The Long-Term Orientation of Managers of Family Firms

The Long-Term Orientation of Managers

of Family Firms

Master’s Thesis

MSc BA Organizational and Management Control

Groningen, January 2015

C.J. Vrieling, Verlengde Willemstraat 3a, 9725 AW, email: cjvrieling@hotmail.com, student number: 2226561

University of Groningen Faculty of Business and Economics, MSc Business Administration Specialization in Organizational and Management Control

Supervisor University of Groningen: dr. E.P. Jansen

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Abstract

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1. Introduction

The ECB warned on 8 December, 2005, that financial imbalances were growing and that it was likely to continue on a global level, including within the Eurozone. This was one of the first indicators that warned for the economic situation worldwide. The economic credit crisis started in the summer of 2007 and became really problematic when Lehman Brothers files for bankruptcy on 15 September, 2008 (European Central Bank). We all know the global economic effects which resulted. We are still suffering from consequences like the European sovereign debt crisis. Sikka (2009, page 868) argues that “the current financial crisis has been incubated by the financialisation of Western economies, which created an abundance of credit and encouraged excessive risk taking through complex financial instruments.”

These recent economic developments have changed a lot about how organizations and managers view the economic environment. Business has to be conducted with greater caution today than in the past. This situation has probably influenced the control systems of many firms in recent years. According to Christie and Zimmerman (1994), it is possible that internal controls are tighter than before to avoid recent situations in which managers and executives focused too much on short-term objectives and ignored risks to maximize their personal wealth at the cost of shareholders. This short-term orientation of the executives and managers might also be a cause of the financial crisis.

The individual time orientations of key decision makers should be taken into account (Lumpkin et al. 2010) because they influence the time orientation of a company. Das (1986) found that more future-oriented executives preferred long-range planning. Firms that are more focused on a long-term strategy are family firms. This is true for a number of reasons. For example, family owners often envision their companies as asset to be passed on to descendants. They envision their children running a firm that bears the family name (Burkart et al. 2003). And the performances of the family firms is closely tight to the utility of the family (Anderson and Reeb, 2003a). One result of this long-term orientation of family firms is that they are less focused on adventurous growth opportunities than are non-family firms. In times of recession, like the credit crisis, they are more resistant and outperform non-family firms. (Druten et al. 2011). So, families are likely to have strong incentives to have much longer investment horizons compared to other shareholders (James, 1999; Kwak, 2003; Stein, 1988).

Family-owned firms are the most common type of firm around the world (Burkart et al. 2003). Bloom and Van Reenen (2007) estimate that 46% of medium-sized manufacturing firms in the United Kingdom are owned by a family. Families own 37% of medium-sized manufacturing firms in Germany and 56% in France. There are approximately 260.000 family firms In the Netherlands. That represents 69% of the total. Family firms in the Netherlands account for 53% of the gross domestic product (GDP) (Ministry of Economic Affairs, 2010). These statistics indicate the importance of family firms all around the world. The family may have a relatively greater influence on the time orientation of family firms than on non-family management that operates a non-family business. Previous literature shows the connection between long-term orientation and the family. In this research we are interested in the time orientation of managers who are not part of the founding family. According to Weber et al. (2003), family firms try to create long-term loyalty in employees. But do families succeed in this? We will investigate whether the founding family influences the time horizon of the managers.

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2. Literature survey

This section introduces what previous researchers have discovered about our subject. There is no literature that directly relates to how family firms affect issues of individual long-term orientation (LTO). Therefore, we have considered subjects in the literature survey that are closely related to this topic. We start by discussing literature about individual LTO, followed by literature about the characteristics of family firms and the role of management control systems (MCS).

2.1 Long-term orientation

Time orientation has been defined in many different ways. Some researchers use the term future orientation (Smith, 2006; Ashkanasy et al. 2004; House and Javidan, 2004), while others speak of LTO (Hofstede, 2006; Logoherel et al. 2009). The main difference between these two terms is the time aspect that is included. Future orientation is about the present and future, while LTO is about the past and the future (Venaik et al. 2013). The past is also of interest in this study because we will attempt to discover a possible transformation of time orientation of managers in this research. We will therefore use LTO instead of future orientation.

The definition that Bearden et al. (2006, page 475) uses is this: “LTO is the cultural value of viewing time holistically, valuing both the past and the future rather than deeming actions important only for their effects in the here and now or the short-term. As such, individuals scoring high in LTO value planning, tradition, hard work for future and perseverance.” Some researchers believe that national culture influences individual LTO (Grier and Deshpande, 2001; Bearden et al. 2006; Bond, 2002). But the main topic of the research concerns the relation between the LTO of managers and that of family firms. Therefore, the study will focus on individual LTO. The influence of culture on LTO (as in Hofstede, 2006) will not be considered here. In the next section we will have a closer look at differences in the LTO of individuals.

2.2 Family firms

Family firms have several characteristic that distinguish them from listed companies. The European Family Businesses (EFB) has offered a definition of a family business. The European commission formally recognized a definition of family business.

A firm, of any size is a family business, if,

1. The majority of decision-making rights are in the possession of the natural person(s) who established the firm; or are in the possession of the natural person(s) who has/have acquired the share capital of the firm; or are in the possession of their spouses, parent, child or children‘s direct heirs.

2. The majority of decision-making rights are indirect or direct.

3. At least one representative of the family or kin is formally involved in the governance of the firm.

4. Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or his or her family or descendants possess 25 per cent of the decision-making rights mandated by their share capital.

