Portraits of Women Founders and Leaders in the North of Portugal: Do Academic Qualifications Matter in the Cultural Patterns of Family Firms?

1. Introduction

Despite the progress in the legal framework and policies to boost equality between men and women, the elimination of gender inequalities remains an unfinished project in the society of the 21st century. Available data from European countries (Eurostat, 2022) have confirmed the persistence of differences between men and women in basic aspects related to the labour market (e.g. women are more likely to work in part-time and low-paid jobs, minor participation of women employed in business leadership and management roles, greater poverty among older women as a result of paying lower contributions to the pension and social security system). Given the increasing feminization of the workforce in full-time jobs, particularly in the Portuguese context (Pordata, 2022), and although they represent more than half of the workforce, women are far from to achieving gender equality in terms of occupying management and administration positions, as well as intermediate positions in most firms.

Notwithstanding the fact that there are visible patterns of continuity of sexual segregation phenomena in organizations (Paço & Falcão, 2021), there are clear signs of an ongoing transformation, such as the recent rise in the level of academic qualifications achieved by women in Portugal and their participation in traditionally “masculine” economic sectors, such as metallurgy, information and communication technologies, among others. In fact, according to the literature on the subject, family owned business enterprises are the most common type of organizations (Ferramosca & Ghio, 2018) and current data (KPMG, 2021) point out that 18% of women have been assuming leadership responsibilities around the world, especially in European and Central Asian countries. In Portugal, it is also worth noting the growing importance of women in positions of power in this business typology, especially those who are in the second generation or in succeeding ones and tend to be more qualified when compared to the founder of the family business (Marques, 2018).

While it is recognizable that micro, meso and macro-structural gender barriers remain, family firms (FFs) have been the stage for intergenerational changes with a notable presence of women in management and corporate responsibility careers. Our interpretive model focuses on the generational, governance and family dimensions, including business succession, which contribute to understanding the complex dynamics of transformation of family firms in the different stages of their life cycle (Dekker et al., 2015, 2013; Sandu, 2019). Likewise, by highlighting the rise of women with higher education in today's society, it is our goal to mobilize educational investment in order to understand the transformations in the cultural patterns of family firms (Dyer et al. 2009; Dyer, 1986) and their extensions to Portuguese reality (Casimiro & Chambel, 2014).

Therefore, two main objectives have structured this paper: 1) to highlight the role of women in the creation of family businesses, denoting an entrepreneurial profile and taking risks as founders as well as women chosen to be successors in family firms; 2) to understand cultural patterns of family firms, both from first and second or more women successors, especially when they have high academic qualifications and professional experience. These processes are illustrative of intergenerational changes by attesting to the presence of women in management and corporate responsibility careers. Focusing on the main findings gathered from the project “Roadmap for Portuguese Family Businesses” (Marques, 2018)¹, the present study intends to understand to what extent the founders and successors have allowed significant changes in the cultural patterns of family businesses, particularly when they have attained high academic qualifications and professional experience. The research design mobilized for the purpose of this study is based on nine in-depth, semi-structured interviews conducted with business women/ managers of family businesses regarding their career experiences when compared with those of their male counterparts. Family involvement in a firm has an impact on many aspects of organizational behaviour, but in this article we propose to limit the discussion to the career experiences of business women/ managers of family businesses, since work is the central life interest for many people and success at work enhances self-esteem (Schein, 1980).

The paper has been divided into three main topics. The first topic briefly examines ongoing changes in the intergenerational succession process with a notable presence of higher qualified women in management and corporate responsibility careers. Secondly, the methodology topic includes the description of the in-depth interview procedures included in the research design of the project “Roadmap for the Portuguese Family Businesses”. The third topic is followed by within-case and cross-case analyses of nine in depth interviews in which particular emphasis will be given to the main management challenges of a family firm according to the cultural patterns from Dyer et al. (2009). In the concluding remarks the implications for policies, practitioners and for further research will be discussed.

