El canon del NT

Studying family owned businesses is the main focus of this doctoral thesis as stated previously in the methodology chapter. Therefore, all the firms selected for this study are family owned. This is shown in the summary table below. The respondents that completed each questionnaire are key members of the families that own the businesses; performing the roles of owners, managers and control (governance).

4.3.3.1 Firm Age and Size

Firm age is one of the most frequently used methods of indicating the life cycle stages of firms in management (Evbuomwan et al., 2012; Bulan and Yan, 2010; Miller and Friesen, 1984). However, different authors use the approach that is most suitable to their study. For example, Bulan and Yan (2010) who studied the publicly quoted companies started counting firm age from the 1st year of each firm’s initial public offering (IPO). Other studies have adopted Miller and Friesen’s five life cycle stages calculating firm age from the business start-up date (Miller and Fiesen, 1984). Some other authors calculate firm life cycles based on industry (Black, 1998). In this thesis, the categorisation of firm’s life cycle according to business age follows the approach

177

of ‘The World Bank Policy Research Working Paper’, compiled by Ayyagari, Demirguc-Kunt and Maksimovic (2011:2–5 28–29); and a paper written by Woldie, Leighton and Adesua (2008:8). The World Bank’s categorisation was especially adopted because the study samples were small. They were medium scale businesses in 99 developing countries, which is very applicable to this thesis’ research site, Nigeria. In the categorisations from World Bank and Woldie et al.’s papers, firms not up to two years of existence are referred to as start-ups; those between three and five years are young firms; six to ten year old firms are in their growth phase; while all firms with more than ten years of existence are categorised as matured firms.

Following the above categorisation, table 4.2 shows the age distribution of firms based on their existence since the company was either registered (for registered businesses), or had commenced operations (for unregistered businesses) (Ayyagari et al., 2011; Casillas et al., 2010; Zahra, 2005).

The youngest business in the sample of 237 family businesses as at July, 2012 was 6 months old, while the oldest was 70 years. The data show that firms between 10 and 20 years in their maturing stage have the largest numbers (71) – representing 30% of the overall sample. This is followed by firms older than 20 years (in their matured stage) 27.8%; and firms in their growing phase, between the ages of 6 and 10 years (50) – representing 21.1% of the sample. Young firms between the ages of 3 and 5 years (33) represented 13.9% of the sample; while start-ups to very young firms of less than and equal to 2 years were only 17 in number – representing 7.2% of the sample. The average age of sampled firms is 14.9 years and the standard deviation is 11.3.

Table 4.2 also provides the descriptive statistics pertaining to firm size. Firm size, in this thesis, is defined by the employee size of each family business (Zahra, 2005; Fernandez and Neito,

2005; Woldie et al., 2008; Ekpenyong and Nyong, 1992; Runyan et al., 2008; Casillas et al., 2010; Wang, 2008). The thesis also adopts the recent criteria specified by the National Bureau of Statistics’ (NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in differentiating between micro, small and medium scale enterprises (NBS and SMEDAN, 2010). Micro enterprises are defined as those enterprises with a workforce of less than 10; small enterprises are those enterprises with a total workforce of between 10 and 49 employees; while medium enterprises are those enterprises with a total workforce of between 50 and 199 employees (NBS and SMEDAN, 2010).

The World Bank’s categorisation was especially adopted because the study samples were small. They were medium scale businesses in 99 developing countries, which is very applicable to this thesis’ research site, Nigeria. In the categorisations from World Bank and Woldie et al.’s papers, firms not up to two years of existence are referred to as start-ups; those between three and five years are young firms; six to ten year old firms are in their growth phase; while all firms with more than ten years of existence are categorised as matured firms.

