The Best of Both Worlds: Exploitation and Exploration in Successful Family Businesses

Family controlled businesses (FCBs) have been found to out-survive and out-earn non-FCBs, and their market valuations reflect that. This edge may be attributed in part to the agency- and stewardship-related consequences of ownership – consequences that via organization governance and design allow many family businesses not only to reap advantages of continuity and focus (“exploitation”), but also to reorient themselves when needed (“exploration”). These capacities rest on qualities such as owners’ discretion, knowledge and incentives, and their stewardship over the mission, core capabilities, people, and external relationships of the firm. We suggest a research agenda to investigate these issues.