Exploring the Effects of the Strategic Behaviours of Family and Non-family Businesses on Regional Development: Evidence from Kenya

Family business theories describe the differences between family and nonfamily businesses but do not fully explain the firm-level strategic behaviours that contribute to their differences, particularly on their regional impact. Scholars acknowledge that family businesses are a unique set of economic actors because of the intersection between family and business logics thus they can alter regional development dimensions differently compared to their counterparts. Drawing on a multidimensional approach regarding perspectives of firm-level entrepreneurship, this study examined how the strategic behaviours differed between family and non-family businesses and to what extent they predict their differentiated contribution to regional development.

The study employed a quantitative survey approach using structural equation modelling to analyse data collected from 307 privately held businesses operating in Kenya, which is an under-researched context. The analysis established significant relationships between firm-level strategic behaviours and regional development dimensions. Therefore, the findings confirmed that a multidimensional approach is best suited to explain how the two types of firms differ in their strategic behaviours and contribution to regional development.

The study contributes to theory in threefold: First, the study extends our understanding of the effects of entrepreneurial behaviours within family and nonfamily firms. Despite nonfamily businesses exhibiting statistically stronger relationships between firm entrepreneurial orientation, firm performance and involvement in industrial clusters, family businesses are likely to contribute more to regional development, Secondly, contrary to the suggestions that family participation in decision-making would positively enhance firms contribution to regional development, the study established that they inhibited firm contribution to regional development as the effects were pronounced compared to nonfamily businesses. Thirdly, the study established that although both firms established strong bridging social capital that positively enhanced their regional impact, family firms tended to focus more on developing their internal social capital. Thus, the level of family involvement in the firm moderates the relationship between firm-level strategic behaviours and regional development outcomes.

Further, the study contributes to the family business theory by developing and testing a multi-dimensional approach in exploring firm-level strategic behavioural influences on regional development. Empirically, it was the first multi-level study to provide quantitative evidence demonstrating the extent and limits of strategic behaviours on regional development, focused on a developing economy. Finally, the study offers a few practical and policy implications for consideration.