Managing cultural diversity and conflict in family businesses: An organizational perspective

Gavrić, Tanja; Braje, Ivana Načinović Article Managing cultural diversity and conflict in family businesses: An organizational perspective Administrative Sciences Provided in Cooperation with: MDPI – Multidisciplinary Digital Publishing Institute, Basel Suggested Citation: Gavrić, Tanja; Braje, Ivana Načinović (2024) : Managing cultural diversity and conflict in family businesses: An organizational perspective, Administrative Sciences, ISSN 2076-3387, MDPI, Basel, Vol. 14, Iss. 1, pp. 1-17, https://doi.org/10.3390/admsci14010013 This Version is available at: https://hdl.handle.net/10419/320836 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Citation: Gavri´c, Tanja, and Ivana Naˇcinovi´c Braje. 2024. Managing Cultural Diversity and Conflict in Family Businesses: An Organizational Perspective. Administrative Sciences 14: 13. https://doi.org/10.3390/ admsci14010013 Received: 10 October 2023 Revised: 3 January 2024 Accepted: 4 January 2024 Published: 8 January 2024 Copyright: © 2024 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). administrative sciences Article Managing Cultural Diversity and Conflict in Family Businesses: An Organizational Perspective Tanja Gavri´c 1,* and Ivana Naˇcinovi´c Braje 2 1Faculty of Business Economics, University “VITEZ”, 72270 Travnik, Bosnia and Herzegovina 2Faculty of Economics & Business, University of Zagreb, 10000 Zagreb, Croatia; [email protected] *Correspondence: [email protected] Abstract: This study aims to investigate the occurrence of conflicts in family businesses, particularly focusing on their impact on founder behavior and organizational culture. Conducted in Bosnia and Herzegovina, the research employs a qualitative methodology to gain an in-depth understanding of conflicts within family businesses. The study utilizes semi-structured interviews as the primary data collection tool, engaging with 5 founders and 12 successors across various family owned businesses. The sample, comprising 17 participants, offers diverse perspectives on conflict dynamics between founders and successors. The interviews, designed to explore recurring key themes, delve into the nature and characteristics of task and process-based disagreements within these family enterprises. Key findings from this study include the observation that task or process-based disagreements, commonly arising between family members, can act as catalysts for founders to re-evaluate their behavior, potentially influencing the shaping of the organizational culture. The research highlights the importance of fostering a culture of open communication, critical thinking, and respect within family firms. Such a culture can play a significant role in reducing relationship conflicts and aid in reaching constructive resolutions. Additionally, the study reveals that the features of organizational culture within family businesses can be instrumental in managing conflicts effectively. This research underscores the complexity of family relationships in business settings and emphasizes the necessity of examining these dynamics from multiple angles. Given the prevalence of family members in key positions within family firms, the study sheds light on the importance of addressing diversity and conflict among family members, considering their long-term implications on the culture and future of these firms. Keywords: family business; conflict; organizational culture; founder; successor; diversity 1. Introduction Family firms play a key role in the economic growth and employment of any country (De Massis et al. 2018;Basco et al. 2021). Thus, over 50% of companies opened in European countries are family businesses (Rotaru et al. 2020). A small number of family businesses survive beyond the first generation and succeed as independent bodies to the third or fourth generation (Mokhber et al. 2017). Reasons for the deaths of family businesses range from inadequate economic situation, insufficient capital and resources, incompetent management to many generational or family related factors that affect the sustainability of these businesses (Bednarz et al. 2017;Moreno-Menéndez et al. 2022). Despite the undisputable importance of family firms, scholars are debating about the distinctive features that make them different from non-family firms (e.g., see Dawson and Mussolino 2014;Zajkowski et al. 2022). Several authors argued that culture of family businesses plays an important role in determining whether the firm continues successfully beyond the first generation (e.g., Dyer 1988;Vallejo 2008). As family firms’ culture is by some authors seen as a strategic resource that can sustain their competitive advantage (Zahra et al. 2004;Vallejo-Martos 2011;Laforet 2016) and improve firm performance compared to non-family firms (Denison Adm. Sci. 2024,14, 13. https://doi.org/10.3390/admsci14010013 https://www.mdpi.com/journal/admsci Adm. Sci. 2024,14, 13 2 of 17 et al. 2004;Sánchez-Marín et al. 2015;Raitis et al. 2020), understanding cultural patterns might have critical importance for the success of family firms. Organizational culture refers to the coherent pattern of beliefs and values that represent common solutions to major organizational problems (e.g., Schein 1983), where cultural values act as wide-adopted norms of behavior (Tipu 2018). In family firms, organizational culture is greatly shaped through the processes of intergenerational interaction (Cherchem 2017;Magrelli et al. 2022). However, although generations are a constitutive element of family firms, a full understanding of all repercussions from their involvement in family