4 Founding families are more likely to forgo short-term benefits for managing earnings because they wish to pass their business on to future generations and protect the family’s reputation (Wang, 2005). In addition, family owners’ long-term horizons and their preference for long-term investments may mitigate managerial incentives for myopic investment decisions, thereby leading to greater investment efficiency (James, 1999).

Bertrand and Schoar (2006, page 94) write that, “The cultural view of family firms implies that these firms might be less willing to make changes to their overall strategy even when market pressures ask for such changes.” This also has an effect on the succession of the family founder. Researchers found a positive effect if the next successor is a member of the family, because transmission of knowledge about the business is easier between a founder and his or her children than between a founder and some outside managers. (Bertrand and Schoar, 2006). On the other hand, Ali et al. (2007) argued that family firms reduce the transparency of corporate-governance practices to get family members on board without interference from non-family shareholders.

2.3 Management control systems

Management controls include all the devices managers use to ensure that the behaviors and decisions of people in the organization are consistent with the organization’s objectives and strategies (Merchant and Van der Stede, 2007). The idea that management’s primary responsibility is to maximize long-term shareholder value is widely accepted in principle but imperfectly implemented in practice. The widespread view is that management focuses on short-term earnings for self-serving purposes (Rappaport, 2005). Corporate executives justify their short-term focus by arguing that investing for the long-term is not rewarded by higher stock prices. This bias is reinforced by incentive compensation plans that reward short-term financial performance (McLean and Elkind, 2003). Stock prices are mostly irrelevant in family firms, but the argument illustrates managers’ belief in the short-term orientation. According to Rappaport (2005), critics frequently recommend reducing the management fee and including a meaningful performance incentive in the compensation mix to align shareholder interests. Most of the MCS has been criticized for being too oriented toward past performance. Traditionally, accounting information concerned financial performance in the recent past, but it says little about an organization’s ability to perform in the future. Therefore, new concepts are developed to support the future focus, like the balanced scorecard (Kaplan and Norton, 1992). This concept could, for example, be used to improve the long-term orientation of management at a family firm and will be discussed more extensively in the next section.

Discussion of the connection between MCS and the LTO of family firms has not been found in the literature. The wealth of founding families is closely tied to firm value, so families have stronger incentives to monitor employees than non-family firms (Anderson and Reeb, 2003a). Lumpkin et al (2010) indicate that the importance of time orientation in family firms is underdeveloped and that future research in this area is essential. The aim of this study is to discover main elements about how family firms and management deal with their different objectives over time. Management is, according to the literature, more focused on short-term orientation and the family firms more on the LTO. So, the research question is this:

“How can the long-term orientation of the family firm be transferred to the management of the family firm?”

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3. Theoretical background

The literature survey introduced the concepts that are related to the phenomenon. This section delves into greater detail about these concepts and explains the relation between them on the basis of three sub-questions. The focus of these sub-questions is to support the main research question. Only literature that has a connection with the research question is covered. The sequence of literature is divided into the three sub-questions.

3.1 Aspects of the long-term orientation of managers

Many disciplines try to understand the working of individual LTO: e.g., psychology, sociology and economics. We summarize literature of the different disciplines, in order to understand the behavior of managers. We start by the effect that individual LTO has on motivation and setting goals. Sociologists Bell and Mau (1971) came up with the idea that social change explains the effect of temporal focus and motivation. They conclude that individual’s images of the future influence their current choices by shaping their goals and the procedures they select for achieving them. Psychologist Lewin (1943) suggested that individuals are motivated to develop strategies and to invest effort to follow their goals. The future, as symbolized by goals, is a strong influence on current behavior. Carstensen et al. (1999) believe that the perception of time has a central role in the choice and execution of social goals, with important implications for emotion and cognition. Deci and Ryan (1985) suggest that self or participatory goals are more motivating than goals imposed by others. Locke and Latham (1990) found no relationship between people’s motivation if goals were self-set, participatory or assigned. Kariniol and Ross (1999, page 598) argued that “goals can monopolize people’s attention as they plan ways to achieve their objectives and evaluate their progress. Goals can influence recollection, observation, and interpretation of information. Individuals may retrieve goal-relevant knowledge from memory, seek and attend to events in their environment that are relevant to their goals, and interpret behavior and events in light of their objectives.”

Researchers also suggested that motivation is affected in two ways, from present to future and vice-versa. The current mood and knowledge affects people’s view of the future, and their view of the future has an impact on their present emotional and cognitive situation. Some theorists (Bandura, 1990; Klinger et al. 1980) argue that immediate goals have a stronger motivational effect on behavior than distal goals. Immediate goals help individuals motivate themselves by enabling them to measure their progress. Successfully pursuing distant goals often requires the support of short-term sub-goals. Beuk et al. (2014, page 652) write that, “for individuals who have a dominant LTO, their short-term actions represent the means by which long-term goals are set in motion. Individuals lacking an LTO will focus on optimizing short-term outcomes.” Some individuals are not able to assess their future likes and dislikes precisely. After some period of time they may become unhappy with choices made on the basis of expected utility. When people are aware of their short-term preferences and their long-term ones are inconsistent, they may be willing to adopt strategies that restrict the possible impact of their changing priorities over time (Schelling, 1984; Thaler and Shefrin, 1981).

There is a great deal of literature about individual LTO, but literature about the link between individual LTO and (family) firms is less extensive. Saunders et al. (2004) believe that the differences in how managers value time lead to various approaches to general business strategy, employee incentives and handling deadlines. According to Bearden et al. (2006) is the time perception of firms and managers interdependence, but their exact relation remains unclear.

