Evolution of Stakeholder Relationships:

Focusing on Family-Managed but not Family-Owned Business

Abstract

This paper investigates why family-managed but not family-owned family businesses can exist, contrary to the general notion that family businesses are managed and owned by a family(s). Based on the analysis of 66 family businesses of this kind listed in Japan, highlighting their board members, shareholders, and other stakeholders from the resource-based view (RSV) perspective, the paper reveals their long-lasting relationship with their stakeholders (financial institutions, vendors, and partners, many of which remain among the major shareholders) constitute their legitimacy of management without ownership influence, with its majority maintaining such a status over 30 years, of which five firms with the longest history has more than one third of the major shareholders over 50 years.

The paper further points out this legitimacy is made possible at the evolved stage of the stakeholder relationships, based upon the analysis of the extant literature. It finds the evolution of stakeholder relationships starts within the family, then developed to other internal and external ones, and finally to the non-family stakeholders. With the above findings, the paper contributes to advancing the heterogeneity study of the family business which is gaining growing importance while implying the relevance of stakeholder relationships evolution in general.