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Introduction
The entrepreneurship literature has examined two primary concepts of the same coin. The bright side is that most writers review and highlight the different elements required or recommended to achieve entrepreneurial efficacy or success and the production of quantifiable innovation (Baumol, 1990; 2010). When considered collectively, entrepreneurship promotes innovation, job creation, economic growth, and knowledge transfer (Casson, 2003; Vettik and Mets, 2024).
Most family business founders are also entrepreneurs, and research indicates that entrepreneurship fosters creativity and innovation (Kirzner, 2011). It also favors regional development (Fritsch, 2011; Fritsch and Wyrwich, 2023). It is possible to establish a relationship between knowledge innovation and the expansion of entrepreneurship (Baumol, 2010) as a crucial agent of technological change (Link and Siegel, 2007). This is based on the positive feedback loop of developing and managing innovative and sustainable territories, producing knowledge (Feldman and Avnimelech, 2011; Castro et al., 2020), and boosting capital for entrepreneurship (Audretsch and Keilbach, 2004; Alerasoul et al., 2022).
With these advantages, the entrepreneur (founder) attains heroic and almost legendary status (Jones and Spicer, 2009). Some see the entrepreneur as an economic redeemer (Sorensen, 2008) and part of the entrepreneurial ecosystem-a conglomerate of elements from the social, economic, cultural, and political domains-that fosters the emergence and expansion of new businesses, particularly those with innovative components. The ecosystem also includes risk-takers and advisors for these ventures (Spigel, 2017; Oliveira et al., 2023).
Many stances have been presented (Jones and Spicer, 2009) to address or explain the behaviors that entrepreneurs may engage in. If not properly controlled or managed, these behaviors may be harmful (dark side) to the entrepreneurial project (i.e., family business), which could be a startup or an established business, as well as to the individual interest groups or stakeholders, which could include employees, families, the community, and ecosystems supporting entrepreneurship and innovation (Yin and Lui, 2023).
Numerous approaches have been taken to study the negative aspects of entrepreneurship, but they almost invariably treat them as characteristics of a construct rather than as a construction itself. Kets de Vries (1985) first used the term "dark side." This dark side has been brought in (or exported out?) to other fields, such as creativity (McLaren, 1993), knowledge leaks (Frishammar et al., 2015), and, more recently, technology (Townsend, 2017).
It has also attempted to define the dark side of entrepreneurship as a construct (Montiel et al., 2020), teach dark-side theories to unnerve entrepreneurship (Talmage and Gassert, 2020), and investigate whether people with entrepreneurial traits are more likely to commit acts of destruction.
Family businesses’ relevance in national economies is well-known (Gomez-Mejia et al., 2020). Researchers like Graafland (2020), Zientara (2017), and Minichilli, Corbetta, and MacMillan (2010) have all raised the possibility of a negative/dark aspect in family businesses. According to Miller and Le Breton-Miller (2014), dysfunctional conservatism may be brought about by family members' desire to maintain control over a company and ensure security for future generations. This could lead to resistance to reviving the company and reduce the motivation to make risky investments (Le Breton-Miller and Miller, 2016). These businesses, which are entirely run by family members, may place rules that put the needs of the family before those of the stakeholders.
According to our analysis, this dark side metaphor has evolved towards a dysfunctional perspective. Following APA (2024), dysfunction is defined as “any impairment, disturbance, or deficiency in behavior or operation.”
This study aimed to identify and structure the relationship between different elements within a dysfunctional perspective and propose an initial point to conceptualize it. This is the main contribution of this study. It represents an evolution of the dark side of family business/entrepreneurship, where the metaphors “bright side/dark side” or “two sides of a coin” are used as an initial way to explore, adopt and manage new ideas through management (Røvik, 2011), is no longer feasible and accurate, since (see Appendix 1) there are a clear trend and growing interest in the academic community for this field, there are several different angles where it has been researched/approached, and there is a need to give a conceptual structure for this nascent research area, where a more structured and ground position can be established. This theoretical thought/standpoint can foster and embrace all the profound interest that has surged recently.
