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Please read the paper included in your course shell titled: Comparison of Human Resources Management in Non-Family and Family Businesses: Case Study of the Czech Republic. As you will see, human resources management, which includes a wide range of activities, may vary between businesses. One of the reasons for these differences may be the fact that they are non-family or family businesses. This study aims to identify differences in the area of human resources management between non-family and family businesses operating in the Czech business environment. Considering the different formulation of the research papers, please critically review and discuss the following aspects:

What do you think are the main differentiators between non-family and family businesses?

What is your opinion of the directions of possible research presented in this paper?

Make sure in your presentation you provide your critical analysis of the paper from the two mentioned perspectives.

Minimum 1000 words please, Intext REFERENCES and CITATIONS please

Reference

Strategic Management: Concepts, 4th ed.

Rothaermel, Frank McGraw-Hill Irwin Publishing, 2019

ISBN: 978-1260092370

sustainability
Article
Comparison of Human Resources Management in
Non-Family and Family Businesses: Case Study of the
Czech Republic
Petra Horváthová * , Marie Mikušová
and KaterÌŒina Kashi
Department of Management, Faculty of Economics, VSB-Technical University of Ostrava, Sokolská třída 33,
702 00 Ostrava 1, Czech Republic; marie.mikusova@vsb.cz (M.M.); katerina.kashi@vsb.cz (K.K.)
* Correspondence: petra.horvathova@vsb.cz
Received: 20 June 2020; Accepted: 7 July 2020; Published: 8 July 2020

