Annual/Termination Reports:

[01/25/2007] [07/17/2007] [01/07/2008] [10/24/2008] [11/30/2009] [11/08/2010] [06/17/2012]

Report Information

Participants

Participants: Fitzgerald, Margaret (Margaret.Fitzgerald@ndsu.edu)  North Dakota State University; Danes, Sharon (sdanes@umn.edu)  University of Minnesota; Pushkarskaya, Helen (Helen.Pushkarskaya@UKY.EDU)  University of Kentucky; Jasper, Cindy (jasper@consci.wisc.edu)  University of Wisconsin; Marshall, Maria (mimarsha@purdue.edu)  Purdue University; Muske, Glenn (glenn.muske@OKSTATE.EDU)  Oklahoma State University; Haynes, George (Haynes@MONTANA.EDU)  Montana State University; Stafford, Kay (kstafford@HEC.OHIO-STATE.EDU)  Ohio State University; Schrank, Holly (schrankh@PURDUE.EDU)  Purdue University; Lee, Yoon (YOONLEE@CC.USU.EDU)  Utah State University; Niehm, Linda (niehmlin@IASTATE.EDU)  Iowa State University; Hess, Donna (Donna.Hess@SDSTATE.EDU)  South Dakota State University, Administrative Advisor; and Schuchardt, Jane (JSCHUCHARDT@CSREES.USDA.GOV) - CREES-USDA.

Brief Summary of Minutes

Summary of the Minutes of the Annual Meeting: This was the first meeting of a new project which began on October 1, 2006. The focus of the meeting was threefold: 1) Transition from the NE-167 Project: Updates focused on the transition from the previous project, NE-167 Family Firms in Economically Vulnerable Communities including the carry-over of remaining funds acquired as other entities purchase our data. Funds that were deposited at Cornell University were transferred from Cornell to NDSU because Cornell is no longer participating in the project. The list-serve has been moved from Cornell to NDSU and the web-site will be relocated to the Ohio State University. 2) NSF Grant Award: Three researchers from the technical committee (Sharon Danes, Kay Stafford and George Haynes) have been awarded a National Science Foundation (NSF) grant to cover the costs of data collection in-part for the NC-1030 project. Discussion centered on development of the questionnaire and how the objectives of the NSF and NC-1030 projects fit together. We also articulated each states plan of work for the next year. 3) Updates to the policy manual: The NE-167 project had a well-developed policy manual which was adopted for use in the new NC-1030 project, however updates needed to be made regarding external funding and declaration procedures for grant proposals.

Accomplishments

Accomplishments and Impacts: The milestones identified for the up-coming year included continued review of the literature, conceptual framework development, sampling decisions and seeking funding. The group is successfully meeting each of these milestones.<br /> <br /> Members of the group continue to review literature and test the Sustainable Family Business (SFB) model developed through NE-167 and are actively presenting and publishing their work using data from the previous projects. Two members of the technical committee, Sharon Danes and Kay Stafford, developed documents on the Description, History, Contribution and Innovations of the technical committee over time and a Summary of the NSF Award that were distributed to North Central AES Directors and the Deans of Human Science Colleges in the North Central Region after the meeting. Sampling decisions were made regarding follow-up data collection with the most recent panel of the National Family Business Survey. The technical committee gathered data in 1997 and 2000 for the previous projects. <br />

Publications

Publications: Presentations and publications listed below reflect work coming out of the last NE-167 project through the transition into the new NC-1030 project (2006-07), and meet the objectives of the previous project as we were only eight days into the new project at the time the state reports were submitted.<br /> <br /> Grant Proposals<br /> <br /> Three grant proposals were submitted by Sharon Danes, Kay Stafford and George Haynes to collect additional data for this project. The following proposal was funded by the National Science Foundation:<br /> <br /> Family business response to federal disaster assistance, submitted to the National Science Foundation, February, 2006  funded.<br /> <br /> Refereed Journal Articles<br /> <br /> Danes, S.M. (In press; September, 2006). Tensions within family business-owning couples over time. Stress, Trauma & Crisis.<br /> <br /> Haynes, G.W., Onochie, J., & Muske, G. (in press). Is whats good for business, good for the family in family business? Journal of Family and Economic Issues.<br /> <br /> Lee, Y.G., Danes, S.M., & Shelley, M. C. II. (2006). Work roles, management and perceived well-being for married women within family businesses. Journal of Family and Economic Issues, 27(3), 523-541. <br /> <br /> Lee, Y., Hong, G.S., & Rowe, B. (2006). Third shift women in business-owning families. Journal of Family and Economic Issue, 27(1), 72-91.<br /> Muske, G. & Fitzgerald, M. A. (2006). A panel study of copreneurs in business: Who enters, continues and exits? Family Business Review. 19(3), 193-205<br /> <br /> Niehm, L.S., Miller, N.J. (2006). Entrepreneurship and the impact of managerial role on family business success. Journal of Marketing and Entrepreneurship. 8(1), 75- 94.<br /> <br /> Ou, C. & Haynes, G.W. (in press). Uses of equity capital by small firms, findings from the NSSBF. Small Business Economics.<br /> <br /> Yilmazer, T. & Schrank, H. (2006). Financial intermingling in small family businesses. Journal of Business Venturing, 21(5), 726-751. <br /> <br /> <br /> Zody, Z., Sprenkle, D., MacDermid, S. & Schrank, H. (2006). Boundaries and the functioning of family and business systems. Journal of Family and Economic Issues, 27(2), 185-206.<br /> <br /> <br /> Book Chapters<br /> <br /> Heck, R., Danes S., Fitzgerald, M., Haynes, G., Jasper, C., Schrank, H., Stafford, K., & Winter, M. (2006). (in press). The familys dynamic role within family business entrepreneurship. Chapter 5 in Poutziouris, P., Smyrnios, K. & Klein, S. Handbook of Research on Family Business. Elgar Publishing, Cheltenham Glos, UK. <br /> <br /> <br /> Refereed Presentations:<br /> <br /> Haynes, G.W., & Ou, C. (2006, January). Did households owning small businesses fare during the largest ever peacetime expansion in the U.S. economy, United States Association of Small Business and Entrepreneurship/SBIDA 2005 Conference Proceedings, Tucson, AZ.<br /> <br /> Danes, S.M., Loy, J. T., & Stafford, K. (2006, April). Family business success: Differences in female- and male-owned businesses. Manuscript presented at the Family Enterprise Research Conference in Niagara Falls, Canada. Manuscript received Honorable Mention at the conference.<br /> <br /> Hsu, P., & Masuo, D. (2006, April). Characteristics of home-based family businesses: A comparison between Hawaii and the United States. Poster presentation at the Hawaii Association of Family & Consumer Sciences Annual Meeting Honolulu, HI. <br /> <br /> Niehm, L.S., Miller, N. (2006). The impact of managerial role on family business success: A longitudinal perspective. In proceedings of the USASBE (United States Association for Small Business and Entrepreneurship) Annual Meeting, Tucson, AZ. <br /> <br /> Yilmazer, T. & Schrank, H. (2006, June). Review of financial bootstrapping and intermingling in small and family businesses. Refereed Paper presented at the EIASS Family Firm Conference, Nice, France.<br /> <br /> <br /> Related Work<br /> <br /> Muske, G., Woods, M., & Swinney, J. (accepted with revisions). Small Businesses and the Community: Their Role and Importance within a States Economy. Journal of Extension. <br /> <br /> Muske, G., Yu, H., & Khoo, C. (2006). Internet standards: How one states small business web sites compare to expectations. Retrieved from Journal of Extension Web site: http://www.joe.org/joe/2006april/rb1.shtml<br /> <br /> Runyan, R. C., Droge, C, & Swinney, J. (2006). Entrepreneurial orientation and social capital as small firm strategies: A study of gender differences from a resource- based view. International Entrepreneurship and Management Journal, Vol. 2, No. 4. <br /> <br /> Swinney, J., Runyan, R., & Droge, C. (2006, June) Differences in Reported Firm Performance by Gender: Does Industry Matter? Journal of Developmental Entrepreneurship, vol. 11 No. 2. <br /> <br /> <br /> <br /> <br />

