FACTORS AFFECTING UPWARD LEADERSHIP IN FAMILY BUSINESS
CHAPTER I INTRODUCTION
According to an audit firm from United States, Price Waterhouse Cooper (PWC), 95% of businesses in Indonesia are categorized as family business. A practition, Tanadi Santoso, said that the family business sustainability in Indonesia is considered good as the business transition to second generation reaches 34%, followed by third generation as much as 24% and the family business reaching fourth generation as much as 5%.
Figure 1.1: Family Business Sustainability in Indonesia
Source: Price Waterhouse Cooper (2014)
Family business is considered unique rather than the common ordinary business. One of the difference is because it has the multiple family members as the leadership team. There goes the pattern of behavior called family dynamics, which will be inherited across generations. The next generation who is assessed to continue the family business is called the successor, while the previous generation is called the predecessor.
Generation gap takes a big part in the succession process. It shows much difference between the predecessor and the successor regarding their belief, value, habit, idealism, character, and interest.
Based on a pre-survey conducted by the researcher, 86.3% of family business successors have faced a generation gap with their parents.
It is not easy for the successors to lead the current company led by the predecessor. This is because they are not going to lead the employees only, but they need to lead the owners too (which means their fathers).
Leadership is a process of in?uencing others to understand and agree about what needs to be done and how to do it, and it is the process of facilitating individual and collective efforts to accomplish shared objectives (Yukl, 2010). There are several leadership styles according to the situation and the leader itself. Kartono (2003) and Shinta (2002) categorize them into Authoritative (Transactional) Leadership, Charismatic (Transformational) Leadership, Paternalistic/ Maternalistic Leadership, Laissez-Faire Leadership, and Democratic/ Participative Leadership.
Each style has its own positive and negative impact. The owner of CV Carmel Hill Machinery (2018) said that a wrong leadership style will bring the company at stake. On the other hand, a right leadership style will bring the company forward, so that the relationship between superiors and subordinates can be well-intertwined.
A further research is required in order to find out a suitable leadership style with its consideration to use one. Therefore, this research will focus on leadership styles that can be used to role a family business with the title of “Factors Affecting Upward Leadership in Family Business”.
There are four direction of managerial networking as mentioned by Bekerom (2015). The most popular one is managing downward, meaning that the leader leads the subordinates. The second one is managing sideward, meaning that . The third one is managing outward. The fourth one is managing upward. This one is the least discussed.
1.2 Problem Statement
The formulation of research question is an important step of a research. Based on the elucidated research background above, the researcher concludes a hypothesis:
What are the factors affecting leading-up influence in family business leadership?
1.3 Research Objectives
The purposes of this research are:
Helping family business successors to cope with the predecessors.
Knowing the factors affecting upward leadership in family business.
1.4 Research Benefits
These are the benefits provided by this research:
1.4.1 Theoretical Benefit
a. An educational source regarding family business leadership.
b. Provides reference for future researcher through the findings of this research.
1.4.2 Practical Benefit
a. Helps the researcher and other family business successors to implement the factors affecting upward leadership in their family business.
1.5 Research Scope
This research focuses on the analysis of factors affecting upward leadership with the considerations of the implementation. The intended leaders are the family business successors only. The researcher particularizes family businesses from Universitas Ciputra family business community, especially the ones that have already graduated and joined the family business.