Abstract: Human resources management, which includes a wide range of activities, may vary
between businesses. One of the reasons for these differences may be the fact that they are non-family
or family businesses. The purpose of this study is to identify differences in the area of human
resources management between non-family and family businesses operating in the Czech business
environment. The authors formulated three research questions and two hypotheses. The article’s
main findings are: non-family and family businesses do not substantially differ in human resources
management. The article is formulating more general conclusions in the researched area, which can
serve as a starting point for further directions of possible research on this issue.
Keywords: human resources management; non-family business; family business; sustainable business
1. Introduction
Sustainable entrepreneurship, based on the principles of sustainable development also includes
social sustainability, expressed in personnel policy, which includes management and care for all
employees. If the company fails to properly manage and maintain the employees, they may leave the
company, which may have significant implications in very sensitive areas, such as business strategy,
achievement of goals, company culture, or the morale of employees. The company may suffer significant
financial losses by the departure of employees, as well as its economic (and thus environmental)
sustainability and its existence may even be jeopardized. On the other hand, the well-managed,
strategically linked and well executed management of all employees becomes a significant competitive
advantage for successful companies and can contribute to its sustainable business.
The basic strategic objectives of each organization include long-term growth and sustainability [1].
In today’s difficult conditions of global competition, and under the increasing pressures of the
globalization of the business environment, human resources are becoming increasingly important for
the achievement of these basic strategic objectives. The success of any business depends on people
and their management which decide not only whether the business succeeds, but whether it will
survive at all in the turbulent conditions of the contemporary world. Human resources management
has fundamental influence on companies’ sustainable businesses, which has to be considered as the
priority of any business functioning. It is not financial resources, modern and efficient technology
or well-developed strategy, but people—efficient employees—that play a crucial role in achieving
performance and maintaining the stability of each company, and they are also the main competitive
advantage for them [2]. Without qualified and knowledgeable employees, there is no possibility of any
enterprise; thus their management becomes an essential component of its functioning [3]. Human
resources management should be understood as a concept that forms part of the company management
Sustainability 2020, 12, 5493; doi:10.3390/su12145493
www.mdpi.com/journal/sustainability
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that focuses on everything that is associated with the human factor in the work process. It is therefore
decision-making in the area of human (employment) relations that affects the performance of workers
and enterprises [4]. Human resources and their management play a critical role in the successful
operation of any company [5]. Practical human resources management, which affects the well-being
of employees and thus the performance of the company [6,7], and which includes a wide range
of activities (e.g., development of personnel strategy and policy, ways of recruiting and selecting,
evaluating, remunerating or promoting employees, etc.), may vary among businesses, depending on
whether it is a non-family or family business. The importance of human resources management for the
efficient functioning of businesses, both non-family and family, is reflected in scientific research; many
of them also address the differences between the two types of business. Czech scientific literature also
deals with this topic, especially the management of human resources in non-family enterprises. There
is only a small amount of Czech research dedicated to family businesses.
The issue of family business is very important in terms of the development of the business
environment and GDP creation. Family businesses are, therefore, crucial for economic progress [8,9].
On the basis of the above, the authors decided to contribute to the expansion and completion of
the theoretical base in the relevant area by carrying out a survey aimed at mapping the differences in
selected aspects of human resources management in non-family and family businesses in the Czech
Republic. Based on the overall evaluation of the acquired data, the result of the survey is to answer the
research questions, disprove/confirm formulated hypotheses and formulate more general conclusions
in the research area as a basis for further directions of possible research for this issue. According to the
authors and available facts, such a survey has not been conducted in the Czech Republic yet.
2. Literature Review
The management of human resources in non-family businesses is attended by a number of
prominent authors (e.g., in [10–13]), and knowledge in this field is well known. However, the situation
is different for family businesses. As mentioned above, as far as the Czech environment is concerned,
only a limited number of professionals are devoted to family businesses. Therefore, the next chapter
will mainly focus on family businesses.
The definition of a family business itself is not unambiguous—the definition of a family business
varies from one country to another, but it always takes into account the number of family members
participating in the company’s capital, the amount of equity to be paid by family members, enterprise
successor generation, etc. The most important feature is that the business is based on the personality
of the founder, on the intensity of family involvement in the business, on the commitment of family
members to perform more on their own and on quality, because to represent their own name and
tradition is a prerequisite for success in future generations [14].
Many research articles focus on family businesses, many of which also address differences between
non-family and family businesses. The differences are found mainly in the area of personnel and
economics [15]. The family business combines more financial and non-financial objectives. Their
managers aim to continue to the business across generations and to maximize the long-term value of
the business [16]. The aim of non-family businesses, unlike family businesses, is primarily the return
of investment by aligning the goals of the owners and managers, including their personal goals [17].
Craigh and Moores concluded, when examining business growth orientations, that family businesses
are more conservative, risk averse and successors tend to conform to tradition [18]. Hubler identified
differences resulting from the uniqueness of resources in family businesses, such as human and social
capital, family financial capital and lower control costs [14]. There are specific attributes within a family
business that have the potential to become both an advantage and a disadvantage. These bivalent
attributes are systematically arranged in the model of Tagiuri and Davis [19]. Given the diversity of
interests, norms, values and structure, the overlap of both systems—family and business—is dynamic
with both positive and negative impacts, as shown by the Three Circle Model [19]. The specifics of
the family business, which are due, among other things, to the intersection of contradictory factors,
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are clearly presented in the Family Business Triangle model [20]. The model emphasizes the balance