Following the above categorisation, table 4.2 shows below the age distribution of firms based on their existence since the company was either registered (for registered businesses), or had commenced operations (for unregistered businesses) (Ayyagari et al., 2011; Casillas et al., 2010; Zahra, 2005). The youngest business in the sample of 237 family businesses as at July, 2012 was 6 months old, while the oldest was 70 years. The data show that firms between 10 and 20 years in their maturing stage have the largest numbers (71) – representing 30% of the overall sample. This is followed by firms older than 20 years (in their matured stage) 27.8%; and firms in their growing phase, between the ages of 6 and 10 years (50) – representing 21.1% of the sample. Young firms between the ages of 3 and 5 years (33) represented 13.9% of the sample; while

179

start-ups to very young firms of less than and equal to 2 years were only 17 in number – representing 7.2% of the sample. The average age of sampled firms is 14.9 years and the standard deviation is 11.3.

TABLE 4.2: A Brief Profile of Sampled Family Businesses

VARIABLE N %

TYPE OF BUSINESS Family Firms 237 100%

BUSINESS AGE IN YEARS (SINCE Mean Age 14.9

17 7.2%

FOUNDING THE COMPANY) Standard Deviation 11.3

Minimum Age 0 (6 months) Maximum Age 70 years

Business Age Range <= 2 years

3 – 5 years 33 13.9% 6 – 10 years 50 21.1% 10 – 20 years 71 30.0% >20 years 66 27.8%

TOTAL 237 100%

FIRM SIZE Small Family Businesses 212 89.5%

(According to the number of Employees) _{Medium-Sized Family Businesses 25 10.5%}

TOTAL _{237 100%}

BUSINESS STATUS AT INCEPTION New Start-up 234 98.7%

Acquired 3 1.3%

TOTAL 237 100%

FOUNDERS’ DISTRIBUTION Respondent 100 42.2%

Respondent’s Spouse 13 5.5%

Respondent’s Siblings 4 1.7%

Respondent’s Parents 44 18.6%

Respondent’s Grandparents 2 0.8%

Previous Owners 3 1.3%

Respondent & Spouse 39 16.5% Respondent & Siblings 20 8.4% Respondent & Others 12 5.0%

TOTAL 237 100%

BUSINESS’ LEGAL STATUS Sole Proprietorship 93 39.2%

Partnership 7 3.0%

Limited Liability Company 102 43.0%

Unregistered 35 14.8%

TOTAL 237 100%

Table 4.2 also provides the descriptive statistics pertaining to firm size. Firm size, in this thesis, is defined by the employee size of each family business (Zahra, 2005; Fernandez and Neito, 2005; Woldie et al., 2008; Ekpenyong and Nyong, 1992; Runyan et al., 2008; Casillas et al., 2010; Wang, 2008). The thesis also adopts the recent criteria specified by the National Bureau of Statistics’ (NBS) and Small and Medium Enterprises Development Agency of Nigeria

(SMEDAN) in differentiating between micro, small and medium scale enterprises (NBS and SMEDAN, 2010). Micro enterprises are defined as those enterprises with a workforce of less than 10; small enterprises are those enterprises with a total workforce of between 10 and 49 employees; while medium enterprises are those enterprises with a total workforce of between 50 and 199 employees (NBS and SMEDAN, 2010).

As Table 4.2 shows, majority (89.5%) of the sampled firms are businesses with a workforce of between 10 and 49 employees and are therefore small businesses. The remaining 10.5% are businesses with a workforce of between 50 and 199 employees and are therefore medium-scale businesses (NBS and SMEDAN 2010). This finding is similar to that reported by Woldie et al., (2008) on small and medium scale enterprises in Nigeria. Woldie et al.’s finding also showed a significant gap between small-sized (77.2%) and medium-sized firms (22.8%) in their study sample; thus supporting that the finding of this thesis is not unusual within the research context.

Further analysis to investigate a possible significant association between the firm size and the firm age, using a cross-tabulation analysis produced the following results: Gamma=+0.575, p<.0000. These results suggest a moderately significant positive association between the firm age and the firm size in the study sample which is generalisable to the study population. The results presented in table 4.3 below also shows the following detailed analyses between the two variables: firms with less than 2 years of existence represent only a small proportion (7.2%) of total employment in the overall sample. On the other hand, matured firms, aged 10 years and above, made more contributions to employment, with small and medium-size firms reporting 47.7% and 10.1% respectively.