business is limited (Magrelli et al. 2022). For example, intergenerational differences in the workplace are a well-documented source of conflict (Urick et al. 2017;Hirsch 2020), resulting with the finding that family firms experience conflicts even more often than other companies (Großmann and Schlippe 2015;Caputo et al. 2018). As founders often desire to retain family control even past their tenure, in the course of intergenerational transition and succession, tensions can occur between the need to honor the founder’s vision of the firm or adapt to the vision of the children/successors (Suddaby and Jaskiewicz 2020), as well as other value tensions between family members (Raitis et al. 2020) due to diversity and different perspectives. Considering the occurrence of conflicts in family firms, existing academic papers seek for a qualitative, in-depth-analyses of conflicts in family firms that are currently lacking (Großmann and Schlippe 2015). This paper attempts to fill this research gap, but also takes a step further as it seeks to examine the effects of such intra-family conflict dynamic on the organizational culture in family firms. In order to contribute to this stem of research, paper proceeds with two research questions. The first research question that is to be answered with this work is: what are the sources and types of intergenerational conflict in family firms? Some conflicts can strengthen the cohesion of the family unit and facilitate choices for both the business and the family (Kellermanns and Eddleston 2007). Yet, conflicts and conflict resolution strategies amend the social systems within organization, thus by applying the systems theory of organization, reaction and adaptation might occur (Vallejo 2008;Großmann and Schlippe 2015;Piekarczyk 2017;Tipu 2018), leading to changes in the accepted behavior rules. Namely, conflicts due to values and aspirations of the many generations involved in family firms (Hall et al. 2001;Vallejo 2008;Sindakis et al. 2022) might give rise to self-reflection and create positive change in founders’ perceptions and behaviors (Speakman and Ryals 2010). By adopting conflict transformation approach, such conflicts become a force that leads to constructive change due to the energy created by conflict (Lederach and Maiese 2003). Given the importance of founder centrality in organizational culture research (Schein 1983;Tipu 2018), Sindakis et al. (2022) argued that applying cognitive theory and investigation of individual perceptions and reasoning in future studies could be beneficial. In that sense, this paper questions whether conflicts can trigger founders to change behavior patterns and in this way shape cultural elements, especially those layers of culture such as patterned ways of behavior and values; leading to second research question: what roles do intergenerational dynamics between founder and successors and conflict resolution have on cultural patterns in family firms? To respond to the research questions, 17 in-depth interviews were conducted with founders or successors of first-generation family firms in Bosnia and Herzegovina. This paper proceeds as follows: after a literature review about the origins of culture among family firms and the occurrence of conflicts, methodology of research is presented. The discussion part includes the analysis of key findings and its alignment with previous research results. The conclusion of this paper offers important insights with respect to culture formation following conflicts among first-generation family firms. Adm. Sci. 2024,14, 13 3 of 17 2. Literature Review 2.1. Features of Organizational Culture in Family Firms Four decades ago, in his seminal work on organizational culture, Schein (1983) recognized that firm founders strongly impact the evolution of organizational culture, as later confirmed by several studies (e.g., see Hall et al. 2001;Tipu 2018;Sindakis et al. 2022). According to Schein, entrepreneurs have a clear idea of what they want to achieve and how should the organization they manage behave. All this leads to imprinting founder’s vision, leadership, and decision-making onto the firm (Davis and Harveston 1999;Chua et al. 2004) and manifesting founder’s personality in family firm values and organizational culture. Adopted values further define firm’s operating style and response to change (Tipu 2018) and serve as a driver of entrepreneurship and growth (Raitis et al. 2020). Family firms are known for their strong and value-based cultures (Sindakis et al. 2022), where adopted values define corporate aims and provide a common basis for dealing with disagreements, challenges, and new initiatives. Through intergenerational transmission these are then passed to new generations in leading positions (Bika et al. 2019) and become a central element of culture, and a foundational element in decision making (Herrera and de las Heras-Rosas 2020;Suddaby and Jaskiewicz 2020). Family firms, especially first-generation family firms, most often develop paternalistic culture (Dyer 1988). Such culture is unique as it emphasizes the founder’s centrality and family’s legacy, which fully confirms Schein’s assumption that founders have a prevailing impact on shaping family firm culture. Research has found that a paternalistic founder-centered culture type does not always have a positive impact on firm performance, especially among SME family firms (Laforet 2016) leading to finding that holistic view of family firms overlooks the fact that these firms are not a homogeneous entity (Heck 2004;Westhead and Howorth 2007;W˛ecławski and ˙ Zukowska 2019). Furthermore, the adoption of a specific cultural configuration will provenly