Agent-Based Simulation of Development Stages of Family Businesses

This article builds on results of the empirical research “The competitiveness of companies” done by Masaryk University in 2007. Within the group of 432 observed companies there were found interesting characteristics of family businesses (91 companies). The family business was considered to be such a company in which members of one family hold at least two strategic management functions. There were used questionnaire surveys in order to obtain detailed data from individual firms. Data were then transferred to the SPSS program, subjected to the primary analysis and correlation analysis. Characteristics of family businesses were used as inputs for the NetLogo agent-based simulation. Agent-based models can be applied in numerous problem domains, typically in computer science, biology or medicine. In case of economy, agent metaphor can be used for modelling companies, decision makers, employees, customers etc. acting in the market. Our agent-based model allowed us to observe developmental stages of two abstract companies: family business and non-family business. The simulation enables experimenting with different settings of parameters (independent variables) that describe companies. The objective of the simulation was to identify the differences between the family and non-family businesses in sense of the Greiner´s theory of the organization growth. The agent-based simulation results showed that family businesses in the first phase of their development grow in terms of amounts of asset and sales. This grow is faster than grow of non-family businesses. The break occurs at the stage of leadership crisis, where family businesses are starting to lag in size behind the non-family businesses. Our findings of the simulation experiments correspond with the findings in the area of family businesses research made in other European countries and in the USA.