181

TABLE 4.3: Firm Size by Firm Age

FIRM AGE SMALL-SIZE FIRMS MEDIUM-SIZE FIRMS

(10 - 49 Employees) (59 - 199 Employees) TOTAL <=2 years 17 (7.2%) 0 (0%) 17(7.2%) 3 – 5 years 33 (13.9%) 0 (0%) 33(13.9%) 6 – 10 years 49 (20.7%) 1 (0.4%) 50(21.1%) 10 – 20 years 58 (24.5%) 13(5.5%) 71(30.0%) >20 years 55 (23.2%) 11 (4.6%) 66(27.8% TOTAL 212 (89.5%) 25 (10.5%) 237(100%) X2_{=16.92; DF = 4; p = 0.000; Gamma=0.515}

The above result is similar to the findings of Ayyagari et al. (2011). In their study, firms <=2years contributed only 6.75% (mean) to employment in their overall sample; while matured firms, aged 10 years and above contributed 48.12% of the total employment in low-income countries and 72.76% in high-income countries respectively.

4.3.3.2 Founding Structure of the Business

Some of the sampled businesses were founded before they were acquired by the families presently managing them. The respondents were asked whether the companies were new start- ups or acquired by the present families. 98.7% (234 out of the final sample of 237 respondents) responded that the businesses were founded by them while the remaining (1.3%) said the businesses were acquired from previous owners (see table 4.2).

For the acquired businesses, respondents stated exactly when the businesses were bought over by the families but did not specify when they were founded. According to the three respondents managing the acquired businesses, those businesses were dead (dormant) when they took them over.

Table 4.2 above also shows the distribution of the founders of the sampled family businesses. The results are as follows: majority (42.2%) were founded by the respondents themselves, (this is similar to the findings of Zainol and Ayadurai (2011) who reported that 79.6% of their respondents were founders/owners of their sampled firms). The results further showed that

18.6% of the firms were founded by respondent’s parents; 16.5% by respondents and spouses; 8.4% by respondents and siblings; 5.5% by respondent’s spouses; 1.7% by respondent’s siblings; 0.8% by respondent’s grandparents; 1.3% by previous owners; and the remaining 5.0% were founded by respondents and any one of the following categories: parents, relatives, or outside investors. Full details of the founders’ distribution of this study sample can be found in appendix 26.

4.3.3.3 Legal Status of Firms

The legal status of the family businesses surveyed is illustrated in table 4.2 above. These shows the registered and unregistered businesses in the study sample. In Nigeria, businesses are expected to register with the Corporate Affairs Corporation of Nigeria (CAC), which is the legal body responsible for registering all businesses in the country.

The results indicate that 39.2% are sole proprietorship, a business registered as a single-owner business. This is a common type of business ownership all across the world as evidenced by different reports. Global Entrepreneurship Monitor’s (GEM) report for Hong Kong and Shenzhen states that sole proprietorships are preferred in both countries (GEM: Hong Kong and Shenzhen, 2004). GEM: Pakistan Report, 2010 also states that the firm structure of businesses in Pakistan is dominated by sole proprietorships.

Although, the figure recorded for businesses registered as limited liability companies (43%) in the results presented in table 4.2 is slightly higher than that of sole proprietorship (39.2%); both figures are quite close. The analysis further shows that 3% of the sampled businesses are partnerships while the remaining 14.8% reports themselves as unregistered. Finding unregistered businesses is not unusual in a developing country such as Nigeria (Evbuomwan et al., 2012);

183

however, the implication of the informal status of businesses on performance is not clearly stated in studies carried out in this region.

4.3.4 The Dominant Generation Managing and Controlling the Sample Family