In a non-family firm, the average tenure of a CEO is less than four years (Le Breton-Miller and Miller, 2006). McConaughy (2000) found that family members who lead a firm have nearly three times the tenure of non-family executives (17.6 years over 6.43 years). This tenure could evince a difference in LTO between family and non-family. As indicated in previous sections, family firms have the tendency to prioritize the long-term implications and make decisions that come to fruition after an extended time period (Lumpkin et al. 2010). In this research, we are interested in the LTO of the key players of the family firms who are not part of the family. Does their time orientation correspond to the family’s, or are they more short-term orientated? The main research question was: “How can the long-term orientation

of the family firm be transferred to the management of the family firm?”. Before we can answer this

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SQ1: “What are the differences and similarities between the long-term orientation of managers and family?”

We hope that after answering the first sub-question, the differences and similarities of the LTO between the management and family will be identified. If we understand these insights, we can have deeper insight into whether management can change their individual LTO over time to match the family firm’s LTO.

3.2 Time perception of individuals

Many researchers (Graham, 1981; Das and Teng, 1998b) argue that the concept of time varies substantially across individuals. According to Graham (1981), the phenomenon of time is so natural to people that once somebody develops a perception of time it is difficult to understand that others could have a different perception from theirs. This could be a basis for conflict among individuals with different time perceptions. Das and Teng (1998b, page 78) argue that, “some people are more future oriented in that they pay more attention to what may happen in a relatively distant future. Others are more present-time oriented in that they are preoccupied with the immediate future. This future present-time perspective tends to be fairly stable for a person, and is thus regarded as a psychological trait that reflects the person‘s psychological ability and focus in perceiving the flow of time. In other words, people can be differentiated by their ability to envision and “grasp” the future.” More researchers conclude that LTO is a characteristic that remains relatively stable over time. They indicate that the past and the future are social cognitive constructs and are more or less stable and realistic (Karniol and Ross, 1996; Zimbardo and Boyd, 1999). The LTO of family firms is related to five dimensions. It is positively related to innovativeness, proactive-ness and autonomy and negatively related to risk taking and competitive aggressiveproactive-ness (Lumpkin et al. 2010). According to Quinn and Spreitzer (1997), autonomy is well-suited for family firms with an LTO. Autonomy motivates managers and empowers them to support and contribute to a company‘s results. It also stimulates independent actions and initiatives. Gebert et al. (2003) discovered that autonomous individuals represent an important source of creativity and entrepreneurial development. In organizations with a high level of autonomy, managers are allowed to be open and have longer time horizons and freedom they need to develop ideas. (Burgelman, 1983). Daily and Dollinger (1992) found that family firms make long-term investments in key personnel and give them more decision-making authority. By setting the right organizational policies and encouraging the right behaviors, the individual LTO of managers can be positively influenced. One way to do this could be to explicitly incentivize long-term outcomes such as market-share gain (Beuk et al. 2014).

Family firms have been described in the literature as a unique working environment that inspires greater employee care and loyalty (Ward, 1988). Job security is the main reason employees choose for family firms (Bassanini et al. 2013). Family firms can offer more job security because families have longer time horizons than non-family firms. (Demsetz and Lehn, 1985). A CEO that has a long-decision horizon has a positive influence on firm performance (Antia et al. 2010). Therefore, families are motivated to hire CEO’s with a LTO. Previous literature is not explicit about whether non-family management can change to the family’s LTO. If managers are not able to change their LTO over time, then it is important to focus on time orientation before hiring them. We are interested in knowing whether the role of the family in the firm influences the LTO of the managers over time. We therefore developed our next sub-question:

SQ2: “Do managers adopt the family’s time orientation during their careers, or does it remain stable over time?”

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3.3 The management control system at family firms

To properly discuss the control and coordination of companies requires that we give attention to a well-known theory in management accounting research: namely, the Agency Theory. The main assumption of this theory is that the principal has limited motivation to follow the agent’s objectives (Baiman and Demski, 1981). According to Dalton et al. (2007), the central tenet of the agency theory is that there is potential for mischief when the interests of owners and managers diverge. In those circumstances, and for a variety of reasons, managers may be able to exact higher rents than would otherwise be accorded by owners of the firm. Gilson (1996) argued that overcoming the agency problem requires a technique that bridges the separation of ownership and control by aligning the interests of shareholders and managers. The literature identifies three fundamental means of mitigating the agency problem, which are independence, equity, and the market for corporate control (Fama and Jensen, 1983a, 1983b). Ali et al. (2007) concluded that family firms face less severe agency problems than non-family firms due the separation of ownership and management (type I agency problems), and that more severe agency problems arise between controlling and non-controlling shareholders (type II agency problems). Because of the ability to directly monitor the managers, family firms have to deal less with the type 1 agency problems (Demsetz and Lehn, 1985). This makes is possible for family firms to tie less of management compensation to accounting-based performance measures (Chen, 2005). So the reported accounting numbers are less likely to be manipulated due to managerial opportunism. Anderson and Reed (2003a) argue that because family firms have better knowledge of the business in which they are operating, they can detect manipulation of reported numbers, thereby keeping this activity in check. Another argument is that family firms have much longer investment horizons compared with non-family firms and that this prevents management from making short-term investment decisions (James, 1999; Kwak, 2003; Stein, 1988).So type I agency problems are less likely to occur in family firms compared with non-family firms.

According to the agency theory, family firms develop the ability to directly monitor managers and therefore have fewer type 1 agency problems to deal with. But how do they monitor the employees? And which MCS use family firms? The literature offers no clear answers to these questions, so it is not possible to have a clear picture of the MCS that family firms use. We therefore focus more on literature about MCS.

