The dual systems approach is based on general systems theory and the usually independent systems of the family and business as overlapping and interconnected systems (Adendorff, 2004; Zahra & Sharma, 2004; Farrington, 2009; Venter, 2009). The family and business systems are separate entities with their own norms, values, rules, structures and goals (Farrington, 2009; Venter, 2009), and the overlap that occurs in family businesses can be the source of synergies leading to competitive advantages or destructive conflict (Degadt, 2003; Cullen, 2007; Litz, 2008; Farrington, 2009; Venter, 2009).
The family system is emotionally based with deep emotional connections between individuals (Cullen, 2007; Farrington, 2009; Venter, 2009; Pieper, 2010) and is motivated by biological imperatives and social norms (Adendorff, 2004; Pieper, 2010). Family systems also tend to be inward looking, placing a high value on loyalty, care, values, nurturing (Farrington, 2009; Venter, 2009) and trust (Sundaramurthy, 2008; Pieper; 2010). Family systems also have a tendency to be risk averse, operating to maintain stability, continuity and harmony (Cullen, 2007; Astrachan & Jaskiewicz, 2008; Farrington, 2009; Venter, 2009).
Business systems are based on task accomplishment with an emphasis on performance and results (Cullen, 2007; Venter, 2009). Their focus is outward, and in contrast to family systems, embrace change in order to survive. Business systems can be divided into subsystems such as management, ownership, external networks and employees (Farrington, 2009).
Each individual involved in a family business has their own set of values, goals and roles that they fulfil, exerting a relative degree of influence on the dual systems. These roles can involve participation in either, or, or both systems simultaneously, and include the descriptions such as the founder, owner-manager, spouse (owner’s or employee’s), husband and wife teams (copreneurial teams), children, in-laws, multi-family ownership and non-family employees (Farrington, 2009).
Key attributes of the overlapping systems are the simultaneous roles of individual members, shared identity, emotional involvement, mutual awareness and the symbolism attached to the business for the family (Adendorff, 2004; Reay, 2009; Pieper, 2010).
The dual systems approach highlights the need to foster synergy in the goals and actions of the two systems to ensure survival and growth. A lack of balance between the two systems can result in both systems suffering. An overemphasis on the business at the expense of the family system erodes family communication, identity and loyalty, which in time affects emotional cohesion within both systems. Similarly, an overemphasis on the family will diminish business communications, relations, decision- making and strategic efficiency, effectiveness and options, as well as impacting the legitimacy of performance appraisals (Cullen, 2007).
Conflicts arise from the differing goals, values and rules of the family and business systems as well as from differing individual perspectives and a lack of communication regarding the purpose of the business (Smyrnios et al, 2003; Farrington, 2009; Pieper,
2010). Conflict is described as discrepancies, incompatible wishes or irreconcilable desires between involved parties. Conflict types are personal or relationship, substantive or task and procedural or process conflicts (Sharma, 2004; Farrington, 2009).
The differing and sometimes conflicting roles and responsibilities of family members in each system is also a source of potential conflict (Smyrnios et al, 2003; Cullen, 2007; Pieper, 2010). The competition for the time and resources of family members imposed by the two systems can put a strain on both familial and business relations as well as individual members (Degadt, 2003; Cullen, 2007), and family cohesion is cited as having a moderating on work-family conflicts (Smyrnios et al, 2003).
Conflicts are not only limited to family members involved but can also arise between family and non-family employees when family employees are favoured for advancement opportunities even when they lack the pre-requisite skills to perform the functions of the appointment adequately (Cullen, 2007).
Families that effectively resolve conflict have a deeper understanding of each other and the resolution of conflict is likely to influence business performance financially and in non-financial terms (Sharma, 2004; Farrington, 2009).
Five strategies for managing conflict cited are competition, collaboration, compromise, accommodation and avoidance. Collaboration leads to positive outcomes for the family and family business, avoidance and competition results in decreased performance, whilst compromise and accommodation create a win-loose outcome where the family- related outcomes usually prevail (Sharma, 2004; Farrington, 2009).
Due to the overlapping and interrelated systems found in family businesses, the family business system as a whole is more complex than most non-family firms. This complexity can yield opportunities so long as the complexity of the business outweighs the family’s complexity (Gersick et al, 1997; Cullen, 2007).
Leadership and succession planning and management, governance and sustaining ownership are key management issues facing family businesses and both systems need to adapt to changes that occur internally and externally in order to survive (Cullen, 2007; Pieper, 2010). Determining strategies that satisfy both systems is not only a key challenge but a necessity (Gersick et al, 1997; Farrington, 2009).
In order to survive, destructive conflict needs to be minimised and managed (Smyrnios et al, 2003; Cullen, 2007) to maintain a synergistic family business meta-identity (Rea, 2009). A degree of conflict is cited as being necessary to stimulate innovation and development, conflict must still be managed to ensure that the results of friction between individuals and systems are synergistic towards the overarching goals of the organisation and family (Kellermanns & Eddleston, 2004; Robbins & Coulter, 2005).
Destructive conflict can be prevented by ensuring that employed family members are as proficient in performing tasks as non-family employees; that expertise from non-family members is acquired when the business or family demands exceed that of the family members; that an outsider should fill a top level position in the company so as to provide objectivity in decision-making; and that the family strives to serve the needs of the business and not insist that the business serves the family (Cullen, 2007).