vary according to the family culture, its diversity of beliefs, values, goals, history, and the social relationships of the family itself (Hall et al. 2001;Heck 2004;Tipu 2018) indicating that family ties have a role in shaping culture within family firms (Magrelli et al. 2022). Additional family related determinants of family firm culture include the level of family involvement in business, meaning is the firm only owned by the family or also managed by the family (Denison et al. 2004;Sánchez Marín et al. 2016), the type of family domination (one or several members), degree of openness and cultural explicitness (Hall et al. 2001), as well as other external pressures (Raitis et al. 2020). Clearly, the interplay of internal and external constituencies impacts on the change in family firms’ culture and values over time (Hall et al. 2001), and the shuffling of family relationships should be further investigated. Generational transition and succession, a unique feature of family firms, has also been recognized as a force with potential to shape culture (Vallejo 2008;Cherchem 2017). The number of generations involved in the business is thus relevant factor while discussing family firms’ culture (Chirico and Nordqvist 2010). Participation of all groups involved in family business, relationships based on trust, stimulating dialogue, and negotiation might be useful to achieve harmony and minimize conflicts (Vallejo 2008). However, evidence shows that multi-generational family firms can be prone to conflicts among family members (see Frank et al. 2011), therefore conflicts in family firms need further attention. 2.2. Conflicts in Family Firms Involvement of the family in business is often portrayed both as a special feature of the family business and as an important source of conflict in these businesses (Qiu and Freel 2020). When family and business are mixed, many positive effects arise; such as family health and prosperity, above-average company performance, better employee retention, socially responsible business, and environmental care (Pieper et al. 2013). On the other hand, while work can meet a family’s needs for income, job, and personal fulfilment, human and financial resources can cause a rift in the family system. Likewise, although family members can provide a skilled and loyal workforce at work, family conflicts and Adm. Sci. 2024,14, 13 4 of 17 nepotism can penetrate business and worsen company performance (Pieper et al. 2013; Maharajh et al. 2023). Two commonly found types of family stipulated conflicts are process and task conflicts (Frank et al. 2011;Jehn 2014). Task conflicts occur in the form of disagreements among family members about goals, strategies and the content of the task being performed, including differences in views, ideas, and opinions (Iqbal and Fatima 2013); often occurring between family members due to generational diversity. Process conflicts refer to disagreements about how the goals should be achieved (Kellermanns and Eddleston 2007). When more generations get involved in the family business both task and process conflicts tend to increase, yet these are expected to be functional conflicts, unlike interpersonal relationship conflicts which have been found to decrease the performance and satisfaction of all parties involved in the family business (Kellermanns and Eddleston 2007;Roseckáand Machek 2023). Task and process conflicts have an ambiguous role in the family business literature. On the one hand, scholars argue that these conflicts can stimulate creativity and improve decision-making processes (De Dreu and Weingart 2003;Kellermanns and Eddleston 2007), while earlier authors (e.g., Harvey and Evans 1994) highlight the detrimental effects of these conflicts on organizational performance and employee satisfaction. This contradiction in perspectives highlights the need for a more detailed and nuanced investigation into the specific manifestations of task and process conflicts in family businesses, along with their distinct effects. Family businesses’ founders have a crucial role in creating an environment that encourages successors to learn from experience, accept their own mistakes, develop their self-confidence and managerial autonomy and purse family business continuity (LeCounte 2022). But, on the other hand, the existence of excessive and inappropriate engagement of the previous generations can cause social disruptions and a higher level of conflict in the organization (Moreno-Menéndez et al. 2022). This interference may be even more noticeable in the case of succession, given the great influence the founder has on the culture and processes of the company and his resistance to leaving the company (Rhodes and Lansky 2013). The challenges that come with “intergenerational change” in family businesses are unique and require a different approach depending on the characteristics of the incoming generation. Conflict can arise in this period for various reasons, with differences in values, priorities, and diversity during intergenerational succession being one of the most significant factors (Gómez-Mejía et al. 2007). The incoming generation may have different values and priorities than the older generation, leading to disagreements about the direction and goals of the business. For example, the older generation may be resistant to change while the incoming generation may want to introduce new technologies, business models, or expansion strategies (Klein et al. 2005). This can create tensions and conflict within the family, as both generations struggle to reconcile their different views. A power struggle can especially arise during intergenerational succession as the