Anthony (1965, page 17) defined management control as, “the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organization’s objectives”. Merchant (1989) defined management control as, “the control managers exercise over other managers. It is the process by which corporate-level managers ensure that mid-level managers carry out organizational objectives and strategies.” Effective control helps managers make the right decisions about organizational objectives. Without proper control, managers can set aside the objectives of the organization and choose their personal goals, because they diverge from each other. (Alchian and Demetz, 1972). A MCS should be designed to fit the organizational structure and the decision-making responsibility for managers. They should also be aligned to organizational strategies and goals. And the MCS must motivate managers and employees. MCS can aim to motivate employees to achieve their goals through incentives (Bhimani et al. 2008). MCS focuses not only on the provision of formal, financially quantifiable information, but also on external information related to markets, customers, competitors, non-financial information related to production processes, predictive information and a broad array of decision-support mechanisms and informal personal and social controls (Ferreira and Otley 2005, 2009).

8 An example of a frequently used MCS is the balance scorecard (BSC). The BSC has multiple financial and non-financial objectives in the systems that are based on the strategy. Exceptional to the system is that it also includes future perspective. The BSC was created by Kaplan and Norton in 1996. The researchers started their paper with a short dialogue between to flight pilots. One says that he is focused on airspeed this specific flight. The other pilot asks why he pays no attention to altitude and fuel. The first pilot answers that he focused on altitude during the last flight, and that he will focus on fuel next time. This illustration shows that managers use their controlling systems in complex environments today. There is a tendency for MCS to focus only on specific assets of an organization (Chenhall, 2003). The BSC is introduced to focus on more than one measurement at the same time. So far, MCS was based on past results to control the managers. Also the systems reported how the organizational strategy worked out in the past period, but provided little guidance to executives about how to navigate in the future. The BSC provides an overview of current operating performance and of the drivers for future performance (Otley, 1999).

The BSC consists of four perspectives: namely, financial, internal business process, learning and growth, customer. All the perspectives consist of objects that are related to the strategy and are connected to each other to provide executives with a comprehensive framework that can translate and communicate a company’s vision and strategy. The objectives in the four perspectives in the BSC consist of different time horizons. A balance between short-term and long term objectives can be offered. Also, the implementation of non-financial measures can overcome limitations of financial measures only (Kaplan and Norton, 1996).

An important aspect of a MCS is the implementation of incentives. Financial incentives for managers have two different sorts of effects. First, the standard direct price effect, which makes the incentivized behavior more attractive. Second, the indirect psychological effect. In some cases, the psychological effect works in a direction opposite that of the price effect and can crowd out the incentivized behavior. Financial incentives can signal that the firm does not trust the intrinsic motivation of the managers. This signal can be “bad news” for the managers, and can affect the intrinsic motivation to undertake the task (Gneezy et al. 2011). Critics of financial incentives indicate that such encouragements may only provide increased in motivation in the short-term while reducing intrinsic motivation, which leads to reduced effort in the long run (Gneezy et al. 2011). According to Falk and Kosfeld (2006), give incentives a signal of distrust. Some individuals experience incentives not as a sign of distrust, but then they mostly feel control and monitoring in this way. Gneezy et al (2011, page 206) concludes that, “when economists discuss incentives, they should broaden their focus. A considerable and growing body of evidence suggests that the effects of incentives depend on how they are designed, the form in which they are given (especially monetary or nonmonetary), how they interact with intrinsic motivations and social motivations, and what happens after they are withdrawn. Incentives do matter, but in various and sometimes unexpected ways”.

Brigham et al (2014, page 83) suggest that for future research about family firms, researchers have to look at unresolved questions. They ask: “How are different incentives and controls associated with LTO in family firms.” Merchant and Van der Stede (2007) argue that companies use MCS to ensure that the behaviors and decisions of managers are consistent with company objectives and strategies. The organizational objectives and strategies for family firms are mostly focused on the LTO. We wonder if the use of MCS can help to extend the time orientation of management. Therefore, the last sub-question is this:

SQ3: “Can family firms use management control systems and incentives to change the long-term orientation of managers?”

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4. Research Methods

Family firms have received quit a lot of attention from researchers in recent decades. A positive relation between family firms and their LTO is discovered. But the relation between the management of family firms and their LTO remains unclear. In this research, several topics are used to discover the relationship between managers and their time orientation. Specific Information about the phenomenon is hard to find. We are combining fields that are close to this subject in the literature research. We therefore looked for information about LTO, characteristics of family firms and MCS. The focus in this research will be on how managers would deal with these specific issues. Connecting these literature subjects gives only limited answers to how managers deal with individual LTO at family firms.

Therefore, this topic needs more research. Eisenhardt (1989) suggests that when research into a specific subject is limited, a case study can be used. Propositions that deal with new relations are explained best by methods, like a case study (Covaleski, 1996). After the literature research, a fitting case study is introduced to help us understand the relation between the LTO of the family firm and the time orientation of the managers of the firm. This study is limited to one case study with a company that does business within the Netherlands in the electro-technical sector. We used a semi-structured interview for the case study. Ideas about the possible relationship suggested by literature review were woven in the interview questions.

4.1 Case company

The case company is Hemmink B.V. (hereafter, Hemmink). Hemmink has exclusive import rights from foreign suppliers to sell their electro-technical products to the Dutch wholesales. The company has about seventy employees, and it originated in 1951. A second-generation family runs this private-limited company (in Dutch: Besloten Vennootschap). Hemmink is located in Zwolle. Because the company has more than sixty years experiences business, it has a lot of technical and market knowledge that enables it to provide added value. The company does business in markets like electrical engineering, industry and TV, data and telecommunications. Hemmink is a specialist that focuses primarily on high-quality products. It styles itself as a company with good process design, a personal approach and involved employees, and is known as a stable and reliable family company with an innovative character. In 2009-2012 Hemmink was chosen as one of the fifty Best Managed Companies and has been certified as an Investor in People since 2002.

