The growth and demand is inherently linked to each other and is hence discussed here. Theory states that there is positive correlation between environmental resource profusion and increased levels of EO in family firms (Cruz & Nordqvist, 2012). The growth of the industry leads to an abundance of external resources. Hence, the perceived current and future growth of the industry will be likely influencers of the firms EO levels. We noticed that the growth of the banking industry was perceived to be stable currently and expected to be so in the future as well (Werner, 2014). In terms of traditional banking services the growth appeared to not be changed
drastically in the future (Werner, 2014) (Ronson, 2014). There were indications that there are additional industries growing out of traditional banking, where technology will play a pivotal role (Bayse, 2014) (Groomes, 2014). However, focusing on the core business of the case-company it does not seem to be volatile changes in terms of industry growth in the future. We observed that the interviewees were quick to bring up technology as an area of the future and also where there was room for improvement. However, there was little to no concern with the traditional financial offering that is their bread and butter. This observation is interesting, since a lack of perceived growth will negatively influence the EO of a family firm. The information attained did not at any point bring up the need for renewal of current core offerings such as loans. We argue that if there is no perceived need to innovative the core offering innovative behavior will suffer. The article by Blake & Saleh (1995)
suggested that family firms in industries where there is ambiguity and opportunities perform more innovative than family firms who are in stable environments with fewer opportunities. The case-company exhibited characteristics that lead us to believe that the lack of industry growth negatively effects innovative behavior, and thus EO. The combination between the lack of opportunities to purse and the false sense of security (Groomes, 2014), were factors found to support the argument. Lastly, the observation of attitudes regarding the industry growth was interesting to see and further emphasizes that the external factor of growth influences EO negatively in the family firm.
5.1.4 Relationship with business partners
Relating to the propensities discovered by Carney (2005) is the relationship with business partners. Carney (2005) noticed that family firm’s behave differently towards business partners than do non-family firms. Theory attributes the partner relationship to the existence of the owner manager (Carney, 2005). This is due to the
50 particularistic choosing of partners on behalf of the owner manager and the effective control of the firm and the ability to without concern to a third party dispose, add, or direct firm’s assets. We argue that the conditions at the case-company are different. The relationship with business partners in the case-company is based on long-term, history, and other non-financial criteria (Groomes, 2014) (Lawley, 2014). The case- company customizes solution to a greater extent than do non-family firms in the industry (Everist, 2014). This was attributed to the long-term view of the firm since it takes more time to develop these solutions (Werner, 2014). The business
relationship with the core business has a huge influence on the case-companies strategic inclination (Bayse, 2014). The largest source of independent revenue is generated from this relationship (Lawley, 2014) and the case-company has to adapt to the demands of the core-business. This means that some strategic decisions are based on how it will affect the core-business (Lawley, 2014). Hence, we assume that the EO will be affected by the demands and requirements set by the core-business. Furthermore, we noticed that the owner’s appear to be more interested in the core- business than the case-company (Lawley, 2014) (Bayse, 2014) (Dodd, 2014). Consequently, the case-company is not only a little sister in size but also smaller in terms of involvement from the owner’s (Bayse, 2014). The implication being that the case-company is the firm that has to adapt and not the core-business. Furthermore, this could mean that the case-company cannot take decisions solely based on what is best for them, rather they have to take into account the views of the core-business. This has the implication that the case-company could lose out on opportunities that could be beneficial, because they do not want to jeopardize the relationship with the core business. We argue that the dependencies created from this relationship have implications on EO since the strategy of the firm is affected by the core-business. Hence, we disagree with the view brought forth by Carney (2005), that the owner involvement and the particularistic choosing of external business partners
characterize the relationships.
Rather, the lack of involvement in the business from the owner’s side and their focus on the core-business is the root of the selection of and relationship to partners. Concluding, the relationship between external business partners that have a shared history and origin is neglected in literature. The effect that this relationship has on EO is also not mentioned. We believe that future researchers can benefit by examining relationships and dependencies between family firms that have the same owner, but are separate companies, in order to get a holistic understanding of EO in family firms and what factors that affect the same. Furthermore, we can see that all the above- mentioned environmental factors influence EO in the private family firm. Hence, we argue that the environmental factor is important for predicting EO in a second generation family firm, as proposed by Nordqvist and Cruz (2012).
51 5.2 Organizational factors
The organizational factors are internal to the firm; in this section we discuss their influence on EO.