outgoing generation may be reluctant to give up control, while the incoming generation may feel frustrated with their lack of decision-making power (Miller and Le Breton-Miller 2021). This power imbalance can create conflict with numerous consequences, including the effect on culture. Generations may struggle to communicate effectively due to differences in communication styles or a lack of trust (Sharma et al. 2003), leading to another factor contributing to conflict during intergenerational succession. Lack of communication can lead to misunderstandings and conflict, making it difficult to develop a clear succession plan. Finally, emotional attachment also contributes to conflict during intergenerational succession. The outgoing generation may have an emotional attachment to the business, making it difficult for them to let go of control (Davis and Harveston 1999), which can create conflict and make it challenging to develop a clear succession plan. The literature has often disregarded the crucial aspect of conflict resolution approaches in family businesses. A study by Alderson (2015) attempted to address this gap by shedding light on the diverse strategies employed by family firms to manage conflicts effectively. The Adm. Sci. 2024,14, 13 5 of 17 research emphasizes the importance of understanding how conflict resolution approaches can influence the long-term sustainability and success of these businesses. If managed appropriately, conflict can lead to opportunities for growth and innovation within the organization (Lederach and Maiese 2003), contribute to the development of new perspectives, and ultimately result in a stronger, more resilient family business (Caputo et al. 2018). The ability to identify conflict and deal with resolution processes is often beyond the managerial skills or time of the family member. Conflict that is not addressed and is allowed to linger in the family business or with the external constituents may create problems that are very complex (Qiu and Freel 2020). Resolving these conflicts, and ultimately improving the health and resilience of families and their businesses, hinges on timely identification and subsequent treatment of potential problems resulting primarily from the business’s impact on and interaction with the family system (Danes and Lee 2004). 2.3. Implications of Conflicts in Family Firms Family businesses’ unique dynamics can give rise to conflicts that may be difficult to resolve (Chua et al. 2004). These conflicts arise due to a variety of factors, including competing goals and interests, power struggles, and emotional entanglements (Davis and Harveston 1999). The outcomes of conflicts have significant implications for the long-term success and sustainability of the family business. When conflicts remain unresolved or are not handled properly, they can lead to bitterness, resentment, and a breakdown in communication between family members (Gómez-Mejía et al. 2007;Claßen and Schulte 2017), which not only damages the business but also the family’s overall well-being. In some cases, unresolved conflicts may even result in family members leaving the business or selling their shares, leading to a loss of expertise, knowledge, and valuable resources (Sharma et al. 2003). On the other hand, many conflicts have positive outcomes, such as increased innovation, improved decision-making, and enhanced creativity (Danes and Lee 2004). Conflict can stimulate change and bring attention to issues that may have been previously ignored or overlooked, leading to growth and development in the family business. In some cases, conflict may even serve as a catalyst for generational renewal and succession planning, helping to ensure the long-term continuity of the family business (Ward 2011). Family members from different generations may resist open knowledge sharing with each other if their relationships are marked by greater conflict due to diversity in experiences and viewpoints (Woodfield and Husted 2017). The resolution of conflicts in family businesses depends on several factors, including the nature of the conflict, the degree of emotional involvement, the diversity of perspectives, and the willingness of family members to engage in a collaborative problem-solving process (Klein et al. 2005). Managing conflict in an integrative manner reflects the needs and priorities of others (Song and Wang 2013), with family members seeking to satisfy each other’s needs by seeking acceptable compromises. This approach involves open knowledge exchange across generations, with open, detailed discussions of opposing views (Alper et al. 2000). In contrast, using domination to manage conflict carries low concern for the preferences of family members and members of other generations (Song and Wang 2013). In a family business, the role of predecessors can be a determinant in creating an environment that encourages successors to learn from experience, accept their own mistakes, and provide a place where significant progress can be made in the development of their confidence and managerial autonomy (Calabròand Mussolino 2012). Creating a culture of learning and growth within the family business can facilitate this process (Urick et al. 2017). Establishing effective conflict resolution policies and procedures, including the use of family councils, independent advisors, and other third-party resources, might help mitigate the negative effects of conflicts (Klein et al. 2005). Adm. Sci. 2024,14, 13 6 of 17 3. Materials and Methods 3.1. Contextualization This study utilizes qualitative methodology using thematic analysis for exploration as this approach allows researchers to better understand the feelings of the individuals involved in the research (Braun and Clarke 2006). The research sheds light on the sources and types of intergenerational conflict in family firms, and the resolution of these conflicts. The background of the study is rooted in the significance of family businesses, which play a vital role in the economic development of countries, including Bosnia and Herzegovina. The analysis begins with creating a framework based on the conceptual dimensions highlighted in the previous literature review (Charmaz 2014). 