Hemmink’s vision is this: Through a personal approach and employees that are highly involved, we do business with pleasure and passion to provide the connection between our customers and our brands. Through expertise, good logistics performance and professional services Hemmink is a reliable partner. Hemmink gives direction and space for the development of its employees, is active in the community and wants to continue to grow as a leading player in the market. To achieve their vision, they have formulated the following objectives: be the best brand builder in the electrical market, unburden the customer, be a strong organization by means of excellent process design, improve product development of suppliers, collect data and translate it into solutions for customers and end users, invest in knowledge and training of employees, offer exclusivity products.

10 liquidity current ratio 2,80 quick ratio 1,98 solvability assets / debt 2,91

equity / total assets 0,66

equity / debt 1,91

Profitability

operating profit / total assets 0,20 net profit / equity 0,23 *table 1, financial indicators 2012 of Hemmink B.V.

Hemmink depends on two parties: namely, suppliers (manufacturers) and customers (wholesalers). Therefore, it is important that Hemmink continue to add value within the chain. Otherwise it is possible that both parties choose for chain reduction and get rid of Hemmink. So, the company must always keep up with current developments in its branches and must monitor for new opportunities and threats within the market. So the focus on LTO plays a major role at Hemmink. Therefore, this case study is suitable for this research, as we are interested in knowing whether the managers also support Hemmink if they are focused on future fluctuations.

Hemmink’s website states that, “Through our personal approach and our team of enthusiastic and committed employees, Hemmink assists in the connection between customers and manufacturer. As an employer, we value challenging and varied functions for our employees with room for development and initiative. There is a pleasant, open working atmosphere; personal attention for employees is our top priority. Hemmink is a company with an informal (social) involved, knowledgeable and friendly profile. Not without reason we are certified as an Investor in People since 2002.”

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Operational

level

MT

DT

*figure 1, the organizational structure of Hemmink B.V.

4.2 Interviewees

This research uses the roadmap of Eisenhardt (1989), which explains how to build a theory form case-study research. We selected for the respondents all six members of the DT and MT. All six interviews were semi-structured qualitative interviews and took on average forty-five minutes apiece. The interviews were tape-recorded and subsequently transcribed. They provide the main data from this case study. The questionnaire that was used can be found in appendix (I). This questionnaire is divided in four different subjects: namely, current job, Hemmink in general, job-related questions and internal-control systems. These subjects and questions are an indirect result of the literature review.

We chose to stop after six interviews because theoretical saturation was reached. Theoretical saturation is the point at which incremental learning is minimal because the researchers are observing phenomena seen before (Glaser and Strauss, 1967). Because of time constraints it was not possible to add more case companies in this study. Eisenhardt (1989) argued that using a case study for theory building, a weakness can be that the researcher tries to capture everything. He said that “The result can be theory which is very rich in detail, but lacks the simplicity of overall perspective. Theorists working from case data can lose their sense of proportion as they confront vivid, voluminous data. Since they lack quantitative gauges such as regression results or observations across multiple studies, they may be unable to assess which are the most important relationships and which are simply idiosyncratic to a particular case” (page 547). Therefore we believe that we are not forced to study more cases of this phenomenon.

4.3 Quality criteria for research

12 bigger case company with more managers. The situation does not conform to common conditions because the case study deals with the organizational transition. This could lead to a suboptimal generalizability of the case study. But we expected that this situation of the case company might nevertheless yield some interesting insights, and we therefore chose this company.

According to Van Aken et al. (2012), the last research variable is validity. Research is valid if someone can argue why it is good research. Validity is about the relation between the researcher and the conclusion. Validity can be split into three parts: construct, intern and extern. Construct deals with the predictability of the results compared to corresponding indicators. This is achieved using semi-structured interviews. Semi-open structure produces every interview new information about several subjects and the structure of the questionnaires ensures the permanent focus on the main subjects. Internal validity is about the relationship between dependent and independent variables and the possibility of convincing other researchers. This research is qualitative; therefore it has no extensive database. With the data we gathered we try to maximize the logical reasoning and explain clearly the research steps. External validity is the degree to which the research results are generalizable. In the case study at Hemmink, we chose a specific situation that lacked maximal generalizability. But in this situation we expected that the phenomenon would reveal itself more clearly and therefore be more easily discovered.

5. Case study at Hemmink

The interviews from the case study at Hemmink yielded many interesting insights. To keep all the information organized, the insights are categorized under the three sub-questions of this study. The relevant findings of the interviews are presented as quotes. The interviewees were members of the director and management teams at Hemmink. These functions were interviewed: owner, financial director, commercial director, marketing manager, recourse manager and sales manager. To avoid using different terms interchangeably in the results section, we use the term executives to speak about all the interviewees expect the owner. By managers we mean members of the management team. Before we reflect on the interviews, we will get more in detail about the interviewees.