between the various dimensions of a family business, which are family and interpersonal relationships,
business management and ownership. The model also implies the complexity of reconciling economic
(e.g., profit, added value) and family (e.g., employment of family members) factors (e.g., in [21]).
Factors that are very difficult to measure, such as devotion to family management or the intention to
hand over a business to future generations, are used to determine the extent to which family goals
are pursued [22]. This very limited list of specific characteristics of the family businesses, together
with other features not mentioned here, that largely affect the human resources management area are
examined in this paper.
The task of human resources management is to create conditions for increasing the intellectual
capital of the company and creating a positive climate, which will be reflected in the economic
performance of the company. Additionally, in this area of management, family businesses face
additional complexities due to the integration of family, business and ownership systems. Flamini and
Gnan see human resources management and family business performances as a duo that could receive
more attention by scholars [23]. In fact, it is ascertained that high performing firms acknowledge the
role of human resources management and they encourage the adoption and the implementation within
family firms.
The positive impact of human resources management systems on firm performance has also been
confirmed by the research of Gauci Borda et al. [24]. The findings show that there is a variety in the
implementation of different combinations of human resources management practices on the spectrum
between the control and commitment of human resources management in family businesses. Applying
human resources management practices has an impact on the overall performance of the company,
as does having precise work definitions and processes, which state the importance of sharing acquired
knowledge and experiences with all of the company employees [25]. Efficiency, especially in family
businesses, can be increased by motivating the employees, considering them not as machines but as
human beings, satisfying their needs and integrating employees into the decision-making processes.
Chopra emphasizes that companies will be more productive through utilizing an efficient human
resources system, providing employees career planning, training and promotion opportunities [26].
In decision-making pertaining to human resources, many family business managers believe they
have to choose between family and business [27]. The same authors state that there is a dearth of
knowledge surrounding human resource practices and policies in the context of family businesses.
They duly address this knowledge vacuum in presenting family business human resources strategies,
supplemented by frameworks and tools for managing such strategies effectively. Additionally, they
suggest that a thoughtful, holistic approach to human resources—and its continuous evolution—is a
critical contributor to long-term success in family business, more so when compared to non-family
business. According to these authors, the human resource practices in family business can be evaluated
objectively. Family vision and values affect aspects of all components of the human resource cycle [28].
If the family and the company work together synergistically, the influence of the family will facilitate
fair human resources management practices [9,29]. Koeberle-Schmid et al. emphasize the emotional
component, which plays a significant role in the family company’s human resources management, and
the need to balance it with the rational side [30]. The link between socioemotional wealth and human
resources management is also the subject of research by other authors (e.g., in [31–34]).
The disequilibrium of family and business interests also affect the process, methods and tools used
in human resources management (e.g., in [35,36]). The ability of family business managers to adopt
“best practices” in the area of human resources management is influenced by the cultural dimensions
of the country where the business is located [37]. Benito-Hernández et al. show that a family nature of
business has a positive impact in the use of human resources management external advice [38].
According to [38], the size of a family business brings further human resources management
challenges. In addition to the classic institutional instruments in a business, such as the general meeting,
the board of directors, etc., the family business also comprises other instruments, such as the family
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protocol, family gatherings and more. The results of Başkurt and Altindağ show that the emphasis put
on institutionalizing family businesses has a positive impact on employee performance and overall
business performance [39].
Moreover, family businesses with a low level of formalization and weak governance practices can
initially benefit from innovation and staff activity, but they must enhance their governance to sustain
growth in performance [40]. The results of the research of Kidwell and Fish indicated that formalizing
human resources systems occurs slowly in the industry [41]. The findings of Eddleston et al. lend some
support to the argument that effective human resource practices in family firms should be balanced
between instrumental governance mechanisms that reflect a monitoring approach and normative
mechanisms that focus on collaborative efforts among family employees [42]. Family firms rely more
on informal human resources practices, based on social networks. More formal human resources
practices were found in family firms with a family CEO [43]. Michiels’s research outputs are different:
the results support the hypothesis that family firms with a family CEO adopt significantly less formal
compensation practices than their counterparts, which are led by a non-family CEO [44].
Talent management also faces additional challenges in the family business, for example by
objectively providing competent company staff and suppressing nepotism. Nepotism in the selection
and placement of employees is the major problem within strategic human resources management
in family businesses [39]. Bhala and Bratton formulated principles that, beyond these generally
accepted best practices in talent management, can overcome these unique challenges [45]. The results
from Springer and Hadrys-Nowak indicate that family businesses are doing slightly better with the
implementation of TM processes than non-family Polish companies [46]. This difference, however, is
relatively small. The specific family business talent management approach, which is embedded in
family business culture is shaped by family values and emotional attachment [47].
Human resources management can play a role in preserving family business at a risky stage
of succession [48]. Human resources management can help to diminish the risk of family business
succession by reducing the dependence on family management through personnel empowerment.
However, as Yedderm argues, potential positive human resources management outcomes for succession
are only possible given the conditions of human resources management professionalization and family
management support [48].
In their research, the authors focused only on one of the two basic areas of differences between
Czech non-family and family businesses, namely personnel management. The aim of the article is
to identify differences in the area of human resources management between non-family and family
businesses operating in the Czech business environment. In this context, the authors formulated three
research questions and two hypotheses:
(1) Is the overall concept of human resources management different for non-family and family
businesses? The authors intended to find out whether the unique nature of family businesses (when
more employee care, family access to employees, the influence of socioemotional wealth on the whole