Therefore, we suggest that it is feasible to identify the emergence of a new school of thought in family business. A new school is recommended when there is “A group of researchers investigating and developing common methods, tools, and techniques (for practitioners to use), often with one or more lead researchers providing the vision in that area.” (Turner et al., 2013, p.8). This theoretical and practical focus raises the possibility that schools of thought are less rigorously defined than scientific paradigms, as defined by Pollack (2007).
The remainder of this paper is organized as follows. In the first section, we begin to look at the genesis of the dark side of entrepreneurship, the original metaphor used to approach the dysfunctional perspective; the second section discusses what is considered a school of thought, this section reviews the leading family business themes in which academics have shown interest. In the fourth section, we explain the method used; the fifth section presents more detailed information on this new school of thought and the conceptual model it proposes and discusses it in more detail, and we conclude and discuss the future of dysfunctional family business studies.
The Dark Side Approach
The Dark Side Approach seeks to explore the hidden and less studied dimensions of the entrepreneurial and family business realms, focusing on the negative aspects of both contexts. This section explores two central areas: the dark side of Entrepreneurship, where the darker aspects of the entrepreneurial process will be examined, and The Dark Side of Family Business, where the dysfunctional factors inherent to family businesses will be analyzed.
Dark Side of Entrepreneurship
As Manfred Kets de Vries proposed in 1985, The Dark Side of Entrepreneurship refers to the less visible and problematic aspects of the entrepreneurial process, which can exist in any organization, independent of its nature (public or private corporation, family business of any size). These may include psychological dynamics such as fear of failure, anxiety, obsession with success, lack of balance between personal and professional life, and dysfunctional behaviors such as impulsivity, entrepreneurial narcissism, and exploitation of others to achieve the entrepreneur's goals. Kets de Vries highlights the importance of understanding and addressing these less visible aspects to promote healthier and more sustainable entrepreneurship.
Studies conducted in France on firms suggest that emotional commitment is crucial in driving entrepreneurs to adopt overinvestment behaviors (Gabay et al., 2024). This finding extends the existing knowledge on the relationship between affection and commitment, highlighting their joint role in developing adverse outcomes for emerging entrepreneurs.
Furthermore, the phenomenon identified as the “resource curse,” which arises from a strong dependence on resources, frequently undermines regional organizational culture, innovation, and the entrepreneurial climate (Yao and Li, 2023). Conversely, Nybye and Wraae (2023) addressed the current gap in how students develop and explain reflective thinking in their entrepreneurial learning process. Considering these insights, entrepreneurs are sensitized to various risks associated with entrepreneurial actions, including physiological distress, emotional distress, and damage to physical health. Montiel et al. (2020) highlight the importance of continuing to investigate the negative or less explored aspects of entrepreneurship to understand better the challenges entrepreneurs face during their entrepreneurial journey. These challenges may include stress, anxiety, social isolation, financial pressure, and personal consequences of entrepreneurial failures.
The dark side of family business
Family-owned businesses have a long history and are crucial, deep-rooted institutions in global economies. Founded and managed by members of the same family, they often develop a distinct identity based on family traditions, values, and cultures.
A family business forms a complex ecosystem for analysis (McCollom, 1992), giving rise to “The dark side of family businesses,” which refers to the challenges, conflicts, and problems that can arise within these companies (Montiel and Soto, 2021) because of their unique family structure and dynamics. These include role conflicts between family and non-family members, lack of separation between personal and professional, succession issues, difficulties in making objective decisions, intergenerational conflicts, emotional tensions, and gender (Berrone et al., 2012; Bernhard and Labaki, 2021; Bang et al., 2023; Pahnke et al., 2024).
Schools of Thought
According to earlier studies (Trajtenberg, 1990; Fleming, 2001), new knowledge is more influential when well-positioned inside an established school of thought and/or integrated outside knowledge. Upham, Rosenkopf, and Ungar (2010) state that new knowledge greatly benefits from being a part of a school of thought and that new knowledge within a school of thought has a more significant influence if it is in the semi-periphery of the school's intellectual framework.