2. Cultural Patterns in Family Firms: Continuity and Changes

There is no consensus among government entities, economic agents and the various scientist to define the nature of the family firm. Specific literature has stated its relevance in the academic arena (Sharma et al., 2012; Litz, 2008; Gallo, 1995; Habbershon & Williams, 1999; Davis & Tagiuri, 1989). Moreover, it is possible to recognise that family firms are different from non-family businesses due to their specific relations at three levels, namely ownership, business and family (Moores, 2009; Gallo, Tàpies & Cappuyns, 2004; Gersick et al. 1997; Tagiuri & Davis, 1992). Therefore, the search for the specific characteristics of family businesses, distinguishing them from non-family businesses, has highlighted the relevance of this area of knowledge in different countries around the world (Ferramosca & Ghio 2018). Regardless of the vast literature, one can highlight its relatively fragmented or insufficient nature (Marques, 2018) or even the sometimes inconsistent results of many of the proposals for models mainly based on binary logics: family businesses versus non-family businesses (Stewart & Hitt, 2011), presence or absence of an external non-family manager (Klein & Bell, 2007). If, on the one hand, this state of the art can be explained largely by the different disciplinary traditions that have been at the origin and development of this field of study, on the other hand, it stresses the importance of expanding and deepening knowledge about family firms. These clearly assume a multidimensionality evident in the “open challenges” of their definition and operationalization through the research purposes that support studies on family businesses (Ferramosca & Ghio 2018:40).

The family firm is assumed to be one in which the family has control, in terms of appointing the management, and some of its members participate and work in the company, whether or not they have gone through a succession process. However, we do not ignore the effort to present a definition agreed upon by the group of experts from the European Union which after a census of more than ninety definitions (EU, 2009), shares the following characteristics of a family business: 1) the majority of the decisions are either made by the founder of the firm, or by the person(s) who obtained the rights to the firm as the natural heir(s), or still by an immediate family member; 2) the majority of the decision-making rights are indirect or direct; 3) at least one family member is formally involved in the firm’s management; 4) finally, registered firms are considered as a family business when the person(s) who founded the firm, or their families or descendants, possess 25 per cent of the decision-making rights mandated by their share capital.

This definition is assumed as “non-restrictive” and places emphasis on the “influence” of the family in business life as a differentiating factor between a family business and a non-family business. Furthermore, stabilized convergences are recognized in the specialized literature regarding the definition of family businesses based on the indication of three key elements: family, company and property. Consequently, critical moments in the life of family firms are keeping high levels of professionalization for future sustainability of business and planning an intergenerational dynamic process based on the transmission of the company's legacy.

The issue of succession in family businesses has been guided by the invisibility of women as a choice to succeed the founder, given the prevalence of logics of birth right, persistence of stereotypes and social gender roles based on masculinized models of professional careers and distrust of abilities and skills management, as well as organizational leadership of women in general. However, by highlighting the trend of women's qualification with higher education in Portuguese society², the choices for business succession by the founder have come to fall on the daughters, which may contribute to the transformation in the organizational cultural patterns of the family firms.

In line with the perspective on professionalization from Dekker et al. (2015, 2009) and Sandu (2019), our attention is focused on analysing the crucial dimensions on the biography of the succession trajectories from the first to the second and subsequent generations at the head of the family business. Our purpose consists in highlighting the the importance of the involvement of multiple generations in keeping the business in the family, especially the “courage” to choose wives, daughters, granddaughters to succeed in the family business, breaking with the traditional tendency of passing the baton on to the son / grandson (Gersick et al. 1997). Indeed, from the perspective of Dyer et al. (2009), the professionalization of the family business depending on its age and/or the succession of ownership/management tends to go through the four models identified in the literature, namely paternalistic culture, laissez-faire culture, participative culture and professional culture. It moves from an informal, subjective and paternalistic leadership, as characteristic of the founders' management style in the early stages of the business, to a more formal, objective and professional leadership in subsequent generations.

The paternalistic culture begins developing in a first-generation company, associated with the founder's idiosyncratic and subjective traits. By playing the role of provider of the family's well-being, as well as envisaging its workers as an extension of the family, the founder centralizes power in himself, and expects, in return, loyalty and obedience from family members and non-family workers, generally giving them little autonomy. Emotional factors are present at the basis of day-to-day decision-making and the appreciation of both the company's reputation and its good name in the context in which it operates, thus characterizing informal management practices. With the second generation at the helm of the company, laissez-faire and participative cultural models take place. More frequent, however, is the laissez-faire cultural model that develops when there is a growth of the company and dispersion of social capital by brothers, cousins ​​and other kinship ties. Although it is possible to verify the presence of the values ​​and influence of the founder, there is a decentralization of power by the various family members and the attribution of responsibilities to non-family workers, accompanied by levels of trust and sharing of suggestions among the members of the organization. The search for new ideas and solutions for business sustainability tends to characterize the environment of the daily management practices of these companies at this stage of the life cycle. The participative cultural model, on the other hand, tends to be less frequent, differing from the precedent by presupposing the minimization of the power and status of the family in the sense of instituting an egalitarian culture. Although formally there may be different positions between family and non-family members, everyone's participation in a teamwork culture is adopted. This means that the organization promotes identical conditions of progression and opportunities for the development of skills and responsibilities, on the one hand, and on the other hand, demands that the same evaluation criteria be applied whether they are family members or not, formally rejecting any type of logic of favouritism or nepotism. In the professional culture model, non-family managers are admitted, the disconnection from family traditions and the incorporation of professionalized management models tend to take place, generally, in the third and subsequent generations. There is a transition to a pattern of organizational culture based on rational decisions and objective criteria of governance, financial control and human resources management, thus marking a more advanced stage in the evolution of the lifecycle of the family business, often accompanied by a transfer of management to members outside the family. Research reveals the coexistence of cultural patterns in the same generation and throughout its lifecycle and highlights the rise of female qualification as one of major ongoing transformations in Portuguese family firms.

