Factors Affecting The Sustainability of Family Businesses in Cameroon: An Empirical Study in Northwest and Southwest Regions of Cameroon

IBIMA Publishing
Journal of Entrepreneurship: Research & Practice

http://ibimapublishing.com/articles/JERP/2017/658737/
Vol. 2017 (2017), Article ID 658737, 19 pages
DOI: 10.5171/2017.658737
Research Article
Factors Affecting the Sustainability of Family

Businesses in Cameroon: An Empirical Study
in Northwest and Southwest Regions of
Cameroon
Nkam Micheal Cho1, Sena Okuboyejo2 and Ndamsa Dickson3
1,2
ICT University Cameroon
3
University of Bamenda Cameroon
Correspondence should be addressed to: Nkam Mike; nkammike@yahoo.com

Received date: 22 July 2016; Accepted date: 19 December 2016; Published date: 10 March 2017
Academic Editor: Robert Ong’eta Kinanga
Copyright © 2017. Nkam Micheal Cho, Sena Okuboyejo and Ndamsa Dickson. Distributed under Creative
Commons CC-BY 4.0
Abstract
Most of the businesses in Cameroon are family-owned and managed. These businesses fall
within the Small and Medium size Enterprises (SMEs) which contribute greatly to the GP of
Cameroon and also provide jobs to many Cameroonians. These businesses face a lot of
challenges ranging from their initiations, management and their lifespan, leading to the collapse
of most of them leaving many people jobless. This study was carried out in the Northwest and
Southwest Regions of Cameroon to identify those factors that influence the sustainability of this
type of businesses so as to propose measures to both the State and Family Business owners that
can be put in place to remedy the situation. Given that this was an exploratory research, a
survey-based approach was used through the purposive sampling technique, where some thirty
family businesses were studied using questionnaires and interviews. Both quantitative and
qualitative research methods were used and the data were analyzed with the aid of SPSS 17 and
Stata 14 software programs. Descriptive statistics was used to summarize the sampled opinions
of the respondents. The results show that most of the family business initiators do not consider
the sustainability of the businesses after they die and hence do not prepare for succession.
Results from this study will enlighten stakeholders concerned with family businesses on the
extent of sustainability and its configuration across business size as well as its determinants.
Keywords: Family businesses, Business Sustainability, Cameroon, Northwest and Southwest

Regions
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Cite this Article as: Nkam Micheal Cho, Sena Okuboyejo and Ndamsa Dickson (2017), “Factors Affecting the
Sustainability of Family Businesses in Cameroon: An Empirical Study in Northwest and Southwest Regions of
Cameroon”, Journal of Entrepreneurship: Research & Practice, Vol. 2017 (2017), Article ID 658737, DOI:
10.5171/2017.658737
Journal of Entrepreneurship: Research & Practice 2
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Background of the Study reforms needed to stimulate the private