Therefore, it can be concluded that the defining elements of a school of thought are Content, Community, and Impact (Silvius, 2017). According to Koltveitt et al. (2007) and Biedenbach and Mueller (2011), a school's shared vision, perspective, and/or set of beliefs serve as distinguishing characteristics in terms of Content. The projects (in our case, the research themes) were evaluated based on these shared elements. This perspective vision can be a well-known theory or paradigm; however, it can also be a set of ideas or precepts that are sufficiently distinct from those of other schools of thought, which is the premise of this study. According to Turner et al. (2010), applying a defined perspective produces shared techniques, methods, and tools.
However, developing specific approaches, techniques, and instruments takes time and effort. Therefore, these processes and procedures may not be developed entirely in an emergent school of thought. Turner et al. (2010) claim that a new school of thought can incorporate techniques and instruments from many other schools, which is an intriguing component of their concept. This emphasizes the suggestion that schools can build upon each other’s bodies of knowledge or be elaborations of other schools for this present study from the recent proposal on dysfunctional studies in entrepreneurship (Montiel, Canales and Alvarado, 2024).
A novel approach to a research stream or area needs to be addressed in an academic or professional Community to be acknowledged as a school of thought (Turner et al., 2010; Biedenbach and Mueller, 2011). Professional practice drives new advances in certain instances, whereas in other situations, the academic community envisions new developments. Nevertheless, a new school of thought should emerge from the sizable body of scholarly publications. Numerous eminent writers are visible in the publication base. Söderlund (2002) discusses “champions” and important contributors in this perspective. Publications, conferences, and congresses are examples of how communities are growing.
Silvius (2017) stated that, even though previous publications did not clearly state this, a school of thought should have some Impact. Prospective schools might offer new viewpoints but lose relevance if academic or professional communities do not acknowledge or adopt them. Although this criterion is, in some ways, part of the criterion Community, it would be appropriate to explicitly assess how the school's procedures, methods, and instruments are integrated into practice. Incorporation into the standards may also serve as a glaring indication of this influence.
Family business schools of thought
Bird, Welsch, Astrachan, and Pistrui (2002) reviewed the FB literature from the 1980s to 2001. So do Debicki, Matherne, Kellermanns, and Chrisman (2009), from to 2001-2007.
Subsequently, Rovelli et al. (2022) examined three prestigious FB scholarly publications (1381 articles). Through a bibliometric analysis from 1988 to 2017, they found that “Family business”, “succession”, “corporate governance”, “socioemotional wealth”, “family ownership”, “firm performance”, “familiness”, “family dynamics”, and “innovation” were among the subjects of interest. In recent years, they found terms like “socioemotional wealth”, “succession planning”, “entrepreneurial orientation”, and “innovation” have become increasingly common. Scholars have lately become interested in subjects like “absorptive capacity,” “gender,” “family control,” “corporate social responsibility,” and “family company heterogeneity.” Later, Combs, Shanine, Burrows, Allen, and Pounds (2020) called for incorporating family science into FB research.
Recently, Montiel, Tomaselli, and Soto (2022) proposed incorporating the dynamics of geopolitics into FB Research, what the 5th Wave is, and how to incorporate geopolitical theory into FB theory (Soto and Montiel, 2024).
It is important to consider the different aspects of the schools of thought (Cunningham and Lischeron, 1991; Müller et al., 2023). Surprisingly, while many research areas have conducted studies in this manner, there is a lack of studies on family business schools of thought. Most (see Appendix 2) only mentioned different topics/theories of academic interest in family business studies. There is no mention of any dysfunctional approach.
Recently, two perspectives have been proposed are not in Fig.1, the 5th Wave or geopolitical approach (Montiel, Tomaselli and Soto, 2022; Montiel and Soto, 2024) and the family business ecosystem (Montiel, Carvalho and Martinez, 2022; Ratten, 2024).
Veblen (1899, 1919) was the first to identify the dysfunctional aspects of the entrepreneurial process. In contrast to his contemporaries, Veblen started to view contemporary entrepreneurs as cunning manipulators, profiteers, predatory classes, and tough robber barons.
