Professionalization in family businesses: The role of leadership style

Abstract

Purpose: This paper investigates the impact of various leadership styles on the professionalization and subsequent performance of family businesses.

Design/methodology/approach: Using a survey method and employing a partial least squares approach to structural equation modeling, we tested our model and analyzed the collected data based on the responses of 216 managers in Iran.

Findings: Our research demonstrates that professionalization mediates the relationship between leadership style and performance. Moreover, our findings show that the participative leadership style is the most effective option for family businesses seeking to achieve professionalization and improve performance.

Originality: Our study suggests that examining the potential impact of leadership styles on professionalization can provide clarity amidst mixed findings regarding the influence of professionalization on firm performance. Additionally, we challenge the oversimplified categorization of professionalization and argue for a multifaceted view, contending that professionalization comprises various dimensions acting concurrently, potentially mediating the effect of leadership styles on family business performance.

Research Limitations/implications: First, the sample used in this study was drawn from a single country, namely Iran. Second, although we adhered to established practices for measuring financial performance, future research could explore alternative dimensions of performance, including non-financial goals. Third, we did not investigate the impact of different leadership styles on each dimension of professionalization.

Practical implications: These findings provide valuable insights for family business managers seeking to adopt a suitable leadership style to achieve professional management and realize favorable outcomes.