sector by improving on the business
Throughout history, families and businesses environment and investment climate to
have always existed to a large extent in facilitate firm entry, growth and survival
tandem (Morck and Yeung, 2002; Narva, (Tabi and Fomba (2013). Entrepreneurship
2001). The economic necessity of earning a is a determining factor in the economic
living and supporting a family is often the growth of most nations. The family
underlying reason for starting and growing a businesses, most of which fall within the
business (Winter et al. 1998). Among other small and medium size enterprises (SMEs),
motivators, lifestyle and wealth accumulation are at the centre of such growth in most
goals play an important role in whether a developing countries including Cameroon.
particular family member or members They are seen as the engines of employment,
choose to start a business in conjunction with alleviating poverty and improving equality
their family. The economic landscape of most (Okpukpara, 2009; Ayyagari et al., 2011). In
nations remains dominated by family Cameroon, a family business usually starts as
businesses (Heck and Stafford, 2001; Klein, a small scale sole proprietor with just a few
2000) which constitute a greater percentage paid employees, who are bound by
of the private sector. Family businesses carry geographical, ideological or psychological
the weight of economic wealth and job factors. They ensure the day-to-day running
creation in most economies. For example, in of the business. It is virtually managed by the
the US, Canada and Slovenia, etc., family manager-owner, who is generally
businesses account for about 80 to 90 responsible for both physical and
percent of the business enterprises and psychological maintenance of the workers
about 50 percent of employment and GNP (Fomba, 2007). An analysis of the country’s
(Phan et al., 2005; Dun et al., 2007). Other growth factors reveals that its economy
researchers have also observed that depends more than 50 percent on Household
generally about 66% of new jobs in the world and Sole Proprietor Businesses which
are created by family businesses (Perreault, constitute a sector comprising mostly
2000; Gaspé Beaubien, 1995). Similarly, informal units with no guarantee of
Etcheu (2003) observed that 90% to 95% of sustainable growth due to their generally
businesses in Cameroon are small and fluctuating performances. Most of these are
medium size enterprises comprising of family businesses characterized by the
family businesses and account for about concentration of capital in the hands of one
49.7% of employment (Perdrix, 2005). Since person, with family members of the
the mid-1980s, most African countries proprietor involved in the management of
implemented both economic and financial the company and low financing by bank
reforms to achieve macroeconomic stability loans.
and improve economic governance. These
reforms in many countries however were One of the major weaknesses of most African
still unsatisfactory as concerns fiscal and Economies and Cameroon in particular could
monetary management. Therefore, more be the absence of a clear understanding of
efforts are needed for these countries to the role of entrepreneurship in the economic
improve their macroeconomic environment development of a nation. However, just like
and achieve sustainable growth rates in every other business, family-owned and
order to meet most of their development managed businesses in Cameroon and
targets gearing towards poverty reduction. elsewhere are facing a considerable number
The private sector is an important channel of challenges ranging from their initiation to
through which this could be realized, and management and consequently their lifespan.
therefore there is a need for these For example, report from the Family
governments to re-examine microeconomic Business Consulting (2009) indicates that
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Nkam Micheal Cho, Sena Okuboyejo and Ndamsa Dickson (2017), Journal of Entrepreneurship: Research &
Practice, DOI: 10.5171/2017.658737
3 Journal of Entrepreneurship: Research & Practice
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only about 30% of family businesses survive What can be done to ensure that family-
into the second generation, 12% are still owned and managed businesses in Cameroon
viable into the third generation and only are more sustainable?
about 3% of all family businesses operate
into the fourth generation and beyond. Dyer The Research Objectives: To find out the
& Whetten (2006), in their article titled extent to which family businesses in
“Entrepreneurship Theory and Practice”, Cameroon are sustainable, to investigate and
observe that even though family businesses analyze factors that affect sustainability of
outperform non-family controlled firms on family-owned and managed businesses in
social responsibility, family firms do not Cameroon, to propose measures that can be
endure over time. Wayne (2010), in his put in place by both the policies’ makers and
article “Creating a Sustainable Family owners of family businesses to ensure that
Business”, found that less than 30% of family these businesses should be more sustainable.
businesses survive into the third generation
of family ownership. These challenges Research Hypothesis: This study is guided
inevitably provide a base for several by the following testable hypothesis, other
preoccupations to be raised on issues things being equal:
pertaining to the sustainability of family
businesses in general and factors that Family owned and managed businesses in
contribute to their non-sustainability in Cameroon are not sustainable and cultural,
particular. managerial and technical factors are
responsible for the non-sustainability of
Problem Statement: Family-owned and family owned and managed businesses.
managed businesses in Cameroon have not The Scope of the Research: This research
been an exemption to the issues that plague will be conducted in the English speaking
the existence of family enterprises around part of Cameroon which are the Northwest
the world, given that they face a considerable and southwest Regions.
number of challenges ranging from their
initiation to management and consequently Cameroon is a country in Central Africa with
their lifespan. This situation has been a population of about 23,130,708 as of 2014
observed with many family businesses in and has a surface area of 475,440 sq km.
Cameroon. Given the importance of this Cameroon is bordered by Nigeria to the west,
sector and its contributions to the economy Chad to the northeast, the Central Africa
of Cameroon, the worry is the fact that most Republic to the east, Gabon, Equatorial
of these family businesses in Cameroon close Guinea and the Republic of Congo to the
down when their initiators die, leaving many south. Cameroon is divided into 10
people unemployed. This inevitably has a administrative regions and has two official
negative impact on the economic languages; French and English. The empirical
development of Cameroon. Based on this, our part of this study will be conducted in the
study therefore is preoccupied with the Northwest and Southwest Regions which
following questions, objectives and make part of the ten administrative regions
hypothesis as it seeks to carry out an in- of Cameroon and which are the two English
depth investigation on issues pertaining to speaking regions of Cameroon. Within this
sustainability of family- owned and managed area of study we shall focus on family-owned
businesses in Cameroon. and managed businesses operating in the
main towns of Bamenda in the Northwest
Research questions: To what extend are region, Kumba, Buea and Limbe in the
family-owned and managed businesses in Southwest region. The designated sample
Cameroon sustainable? What are the factors size for our study is 30 family businesses,
that affect the sustainability of family-owned targeting 130 respondents, with at least 4
and managed enterprises in Cameroon?
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respondents expected to be selected from Review of Basic Terms and Concepts:

each family-owned and managed business. . Here we are going to review some of the
fundamental concepts and terms that are
Significance of the Study: This study will shared across this study ranging from
provide a better understanding on how definitions to the consideration of different
businesses that are failing can draw from opinions as regards some concepts.
those that have recorded a marked success as
far as sustainability is concerned. With Business: According to the Business
review of lessons drawn from other Dictionary, a business is an organization or
businesses worldwide that have succeeded economic system where goods and services
in remaining considerably sustainable even are exchanged for one another or for money.
after the death of their initiators, it will be Businesses can be privately owned, not-for-
interesting for Cameroonian family business profit or state-owned. Family businesses,
stakeholders to know how factors which are the main thrust of our research
responsible for failure of family-owned and work, are part of privately owned businesses.
managed businesses can be avoided or
curbed during the running of a business. Family: The definitions of a family are
Lastly, apart from contributing to the existing evolving following a continuous change in
literature on Family business sustainability the demographic structure of different
in Cameroon, this study builds on actual countries and in different contexts. In the
practices and experiences, such that it can be United States, the definition of a family is
linked to action and their insights contribute based on the ‘nuclear’ model of a
to changing practice in the field of family heterosexual married couple, living with
entrepreneurship undertaken by their children in a household headed by the
Cameroonians as a whole. Apart from husband (Rothausen, 1999). However, the
providing useful information for the demographic structure of American families
country’s current and future achievements, has changed significantly with increasing
this work would also likely arouse the divorce rates and single-parent households
interest of other research students to (Fields, 2003) together with the prevailing
conduct more research in this field of study. homosexuality marriages leading to a
different perception of what a family is. In
Review of Related Works many Asian countries, a family includes three
or more generations living in one household,
This section deals with the literature review, sometimes with aunts, uncles and cousins in
comprising of the conceptual framework and addition to parents and children (Rothausen-
the theoretical framework. The conceptual Vange, 2005). The African countries
framework consists of the review and definition of a family is very similar to that of
definition of some basic terms and concepts Asian countries but for the fact that this
while the theoretical framework on its part extended family may not necessarily be living
presents some theories on family businesses, in one household. The role of extended
bringing out some empirical literature and families is becoming progressively more
some models on family businesses. important given increases in marital
instability and divorce rates (Bengston,
Conceptual Framework: A conceptual 2001). This also raises a number of questions
framework is an analytical tool with several with respect to the definition of a family
variations and contexts. It is used to make business.
conceptual distinctions and organize ideas. In
fact, it can be defined as a way ideas are Family Business: The concept of family
organized to achieve a research project’s business and family enterprise are often used
purpose. interchangeably although the latter and the
former are closely associated with the Anglo
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Saxon and French traditions respectively. since we are more interested in seeing the
The concept of family enterprise is also family businesses transmitted from one
bound to vary considering the fact that they generation to another and hence the concept
are based on unique socio-cultural realities of sustainability which is considered as the
of a given group of people and institutions. main performance indicator of family
This justifies differences in Western and business needs to be taken into
African based definitions due to predominant consideration.
practices of nuclear and extended family
systems respectively. The literature on family In Cameroon, authors like Tchankam (2000)
businesses or family firms ranges widely have attempted a definition of a family
with respect to definitions of what family business taking into consideration all specific
businesses are. Although, there is a lack of a aspects of the Cameroonian context. As such
widely accepted definition of what a family he defines a family business as a type of
business is (Bennedsen et al., 2010) , authors enterprise where members of the same
like Miller et al,.(2007); have succeeded in family control activities or work and actively
giving a comprehensive review of various participate in the management, and maintain
definitions of family businesses. a strong relationship between the family and
the enterprise. Such enterprises possess
Considering that the definition of a family
unique characteristics, as compared to those
business can vary widely from study to study,
with non-family characteristics, since they
Dyer (2006) suggests two versions of such
rely much on family members and kinsmen
definitions. The first one is subjective,
that influence the vision, perception and
defining a family firm as one whose
values that determine the structure and
management is controlled by the family
functioning of the enterprises. With regard to
members who own it. In this case, outside
motives behind this business, family growth,
persons are not involved in the management
personal occupation, extra family income and
and there is strict family
containment of jobless family members have
ownership/management. The second
usually been observed. The definition of a
definition is more objective, considering a
family business in our context therefore is
firm to be a family business if it meets certain
very close to the one used by Amit and
criteria such as the family’s ownership
Villalonga (2006) and the objective version
percentage or the number of family members
of Dyer (2006).
holding directorships or filling key
management posts.
Business Sustainability: Business
According to Allouche and Amann (2008), a
sustainability, also known as corporate
family business is a business in which one or
sustainability is the management and
several families significantly influence its
coordination of environmental, social and
development through ownership of its
financial demands and concerns to ensure
capital, placing the emphasis on family ties
responsible, ethical and ongoing success
with regard to the process of selecting
(Wigmore, 2013). According to the ‘Financial
company directors, whether they are family
Times’, business sustainability represents
members or workers recruited externally,
resiliency over time-businesses that can
and expressing a desire to transmit the
survive shocks because they are intimately
business to the next generation while
connected to healthy economic, social and
understanding the importance of the
environmental system. Such businesses
business for the interests and objectives of
create economic value and contribute to
the family. This definition emphasizes the
healthy ecosystem and strong communities.
sustainable dimension of the business,
Some practices that foster business
characterized by the desire to transmit the
sustainability include: stakeholder
patrimony it represents from one generation
engagement, environmental management
to another, in addition of the presence of the
family. This definition seems to suit our work
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system, life cycle analysis, reporting and management of family businesses, and also
disclosure etc. theories which are in line with the
explanation of factors responsible for the
Theoretical Framework: A theoretical non-sustainability of family businesses
framework is a collection of interrelated especially after the death of the initiators.
concepts linking to the area of study. It
guides our research, determining what things Maslow’s Hierarchy of Needs Motivation
we will measure, and what statistical Theory: Maslow (1943) observed that
relationships we will look for. It presents human beings are driven by different factors
some theories related to the field of study at different times and that these driving
together with some models connected to the forces are hierarchical, starting from the
study. Even though family businesses bottom layer to the top. Maslow then came
represent a dominant form of economic up with the Hierarchy of Needs in which he
organization throughout the world attempted to capture these different levels of
(Beckhard and Dyer, 1983; Shanker and motivation. He also observed that the high
Astrachan, 1996), it is unfortunate that needs do not appear unless and until the
family businesses have received scant unsatisfied lower needs are satisfied. The
attention in the mainstream management different levels of needs also correspond to
literature, particularly with respect to the the different stages of life. The basic
development of theories of the firm (James J. physiological needs at the bottom are
Chrisman, 2003). However, considering its predominant in infancy; safety needs come
number and contributions to the world into focus in early childhood; esteem needs
economy, researchers are now interested in predominate in early adulthood and self-
the development of theories on family actualization only really comes into focus in
businesses. This research will examine some mature adulthood.
of the theories related to the creation and
Self
Actualization
Esteem Needs
Love and Belonging Needs
Safety Needs
Physiological Needs
Figure 1: Illustration of Maslow’s Hierarchy of Needs
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The first level, at the bottom of the pyramid, interests at the expense of those who actually
consists of short- term basic needs, also own the business (Barney and Hersterly,
known as physiological needs; food, warmth, 2008). This theory specifies certain
water etc. The second level consists of mechanisms which reduce agency loss such
longer-term safety needs; security, order, as tie executive compensation, levels of
stability etc. The third level represents the benefits, and also manager’s incentive
social needs for affiliation, also known as schemes by rewarding them financially or
“love and belonging”. At this level, the human offering shares that align the financial
beings want to have stable relationships. The interest of executives to motivate them for
fourth level represents the need for esteem. better performance. It will be important to
Within the different social groups human understand this theory in this study which is
beings want to be recognized and admired as aimed at examining the sustainability of
individuals who accomplish things; want family businesses in Cameroon. The
prestige and power. Almost at the top of the importance of motivating both family
pyramid, self-actualization is the desire to members and non-family members who
experience ever deeper fulfillment by occupy managerial positions in family
realizing (actualizing) more and more human businesses should not be undermined. When
potential. At the very top of the pyramid is managers are offered shares through
the desire for self-transcendence; to incentives schemes, they will be protecting
experience, unite with and serve that which their interests by protecting the business and