The owner and chairman of the direction team (Own) have a free role in the direction team with no specific organizational obligations. He prefers not to see himself at the top of the company; he wants to put himself alongside the company. He believes that the firm must be able to operate even if there is no family in it. Therefore, he concentrates more on national and international external networks. The financial director (FD) is responsible for finance, information technology, human resources, and logistics and purchasing. He started eleven years ago as a controller and was promoted recently to director of Hemmink. The commercial director (CD) is responsible for sales, marketing, product management, and for all related fields from the suppliers down through the chain to the customer. Together with FD, he is responsible for the daily direction at Hemmink. He started twenty-five years ago in sales back office, and after several functions he was promoted recently to director of Hemmink. The marketing manager (MM) is responsible for the marketing department. His job is to find new markets and to figure out which targets groups and which products to focus on. He started in April 2012 in his current position. The human resource manager (HR) is responsible for the coming and going of personnel. He focusses on aspects like recruitment, education, dismissal and retirement. He has been active as HR for Hemmink since May 2014. He worked previously as an external consultant, and was for two years also connected to several projects at Hemmink. The Sales manager (SM) is responsible for all the sales, from back office to salesmen. This is the largest department of Hemmink with about thirty employees. He started at Hemmink in October 2013. The SM said in his interview that, “Hemmink is a nice firm to execute a case study, because lot’s happened last years at Hemmink because we want to be ready for the future. And the organizational transition caused lot of change at Hemmink recent years.”

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5.1 The differences and similarities in long-term orientation of executives

At stated above, the results are categorized on the basis of the sub-questions. The first sub-question was about the similarities and differences between the LTO of family and executives. To find a possible answer for this complex issue, we divide the quotes into different time elements. LTO is about valuing the past, present and the future. Therefore, we started with past and ended with future elements. To evaluate the past, we started with the organizational transition which was introduced five years ago.

Own: “five years ago, we embarked on a path in which we appointed two directors with their own areas of interest. At that time, I was much more active in the operational field. And because of the continuity in the long term of the firm, it seemed sensible to me to strengthen the management. My opinion is that employees who develop themselves in their own discipline are better in that specific field than I am. And back then, we decided that this idea must lead to designing the organizational structure. There was no uncertainty to give control over the firm to other people. For the management at that time, it was a great challenge. My idea was to transfer my knowledge and experience, but also to give them also the freedom to make their own choices. From that perspective, I let them discover for themselves how to act within the new role in the company. You see clearly a shift over time, and I feel we have reached almost the end of this transition.”

Many aspects correspond between the literature and the opinion of the owner. For example, the high autonomy the firm offers its management is a typical strategy used to extend time orientation. This organizational transition also gives management new challenges that probably motivate them to broaden their views. And the family is not pushing specific goals but allows managers to discover for themselves how to fill in their new roles. Hemmink does all it can to let managers form a LTO, according to the literature. We are wondering whether the management shares this idea about the organizational transition.

CD: “We started the transition phase a few years ago when the MT become the DT so that the owner can take distance from the company. This role makes me and FD responsible for what is happing within the firm. And in the past years we have given the MT more responsibilities with regard to the operational level. So, if the MT is functioning well, we as DT have more freedom to focus on the strategy and future.” FD: “From the direction it is expected that we interfere less on the operation level. We must find new opportunities and think about which markets Hemmink wants to be successful in the day after tomorrow. To be able to focus on future aspects, we must make sure that we are not confronted with too many operational issues. Therefore we must ensure that the MT is in a good position, so we try to inspire and challenge the MT to bring the operations to a higher level. For me it is a challenge to stop thinking about operational issues, because it was always a part of the job.”

The direction experiences of the organizational transition correspond in many ways with the owner. They clearly noticed that they made a promotion from management to director and that it has many consequences. They felt that they have now more freedom to focus on the strategy and to find new opportunities. These quotes confirm that the direction has the same feeling about the organizational transition. This similar reasoning means that the direction and the owner value the past equally. But are the new managers sharing the same ideas about this subject?

SM: “When I started at Hemmink, the firm was already in a transition in which the new polices became more commercial, sharper and stricter… The directors have worked here a lot longer than me. They witnessed a time before the transition, so it is likely that I think about and handle some subjects differently than the directors.”

HR: “I noticed that the family lets everyone make decisions and doesn't control tightly. The firm collects professionals who are skillful, are known to have the long-term goals of Hemmink and who give professional guidance.”

14 high and that you are free to make you own decisions. It is remarkable that the SM have a different point of view about the transition while the HR shares the view of the family. The SM has something more to say about the transition of Hemmink.

SM: “I think that 'being to social' is a common pitfall for family firms. The challenge is to find a good mix between being social and being responsible. A family must have the courage to take action and make decisions that are not always pleasant for employees. The organizational transition has the result that Hemmink is now more result-oriented. And I’m happy with this transformation, because in the end what matters is that we make a good living together and that everyone performs the tasks well, and if not, you must be able to discuss it.”

The main reason for the family to start the transition was to be ready for the future and not to become result-oriented. The SM argues that the main motive for the transition is that Hemmink must become more result-orientated. This indicates that the SM has a different thought about the intentions of Hemmink. While he is not in disagreement with the organizational transition, he has arguments for it that do not totally correspond. Overall we can say that the directors of Hemmink evaluate the organizational transition more like the family than the managers do. Therefore, we conclude that the family values the past more like the directors but less like the management. In the next stage, we criticize the manner in which the family and the directors and managers value the present. So, we asked that interviewees describe the traditions and culture of the firm. First we quote the owner, and then we compare his view with that of the executives.

Own: “We are a family firm and try to treasure the values that we consider important, especially the personal involvement of the employees. In recent years we have been thinking about how to link the old family values of the firm to modern management techniques. The challenge is to find a good balance between the formal structure and also pay attention to the human dimensions of the employees. I think that these two factors clearly influence each other. This year we have some changes in our workforce for a variety of reasons, but that is not in line with recent years. On one hand, we hired in recent years some new people with a high education to bring knowledge into the company. And on the other hand, we try to keep the existing employees at the firm. The question is, how do you combine old and new?”