2. Methodological Design: Brief Presentation

The previous section highlighted one of the major themes developed under the project “Roadmap for Portuguese Family Businesses”, namely the assessment of intergenerational succession in the continuity of family businesses and its prevalence as the main type of organization in North of Portugal. Moreover, the impact of the family business on the wealth and employment growth in the local, national and international economy has already been stated in previous studies (Marques, 2018; Marques & Couto, 2017; Costa, 2018; AEP, 2011).

Nevertheless, there are few studies that empirically explore the internal dynamics of the family business via female founders and successors holding higher education levels, and its impacts on changes in cultural patterns. In that sense, this paper is supported by a methodological design based only on qualitative approach, accompanied by in-depth interviews and the respective treatment techniques of data³. In total, 23 interviews were conducted with the family managers/ owners who represented all the diversity of this business typology taking into account, for example, the sector of activity, size, years of foundation, sex and so on. However, for the purpose of this paper, only nine female interviewees will be mobilized in our analysis and discussion of changes in cultural patterns because, as we will see, they represent the “story” of women at the lead of family businesses, most of them chosen by the founder.

The option to restore visibility to these nine narratives and testimonies of women managers involved in different phases of the business lifecycle (from the first to the second or subsequent generations), is justified by the opportunity to understand the manifestations of the social phenomenon in its real context (Yin, 1994).

Thus, this research design was based on by in-depth interviews with a semi-structured script with open topics which enabled the reconstruction of the “history” and “culture” of the family business and kinship networks, so as to recover the founder(s) trajectory, the main critical moments of business turnaround/ transformation, as well as issues related to the present situation and the challenges for the future. All interviews were recorded and had an average duration of 1h:30m. In addition, this activity allowed the team of researchers to visit some family businesses and record the information resulting from the observation and interaction between several family and non-family members.

The content of the interviews was processed using the MAXQDA software (version 12), a program which allows the researcher to manage, give shape and meaning to unstructured information. With this program, it is possible to carry out a wide range of actions that facilitate the task of analyzing the material, identifying the categories, reflecting and developing conclusions (Tesch, 2013). The attribution of meaning to the text, that is, the transposition of raw text into units/categories, the establishment of comparisons and all the creative and reflective work falls on the researcher. With regard to data analysis, main categories that emerged a posteriori in the testimonies, experiences and representations by the interviewees were chosen, as well as those that can be organized from the most relevant keywords and guided by the selected literature for the analysis and discussion of the results (Casimiro & Chambel 2014; Deyer et al. 2009). Then, each interview was analyzed in order to preserve its holistic character (Scholz & Tietje, 2002) and, subsequently, a cross interview analysis allowed us a to provide a systematization of common and different aspects of the new case studies that make up the present study. The effort of analytical integration and discussion was aimed, above all, at identifying patterns or singularities of the choice/decision processes by founders and those who assume leadership in the first generation, and their articulation with changes in organizational culture patterns oriented towards the professionalization of the business.

3. Portraits of women founders and successors of family firms (FFs) in the North of Portugal

The women interviewed belong to various types of companies and economic sectors, nonetheless, it is clear that four of them are at the head of the company as owner-leaders who correspond to the first generation, while the remaining five appear as the second (two interviewees), third (two interviewees) and fifth generation (one interviewee). All of them have a higher education level, including a master's and two of them hold a doctorate degree. As far as age is concerned, five of them are aged between 35-40, two are in the 40-45 bracket, and the other two are aged between 45-50. They are present in several sectors of the economy (micro, small and medium sized firms) and in different sub regions of the North of Portugal (cf. Table 1).

Table 1. Characterization of women founders and successor interviewees from FFs

Source: Marques (2018)

What appears to be more significant is the persistent effort to qualify the current generation at the head of the family business, especially the higher education profile of young businesswomen who will certainly play a leading role in renewing the pattern of productive specialization, as well as the (expectable) transformation of the leadership style and strategic management of family businesses in the medium and long term (Marques, 2018:68). The data allowed us to identify both the role of women in the creation of family firms and the process of being chosen by the founder of family firms.