is beyond the individual self (peak hence making the business sustainable.
experiences): the unity of all being( Koltko-
Rivera, 2006). This theory is in line with this Agency Theory: Agency theory and
research since it gives us reasons why people stewardship theory are two interconnected
create family businesses. It is on the basis of theories that describe the relationship
the various needs that individuals create between two actors: the principal and the
businesses. This is supported by Winter et al. agent. Therefore, stewardship theory extends
(1998) who acknowledged that the economic agency theory by integrating the views of
necessity of earning a living and supporting a other disciplines. The agency theory, also
family is the underlying reason for starting known as principal-agent theory is
and growing a business. At this level the theoretically based on divergent interests,
motivation of creating a business is first to asymmetric information, opportunistic
satisfy physiological and safety needs. Among behaviour, and deals with the conflict of
other motivators, lifestyle and wealth interest between an agent, who acts as the
accumulation goals play an important role in representative of the principal, and the
urging a family member or family members principal who delegates work to an agent.
to start a business. Here, the motivation is This is always associated with agency costs
the needs for self-esteem. Understanding the as a result of conflict in a situation where the
motivations of starting a business may help two have different interests to protect. In a
us understand how sustainable will the situation where the principal and the agent
business be. have the same interests, no conflict of
interest exists and no agency costs arise
Stewardship Theory: This is a theory that (Jensen and Meckling, 1976). Typically, an
explains the situation whereby when agent will possess more or better
managers are left on their own, they will act information, the decision situations about
as responsible stewards of the assets they himself than the principal will do (Ross,
control. This theory is an alternative view of 1973). As a result of this asymmetric
the agency theory which explains the information, two types of agency conflict can
phenomenon whereby managers of be distinguished: Adverse selection and
businesses tend to act to their own self- moral hazard. Adverse selection describes a
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situation before contracting, where the control of the non-family manager can
principal unknowingly chooses an agent who decrease information asymmetries between
is less performing, committed and family owner (principal) and non-family
industrious than the principal expected. manager (agent). This would limit the
Moral hazard describes a situation after possibilities of non-family managers using
contracting, where the agent acts on his or the business resources for their own
her own interests rather than the interests of purposes which always reduce the
the principal. Complete contracts, which performance of the business and affect the
anticipate and provide for every eventuality, owner’s interests negatively (Ang et al.,
can only exist if information is perfect and 2000).
costless and people are unbounded in their
mental capabilities (Williamson, 1975). But Family Owner versus Non-Family
this is often not the case in reality, where Shareholder: An agency conflict can also
people have bounded rationality (Simon, exist between a dominant shareholder and a
1957). This leads to incomplete contracts minority shareholder. In publicly traded
between the principal and the agent. In order family firms, the family often holds large
to control the adverse selection and moral stakes while other shareholders hold only
hazard problems, principals have to invest in small stakes. In this case, information
the recruiting process and align interests asymmetries and a conflict of interests may
between themselves and agents. The costs exist between the dominant shareholder and
related to the control of these agency the minority shareholder. In particular, in
problems are called agency costs. In family family business groups where a family
businesses, three different agency conflicts controls a large number of firms, minority
may occur, namely: family owner versus non- shareholders can be disadvantaged. These
family manager, family owner versus non- family business groups often use a pyramidal
family shareholder, and family owner versus structure in order to separate ownership
family manager. We are going to examine from control. This means that a family
these different agency conflicts situations directly controls a firm, which in turn
separately. controls other firms, each of which controls
other firms and so on. Through this chain of
Family Owner versus Non-Family Manager: ownership relations, the family achieves
Many family businesses would in many cases control over a large number of firms. Morck
employ non-family managers because of lack and Yeung (2003, p. 367) state that “such
of qualified members or lack of agreement as structures give rise to their own set of agency
of which family members should manage the problems, as managers act for the controlling
business. In this case the relationship family, but not for shareholders in general.”
between the family owner (principal) and the Minority shareholders are used to bring in
non-family manager (agent) appears capital, but without receiving a majority of
deceptively as the case with non-family votes in one of the family business group’s
businesses. Family members are highly firms. The conflict of interest increases when
interested in the good performance and the the family firm is managed by a family
future of the business since most of their member. The information asymmetries
lives depend on it (Andres, 2008). This high between the family, as the dominant
interest of the family members to the success shareholder, and minority shareholders
of the business would lead to a very close increase because the manager is a member of
monitoring of the non-family manager, a the family and shares more information with
situation Demsetz and Lehn (1985) state that the family than he or she does with the
such concentrated ownership indicates a external shareholders. Family management
strong economic incentive to monitor the can lead to managerial entrenchment
non-family manager and hence reducing problems, which describe a situation where a
agency costs. This close and more effective family manager possesses so much power
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that he or she can act in his or her own bundle of resources that are distinctive to a
interest or in the interests of the controlling firm as a result of family involvement as the
family. In this case, external or minority ‘familiness’ of the firm.”This unique bundle of
shareholders are disadvantaged again. resources can arise when a family impacts a
business. The interaction between a family,
Family owner versus family manager: its members, and the business are inimitable
Firms owned by a family are often managed for each family firm. Sirmon and Hitt (2003)
by family members. In this case, agency costs identify five family firm-specific resources
may decrease, because there is no separation and attributes that have the potential to
between ownership and control, Fama and provide competitive advantages for family
Jensen (1983a). Principal and agent are firms. In their resource management process
unified in the family manager, who ideally model, they argue that family firms evaluate,
acts in the interests of the family. The acquire, shed, bundle, and leverage these
identity of the goals and interests between resources in a different way than do non-
the family owner and family manager may family firms, resulting in a potential
lead to lower agency costs. competitive advantage. These resources are
human capital, social capital, survivability
According to Miller and Le Breton-Miller
capital, patient financial capital, and
(2006), family managers often have
governance structure.
emotional relationships with their companies
as their family’s wealth, personal satisfaction,
Family Business Models: According to the
and the satisfaction of the family are tied to
Harvard Business Review Jan.23, 2015, a
firm performance. They observed that the
business model is a design for the successful
Stewardship theory supports this view by
operation of a business, identifying revenue
describing family managers as stewards, who
sources, customer base, product, and detail
are intrinsically motivated by higher-level
financing. A successful family business can
needs to act in the interests of the firm
continue to grow and achieve for
and/or the family. Stewardship theory is
generations, but the nature of the family
based on a different model of man and a
enterprise can often make managing the
different behaviour of individuals in
business and being part of the family at the
comparison to agency theory, Davis et al.
same time very complicated. This increasing
(1997), Donaldson and Davis (1991).
complexity has to be properly managed. This
situation can be well handled if appropriate
Resource-based View Theory: The
family business models are applied. In this
resource-based view theory (RBV) aims at
research, we made use of two of such models;
answering the question of why some firms
The Three-Circle Family Business Model
outperform other firms. Apart from being
which facilitates the understanding of the
used in family business research, the RBV has
interactions that occur in a family-owned
been used as an underlying theory by many
business, and a Multi-Level Family Business
studies in different fields of research. For
Choice Model which provides an actual
example, Hitt et al. (2001b) show that human
decision-making process within a family-
capital has an indirect and a direct effect on
owned business.
firm performance. Miller and Shamsie (1996)
test the RBV and find evidence that in
The Three-circle Model of Family
contrasting environments different types of
Businesses: The three circle family business
resources (knowledge-based vs. property
system model was proposed and developed
based) are the explanation of financial
by Tagiuri and Davis in 1982. The idea was to
performance. In addition, family firm
create a tool such as a framework, for helping
researchers have adopted the RBV to resolve
family businesses to analyze their existing
family firm issues. The most widely known
business model at the succession time and to
study using the RBV stems from Habbershon
co-design a new one that the successor could
and Williams (1999, p. 1) who define “the
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execute to survive or grow. This framework sources of value creation. The three-circle
clarifies, in simple graphic terms, the three model of family business is very important
interdependent and overlapping groups that for the explanation of our work which is
comprise the family business system: family, intended to investigate the sustainability of
business and ownership. As a result of this family businesses. It will be noticed that the
overlap, there are seven interest groups mission and the structure of the family
present, each with its own legitimate business with respect to the business, family
perspectives, goals and dynamics. The long- and ownership has a lot to do with the
term success of family business systems sustainability of the family business.
depends on the functioning and mutual According to Jensen and Meckling (1976) the
support of each of these groups. cost of reducing information asymmetries
and their accompanying agency threats is