Impact Statements

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Report Information

Participants

Participants:
Fitzgerald, Margaret (Margaret.Fitzgerald@ndsu.edu)  North Dakota State University; Danes, Sharon (sdanes@umn.edu)  University of Minnesota;
Jasper, Cindy (jasper@consci.wisc.edu)  University of Wisconsin;
Muske, Glenn (glenn.muske@OKSTATE.EDU)  Oklahoma State University;
Haynes, George (Haynes@MONTANA.EDU)  Montana State University;
Stafford, Kay (kstafford@HEC.OHIO-STATE.EDU)  Ohio State University;
Schrank, Holly (schrankh@PURDUE.EDU)  Purdue University;
Niehm, Linda (niehmlin@IASTATE.EDU)  Iowa State University; and
Hess, Donna (Donna.Hess@SDSTATE.EDU)  South Dakota State University, Administrative Advisor

Project Participants not able to attend the May meeting:
Pushkarskaya, Helen (Helen.Pushkarskaya@UKY.EDU)  University of Kentucky; Marshall, Maria (mimarsha@purdue.edu)  Purdue University;
Lee, Yoon (YOONLEE@CC.USU.EDU)  Utah State University; and
Schuchardt, Jane (JSCHUCHARDT@CSREES.USDA.GOV) - CREES-USDA.

Brief Summary of Minutes

Please see the official minutes of the May meeting for more complete information. Highlights of the May meeting included the following:

-Conference call with Jane Schuchardt regarding impact statements, the farm bill, media releases and the logic model.

-Conference call with faculty and research staff from Baruch University on the National Minority Business Owner Survey.

-A presentation by George Haynes on the SHELDUS data, and the completed merger of the SHELDUS data with our National Family Business Survey data.

-Presentations by technical committee members of concept papers related to our key project (resilience, community social responsibility, definitions of disasters, and so on).

-A conversation with Dean Jan McCullough and Associate Dean of Research and Public Policy, David Johnson from the University of Minnesota, on the vision for the new college with an emphasis on work that is multidisciplinary, multicultural and emphasizes models of engagement.

-Review of the questionnaires for the 2007 data collection and continued development of plans to meet the NC 1030 objectives.

-Assignments for the next meeting and review of possible agenda items.

-Set the next meeting starting at noon on Wednesday, Oct. 17th, ending at 4 pm on Friday October 19, 2007.

Accomplishments

Data collection will begin for the next wave of the National Family Business Survey (NFBS) this spring. The merger of the previous waves of the NFBS with SHELDUS data is complete. <br /> <br /> Members of the group continue to review literature and test the Sustainable Family Business (SFB) model developed through NE-167 and are actively presenting and publishing their work using data from the previous projects. <br />

Publications

The projects list of presentation and publications will be updated following our fall meeting; the members of the technical committee present their state reports in the fall.<br /> <br />

Impact Statements

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Report Information

Participants

Participants: Margaret Fitzgerald, North Dakota; Diane Masuo, Hawaii; Sharon Danes, Minnesota; Jane Swinney, Oklahoma; Cindy Jasper, Wisconsin; Maria Marshall, Indiana; Glenn Muske, Oklahoma; George Haynes, Montana; Kay Stafford, Ohio; Holly Schrank, Indiana; and Yoon Lee, Utah.

Absent: Helen Pushkarskaya, Kentucky; Linda Niehm, Iowa; Ramona Heck, New York; Jane Schuchardt, CSREES-USDA and Donna Hess, Administrative Advisor.