This indicates that the owner deals with the professionalization of the firm, but still wants to be social in a modern way. The social involvement can be seen as a way to preserve the tradition of Hemmink. The stable workforce indicates that employee turnover is fairly low, and this indicates the LTO at the family firm. The owner also deals with modern management techniques, which indicates that he highly values the future. He values both the past and the future in the present culture, and we could say that his LTO is high. But what is the LTO of the executives concerning cultural issues?

MM: “Hemmink is a flat organization and is very informal. Hemmink is result-oriented, but it is not shareholder driven, which means that we focus only on quarterly results. If we have a less profitable quarter, then it is not a big issue. I see that traditions are certainly present at Hemmink. For example, the commitment is very high under the employees, and this is a positive thing. But because of the high commitment, it is not possible to make quick decisions because everyone wants to share his point of view.”

FD: “Hemmink is a people-oriented organization with an informal culture in which performance also matters. So, in my experience, Hemmink is results-oriented and people-oriented and has an informal and open culture. We try to be a good employer. Therefore we introduced, for example, flexible working hours and give an opportunity to work from home, etc. With these changes, we try to be as attractive as possible for the new generation.”

15 first sub-question we looked at how family and management value the future. Therefore, the study compares the opinions about objectives and strategy of Hemmink. As before, we start with the owner.

Own: “since three years ago we have a strategic program for our objectives. At that time we formulated a number of organization-wide goals that focus on the next couple of years. We concretized these goals in some special themes. In this program, the themes are linked to action holders. And this is a continuous process of maintenance and improvement. The program is a familiar phenomenon for everyone in the organization. And we work with this program on a daily basis.”

The objectives are created in collaboration with the family and the executives. According to the literature, self or participatory goals are more motivating than goals imposed by others. So, to motivate the executives, they formulated them together with the family. The program is used daily. This indicates that the organization-wide goals are translated into immediate goals, and this also influences positively the motivation of the employees. According to the owner, everyone is familiar with this approach. We therefore examined the thoughts of the executives about the objectives as well.

MM: “The goals for Hemmink in general are focused between four and five years. In our department, I have some long-term objectives, but mostly we are just looking at what we want to achieve next year. For example, if you look for new product market combinations, we look forward several years. The DT and MT together determine the general marketing objectives. In these meetings, we formulate specific marketing goals, but also goals which include several departments like the sales department.”

FD: “Of the DT and MT it is expected that we are long term oriented. The MT must look between one and two years forward, and the DT must look further ahead. On the operational field, people are more short-term oriented. Maybe some team leaders look slightly ahead, but management and directors really look into the future.”

These views of the MM and FD conform with the statement of the owner. Both indicate that the operational level must focus on the next year, so they work with immediate goals. The MT and DT must look further ahead and focus more on the future organization-wide goals. This indicates that the function of the firm is determining the expected LTO of an employee. At Hemmink, the family expects that the executives have a LTO. We can state that the time orientation of the objectives of Hemmink is experienced fairly equally between the family and the executives. But do the executives have the same view on strategy as the owner?

Own: “With the DT we are constantly working with a business plan. It is really challenging to identify where we want to be in the future with Hemmink. The current strategy has been formulated mainly within the existing market-product combinations. And the business plan gives us the opportunity to “dream” about Hemmink. If you look, for example, at the internet, this is becoming more and more a threat to us. We cannot only think anymore in the traditional way, because we expect that ten years from now internet will play a major role in our branch. So, we as suppliers must also start with e-commerce.”

Own: “We are not a manufacturing company that deals with large investments. But if we must do some big investment, we use financial analyses that are about three years ahead. If we talk about mergers and acquisitions, then the strategy we use is based on “buy and build”. This means that when we buy something, we also want to invest in the purchase. I don't want to be financially dependent, and I therefore choose often not to participate in a merger or acquisition. I see the family firm as a solid business with a high solvability without pressure of banks. This is what I feel comfortable with, so I'm not taking big risks.”

16 the quote of the owner. This behavior can be confirmed by the good financial indicators of the firm. But do the executives agree with the statement about the strategy of Hemmink?

SM: “Hemmink is trying to stand at the forefront in the branch to look for new opportunities. With the DT and MT, we try to think out-of-the-box to see where Hemmink started over ten years… Plans for the future are often discussed and defined during MT and DT meetings. First we make broad plans, and then we might make concrete plans. Mostly, these plans are for the medium term, like three to five years, or for the long term, between five and ten years. For example, if you want to open an office in Belgium, it is for the long term. Then you even look further than ten years. If we step into another segment with totally new products, it would be something for the medium term where it would be profitable within three to five years.”

CD: “Hemmink is now focused on the market in the Netherlands, but we are now also seeing if we can cross borders and search for partnerships with international organizations. My opinion is that any sort of reliable prediction is between three to five years. I think that this period is the maximum to make a reasonable judgment about what is going to happen. To look beyond five years is almost not possible.”

Many aspects correspond between the family and the executives. The SM is thinking out-of-the-box. The CD is talking about crossing borders. Both ideas match with those of the owner, who talks about dreaming of Hemmink. Also, the future plans are in the same time horizon. The owner and executives all say that concrete plans must be between three to five years and the more comprehensive plans have a time horizon of ten years at most. Before we conclude our discussion of the executives’ orientation toward the future, we consider how the MM talks about risk taking.

MM: “Internationalization and chain reduction can become a threat for Hemmink in the future. These themes are in the agenda of DT and MT, but, in my experience, we do not pay lot of attention to them. I prefer that we pay more attention to it. There are opportunities that we let pass.”