The challenge for business families is that
lowest when owners directly participate in
family, ownership and business roles involve
the management of the business. It therefore
different and sometimes conflicting values,
means that if most of the managers of family
goals, and actions. For example, family
businesses are family members who also
members put a high priority on emotional
have ownership of the business (i.e those
capital; the family success that unites them
who fall in the region numbered 7, which is
through consecutive generations. Executives
the intersection of the business, family and
in the business are concerned about strategy
ownership), the agency costs will be greatly
and social capital; the reputation of their firm
reduced, leading to a more profitability of the
in the marketplace. Owners are interested in
business and hence greater chances of
financial capital; performance in terms of
sustainability.
wealth creation. A three-circle family model
is often used to show the three principal
Multi-Level Family Business Choice
roles in a family-owned or -controlled
Model: Although the three circle model for
organization: Family, Ownership and
family businesses facilitates our
Management. This model shows how the
understanding of the interactions that occur
roles may overlap. Everyone in the family (in
in a family-owned business, it does not
all generations) obviously belongs to the
provide an actual decision-making process
Family circle, but some family members will
which may affect its sustainability. It is for
never own shares in the family business, or
this reason that the current research
ever work there. A family member is
proposes a decision-making model for
concerned with social capital (reputation
family-owned business that compliments the
within the community), dividends, and family
Tagiuri and Davis (1982) and Ward (1988)
unity. The Ownership circle may include
models of interaction. Hence, a Multi-Level
family members, investors and/or employee-
Family Business Choice Model has come in to
owners. An owner is concerned with
fill this gap.
financial capital (business performance and
dividends). The Management circle typically
Explanation of the Multi-Level Family
includes non-family members who are
Business Choice Model
employed by the family business. Family
members may also be employees. An
The first level of the model requires the
employee is concerned with social capital
existence of a business opportunity requiring
(reputation), emotional capital (career
a decision; for example, the opportunity to
opportunities, bonuses and fair performance
extend a product line, or the consideration to
measures).A few people; for example, the
dismiss an unproductive family employee.
founder or a senior family member; may hold
The second level consists of two prongs. The
all three roles: family member, owner and
first prong is the current family situation.
employee. These individuals are intensely
Members of the family business will assess
connected to the family business, and
whether the family situation is positive. If so,
concerned with any or all of the above
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consideration of the business opportunity need to place the family and business as a
would continue to the next step. If the priority. For example, if the business mission
current family situation was deemed statement emphasizes the goal of becoming a
negative then consideration would stop. The leader in the global economy, they may
second prong of level two entails the current embark on the strategy of expansion. On the
business situation. For example, if the other hand, if the family mission statement
business was currently facing cash flow emphasizes on the family legacy, they will
problems, then expansion at the current time embark on the strategy of sustaining the
would be unadvisable. If the family and business from generation to generation. In
business situations are considered positive this case, sustainability factor which is of
then the opportunity should be considered interest to this study will have to be critically
further. The third level consists of two examined
prongs. The first prong of level three
concerns the direction of the family and the Empirical Literature: This section reviews
second prong concerns the direction of the some empirical studies of the literature
business. That is, we consider whether concerning family businesses. Olson et al.
deciding in the affirmative on the (2003) in their study defined a family
opportunity coincides with the mission business as a business that is owned and
statements of the family and of the business. managed by one or more members of a
If the objectives of the family and business household of two or more people related by
are both being met then we would proceed to blood, marriage or adoption. Their work was
the fourth level of the decision making aimed at identifying strategies for families to
process. The fourth level entails analyzing utilize in order to increase the success of
the effect that deciding in the affirmative both their business and their family. The
would have on the family and on the review of this work is essential to our study
business. For example, a possible positive given that we aim at underscoring not only
family effect could be an increase in the sustainability but also non-sustainability
number of offices that exist, allowing for issues plaguing family-owned and managed
additional family members to assume businesses in Cameroon. Apart from finding
management positions. A possible positive out that aspects like business assets, age of
business effect would be an increase in sales. the business, personnel management,
If both the family and the business are owner’s weekly hours in the business, family
positively affected then the business employees and hiring temporary help were
opportunity should be pursued. We notice positively associated with increased
that this model has several layers to the achievements for both the business and the
actual decision-making process, but the family, the result of their study also showed
order of these layers is very important. that the success of the business depended on
family processes and how the family
This model is in line with this research work responded to disruptions rather than simply
since it is intended to provide guidance in how the owner managed the business alone.
family business decision-making. In this case, For Olson et al., (2003), when families let
if the decision-makers within a family tension build up within the family, the
business can objectively analyze the current business suffers. Single-generation
status of the family and the business, households were associated with less
interpret their family and business mission business revenue; however, if during hectic
statements, and understand the outcome of periods in the business the owner hired
the decision, then a good decision will be temporary workers rather than asking
made which will help in the sustainability of friends and relatives to help out, success
the business even when the initiator dies. increased. The family supply of labour to the
Due to the dual emphasis in decision making business was key to whether the family had a
in this model, Koenig (1999) emphasized the net positive effect because family employees
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had a much larger effect on revenue than are associated to family businesses. He
other variables. Olson et al recommended presents four of such theories namely: the
that consultants and family business resource-based view theory, the social
programs need to help business owners capital theory, the agency theory and the
realize the relationship between business stewardship theory. He went further to
revenue and employing relatives. compare the agency theory and the
stewardship theory, taking into
Miller et al., (2007) on their part adopt an consideration the psychological mechanisms
empirical approach of small firms that are and the situational mechanisms. In our work,
owned and managed by their founders. They we attempt to define a family business taking
compare family-owned and managed into consideration the Cameroonian context.
businesses with non-family businesses. Their In this light, we view family business as a
findings showed significant support for type of enterprise where members of the
aspects of stewardship perspective of family- same family control the activities or work
owned businesses, and no support for any and actively participate in the management,
element of the stagnation perspective. and maintain a strong relationship between
According to them, family-owned businesses the family and the business. On the other
have unique characteristics of stewardship. hand, as our work seeks to determine and
The owners are said to care deeply about the analyze the factors responsible for the
long term prospects of the business, in large sustainability of family-owned and managed
part because their family fortune, reputation businesses, especially when their initiators
and future are at stake. Miller et al., (2007) die, the agency theory and the stewardship
claim that the stewardship of family-owned theory become imperatively important since
businesses is said to be manifested by the sustainability of most businesses
unusual devotion to the continuity of the depends to a larger extent on management
company, by more assiduous nurturing of a which itself is always subjected to the agency
community of employees and by seeking out conflict between the owners, managers and
closer connections with customers to sustain employees at different levels. The detail
the business. Although the main thrust of our study and understanding of these theories by
research work falls apart with the above the owners of family businesses will reduce
point of view, it however goes in tandem this phenomenon which is always
with their second perspective of family- accompanied by the agency costs, and hence
owned businesses which proposes that will improve on the profitability of their
family-owned businesses are unusually businesses which may equally enhance
subject to stagnation. This is because they sustainability. According to Bertrand &
are said to face unique resource restrictions, Schoar (2006), involvement of families in
embrace conservative strategies, eschew businesses is very common in Latin America,
growth, and are therefore doomed to short Africa and the Middle East, and parts of
life. Kraiczy (2013) in his work accepts the Western Europe and Asia. They attempt to
challenges of developing a general definition bring out some reasons why family
of family business. He tries to give a businesses are so prevalent and the
definition of family business which according implications of family control for the
to him is the widely accepted definition. He governance, financing and overall
affirms that this difficulty is due to the performance of these businesses. They also
heterogeneity of family businesses. To him, a try to verify whether family businesses
business is said to be a family business if one evolve as an efficient response to the
of the following characteristics applies; a institutional and market environments, or
family is the owner, the business is family- whether they are the outcome of cultural
managed, or the business is controlled by a norms that might be costly for corporate
family. He equally delves into the decisions and economic outcomes. To them a
presentation and analysis of the theories that culture based on strong family ties may
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sometimes impede economic development. economies with high levels of corruption