Brief Summary of Minutes

Accomplishments

<br /> Milestones<br /> <br /> This report is based on the first year of the project. Designated milestones in the project proposal for 2007 included the following:<br /> -Continued review of literature<br /> -Conceptual framework development<br /> -Sampling decisions<br /> -Seek funding<br /> <br /> The group is on-track with the review of literature and development of the conceptual framework. Data collection, which was initially scheduled for 2008 was nearly complete at the time of the October 2007 meeting. The group was able to proceed with sampling decisions, questionnaire development and data collection ahead of schedule due to the receipt of an NSF grant (Danes, Stafford and Haynes). The group continues to focus on grant-writing and completion of publications from the previous project, NE 167, as well as meeting the objectives of the NC 1030 project. The attached list of recent publications and presentations indicates that progress is being made toward the accomplishment of each NC 1030 objective (1a, 1b, 2a, 2b). <br /> <br /> <br /> <br /> Research Progress and Findings <br /> <br /> NE 167 was offered as an example in the report<br /> http://www.csrees.usda.gov/business/reporting/part/self_rev_g2_pt_22.pdf<br /> (see page 80) as a highly productive, multi-state research project. The<br /> Portfolio review is required by the U.S. Office of Management and Budget<br /> to show outcomes from federal investments. <br /> <br /> Activities of the NC 1030 research group have revealed new knowledge and understanding of families in business. Progress in several areas is summarized below. First, the developments related to the conceptual framework are presented. This is followed by summaries of research findings in the areas of owner resources for start-up and growth, quality management practices, firm survival, women in the family business and copreneurs, or husbands and wives who own and operate businesses jointly. Next, results using data from the National Minority Family Business Survey (NMFBS) are presented because the NE 167 Family Business Research Group provided templates of our questionnaires to Baruch University for use in collecting the NFBS. Several researchers on the NC 1030 project work with the NMFBS data to either parallel or compliment work on the NFBS data. Lastly, because researchers on the NC 1030 project also have family business data on the tobacco buy-out program, publications related to this program are summarized.<br /> <br /> Conceptual Framework. The SFB Model offers a comprehensive view of the family business and suggests that such businesses are far more complicated than was previously realized. Only careful delineation of the components of the family and the business in the context of the community will afford researchers sufficiently rich understanding of the internal dynamics of the family business and how they relate to external environments such as their communities. <br /> <br /> The SFB Model is a flexible model that enhances the understanding of the dynamic role of family within family business entrepreneurship through its systems orientation. It explores the entrepreneurship of the business within the social context of the family. Unlike many other models that take an individual approach to the study of the family business, it emphasizes the overlap of the family and business systems while recognizing the unique characteristics of each of the systems. One of the features of the model is its recognition that processes differ in times of stability versus times of change; it includes the Family Fundamental Relationship Orientation Model (FIRO Model) as a working model that explicates the reconstruction that is needed during time of changes for family businesses to remain resilient and, thus, sustainable over time. <br /> <br /> A recently completed conceptual and analytical review of the Sustainable Family Business Model (Stafford et al., 1999) was published by members of the NC 1030 group in 2006 (see list of recent citations). This work was published in a chapter that presents the theoretical perspective and major premises of the SFB Model of family business. The chapter offers an analytical model for study of the family business based on the SFB Model. Additionally, it more fully identifies the salient family factors that influence the business and vice versa as well as placing the family business within its community context. Suggestions for further applications and future research using the SFB Model are offered. In summary, our work shows that there is a complicated array of factors that contribute to the success or failure of family businesses including public policy<br /> Firm Start-up and Growth. Data related to human, financial, and social capital (the entrepreneurs use and perception of community links and resources) were collected in order to assess their effect on an entrepreneur in the business formation process. Results showed that business planning is crucial to the start-up process, thereby providing small business development practitioners improved information that may help them structure their assistance programs to best meet the needs of entrepreneurs.<br /> <br /> Small businesses often begin with significant capital from the owners resources, including cash grants and loans from family members, use of family assets as collateral, and unpaid or below-market labor contributed by family members. A new business does not usually generate sufficient revenue to support itself and because of lack of a track record, the business is not generally considered a good risk for credit or equity capital. Thus, the use of owner resources is not only common, but necessary. Our research shows that some of this use of owner resources continues well beyond the time when a business would be expected to begin using debt or equity capital to fund its continued growth. The risk to the owners family is high because the original owner resources are not being returned to the household coffers, and the household not only has lost part of all of its original investment, but it has also lost the opportunity to make a better return with some other investment instrument. Households are generally not protected by any type of paperwork (as commercial lenders would be), and they have little to no legal standing as creditors if the business fails. We have begun the process of educating our business school colleagues of the importance of considering household variables in addition to business variables as they study the use of financial bootstrapping strategies, especially the use of owner resources. We believe that seminars and other educational opportunities for future small business owners need to address risk of use of personal assets for small business startup. <br /> <br /> Current literature related to the entrepreneurship process is concerned with the attributes and/or conditions that make up an entrepreneur and the factors that determine his/her success or failure (Lichetenstein 1996, Lyons 2002, Reynolds et al. 2003). Reynolds et al. (2003) identified three stages in the entrepreneurial process with three transition points. The first transition point, conception, is the point at which an individual has decided to start a business. Conception leads to the second stage of the entrepreneurial process called gestation that consists of activities associated with the start-up effort, such as gaining capital, building social networks, or attending workshops. The transition point from gestation is known as firm birth and leads to the final stage of the processinfancy. During the infancy stage, the entrepreneur makes use of the resources gathered during the gestation stage to stabilize and grow the business in the context of its surroundings.<br /> <br /> The Survey of Consumer Finance study has raised an important issue. It appears that the risk premium paid to small businesses has been relatively stable to decreasing over the past decade. This result may partially explain why small business wealth growth has lagged behind household wealth growth over the past decade. Further work is being conducted to verify this statistical result.<br /> <br /> Quality Management. Authors investigated the contribution of quality management, inclusive of family/business interface management, to the success of 572 small private firms over time. The regression results were based on weighted data. NFBS weighted data yield samples that mimic the prevalence of firms throughout the U.S. without inflating degrees of freedom and biasing hypothesis testing. Gross revenue and congruity in 2000 were regressed on explanatory variables from 1997. A positive reputation with customers was the most important business goal for 44.6% of firms. Family/business interface and business management significantly explained business revenue and congruity between business and family while controlling for owner and business characteristics. Family/business interface management explained 9.7% of congruity variance and 8.2% of gross revenue variance while business management explained 3.3% of congruity variance and 2.2% of gross revenue variance.