used, but only in limited contexts and intermittently (Diéguez-Soto et al., 2015; García-Castro and Sharma, 2011). The Diéguez-Soto et al.’s (2015) classification was empirically validated by their authors, and later was slightly modified and applied by López-Delgado and Diéguez-Soto (2015), in both cases with Spanish firms. The first of these scales (Diéguez-Soto et al., 2015) takes advantage of the Spanish custom of giving children two surnames, one from each parent; but since this custom is not followed in other countries (for example in English-speaking countries), there is a limitation for its applications in other contexts. Consequently it also constitutes a handicap for the replication of the scale, because common factors emerging when heterogeneous samples (for example, from different regions) are used to develop measures tend to provide a more complete understanding of any phenomenon (Sutton, 1987). The García-Castro and Sharma's (2011) classification was later applied by García-Castro and Aguilera (2014). Although this scale (García-Castro and Sharma, 2011) proposed 32 possible configurations of family firms, both García-Castro and Sharma (2011), and García-Castro and Aguilera (2014) used a dataset of 6611 publicly listed and major unlisted companies from 46 countries, and they only found 24 of these configurations with at least one observation, while the number of combinations found with at least 1% of cases in the sample (66 firms) decreases to 11. In our view, and in line with the idea of parsimony expressed by Chrisman et al. (1988), the definitions or categories differing only slightly make it difficult not only to compare across research, but also to integrate theory (Astrachan et al., 2002). Hence we consider that the taxonomy of García-Castro and Sharma (2011) is difficult to apply and replicate, and therefore, makes knowledge accumulation difficult.

Regarding the classification of Shanker and Astrachan (1996), called the “bull's eye model” and using demographic parameters, we have only found one particular development of this classification system (Anderson et al., 2005), that consisted in extending the bull's-eye model to incorporate Birley et al.’s typology (1999). None of the remaining scales identified has been employed in later studies rendering the accumulation of knowledge a very challenging task. In summary, most of the scales have been never employed by other scholars, while the remaining one has been only scarcely replicated preventing the accumulation of knowledge.

For accumulating knowledge it is important to find effective ways to classify family firms (Sharma and Nordqvist, 2008) and in addressing the third research question, our review shows that, hitherto none of the extant classification systems appearing in the literature has been accepted or used by the scientific community, with the only exception being F-PEC (Astrachan et al., 2002). However, our research reflects that family firm scholars have not found an optimal classification system yet, despite the fact that such a system seems to be more and more necessary, since some of inconsistencies found in the family firm research could be justified by its heterogeneity. Therefore, with a mind towards aiding researchers it is necessary to simplify the number of types of family firms (Davis, 2009; Dekker et al., 2012) in order to harness the main strength of the categorization: its simplicity (Snyder, Witell, Gustafsson, Fombelle, and Kristensson, 2016). Given that the existing classification systems do not seem to be operative and effective ways to classify family firms, we encourage scholars to undertake further research along these lines because developing and using categorizations allow for useful heuristics and provide a systematic basis for comparison and operationalization (Smith, 2002; Snyder et al., 2016).

Since its inception, the family business field has tried to arrive at some sort of consensus on what defines or characterizes a family firm, by comparing family businesses with non-family businesses. However, in recent years, the academic community has increasingly moved from viewing family firms as homogeneous entities to considering them as heterogeneous (e.g., Dekker et al., 2012; Westhead and Howorth, 2007). This heterogeneity of family businesses (e.g., Chua et al., 2012; Nordqvist et al., 2014) has rendered it necessary to compare family firms among themselves (Westhead and Howorth, 2007). Consequently, researchers have tried to identify different categories or types of family firms (De Massis, Kotlar, Chua, and Chrisman, 2014; Westhead and Howorth, 2007).