Their idea is supported by a view that dates (Fisman, 2001; Faccio, forthcoming 2006).
back at least to Max Weber’s 1904 essay, Family values, Nepotism, legacy, inheritance
which argues that strong cultural norms are some of the factors they believe
predetermined family values may place influence the existence of family businesses.
restraints on the development of capitalist This work of Bertrand & Schoar (2006) is
economic activities. They put forward a very much in line with this research work
similar argument developed by Fukuyama which seeks to determine the sustainability
(1945), that in societies where people are of family businesses especially after the
raised to trust their closed family networks, death of their initiators. In this light, we
they are also taught to distrust people notice that the sustainability of a business
outside the family, which impedes the depends to a large extent on some cultural
development of formal institution in the aspects as well as the reasons for which the
society. That under such cultural views, business was created. If a family business is
suboptimal economic organizations can created in line with the view of Giovanni,
emerge when parents put too much weight which to him a family business is an
on keeping the business in the family, maybe inheritance to be protected and handed on
due to a strong sense of duty towards other from one generation to the other, it will
family members or a selfish desire to turn the certainly be protected and sustained for
business into a family legacy. In their attempt family legacy. On the other hand, if the
to give reasons why family businesses exist initiator of the business created it to survive
and a lot of importance is given to them, they and sustain his/her life economically, the
examine the words of Giovanni Agnelli, the business will likely collapse after his/her
late patriarch of the Italian industrial dynasty death. In Cameroon, several works have also
(as quoted in Betts, 2001). “The family been done with respect to family-owned
company is an inheritance to be protected businesses and issues relating to their
and handed on. It is the outcome of the next productivity. Tabi and Fomba (2013) have
and each generation’s commitment to the attempted to explain productivity
last”. Similarly, John Walton of Wal-Mart performance between family and non-family
describes his family’s perspective on their firms in Cameroon, and also to determine
involvement with Wal-Mart as follows whether the relative contribution to the
(Weber and Lavel, 2001): “We view the social and economic development of a
company really more as a trust, as a legacy country by family businesses as opposed to
we are responsible for, rather than non-family businesses is related to
something we own”. The underlying idea is differences in production technology and
that the links that bind current generation to production efficiency. Their work portrays
future ones provide family businesses with a the main features of corporate governance
focus of maximizing long-run returns and the model of Cameroonian businesses. They
desire to pursue investment opportunities concluded that family members are heavily
that more myopic widely held firms would involved in family firms than those of non-
not. To them, another important reason for family firms which are mostly managed
the existence of family businesses is that externally. They observed that non-family
family ties serve as a second-best solution in businesses employ more labour and invest
countries with weak legal structures, since more in capital compared to family-owned
trust between family members can be a and managed businesses. Although their
substitute for missing governance and work provides evidence-based policy
contractual enforcement. They present other recommendation to enhance the
reasons which include: human capital sustainability and competitiveness of family
availability, politics; since it is believed that and non-family enterprises in Cameroon, it
political connections can provide large fails to underline the need for the
benefits for private firms, especially in sustainability of family-owned businesses.
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Our work fills this gap by stressing not only family members, other workers etc, in our
on the need for sustainability of family- sampled family-owned and managed
owned businesses but also on the factors enterprises. The non-probability sampling
responsible for the non-sustainability of techniques were used for this study;
family-owned and managed businesses. convenience sampling, judgmental sampling,
and quota sampling were employed.
Research Design and Methodology
Data Analysis and Interpretation of
Our research is an exploratory and causal Results
study in which we made use of the survey
and descriptive design and using a sample The data collected for this study were
given that the population under study was analyzed using descriptive statistics and logic
large, making it difficult to access all the regression using SPSS 17. A logistic
necessary and required information. We then regression analysis was employed using
resorted to conducting interviews and STATA 14, given that the dependent variable,
administering questionnaires to some sustainability of family-owned and managed
selected respondents especially the initiators businesses (S) is dichotomous or binary and
or proprietors of family-owned businesses, takes values 1 for a business that is profitable
the managers, the accountants, influential and deemed to live long and 0 otherwis
Table 1: Summary views of respondents concerning decision making within the family
business
Frequency/ OPTIONS
Percent
YES NO SOME WHAT DON'T KNOW TOTAL