<br /> <br /> Firm Survival. Another study analyzed the effects of severity and frequency of risk exposure from natural disasters on family firm survival from 1997 to 2000. The sample was 553 owners of businesses in the 1997 NFBS for which the status was known in the 2000 NFBS. For this analysis data on natural disasters in the counties in which the businesses were located were merged with the NFB Panel data. Neither the number of natural disasters between 1997 and 2000 nor the damage caused by the disasters affected the survival of the family businesses. However, the economic vulnerability of rural counties did affect the probability of survival. Businesses located in economically vulnerable counties were more likely to survive the three year interval. Financial intermingling between the family and the business and family income derived from the business also were positively associated with business survival. <br /> <br /> Women in the Family Business. Women assume a variety of different role combinations for work inside and outside of the family business. There are several significant differences between the women in various statuses. For example, female business managers are less likely to be married than other women associated with a family business, and they tend to operate smaller businesses. Yet, the women with various roles do not have differing levels of family functionality. Thirty-four percent of the variance in family functionality was explained by the model including characteristics of the women and their families, the family/business interface and characteristics of the business. For all groups of women, family goal success, satisfaction with role in the business, and being married were significant predictors of family functionality. Higher levels of household tension about the business were negatively associated with family functionality. <br /> <br /> Copreneurs. Copreneurs are significantly more likely than other married couples with family businesses to use the adjustment strategies of reallocating family resources to the business, intertwining tasks, reallocating business resources to the family, and using volunteer help during hectic times in the family or the business. Additionally, over 80% of couples in business together were found to intermingle their business finances with the family finances. Most often family property or household income is used to finance the business or family members work without pay in the business. In the other direction, business property and other business assets are used to finance family needs.<br /> <br /> National Minority Family Business Survey. Preliminary data analyses were completed for a paper based on data from Baruch Colleges 2003 & 2005 National Minority Family Business Survey. The theoretical framework for this paper came from a previous study which was based on a sample of family business households from the National Family Business Survey. Preliminary findings indicate that: (1) regressions need to be run on separate, not a combined group (Chow Test, Critical F (8, 384 df): F.05=1.96; (2) predictors of family and business success differ between Korean and Mexican Americans; and (3) more work is needed to explain why family success ratings are higher for Mexican Americans, while business ratings are higher for Korean Americans. <br /> <br /> The same theoretical framework used to examine family and business success among a national sample of family business households in the U.S. is applicable to Mexican- and Korean-American populations. Preliminary results suggest that Beckers household production function theory is applicable. However, the factors that predict family and business success are different for Korean Americans and Mexican Americans. This finding points out the need for business development practitioners to tailor their outreach programs to their client groups. Further work is needed to explain why the Mexican American business managers had significantly higher scores for perceived family success, while the Korean American managers rated their business success significantly higher than did their Mexican American counterparts.<br /> <br /> The National Minority Business Owners Survey (Baruch College) was also employed to examine the intermingling among Mexican- and Korean- American family-owned business. Mexican-American businesses are more likely to intermingle resources than Korean-American businesses. Non-minority business managers were more likely than the Korean-American business managers and equally likely with the Mexican-American business managers to engage in any intermingling. In addition, this study suggests that Korean-American managers are less likely to intermingle financial resources than Mexican-American managers. Although similar factors contribute to intermingling, respondents living in rural areas and borrowers are more likely to intermingle financial resources for both ethnic groups. it appears intermingling behavior derived from the business culture may trump ethnic culture.<br /> <br /> The National Minority Business Owners Survey (Baruch College) was also employed to examine financial structure difference between Korean- and Mexican-American small businesses. This study suggests successful (or content) Mexican-American small business owners are less likely to utilize commercial banks, while more successful Korean-American small business owners are more likely to utilize commercial banks. Family businesses with relatively content families and businesses are less likely to face lending constraints than other family businesses. <br /> <br /> While new market opportunities provide scholars with interesting contexts to research, many minority entrepreneurship studies do not distinguish possible differences based on gender. Using the 2003 and 2005 National Minority Business Owners Surveys databases, a study discovered to what degree, if any, differences exist among the surveyed women, particularly when classified by ethnic identity or when compared to the surveyed men. Entrepreneurship is the process where an individual (or group of individuals) use organized efforts to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness, no matter what resources the individual [entrepreneur] it currently has (Coulter, 2003). Within entrepreneurship research, a small, but expanding, literature has developed in recent years related to the role and characteristics of women-owned and minority-owned businesses. This study may contribute to ongoing scholarly discussions on the traditional views of women entrepreneurship and minority ownership. <br /> <br /> Future work using the NMFBS. Using the 2003 & 2005 National Minority Business Owner Surveys, a study will investigate factors associated with the probability of having succession planning by minority-owned family business owners. The major purpose of the study is to profile minority-owned family businesses that have planned to operate their businesses until they retire and to transfer the ownership of the family business to their children or other family members. There were two objectives as the following: 1) To describe the characteristics of minority-owned family businesses that have planned to transfer the ownership of the family business to their children or other family members and those who have not. Characteristics include: financial, business manager, and business; 2) To establish if those characteristics differ when business owners have planned to transfer the ownership of the family business to their children or other family members. <br /> <br /> Another study will investigate resources and constraints for four ethnic family business groups (Korean-American, Mexican-American, African-American, and White-American). There are three objectives in this research. The first objective is to describe the characteristics of minority-owned family businesses that have had cash flow problems and those who do not have cash flow problems. Characteristics include: financial, business, Responses to disruption, and business manager characteristics. The second objective is to determine the differences in selected business system, family system, and resource intermingling characteristics between those family-owned businesses that have cash flow problems and those that do not have cash flow problems. The third objective is to test the influence of family system characteristics over business system characteristics and influence of resource intermingling over the combination of business and family system characteristics on cash flow problems. Due to the separate yet interdependent systems within family-owned businesses, it is critical to investigate cash flow problems in (a) the business, (b) the household, and (c) both the business and the household simultaneously.<br /> <br /> Also using the 2003 & 2005 National Minority Business Owner Surveys, a study is planned to investigate the influence of social networks on the debt structure for four ethnic family business groups (Korean-American, Mexican-American, African-American, and White-American). Debt-to-asset ratio, debt-to-income ratio, and debt-to-net worth ratio will be used to measures of debt structure in this research. As control variables, business characteristics will be used to predict debt structure of four ethnic family business groups. <br /> <br /> Tobacco Buy-out Legislation. The tobacco buyout legislation (November 2004) was designed to prevent (or at least decrease) the recent continuous decline in net income for U.S. tobacco growers. This decline has resulted in depressed economic conditions for tobacco farmers and their tobacco-dependent rural communities. It has been suggested that tobacco farmers in Kentucky may start new businesses as an alternative to tobacco production and that this will revitalize rural economies. In addition, Fritsch (2004) found that individuals who receive an inheritance are more likely to start new businesses. In effect, several thousand Kentucky farmers have received an inheritance in the form of buy-out checks. <br /> <br /> Our analysis showed that personal characteristics, such as age, gender and level of education have a statistically significant impact on the individuals decision to start new business. In addition, the expenditure decision seems to be affected by important recent events in life, such as major illnesses; by propensity to access diverse sources of information, i.e. custom to use the internet to accumulate the information necessary for the decision making; and by individual perception of the business climate in the community. <br /> <br /> Twenty-three percent of farmers indicated they had not decided how to spend the buyout check. This is consistent with a defensive avoidance bias. From a policy perspective a possible presence of a defensive avoidance bias implies that farmers are likely to go through a period of adjustment before they switch from passive expenditure choices to new more active choices such as diversification or new business activities; moreover, since this bias seems to affect women more than men, women might need more assistance during the transition period. <br />