Portraits of women founders express traits of entrepreneurial leadership, adopting risky behaviours, initiative and resilience. Some of our interviewees have been socialized early within the family, seeing their parents or other family members who have family businesses; others took the risk of breaking with a trajectory of organizational dependence as employees or holding precarious contracts (called “green receipts”).

At the origin of the creation of the company, there are intrinsic reasons such as the family legacy or the professional challenge, thus being useful to mobilize existing resources in the family, whether they be material, affective and stimulating, in line with “familiness” perspective (Gomez-Mejia, 2016; Habbershon & Williams, 1999), that is, a set of resources that the family business has in the interaction with the family as a whole. For the following interviewees, both economic autonomy and the realization of a career projection based on organizational autonomy led to the creation of their firm:

This is a recent company and is in the name of one of my brothers, but the history of the company comes from what my father did back in his life (...) I have a degree in Mathematics, a post-graduation in Education and a Master's in Management (E1)

I did not have any type of help. Initially the investment wasn’t much and then with my own services I grew [12 employees], I invested in machines, then there was the need for vans and I always bought them outright" (E20)

In 2010, the company was born as a consequence of what has been my path. That is, I graduated in oenology and at the end of the course I realised I had started liking issues related to marketing (...) (E2)

The company started as a part-time job that I created together with two or three other people. I was still studying [Fine Arts], I was in my fourth year. In the fifth year, I decided to try working effectively and it was a huge adventure 27 years ago in Vila Real to have a great company that started with this - design! (E5)

Regarding the cultural traits systematized in table 2, we took as central the perceptions of the interviewees oriented towards the following categories: i) origin of the FF; 2) governance and HR; 3) family influence; 4) business succession. For each of these dimensions, the most representative categories of each interviewee were selected, without any claims to be exhaustive either in the identification of topics and subtopics or in their further deepening⁴.

Table 2 – Founders entrepreneurs/ managers of FEs

Source: Inspired and adapted from Dyer et al. (2009)

Among the cultural patterns identified, there is a trend towards professionalization of the culture of the family business managed by the first generation that seeks to internalize the knowledge acquired in their academic and professional trajectories. Access to funds and applications to finance companies is evident in Interviewees 1, 2 and 5. These aim at the development of the business and its sustainability based on the quality and reputation of the work performed. Likewise, they recognize the appreciation of their role in the company and status, declaring that they like their professional activity, reaffirming the entrepreneurial dimension.

On the other hand, if we consider the family dimension, it is possible to identify the appreciation, firstly of the family and its influence on business, especially in the case of interviewees 1 and 20, but also the need to manage the boundaries between professional and family. For those with small children though, this management implies an additional effort to cope with the family or private work. It is also understood that, transversally, the theme of business succession is absent or is acknowledged as extemporaneous given the few years of the company and/or its descendants. The testimonies corroborate part of the arguments advanced in the literature that point to succession as one of the critical phases in the sustainability of the business, either by not preparing or by postponing it. Furthermore, it is possible to state that accessing to leadership positions is accompanied by constraints in reconciling professional, family and private life. In table 3, these difficulties in balancing professional and family/ private life also remain for the following testimonies.

The second generations are represented by interviewees 11 and 18, the first from the textile sector and the second from construction. With paths marked by academic investment, they maintain a record of proximity to the first generation of founders who are present in the day to day life of the company.

This company [***] is 30 years old. It was founded by my father with a partner he had at the time, and they created it together. My father was already working in the same area, along the lines of the company, and at some point he decided to follow his path and found this company. // I have a degree in Environmental Engineering, but the opportunity arose and I thought it was a challenge. I accepted the challenge, came and here I am. (E11)

The founder was my father with two partners who had children, but they died // then my brother and I had already graduated, so we bought it from the partners, from the heirs of the second partner who died and we bought the quota, half each, so it was left with my father, the two of us and the company. It was like this for about ten years // I studied Social Work at the Instituto Superior de Serviço Social and then I did a post-graduation course in management here at the Faculty of Economics". (E18)

Representing the third generation, interviewees 13 and 11 are clearly intertwined with the family legacy. The same is true of interviewee 5 who shows a more significant longevity of the company when declaring that it is in the fifth generation. It is well known, the survival rate of third-generation family businesses is very low, with estimates of around 20% or less, considering our results (Marques, 2018).