The opinions of employees are Frequency 57 25 35 7 124
often taken into consideration Percent 46.0 20.2 28.2 5.6 100.0
The accounting system of the Frequency 57 9 25 33 124
enterprise is reliable and Percent 46.0 7.3 20.2 26.6 100.0
transparent
Auditing or stock taking within the Frequency 63 13 16 32 124
enterprise is usually well done Percent 50.8 10.5 12.9 25.8 100.0
Is the proprietor of this business Frequency 46 14 7 57 124
putting in place measures to Percent 37.1 11.3 5.6 46.0 100.0
ensure the survival of the business
after his/her death?
Discrimination amongst employees -.4846 .6159 .2473 -1.96 0.038
The children of the proprietor are Frequency 48 30 11 35 124
interested in their father/mother Percent 38.7 24.2 8.9 28.2 100.0
business
I think that this business can Frequency 71 18 22 13 124
continue moving very well whether Percent 57.3 14.5 17.7 10.5 100.0
the proprietor lives or not
The responses from the tables above are for the difficulties they faced when running
supported by the views of some former the businesses, many indicated the constant
workers of some collapsed family businesses intervention of the business owners in some
following some interviews held with them. As technical issues such as recruitment. They
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always impose some family members in their expertise.

some posts of responsibility irrespective of
Table 2: Summary statistics of the result of the logistic model
Variables Coefficient Odd ratio Standard error t-statistic p-value