Publications

Publications and presentations are provided in the attached link.

Impact Statements

1. Every thousand dollars of annual family income derived from the business in 1997 was associated with a .1% increase in the probability of survival until 2000.
2. Owners who consistently put the business&lsquo;s needs ahead of the family&lsquo;s needs had businesses that grossed an average of $512,480 more annually. Owners who hired temporary help had businesses that grossed an average of $207,771 more annually. Each additional hour worked weekly in the business by the owner resulted in an average of $20,302 in gross revenue annually. Another half day a week of effort would result, on average, in $81,208 more revenue.
3. A one unit change in the hiring of temporary help response was associated with a 20% increase in revenue and a 1% decline in congruity. An extra hour in the business resulted in a 2% increase in revenue and a .1% decline in congruity. The cost of an additional $512,480 revenue was a 1% decline in congruity.
4. Owners who combined business ownership with a second job grossed $541,438 less revenue. They also had less congruity between the family and the business.
5. The smaller firms are the ones whose owners are more likely to self-finance. Self-financing may be a lose-lose proposition for those owners because not only does self-financing jeopardize the family&lsquo;s finances, it reduces congruity between the business and family.
6. Each unit increase in the preparing financial records response scale was associated with an increase of $116,070 for the average firm and an increase of .306 units in the congruity score. Each unit increase in preparing a written plan response scale was associated with $173,954 less revenue for an average firm and a .226 lower congruity score. Owners&lsquo; businesses and families benefited from financial management.
7. Business characteristics explained 44% of total variance for business success over time for females and 60% of total variance explained for males. Business planning practices explained 25.6% of total explained variance for females and 5.5% of total variance explained for males. Business owner accounted for 27.2% of the explained variance for females and 30.2% for males. Innovation accounted for 3.1% for females and 4% for males. Successfully achieving family goals, and having lower education, less competition between family and business resources, no family cash flow problems, and higher management activity contributed to positive perceived well-being. Well-being increased at a decreasing rate as income increased.
8. Firms located in counties receiving more disaster assistance are not more likely to survive or succeed than firms located in counties receiving less disaster assistance. Businesses located in an economically vulnerable rural county, those engaged in family to business resource intermingling and those transferring more business income to the household were more likely to survive. Larger businesses, those headed by women and those families with higher levels of functional integrity were most likely to succeed.
9. For women, there is a huge benefit to working smarter rather than harder. For example, gross revenue for the average female-owned family firm would increase by almost $292,000, if women were to simply increase the frequency of their business planning practices enough to raise their scores on each practice by a half a point. Training small business owners in a holistic approach to quality management would increase the annual revenue of the average firm by more than $495,396 a year. Given the size of the average family firm, these firms could potentially increase their revenue 48.7% using a more holistic quality framework.
10. Nearly 1 in 5 households in Oklahoma own and manage a business. Most employ at least one other person. Although gross income varies widely across business types, an average gross business income of $135,000 was noted.
11. Three major developments over the past two decades determined the levels and changes in the income and wealth of veteran households and veteran business owners in the United States in comparison with the overall population. The number of veteran households declined from 1989 to 2004 (from 28.6 million households in 1989 to 25.3 million households in 2004), the age composition of the head of the veteran households grew much older by 2004, and the percentage of small business owners in the population of veteran households declined (from 13.6 percent in 1989 to 12.2 percent in 2004). Interestingly, the likelihood of being high income has declined for these veteran small business owners by nearly 24 percent while the likelihood of being high wealth has increased by nearly 22 percent.
12. Regression analysis, which controls for such variables as age, suggests that veteran households generally had lower income than non-veteran households, veteran small business owners had higher wealth than other veteran households and veteran small business owners had a lower wealth than non-veteran small business owners. Most importantly, there we no substantial changes (neither increases nor decreases) in the differences in income and wealth between veteran and non-veteran households, veteran business owning and veteran non-business owning households, and veteran business and non-veteran business households from 1989 to 2004.
13. Oklahoma has the second largest Native American population in the nation with the average community being 7.9% Native American. Yet it appears that Native Americans are not correspondingly reflected in the numbers of entrepreneurs. Data analysis has provided information community development officials can use to attract more Native Americans to the entrepreneurial ranks. Findings from indigenous communities indicate that indigenous and majority entrepreneurs are not significantly different in terms of their small business orientation or their entrepreneurial orientation.

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Participants

Sharon Danes, University of Minnesota, sdanes@umn.edu;
Margaret Fitzgerald, North Dakota State University, Margaret.Fitzgerald@ndsu.edu;
George Haynes, Montana State University, haynes@montana.edu;
Cynthia Jasper, University of Wisconsin, crjasper@wisc.edu;
Yoon Lee, Utah State University, yoon.lee@usu.edu;
Maria Marshall, Purdue University, mimarsha@purdue.edu;
Diane Masuo, University of Hawaii at Manoa, masuo@hawaii.edu;
Glenn Muske, Oklahoma State University, glenn.muske@okstate.edu;
Linda Niehm, Iowa State University, niehmlin@iastate.edu;
Timothy Park, University of Georgia, tpark@uga.edu;
Holly Schrank, Purdue University, schrankh@purdue.edu;
Kay Stafford, The Ohio State University, stafford.2@osu.edu.