human resources management process, etc. are often declared) affects the overall concept of human
resources management. Thus, to what extent, if any, is the concept of human resources management in
non-family businesses different from family businesses.
(2) Do non-family businesses use tools other than family businesses within the survey population
for active work with people (e.g., training, development, motivation, remuneration, etc.)? Of course,
non-family members are employed in family businesses, often even in key positions. There may be
situations where a non-family employee may feel injustice. Does the family character of the business
influence the choice of tools for the selection of workers, their training, motivation, remuneration, etc.?
Are family businesses trying for equal access to family and non-family employees? Therefore, does a
family business prefer other tools than the non-family type?
(3) Does the informal approach in the field of human resources management prevail in family
business? In the analyzed literature, researchers often encountered outputs that confirmed a
rather informal approach to decision-making and problem solving, not only human resources
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management-related problems. The authors wanted to confirm or refute the informal approach
in human resources management policy in this research as well. The hypothesis was formulated in this
sense, so H1: The informal approach in the human resources management system/concept is accepted
to a greater extent in family businesses than in non-family businesses. However, at the same time, the
authors considered that, even in family businesses, their managers are aware of the need for a formal
approach. In this context, they created another hypothesis on this research question. They intended to
disprove/confirm the idea that, even if the informal concept of human resources management prevails,
a formalized approach will be preferred in some areas. The authors focused on the area of performance
evaluation, as it is closely linked to remuneration and, therefore, closely related to costs, therefore
H2: More than two thirds (i.e., 66% of companies in which the informal concept of human resources
management is preferred), use formal evaluation of employees. Hypothesis H2 will be tested for family
and non-family businesses.
The goal of the manuscript will be met both by evaluating the data obtained by the online
questionnaire survey (thus answering the first two research questions) and by testing the formulated
hypotheses (thus answering the third research question).
3. Methods and Data
A survey was conducted to investigate human resources management in non-family and family
manufacturing industries in the Moravian–Silesian region. Its aim was to identify differences in two
basic areas of human resources management—in the overall concept of human resources management
and in the used human resources management tools in specific areas of human resources management.
Primary data were collected through a quantitative survey (using a questionnaire). This method
was chosen for its advantages over the other options for addressing respondents. The advantages of
this method are the ability to address a large number of respondents and, at the same time, address
those who are not willing to provide a personal interview, as well eliminate the relationship between
respondent and researcher, which may allow for obtaining a relatively exact and objective opinion.
However, the questions must be precise and comprehensible so that they are clearly understood and do
not require further explanation. Other advantages include, for example, low costs, high return, speed
of answers, versatility and greater sincerity of respondents than, for example, in personal interviews.
On the contrary, the risks of this method include the fact that not everyone is connected to the Internet
and also susceptibility to technological problems [49].
The formulation of individual questions was verified by the Focus Group qualitative research
method with the participation of 20 experts (10 non-family representatives and 10 family business
representatives) from practice. It was determined whether the chosen method of online questionnaire
survey was appropriate, how focus group participants responded to the questions of the questionnaire,
whether the questions were well formulated, whether they understood the questions and whether the
offered answering options were appropriate. Based on the outputs of the focus group, two questions
were combined into one question, one dealing with the existence of a human resources strategy and
the other with the existence of a human resources policy. The focus group participants agreed that
they see the strategy as focused on the personnel area as a whole, and the policy as the rules that the
company follows in any decisions that in some way directly or indirectly affect workers and work, and
that in both areas they can be included in a single question that offers answers that cover the existing
reality in practice. A similar situation occurred on two issues—one concerning the knowledge of the
business owner and the skills of human resources management. They understood skills as the practical
application of knowledge of this issue, and to ask these two things in one question, they argued
that it is not possible to have skills without knowledge. Furthermore, the focus group participants
requested that a question concerning the form of the personnel information system be included in
the questionnaire. The result of the focus group meeting was the final questionnaire, which was later
validated by experts from practice—the experts also commented on the extent to which individual
questions and proposed answers described individual areas. Out of the total number of 15 questions,
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only one did not differ much in the number of experts who considered it essential and those who
considered it insignificant and useless. The content validity was also evaluated using the Content
Validity Ratio (CVR). CVR = [(E−(N/2))/(N/2)], where N is the total number of experts and E is the
number of those who rated the object as essential. The final form of the questionnaire consists of 3 main
topics and 15 items. The content validity ratio (CVR) ranged between 0.85 and 1.00 for each topic and
from 0.75 to 1.00 for each item. Therefore, the questionnaire is considered valid from a quantitative
point of view in terms of content. The final questionnaire was then used to survey human resources
management in non-family and family business.
In the cover letter, respondents were informed of the purpose of the questionnaire survey, they were
asked to complete the questionnaire and were also informed of the possibility of getting informed about
the results of the survey. The questionnaire included one identification question (number of employees)
and 15 questions concerning the subject of the survey, where respondents chose only one option
from predefined answers. Issues covered by the first area related to human resources management
strategy and policy, knowledge and skills in the area, conceptual and administrative aspects of human
resources management, personnel activities, human resources management decisions and the personnel
information system. The second area concerned the tools used in the areas of recruitment, selection,
placement, training and development, motivation and retention of workers in the company, their
performance appraisal, their remuneration and succession management (talent management).
The population consisted of all (more than 100,000) enterprises operating, according to CZ-NACE,
in the manufacturing industry of the Czech Republic, divided according to Commission Regulation
(EC) No 800/2008 (excluding independence) into a micro enterprise (
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