Tertiary Education .1038 1.1094 .0472 2.20 0.044
Opportunities for extra training .1447 1.1557 .0233 6.22 0.000

Discrimination amongst -.4846 .6159 .2473 -1.96 0.038
employees
Opinions of employees taken .8905 2.4363 .5177 1.72 0.086
into consideration in decision
making
Transparent and reliable 1.7539 1.7771 .5241 3.35 0.001
accounting system
Family members work for free -.8671 .4202 .7061 -1.23 0.219
in the business
Proprietor puts in place .6795 1.9710 .0739 9.20 0.000
measures for the survival of the
business after his/her death
Constant 1.0425 .6090 1.71 0.087
LR chi2(9) (p-value) 21.23 (0.0117)
Pseudo R2 0.4434
Following the logistic model analysis, the employees tend to be more profitable and
independent variable “Proprietor puts in sustainable than those that do not offer such
place measures for the survival of the opportunities. A family business will be more
business after his/her death” is very profitable and sustainable if the accounting
important for the sustainability of family system put place is transparent and reliable.
businesses; with a t-statistic value of 9.2 at Considering the opinions of the employees
1% level of significance. It is therefore when taking decisions within the family
evidence that if this variable is not well taken business plays a vital role in the profitability
care of, the death of the proprietor will lead and sustainability of a family business. When
to the collapse of his/her business. the initiators of family businesses encourage
their children to participate and develop
Discussion interest in their businesses, it will enhance
the sustainability of the businesses. A bad tax
Family businesses collapse after the system will affect the sustainability of family
initiators die because the notion of business businesses.
sustainability was not in their mind when
they were creating these businesses, and Implications of Findings: The initiator of a
hence did not put measures in place to family business should choose his/her
ensure their continuity after they die. This successor when he/she is still relatively
was supported by about 93% of the family young and energetic. They should avoid
business owners during a series of changing employees so often since workers
interviews with them. Businesses that offer gain more experience as they spend more
extra training opportunities to their time in a particular business. In addition,
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there are costs incurred as a result of years. On the other hand, just about 7%
employees’ rotation and training. More existed for at least fifty years and are
attention should be placed on the therefore considered as having survived into
recruitment process so as to select well the third generation. This is very low
qualified workers for the various posts of compared to the finding by Family Business
responsibility. Family business owners Consulting (2009) which indicates that only
should constantly offer training about 30% of family businesses survive into
opportunities to their employees. Family the second generation, 12% are still viable
business owners should market their into the third generation and only about 3%
businesses to the younger generation by of all family businesses operate into the
letting them see the benefits and rewards fourth generation and beyond. This research
they derive from their businesses, instead of brings out some factors that are seen to be
continuously letting their children critical to the sustainability of family
understand how stressful the businesses are businesses such as: poor succession planning
to them. Family business owners should which is as a result of the fact that the
always choose independent firms that can business initiators do not always have the
provide a candid appraisal of their notion of sustainability in mine; poor tax
accounting department’s operations so as to system and lack of transparent and reliable
avoid fraud. The government should put in accounting system leading to corruption;
place regulations together with follow-ups to discrimination among employees leading to
ensure that family businesses are being unqualified workers occupying some key
operated within the prescribed norms, and positions because they are family members,
also to protect them from foreign threats lack of children’s interests in their parents
such as importation favours. The government businesses together with lack of the
should create an enabling environment for involvement of their children in the
the smooth running of the various family management of these businesses, and lack of
businesses through the provision of social update of employees through training
amenities such as security, health facilities, programs. Also, family business owners are
infrastructures, energy, water etc. Tax laws not often willing to incorporate non-family
should be simplified to the understanding of shareholders and hence mostly operate with
the common man and tax payers should be little capital which may not be able to enable
well informed of their rights so as to avoid them withstand competition within the
exploitation whereby tax administrators. various industries.
For better and recommendable findings,
Conclusion further research on family business
sustainability should be carried out
The population under study was not separately in the various sectors; for example
homogeneous since the sub-groups were in the transportation sector or educational
very different in size. On the field we realized sector.
that the businesses were very different in
size and carrying out different operations. References
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Factors Affecting The Sustainability of Family Businesses in Cameroon: An Empirical Study in Northwest and Southwest Regions of Cameroon

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Journal of Entrepreneurship: Research & Practice

Factors Affecting the Sustainability of Family

Correspondence should be addressed to: Nkam Mike; nkammike@yahoo.com

Keywords: Family businesses, Business Sustainability, Cameroon, Northwest and Southwest

Background of the Study reforms needed to stimulate the private

respondents expected to be selected from Review of Basic Terms and Concepts:

Love and Belonging Needs

Figure 1: Illustration of Maslow’s Hierarchy of Needs

sometimes impede economic development. economies with high levels of corruption

YES NO SOME WHAT DON'T KNOW TOTAL

always impose some family members in their expertise.

Table 2: Summary statistics of the result of the logistic model

Variables Coefficient Odd ratio Standard error t-statistic p-value

Opportunities for extra training .1447 1.1557 .0233 6.22 0.000

LR chi2(9) (p-value) 21.23 (0.0117)

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