Brief Summary of Minutes

Accomplishments

Milestones<br /> <br /> The NC-1030 group is ahead of schedule with regard to our milestones. We had anticipated that in 2008 we would develop and pre-test instruments, select the sample and begin data collection. Because of the receipt of an NSF grant (Danes, Stafford and Haynes), we have completed each of these tasks. The NSF researchers have also completed the preparation and distribution of the data set and codebooks to the NC 1030 group. Moreover, they have conducted three webinars on using the three waves of data with a fourth webinar on filters scheduled for early December, 2008. Therefore, as the group moves into 2009, we are conducting preliminary analysis on the 2007 data and conceptualizing longitudinal analyses with the three waves of panel data (1997, 2000 and 2007), and have secured a special edition of the Journal of Family and Economic Issues (Neihm & Lee as co-editors) with the goal of paper submissions for 2009. <br /> <br /> Selected Research Findings and Outreach Applications<br /> <br /> Individual state reports and the list of 2008 publications/presentations (linked to this site) provide more information on our accomplishments. The following is a summary of highlights to date:<br /> <br /> The NC 1030 data on family business response to disaster has been linked to the Spatial Hazard Events and Losses Database for the United States (SHELDUS), Public Entity Research Institute (PERI) and County Business Patterns (CBP) data. Preliminary analysis suggests that disaster assistance has a positive effect on the number of business establishments remaining open, number of employees and total payroll.<br /> <br /> Business survival from 1997 to 2000 was not affected by the severity and frequency of risk exposure from natual disasters, nor did the diasters affect the growth of gross revenue. However, the frequency of risk exposure to natural disasters did impact the owners' perceptions of their business success in 2000.<br /> <br /> Several variables, including the econonomic vulnerability of rural counties, were identified as predictors of business closing.<br /> <br /> Firms in more economically vulnerable counties have a lower hazard rate. <br /> <br /> Using the National Minority Business Survey (informed by the NFB survey) to examine the debt strcture of small businesses owned by Mexican- and Korean-Americans, researchers found differential borrowing patterns by those with higher household net worth and financial strength of the community.<br /> <br /> Empirical results show that Korean American and Mexican American entreprenerus have greater role demands, and subsequently, higher levels of difficulty in managing work-family conflict than African Americans and Whites. Furthermore, difficulty in managing work-family conflict negatively impacts business performance whether performance is measured through the perception of the business owner, or through more objective financial measures.<br /> <br /> Outreach pieces developed as a result of the project's research results were used in the natural disaster work done in Rushford, MN because of a natural disaster caused by the flooding of the Root River.<br /> <br /> <br /> <br /> <br />

Publications

Impact Statements

1. Training small business owners in a holistic approach to quality management would increase the annual revenue of the average firm by more than $495,396 a year. Given the size of the average family firm, these firms could potentially increase their revenue 48.7% using a more holistic quality framework.
2. It is important for practitioners such as SBDC counselors to consider business conditions before soliciting participation in support groups. Support groups may disproportionately advantage those who are meeting business challenges successfully and represent further constraints on time and personal energy for struggling business owners.
3. It is no longer possbile to depend solely on human capital theory and household charactersitic descriptions to understand the complex and interdependent relationships between the ethnic owning-family, its firm, and the community context in which the firm operates.
4. Preliminary results of research to assess the impact of federal disaster assistance on family-owned small business suggests that family reslience is critically important to the survival and success of family-owned businesses.
5. A study of financial patterns addressing the relationship between commercial banks and other lenders suggests that commercial banks and finance companies complement one another. This information is important to SBDCs and others advising clients about access to financial capital.
6. Research indicates that internal funds are at least as important as debt capital in small business growth. This information is important to SBDCs and others advising clients about how to finance their growth.
7. Community dynamics are critically important in assessing the demand for financial capital from commercial banks. Understanding these dynamics is important to lenders in assessing the financial records supplied by minority owned businesses and ultimately in making the decision to loan money.
8. Family business managers prior knowledge and level of integrated use of information technology (IT), business location (in home or not), community size, and business size (number of employees) are important antecedents to perceived ease of IT use and the decision to adopt IT by small family firms. Ease of use and decision to adopt IT accounted for over 60% of the variance in the usefulness of IT and implementation of Internet and IT capabilities. The implementaion of IT capabilities accounted for nearly 40% of the variance in actual use of IT and perceived impact of the Internet on firm performance.
9. Small business development specialists in Hawaii should inform entrepreneurs about the characteristics that were found among the more profitable businesses in Hawaii. They include: higher levels of education, age (older vs. younger) and work in service and construction industries.
10. A list of guiding questions for family business consultants working with ethnic family businesses was developed for them to work through and become more cognizant of their own cultural values and assumptions. The self-awareness questions focus on consultants family and cultural heritage and on beliefs and biases that they might carry.

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Report Information

Participants

Technical Committee Members, Administrative Advisor & Institutional Representatives;

Danes, Sharon (sdanes@umn.edu), University of Minnesota;
Fitzgerald, Margaret (Margaret.Fitzgerald@ndsu.edu), North Dakota State University;
Haynes, George (haynes@montana.edu), Montana State University;
Jasper, Cynthia (crjasper@wisc.edu), University of Wisconsin;
Lee, Yoon (yoon.lee@usu.edu), Utah State University;
Leholm, Arlen (leholm@cals.wisc.edu), University of Wisconsin;
Marshall, Maria (mimarsha@purdue.edu), Purdue University;
Masuo, Diane (masuo@hawaii.edu), University of Hawaii;
Muske, Glenn (glenn.muske@okstate.edu), Oklahoma State University;
Niehm, Linda (niehmlin@iastate.edu), Iowa State University;
Pushkarskaya, Helen (helen.pushkarskaya@uky.edu), University of Kentucky;
Schrank, Holly (schrankh@purdue), Purdue University;
Stafford, Kay (stafford.2@osu.edu), Ohio State University;
Swinney, Jane (swinnej@okstate.edu), Oklahoma State University;

Technical Committee Members Absent: Park, Timothy (tpark@uga.edu), University of Georgia;

Guests:; Kathryn Boys, Clemson University; Katie Brewton, University of Minnesota; Whitney Peake, Marshall State University; Chung He Yung, Ohio State University; Sandra Sydnor-Bousso, Ohio State University