Subsequently, Jensen and Meckling (1976) described an agency relationship as a legal arrangement in which one or more individuals (the Principal(s)) hire another individual (the Agent) to carry out a service on their behalf, hence giving the agent decision-making authority. In cases where both partners prioritize maximizing their own utility, it is reasonable to suspect that the agent may not consistently behave in the principal's best interest. The principal can restrict deviations from his interests by providing the agent with suitable incentives and incurring monitoring expenses intended to curb the agent's dysfunctional behavior.
Method
An exploratory study was conducted to establish the usefulness and applicability of DYSFB as a construct in family business research. Exploratory reviews are particularly beneficial for addressing “emerging” topics that permeate various disciplines, making it possible to “map the key concepts” and recognize “gaps” in current research (Peters et al., 2015). In this context, a comprehensive review was conducted to examine the current literature linked to dysfunctional issues in family companies, prioritizing the selection of high-quality articles that provided robust evidence and solid methodologies.
Databases of great scope and relevance were chosen to guarantee a detailed and academically rigorous study, such as Google Scholar, EBSCOhost, ProQuest, Scopus, Emerald, Ingenta, JSTOR, ScienceDirect, and Wiley. These databases were selected for their influence and recognition in academic research and their ability to host high-quality peer-reviewed articles in business and society. Also, these sources were chosen based on their interdisciplinary scope, importance in family business research, and diverse scholarly publications.
To optimize the validity of the findings, rigorous selection criteria were applied, prioritizing articles with relevant empirical or theoretical contributions, high citation rates, or publication in prestigious journals. It is worth mentioning that some bibliometric articles or those analyzing the field's evolution were considered, which guaranteed the inclusion of significant literature. No date limits were established, thus allowing the inclusion of publications from “any time or instant” to capture previous conceptualizations of DYSFB.
Key terms such as “new school of thought,” “dark side,” “organization,” “dysfunctional,” “family business,” “conflict,” and “misconduct” were used, duplicating these searches in Spanish to expand the geographic and cultural range of the findings. The most recent search took place in August 2024. Despite this thorough study, no previous references conceptualizing DYSFB were found, suggesting that this research approach may represent an emerging school of thought, in line with Meckler and Boal's (2020) findings regarding the increased interest in dysfunctional issues in literature.
Discussion: Dysfunctional studies in family business (DYSFB)
A growing body of literature approaches this phenomenon from a dysfunctional perspective (Montiel, Canales, and Alvarado, 2024). Since there is an intersection between entrepreneurship and family business (Aldrich et al., 2021), this new school of thought can be applied to family business studies. Appendix (1 and 2) shows the recent literature on family businesses using a dysfunctional perspective, linking to entrepreneurship schools of thought because of the intersection mentioned. This literature review suggests that this is the first attempt to do so.
The Appendix 1 shows a clear trend in the FB literature toward a dysfunctional perspective, as Turner et al. (2013) and Söderlund (2002) mention that some researchers (Montiel and Kidwell) are leading the vision.
Figure 1 constitutes the central theoretical axis for analyzing dysfunctionality in family businesses, providing a fundamental conceptual framework. This figure not only visualizes the elements that have been termed dysfunctional studies in family firms (DYSFB) but also lays the groundwork for future research in family firms and complementary areas such as entrepreneurship, innovation, organization, and management.
This theoretical representation is based on the works of Montiel, Clark, and Calderon (2020); Montiel, Canales, and Morales (2023); and Montiel, Canales, and Alvarado (2024), structures a series of stages to identify key categories and enable their subsequent quantification or qualification. Figure 1 schematically shows the deviations from the ideal situation of family businesses in detail, highlighting their negative impact on economic and social systems and the interaction between individual actions and detrimental relationships with the internal and external environment.
The selection criteria for constructing the proposal entitled Kaleidoscope of Dysfunctional Entrepreneurship were based on a priori categories established through an exhaustive literature review. Their identification by the researcher distinguishes these categories and reflects concepts or codes relevant to explaining the phenomenon under study. This analysis recognized the possibility of grouping the categories into four quadrants, facilitating the organization of information and providing an exploratory theoretical-conceptual framework to examine the underlying logic in the complexity of dysfunctional studies on family businesses.