3.2. Sample Selection For this study, data were gathered through 17 in-depth, semi-structured interviews conducted with family business members located in Bosnia and Herzegovina. When choosing suitable participants for this research, they were sought founders and successors who were ready to openly talk about conflicts. The selection of family business was based on the following criteria: (1) does the firms declare themselves as a family business; (2) is a family business owned by one family, (3) are there at least two generations of the owning family involved in the business. After setting the criteria authors starting contacting firms. Of the approximately 30 family businesses contacted to volunteer for the interview, 10 firms agreed to participate in the study. Random sample strategy was used for hiring respondents, where each individual has an equal and similar probability of selection (Creswell 2013). Such randomization of sampling generates results that diversify the database result and thus has greater implications for generalization in larger population samples. Respondents were selected based on their status in the family business, only founder and potential successor of the business were included. Age, gender, and other demographic characteristics, as well as the size of the business were not restrictive. A total of 12 successors and five founders were interviewed. To increase the variation relevant to research questions, a sampling method that considered several factors such as the employee status, firm size and age of the firm was employed. This allowed to capture diverse perspectives and experiences from respondents. To gain a comprehensive understanding of intergenerational conflict, founders and successors from the same company were interviewed (Interviewees 2 and 7, Interviewees 4 and 17, Interviewees 5 and 6, Interviewees 10, 11, and 12, and Interviewees 13 and 14). Although it was attempted to interview both owners and successors from each company, not all founders were willing to participate resulting in a discrepancy in the number of owners and successors. Despite respondents being familiar with each other, interviews were conducted separately to ensure unbiased responses. Research has shown that founders may be reluctant to discuss certain aspects of their business, particularly those related to succession planning and conflict resolution, possibly due to the feelings of ownership, attachment, and identity that make them resist delegating authority or surrendering control to successors (Davis and Harveston 1999). In contrast, successors may have a different perspective on these topics and may be more willing to discuss them openly and may have a more realistic view of the business, less biased by their personal history and the past successes of the business, which can make them more open to discussing succession and conflict resolution (Zahra et al. 2004). Therefore, by allowing for a flexible approach in the number of founders and successors interviewed, the researchers were able to obtain more realistic and honest answers from the interviewees. Table 1provides a summary of the sample, which includes both founders and successors belonging to the same organization. Adm. Sci. 2024,14, 13 7 of 17 Table 1. Employment status and demographic information of family members. Gender Employment Status Firm Size Firm Age Primary Industry Interviewee 1 F Director/successor 32 8 Hospitality industry/tourism Interviewee 2 M Director of finance/successor 40 27 Manufacturing Interviewee 3 F Founder 3 16 Retail sales Interviewee 4 M Executive director/successor 114 27 Retail and service Interviewee 5 M Founder 90 26 Manufacturing Interviewee 6 F Executive director/successor 90 26 Manufacturing Interviewee 7 M Founder 40 27 Manufacturing Interviewee 8 M Director/successor 25 18 Retail sales Interviewee 9 M Director/successor 3 16 Retail sales Interviewee 10 M Founder 5 27 Haberdashery Interviewee 11 M Employee/successor 5 27 Haberdashery Interviewee 12 M Director/successor 5 27 Haberdashery Interviewee 13 M Founder 2 50 Manufacturing Interviewee 14 M Director/successor 2 50 Manufacturing Interviewee 15 M Managing director/successor 7 19 Media and Broadcasting Interviewee 16 M Director/successor 6 33 Retail sales Interviewee 17 M Forwarding manager/successor 114 27 Retail and service Source: own study. 