Brief Summary of Minutes

Accomplishments

The primary data collected by the NC 1030 group is the National Family Business Survey (NFBS) 1997, 2000 and 2007 waves. The current project focuses on data collection and interpretation for the third wave of data. The third wave (2007) is unique in that it contains information on family business experience with natural disasters. Such data allow us to distinguish between business failures due to a natural disaster and those failures that are routine business failures. Only a small body of disaster research exists on individual responses that estimate disaster prevalence, nature of losses, and predictors of recovery. These studies have been conducted either in urban disaster locations or with small convenience samples. All samples have been cross sectional. Studying businesses at one point in time potentially has presented a distorted picture, since businesses may fail at a later date; economic cycles and increased indebtedness after the disaster can influence success and failure over the long-term (Tierney, 1997). The NFBS panel data can begin to provide some insight into the distinction in failure rates. Members of the technical committee also informed the development of the National Minority Business Owner (NMBO) Survey and work with data on the Tobacco Buy-out in Kentucky.<p><br /> Short-term Outcomes<p> <br /> Firms located in counties receiving more disaster assistance are not more likely to survive, however these firms are more likely to realize positive changes in revenue than firms located in counties receiving less disaster assistance. Businesses located in an economically vulnerable rural county, those engaged in family to business resource intermingling and those transferring more business income to the household were more likely to survive. Larger businesses, those headed by women and those transferring more income from the business to the family were most likely to succeed.<p><br /> Higher levels of federal disaster assistance were associated with lower family firm resilience for male-owned businesses and higher family firm resilience for female-owned businesses.<p><br /> Results from disaster assistance work refutes previous findings that firms experiencing more disasters are less likely to survive. Results were mixed in supporting claims that disaster assistance helps individuals recover but not businesses, and that disaster assistance is negatively related to disaster recovery.<p><br /> Disaster assistance had larger and more significant effects on female firms. Most importantly, this research found that disaster assistance had a positive impact on the success of women-owned small businesses, while having no impact on the success of men-owned small businesses.<p><br /> An on-line resource tool, The Entrepreneurs Toolbox, has been developed to assist minority business owners. It is available at http://www.ctahr.hawaii.edu/oc/freepubs/pdf/ER-10.pdf<p><br /> Outputs<p> <br /> National Family Business Survey Data<p><br /> Research results and outreach pieces developed as a result of the projects research results were used in the natural disaster work done in Rushford, MN because of a natural disaster caused by the flooding of the Root River.<p><br /> It is important for practitioners such as SBDC counselors to consider business conditions among participants before soliciting participation in support groups. Support groups may disproportionally advantage those who are meeting business challenges successfully and represent further constraints on time and personal energy for struggling business owners.<p><br /> Small business consultants or professionals can better support female business owners by understanding which areas of business innovation their clients do and do not actively engage, and better support female owners in obtaining business innovation skills. Understanding how differential responses based on characteristics of the business owners will help policy makers, business consultants, and small business owners improve business performance.<p><br /> Copreneurs, or couples who own and operate businesses together, are more likely to intermingle business and personal finances with varying results. While the use of the home equity increased business profits, using business cash for the family decreased the feeling of success.<p><br /> Copreneurs who did not start as such but who later formed this type of business were less likely to intermingle resources. This may be related to the fact that these businesses were often financially stronger in terms of profit and revenues.<p><br /> A preliminary analysis of longitudinal data indicates that innovation and strategic planning may be a distinguishing factor, as suggested by Carland, Hoy, Bolton and Carland, between entrepreneurs and small business owners.<p><br /> National Minority Business Owner Survey Data<p><br /> Programs targeting minority-owned family businesses can be developed for educational purposes in order to help them to be successful in business and in achieving business goals. When minority business owners placed family needs first over business needs, the level of business success decreased. Thus, providing family coping strategies for minority owners might help them to be more successful in business.<p> <br /> Business owner motivation should be studied beyond the start-up phase and well into the life of the family business. Business consultants who work with small business owners need to consider the influence of goal orientation on business performance and growth. Goal setting and goal orientation are an important part of business planning activities that in the long run set the stage for family business success.<p><br /> Korean-American business owners reported significantly more business problems than their Mexican-American counterparts on items ranging from assessing customer needs to managing family/business conflict. Korean-Americans, as more recent immigrants than Mexican-Americans, face more challenges as business owners, relative to obtaining credit, navigating and complying with local and state laws and finding qualified workers. Therefore, Korean American family businesses in particular can benefit from support coming from a network outside their own family. Examples of community agencies in Hawaii include the Korean Chamber of Commerce and the Center for Korean Studies. Lending institutions can help by providing copies of regulations translated into Korean as well as offering business start-up workshops.<p><br /> Kentucky Tobacco Buy-out Program<p><br /> The increasing availability of the internet in rural areas changes the demographic profile of rural entrepreneurs. In particular, entrepreneurship becomes a more available employment option for married females, but is less available for low income populations.<p><br /> Activities<p><br /> Members of the NC 1030 technical committee are engaged in the following efforts related to this project:<p> <br /> A second National Science Foundation (NSF) grant has been awarded to two individuals on the NC 1030 project. Maria Marshall and Holly Schrank from Purdue University have been funded for the project Small Business Recovery and Demise After a Natural Disaster.<p><br /> Data collection for Phase I of the USDA grant, Rural Community Resiliency: The Role of the Retail Sector in Easing the Effects of Slow Motion Shocks was completed in September, 2009.<p><br /> Qualitative interviews were conducted with small family businesses in Iowa and Oklahoma on the business owners views of community social responsibility (CSR) for family firms.<p><br /> Outreach projects were conducted in spring 2009 with rural retail and hospitality firms with funding received from the Main Street Iowa Program, Iowa Dept. of Economic Development. Six businesses from a small community impacted by recent floods in Iowa were provided with marketing and branding assistance, competitive strategic advice, and physical enhancements of the actual business.<p><br /> A second round of funding was received for the Rural Renaissance Community Index (RRCI) Project that is focused on attracting and retaining residents in small rural communities.<p><br /> In cooperation with the Northern Rangelands Trust, a Kenyan wildlife conservation group, a community-based pilot project is being conducted in Il Ngwesi, Kenya. The project is designed to help a Masai rural community of pastoralists better manage their range lands, earn more from the sales of their livestock, and find alternative enterprises to supplement their income. In addition to faculty efforts, graduate students are able to collect data for thesis projects.<p><br /> Additionally, a member of the technical committee is serving on the Board of Directors of the Prairie Family Business Association, the second largest family business association in the nation.<p><br /> Consulting projects, such as those noted above, provide valuable professional and service learning for students, develop entrepreneurship capabilities in students and rural communities, build networks between communities/universities/state organizations, and aid in building various forms of value and life quality enhancements for participants.<p> <br /> Milestones and Plans for the Upcoming Year<p> <br /> The project timeline indicates that by the end of the year in 2009, the technical committee will have completed data collection and prepared preliminary descriptive analysis. The project is ahead of schedule as data collection was completed prior to 2009 and the data set for the current (and third) wave of the National Family Business Survey has been merged with the two previous waves of data (1997 & 2000). Moreover, the NFBS data sets have been merged with the following data sets containing disaster-related information: PERI, SHELDUS and County Business Pattern data. Complete data sets have been distributed to technical committee members and several webinars developed by the primary investigators on the first NSF grant have been conducted to help technical committee members use the longitudinal family business and disaster-related data.<p><br /> In terms of meeting the objectives for the project, outputs in the form of presentations and publications have been achieved for all four objectives (1a, 1b, 2a, and 2b), and are presented in the Publications section of this report.<br /> In 2010, as specified in our proposal, the committee is responsible for analyzing data and testing hypotheses and models. Presentations to stakeholders and scholars is also to take place. Early evidence of our ability to accomplish these tasks include scheduled publication of a 2010 special edition of the Journal of Family and Economic Issues for which two of our committee members are serving as guest editors, and the members of the committee have submitted papers for review. There are also papers accepted for presentation at the United States Association for Small Business and Entrepreneurship annual conference in January, as well as proposals submitted to other conferences. Members of the committee will continue to develop and submit manuscripts for review as hypothesis testing is completed. <br />