The “Kaleidoscope of Dysfunctionalities in Family Businesses” model presented in Figure 1 becomes a crucial analytical tool by allowing a comprehensive approach that exposes and examines deviations from ideal organizational behavior. This facilitates the study of family business dysfunctionalities and provides a solid basis for assessing their impact on long-term organizational performance.
To this end, we propose segmenting the kaleidoscope into four quadrants. The first quadrant concerns the psychological dysfunctions of entrepreneurs/founders and their collaborators, the second concerns dysfunctions within the entrepreneurial ecosystem, the third concerns organizational dysfunctions, and the fourth addresses dysfunctions associated with the business's future vision.
The quadrant of psychological dysfunction in the upper right corner of the kaleidoscope pertains to personal behaviors, attitudes, knowledge, and emotions that may divert or inhibit entrepreneurial behavior. Factors such as overconfidence, fear of failure, excessive risk aversion, impulsive decision-making, chronic stress, emotional burnout, confirmation bias, and a short-term focus on success were identified within this domain.
Figure 1 constitutes a theoretical-conceptual framework designed to enhance the understanding of dysfunctional elements that impact family businesses. It aims to elucidate the dynamics stemming from sustainability, governance, external connections, and decision-making processes. This Kaleidoscope of Dysfunctionalities in Family Businesses provides a structured perspective, enabling the quantitative or qualitative assessment of deviations from the ideal state of family businesses and facilitating strategies to address these dysfunctions effectively. However, as an exploratory model, its primary limitation lies in its foundation on a documentary review. Nonetheless, it offers a robust conceptual basis for future validation and practical implementation.
Overconfidence bias is a dysfunction of the entrepreneur/founder that manifests as an overestimation of their own abilities or those of their collaborators, leading to an underestimation of risks and actual probabilities of success. Fear of failure and excessive risk aversion prevent emerging entrepreneurs/founder from seizing growth opportunities, as they hinder their ability to act swiftly in adverse situations. Additionally, the tendency to make impulsive decisions without prior evaluation can lead to negative behaviors, such as anxiety, euphoria, or stress.
Chronic stress results from the constant pressure associated with managing a business, affecting the entrepreneur's physical and mental health. Simultaneously, chronic stress leads to emotional burnout, which results from excessive work dedication. These conditions negatively affect productivity, creativity, and the ability to make strategic decisions.
Confirmation bias refers to the tendency to seek out and favor information that confirms pre-existing beliefs, which involves ignoring or undervaluing divergent information and can lead to a distorted view of reality. A short-term focus on business success involves concentrating on immediate gains at the expense of long-term performance. This focus can lead the entrepreneur/founder to deviate from the strategic decisions that would benefit the business. Collectively, these psychological dysfunctions could act as significant barriers, limiting both the entrepreneur's potential and the overall performance of the venture.
The second quadrant, Dysfunctions of the Entrepreneurial Ecosystem, describes the anomalous connections between entrepreneurs/founders and their environment. Specifically, it addresses how various actors (entrepreneurs, investors, institutions, and customers) interact and contribute to a business’s success or failure. These dysfunctions are characterized by a lack of infrastructure, financing issues, inadequate network formation, bureaucracy, insufficient training and talent development, cultural and social barriers, inefficient market structures, and disconnection among ecosystem actors.
The lack of infrastructure to foster or promote entrepreneurship within family businesses constitutes a dysfunction as the scarcity of material resources is reflected in the absence of coworking spaces, access to advanced technologies, and effective distribution networks. Financing issues limit access to venture capital and the economic incentives necessary for business growth. At the same time, inadequate support networks prevent entrepreneurs/founder from accessing mentoring, advisory structures, and contacts that could provide them with new knowledge and infrastructure.
Bureaucracy refers to regulations, administrative barriers, and unfavorable government policies that hinder establishing and operating new businesses. This dysfunction is linked to a lack of training and talent development due to the scarcity of educational or training programs that cultivate the skills necessary for entrepreneurial success. Additionally, market problems, represented by monopolistic or inefficient productive structures and cultural barriers, limit the generation of innovative ideas, foster unfair competition, or hinder access to new markets.
The dysfunctions mentioned above lead to a disconnection among the ecosystem's actors, characterized by a lack of collaboration and communication among entrepreneurs, investors, academics, and other stakeholders. Consequently, connections with the environment limit the ecosystem's effectiveness and potential for innovation and economic growth.