3.3. Interview Process Data were collected by using semi-structured interviews. A key consideration in selecting interview participants was the involvement of the second generation in the family business. The semi-structured interview process consisted of both general and open-ended questions, aimed at stimulating narratives about significant turning points and conflicts in the history of the family businesses. The initial questions were general in nature, with the aim of establishing a rapport and creating a comfortable space for the interviewees to share their personal associations and narrative threads. As the interview progressed, more sensitive questions were asked about intergenerational conflict, building on the earlier responses to generate more in-depth discussions. The intention was to allow the interviewees to share their experiences and insights while also creating the opportunity for the researcher to delve more deeply into specific themes and topics. All 17 respondents were interviewed individually, and their identities were disguised: they were named by pseudonyms. Most interviews were conducted at the respondents’ workplace. The interview session lasted between 30 min and two hours. Interviews with some founders lasted more than expected, mostly because they were less open to talking about conflicts, so authors used additional questions to gather sufficient information. All interviews were conducted in a friendly environment, with authors being in the position of a listener striving to maintain a comfortable and stimulating environment and not affecting answers. All interviews were conducted in the participants’ native language. 3.4. Coding and Analyzing To conduct the coding process and analysis, the grounded theory approach was employed (Strauss and Corbin 1998). Such approach involves a systematic and iterative process of data collection, analysis, and interpretation, with the goal of generating theory that is grounded in the data (Charmaz 2014). Interviews with family business founders and successors were transcribed and analyzed using a coding scheme. We started by reading through the interview transcripts to familiarize ourselves with the data. We then used an Adm. Sci. 2024,14, 13 8 of 17 inductive approach to coding, allowing the themes to emerge from the data rather than imposing preconceived categories onto the data (Charmaz 2014). Meaningful units of data were identified and assigned with descriptive labels. This process continued until saturation, or the point at which no new codes or themes emerged from the data. As the data were coded, patterns and connections between the codes started to emerge. Axial coding was used to group related codes together and develop broader categories, or themes. Axial coding involves linking categories based on their relationships to one another, such as how they are related conceptually, causally, or chronologically (Strauss and Corbin 1998). Through the axial coding process, different types of conflicts present in the data were identified and categorized into three main types: generational differences, task conflict, and relationship conflicts related to family matters (see Table 2). We then examined the causes and consequences of each type of conflict. To categorize the causes of conflicts, we searched for recurring patterns in the responses and identified four main categories, encompassing the diversity of generational differences in ideas and ways of doing things, resistance to change, personal feelings, and lack of openness and honesty. We then analyzed the consequences of conflicts, which often included conflict resolution and the adoption of new values. Table 2. Coding scheme. Types of Conflicts Causes of Conflicts Consequences of Conflicts Generational differences Diversity in ideas and approaches due to generational differences Conflict resolutions, adopting new values Task conflict Resistance to change, lack of openness and honesty Improved communication and collaboration, increased productivity Relationship conflicts Personal feelings, lack of clear communication, succession planning disagreements Strained family relationships Source: own study. 4. Results The study involved 17 participants from diverse family businesses in Bosnia and Herzegovina. This group consisted of 5 founders and 12 successors, providing a balanced view of both the established and upcoming generations in family businesses. Among the participants, there was a gender distribution of 13 men and 4 females. The successors, comprising 70% of the participants, brought fresh perspectives to the research, while the founders, representing 30%, offered insights rooted in experience and tradition. The successors’ ages ranged from early 30s to mid-40s, indicating a younger cohort taking up strategic roles in these family firms. The founders were predominantly in their 60s and 70s, providing a contrast in generational viewpoints. The participants held various roles within their firms, ranging from directors and CEOs to deputy directors, highlighting a wide spectrum of managerial and leadership experiences. The firms varied in size, with employee numbers ranging from 2 to 114, indicating a mix of small to medium-sized enterprises. These firms operated in various industries, including hospitality, manufacturing, retail sales, haberdashery, and media and broadcasting, and had been in operation for periods ranging from 8 to 50 years. Three specific topics, corresponding to research questions, emerged as a part of interviews with owners or successors of family firms: conflicts in family firms, resolving conflict situations, and the possible role of conflicts in shaping patterned behaviors. 4.1. Sources of Conflicts in Family Firms Survey participants were first asked about the occurrence of conflicts within family firms, namely conflicts among family members. Family members working in family companies are expected to fulfil dual roles, being a family member and an employee which, in combination with intergenerational differences, can create tensions and possible Adm. Sci. 2024,14, 13 15 of 17 Caputo, Andrea, Giacomo Marzi, Massimiliano Matteo Pellegrini, and Riccardo Rialti. 2018. Conflict management in family businesses: A bibliometric analysis and systematic literature review. International Journal of Conflict Management 29: 519–42. [CrossRef] Charmaz, Kathy. 2014. Constructing Grounded Theory. 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