Publications

Impact Statements

1. Survival: There is an 82% survival rate of family firms from 1997 to 2000 in the NFBS from an initial sample of the 673 households in which complete data are available from the household and business manager.
2. Survival: Family reslilence was found to be crutially important in determining the survival and success of family businesses after a disaster.
3. Family Capital: It is the access and use of family capital that is more important in the sustainability of family business than is the level of family capital available.
4. Family Capital: Certain levels of family captial are helpful in developing a business, such as home equity. Helping nascent copreneurs achieve these types of resources may be important in helping the business to be a profitable, on-going enterprise.
5. Family Captial: Assessing family captial is very important when studying changes in family business survial and success. Family captials explained over 13% of variance in gross revenue and 4% of the variance in the owners perceived success in the short run. Family captials explained nearly 27% of the variance in gross revenue and nearly 12% of the variance in the owners perceived success in the long run.
6. Financial Capital: The effects of social networks and access to financial capital on business success were not statistically significant among minority women business owners and there were no signficant differnces between minority business owners on measures of business success. However, when women business owners were successful in achieving their business goals, it positively affected the level of business success.
7. NMBS: Data from the National Minority Businesss Survey (NMBS), informed by the NFBS, was used to compare Black, White, Korean and Mexian small business owners. Black owners reported lower levels of business success than White owners, while Korean, Black, and Mexican owners reported lower levels of business goal achievement than White owners.
8. NMBS: Mexican-Americans were significantly more likely than Korean-American family business owners to have home-based businesses and perceive higher business success. Mexican-American businesses had higher average income of more than $440,000 and a higher number of workers.
9. Disaster Assistance: Federal disaster assistance explained a signficant amount of variance in firm-owning resilience. Higher levels of federal disaster assistance were associated with lower family firm resilience for male-owned businesses and higher family firm resilience for female-owned businesses.
10. Disaster Assistance: It is very important that staff members in agencies offering disaster assistance consider the impact of gender when making grants or loans. While women-owned family businesses may grow slower, they may be susatained longer than men-owned family businesses.
11. Spousal Support: The first empirical study that treats the subject of spousal support as a serious theoretical and empirical matter in family-owned businesses was completed.
12. Tobacco Buy-out Program: Kentucky farmers were expected to transition to other business activities as a result of the tobacco buyout program, however their expenditures based on their quota were influenced by age, education, on and off farm income, and overall lifestyle. Therefore, the composition of the farm population had a signficant impact on the outcomes of the tobacco buy-out program on rural communities.
13. Tobacco Buy-out Program: The decision to exit tobacco farming is positively correlated with the farmers tenure, but not the age. Furthermore, for farmers older than 65 the probability to exit tobacco farming decreasess as the number of household members involved in farming increases; however the effect of family involvement in farming is not as strong as the effect of the size of the farm.
14. Information Technology: Ease of use and decision to adopt information technology accounted for over 60% of the variance in usefulness of IT and implementation of internet and IT capabilities. The implementaion of IT capabilities accounted for nearly 40% of the variance in acutal use of IT and perceived impact of the internet.
15. Adjustment Strategies: Significant differences in handling hectic times are noted in surviving and non-surviving businesses from 1997 to 2000. Surviving businesses adjusted by having the household manager forgo sleep to do business work or by business managers shifting business work to spend time with family. This study is one of the first to look at the long-term effects of managerial adjustment strategies on family business success and survival.
16. Adjustment Strategies: The managerial adjustment strategies examined reflect real-time efficiency of family owned enterprises. Time spent working can generate financial rewards; however, time spent with family has its own value. Thus, in some measure,a fundamental question for working families is answered in that operating a successful family business does allow time for family and that even in hectic times, there are strategies families can adopt for coping.
17. Copreneurs: Consultants working with copreneurial couples should determine the level of intermingling that is occurring and help coprenreurs ensure that they are accurately tracking exchanges. Without these types of records, it is difficult to determine a true picture of objective business success.

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Report Information

Participants

Brief Summary of Minutes

See attached file for NC1030 2010 Annual report, Minutes, and Publications/Grants

Accomplishments

Publications

Impact Statements

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Report Information

Participants

Brief Summary of Minutes

Attached please find the termination report for NC_temp1030 under the "Copy of Minutes" link below.

Accomplishments

Publications

Impact Statements

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