The third quadrant describes the organizational dysfunctions that impact internal venture operations. This includes a rigid organizational structure, lack of effective leadership, deficiencies in internal communication, inefficient processes, high employee turnover, misalignment with the business's vision and mission, ineffective talent management, resistance to change, a toxic organizational culture, and inefficient human and material resources management.
A rigid structure represents dysfunction, as enterprises with hierarchical organizations often inhibit knowledge generation and limit their ability to respond to rapid market changes. A lack of effective leadership characterizes dysfunctional situations in business performance, as the absence of a leader can result in a lack of direction, internal conflicts, and low morale among business participants. Deficiencies in internal communication foster a negative attitude toward entrepreneurial development, leading to potential misunderstandings, loss of crucial information, and delays in decision-making. Additionally, inefficient internal processes slow company operations, increase operational costs and diminish the ability to manage organizational resources effectively.
In enterprises that provide employment, high staff turnover represents dysfunction. It can indicate organizational issues related to leadership, a toxic culture, or a lack of professional development opportunities, which can impact the formation of knowledge networks within the company.
The lack of alignment with the business's mission and vision represents an adverse condition by highlighting the disconnect between organizational objectives and vision. This disconnect may result from a lack of leadership and insufficient clarity in the business strategy. Ineffective talent management limits the ability to generate new knowledge for innovation and growth, whereas resistance to change hampers the adoption of new technologies, work methods, or innovations. Such situations can lead to businesses falling behind competitors willing to innovate.
In summary, organizational dysfunction leads to the development of a weak or toxic entrepreneurial culture that undermines teamwork, productivity, and the business's overall success. This, in turn, results in ineffective management of time and resources.
The fourth quadrant, which addresses entrepreneurial dysfunctions about the future vision of the business, refers to failures or deficiencies that can impact a company's ability to achieve its long-term goals. Among these negative situations are the lack of clarity in vision, weak strategic planning, and the absence of a positive outlook on the future benefits of innovation. Setting long-term objectives and guiding strategic decisions becomes challenging when an enterprise lacks a clear and shared vision. This lack of vision can lead to a lack of direction and cohesion within a team. Simultaneously, the absence of effective strategic planning prevents the organization from anticipating and adapting to environmental changes, thereby limiting the growth and sustainability of the business over the long term.
In general, entrepreneurial dysfunction is metaphorically represented by a kaleidoscope comprising four quadrants, each encompassing psychological, economic, and administrative perspectives and how adverse factors may interrelate. As the kaleidoscope turns, combinations of dysfunctions that could affect family businesses performance are revealed, with dysfunctional connections forming a vicious cycle at its center. This metaphor seeks to establish a new school of thought that conceptualizes family businesses as a network of complex connections, some of which may exhibit an adverse nature.
Conclusion
This seminal study calls for establishing dysfunctional studies in the family business (DYSFB) school of thought and, more profoundly, exploring its proposed theoretical foundation and potential methodologies from a multidisciplinary standpoint. The literature review presented in Table 1 supports the idea that all four quadrants described in the model affect and disturb the operational/strategic family business tasks and processes.
There are myriad opportunities for this new school of thought, which today emerges forcefully in family businesses due to the world’s geopolitical, financial, geoeconomic, and geosocial changes. This novel theoretical frame can help us understand these changes more deeply.
We are aware that our proposal to establish the DYSFB can be challenging and subject to debate and controversy. We acknowledge that this study may be considered its foundation, and we are aware of the risks and limitations of the present study.
However, history has taught that every new school of thought has been in the same position; therefore, there is no reason to expect the DYSFB to be an exception. This new perspective has a long road ahead to achieving a robust and developed framework, both in theory and methods. Family businesses, as relevant as they are in today’s national economies across the globe, are worth and deserve more attention from academics and policymakers.
The results of this study have implications for the development of public policies. More awareness and action plans can be made by business incubation organizations, federal, state, and municipal entrepreneurship, small- and medium-sized company (SME) programs, educational institutions, and entrepreneurial families and their founders.