It has been held that the recognition and utilization of the types of family firms provides fresh and contextualized insights into the multi-faceted family firm phenomenon (Howorth, Rose, Hamilton, and Westhead, 2010), requiring an identification of all the important dimensions by which they may vary from each other (Chrisman, Chua, and Sharma, 2003). What emerges from our analysis of 258 definitions appearing in the literature (Hernández-Linares et al., 2014; Sarkar et al., 2014), is a necessary condition for distinguishing a family from a non-family business implied by the triad “ownership”, “management”, and “continuity”. However, if we compare this result with existing typologies, we find that while six classifications systems included these three core conceptual elements, none have taken into account this triad for establishing the difference between family firms and non-family firms. In this sense, Dyer (2003) argued that regardless of which definition is chosen, researchers should clearly set up what a family firm is and use multiple definitions to determine varying degrees of familiness. In line with him, we encourage scholars to establish a clear definition of the family firm as the first step for an optimal and useful classification system, and more concretely to establish this definition over the basis of the core conceptual elements “ownership”, “management” and “continuity”.

From our analysis eight conceptual elements emerged, but not all of them need to be considered for developing an optimal classification system along the lines suggested by Chrisman et al. (1988). Yet, while Dekker et al. (2012) stated that it is not possible to encompass all family firm-related dimensions into a single and workable typology, we believe that is possible to encompass all main dimensions (in the form of the three core conceptual elements that our analysis identified: “ownership”, “management”, and “continuity”) into a workable taxonomy, and that this should be based on the key characteristics captured by the field's definitions.

We also consider, along the lines of Bock (1973, p. 379), that any classification system has to provide the foundation for all comparative studies, with “the best classification being the one that permits the most useful comparative investigation”. Thus one guiding principle for any taxonomy to become a useful classification is parsimony (Chrisman et al., 1988), and definitions or categories that differ only slightly make it difficult to integrate theory (Astrachan et al., 2002). Therefore, to get a useful classification, we would recommend future taxonomies establish a reduced number of categories by using a hierarchical structure, since this type of taxonomy facilitates information retrieval, making the classifications system easy to use, facilitating comparative research because generalization can be developed about each categorical level (Chrisman et al., 1988).

Finally, we consider that a useful classification system of family firms should be established with a general purpose, oriented to the study of a specific topic within of the field (e.g., professionalization), in order to make comparison among studies easier. With the purpose of finding a general classification of family firms that can be applied to all contexts, we encourage future classification systems to advance the inclusion of the missing variable of the tandem “family firm” (Dyer, 2003): the family; opting for an inclusive definition, applicable to any national or cultural context. Specifically, we suggest that the definition of family be adopted from the self-perception perspective, considering as “family” the group of people that perceives itself as a family, instead as “a group linked by blood or marriage” (Chrisman and Patel, 2012; Villalonga and Amit, 2006). Additionally, considering that the scarcity of investigation on the family side of the family-firm may be due to the fact that most of the researchers of this field have a business or management background, we call for increasing multi-disciplinary studies in this area, as well as for including in family firm research more scholars with different backgrounds, such as psychology or sociology, among others.

Our work is not exempt from some limitations. First, we have selected definitions included in this analysis based to the relevance of the studies in which definitions appeared, which was measured by the citation index per year. However, this quantitative approach does not capture the intention the authors had in referring to other works and, hence, citation cannot be considered a synonym for importance or relevance (Vogel and Güttel, 2013). Second, our study allows the inspection of the nature and structure of relationships among the conceptual elements, but it is difficult to make detailed inferences from it.

Despite these limitations, our investigation provides opportunities for future research. Studies comparing results of the use of different categories of family firms will help transform research results into tangible and directly applicable practices for policy-makers and professional dealing with these firms. Therefore, we encourage scholars to build a taxonomy or classification of family business based on the key characteristics of the entities classified, creating a general, parsimonious and hierarchical classification, and not specific to any certain time period. For that, we firstly propose establishing a clear distinction between family businesses and non-family business, and then to classify family firms in a reduced number of categories, considering all definitional criteria identified in this research.

The authors have no conflicts of interest to declare.