My grandfather, because I have only been here for a year // Then my mother came 40 years ago, together with my uncle Zé and my uncle Manuel, and the three of them are still here with us. The third generation came to the company gradually. It's me and my brother and my two cousins (...) // My cousin and I are graduates (...) // I worked 15 years in Santa Casa and I made the decision to quit and come to work in the family business. (E13)

My grandparents were from a village [***] that had open trade. Meanwhile, my grandfather and grandmother got married (...) this was back in 1930. // My father studied at UTAD in Vila Real, he was one of the first students of the former Polytechnic Institute of Vila Real (...). // I took business management, then I started a doctorate in business management and administration, I did all the curricular part (...) and in the meantime a master in Tourism Management and Administration appeared (...) (E3)

My great-grandfather accepted it and my father gave 50% of the shares to his father-in-law, one of my great-grandfather's sons-in-law who did not know how to manage the company (...). My father's father-in-law, my mother's father, was a lithographic designer, he only knew how to design, he designed all the shapes that we have today. // At the end of the 1970s, the third generation came in with my mother's father and, at the same time, the fourth generation, my father, who was an insurance broker, came in at the end of the day and did more management and commercial work. He quickly realised that either we would grow exponentially or the company would die. He started to turn to exports at the beginning of the 1980s. // I came here, I grew up here, I remember the company when it was located in the back of my great-grandfather's house, with 200m² (...) For me it has always been here, as long as I can remember (...). // I wanted to graduate in psychology (...)" (E9).

In these testimonies that attest to companies whose existence has been marked by several generations, it will be possible to signal traits of a paternalistic culture, which still reveals closeness to the founder, his values, prestige and identity and with the traits of a laissez-faire culture, through the second and third generations ahead. We are witnessing the growth of the company and a dispersion of social capital by brothers, cousins ​​and other kinship ties, as well as a certain decentralization of power among the different members of the family. As for the signs of a professional culture, there is an attempt at stimulating innovation, internationalization and the search for greater formalization of decisions, human resources management, and also an attempt to separate the interests of the company from the family (Table 3).

The importance of promoting the qualification of the women who have most recently reached the top in certain areas of the company's business is evident, be it in the management, commercial and marketing areas. Although they have autonomy and leadership capacity in their areas of intervention, the “final” word remains with the founder still present in the company’s life and/or is taken collectively with the brothers and cousins ​​who make up the company’s governance body.

Table 3 – Successors of family firms FFs

Source: Inspired and adapted from Dyer et al. (2009)

Conclusion

The crucial role that family firms play and the importance they perform in the economy is unquestionable. In addition to the potential for innovation expressed by the increase in the level of qualification of their leaders, with an expression above average of managers of non-family businesses, as discussed previously, there is also the significant importance of the place of women at the top of the hierarchy. Whether due to the fact that they are owners/shareholders, or because they take on management positions, family businesses have witnessed relevant transformations. These are visible in the changes in occupational segregation patterns, with women entrepreneurs, for example, in traditional sectors such as metallurgy, but also in vertical segregation, the most expressive in the context of this study. In fact, this paper finds that the “masculinist” perspective is shifting due to the crucial role of the qualifications and professional competence of family firms’ female founders and leaders. Moreover, the increasing academic level of women in today's society is one of the factors that is at the root of the emergence of shifts in the cultural patterns of family businesses which will impact on intergenerational succession.

Moreover, our research findings allow us to identify composite or hybrid cultural patterns in same family firms, as in Casimiro and Chambel’s study (2014). Thus, it is possible to highlight that the transition from a paternalistic culture to that of laissez-faire tends to be associated with a company lifecycle that sees an expansion of family members who are part of the governance structure, as well as the human resources that make up the company, providing business growth. This trend appears in line with the contributions of Dyer et al. (2009). However, when associated with the effort of internationalization, formalization and qualification of the business family and its workers, these family businesses are also imbued with traces of professionalization, although the idea of ​​“keeping the business in the hands of the family”, not open to non-family external managers persists. The qualification of the current, younger generations, and in line with innovative ideas and the perception of the challenges for the sustainability of the family firm has ensured continuity in the transition of the family legacy.

Lastly, the participation of women in the labour market and the notorious presence of female founders and/or successors in family business contexts have become evident as driving forces of societal and economic transformation, associated with an entrepreneurial mindset that mobilizes academic and economic skills. Protagonists of a fundamental movement translated into trajectories of economic and leadership empowerment of family businesses composed by several generations, women have helped to mitigate gender stereotypes that underlie the persistence of sexually segregated organizational cultures. It is crucial that family businesses, and their leaders, are competent and anticipate the uncertain and unpredictable challenges of the digitalization of the business, as well as the health crisis caused by Covid-19.

References