The MM argued that Hemmink is not taking every opportunity to be ready for the future. This is an indication that Hemmink shows risk-avoidance behavior and that the MM is prepared to take more risk than the family firm. This reflects perfectly the theory in the literature that family firms don’t like risks.

To answer sub-question 1, we must combine three different time elements of LTO. To find an answer to the question where the differences and similarities are between the LTO of family and executives, we look at how they value the past, present and future. Many long-term values correspond between the family and the executives of Hemmink. Specifically, the thoughts of the directors and the owner correspond closely. The managers have some minor difference in valuing the past, present and future. These variations are mainly expressed about how to review the result-orientation and risk-averse behavior of Hemmink. To conclude, similarities can be found between the owner and the directors. Similarities between owner and managers also exist, but are somewhat fewer. Differences among the managers can be attributed to the fact that they value the LTO slightly differently.

It is interesting to see how the owner and the directors have almost the same LTO. We are also curious to know how the LTO of the owner can slightly differ from that of the managers. Therefore, we want to introduce our second sub-question. This can help us see how and when executives take over the LTO of the family.

5.2 The adaption of long-term orientation of executives

17 we start with the situation in which the executives join Hemmink and are not influenced by the family’s LTO.

FD: “I chose for Hemmink only because of the function description. The company (Hemmink) was not relevant for the choice for a new job. I was not looking for a specific family firm or listed company.” CD: “Previously, when I was a salesman, I was not concerned with my own long-term vision. I was twenty-five years old when I started at Hemmink, and at that time my thoughts were to work here for about three years. The function was for me the crucial reason to choose Hemmink and the long term perspective did not play any role. I think that many employees of Hemmink had the idea that the long-term orientation comes later after some experience in the job.”

MM: “I was searching for a new opportunity and found this vacancy. The job description took my interest, and after that I went to see what sort of company Hemmink was. I didn't have family firms as requirement, but I did not want an employer who was very result-orientated.”

HR: “I chose specifically for Hemmink because of the LTO of the firm. I have worked now a half year at Hemmink, but before I was because of my previous job as consultant in some way connected to Hemmink. I had some HR projects at Hemmink that needed to be professionalized. Then I noticed how nice it was do projects in family firms, because a family business is really focused on employees and employee development. And that is the reason I started working at Hemmink as HR manager.” SM: “When you work at a multinational, you are like a number. You receive a salary, and there for you have to perform a certain tasks. At a family firms it is only a part of this situation, it values much more as how you are as a human being. And this is what I like and this was an argument to choose for Hemmink. During my career I have worked for family firms to multinationals, but I prefer to work for family firms because of the social aspect.”

The reasons the executives gave for choosing Hemmink are diverse. Both of the directors were mainly focused on the job description, while the management was primarily influenced by the strengths of a family firm. The CD motivation is remarkable, because he started with the idea of working for only three years at Hemmink but has worked now for twenty-five years at Hemmink. Also, the FD, who has worked now for eleven years at Hemmink, chose only because of the job description. The HR chose specifically for Hemmink because the firm deals with a LTO. We can conclude that age and experience are possible determining variables for motives to choose for a company, because the FD and CD both came with less family-firm experience, while the HR and SM worked already for other employers and had some experience with family firms and therefore chose for a LTO firm. This reasoning can also be confirmed by the CD in the next citation.

CD: “I think that the awareness of the LTO of an employee comes when he is connected for a longer time period with a company. Or if you already have more experience, you choose more consciously where to work. Then you are familiar with the difference between a listed and a family company. At some job interviews, I hear that a candidates specifically selects a family firm, especially with the higher functions… We are more and more focused on hiring young, high-educated graduate students. These students do not have a frame of reference, so you need to explain more in detail about the differences that exist between Hemmink and a listed company.”

Thus employees differ in valuing the time orientation as a motive to choosing Hemmink. So, we can conclude that at the start of the job, the LTO fluctuates among executives. After hiring the executives, does the family try to influence their time orientation to get their LTO on one line? First we consider what the owner has to say about this.

18 The family highly values relations between personal development and long-term business objectives. This corresponds with the literature, because Daily and Dollinger (1992) found that family firms make long-term investments in key personnel. We see these investments in employees as a way to stimulate a LTO in executives. We are now interested in seeing how the executives experience this stimulation by the family. Does the family strongly stimulate the LTO, according to executives, and what influences does this have on them?

CD: “the owner encourages the DT to always focus on the future. He always reminds us to be busy with tomorrow. And after the organizational transition, the agenda of the DT is almost only determined by forward-looking business.”

SM: “I see clearly that this family firm is stimulating the long-term orientation of its employees. Hemmink has a meeting twice a year in which we propagate the long-term orientation. The DT explains what steps are going to be made in the future.”

FD: “The owner says that he wants to know what is happing, but he stays the sideline and does not fully participate. He prefers to put responsibilities down in the organization. He lets the DT and MT make the decisions and keeps his distance. But he knows exactly what is happing at Hemmink.”

On one hand, the family stimulates the LTO of management, and on the other hand, they give the executives lots of freedom to make their own choices. This is in line with the thoughts of the owner, because he is stimulating them to achieve the long-term objectives of executives but leaves them free to make their own decisions. To give the executives this autonomy is to stimulate personal LTO. So, we can argue that the family is trying to influence the LTO of the management. The family is not aggressively stimulating the LTO; rather the owner influences the executive from a distance. To see if this has an effect, we move on to the next stages in which we evaluate the present LTO of the management.

FD: “We must stay alert to avoid the moment when we think that we are doing a good job today and tomorrow. We must always look for new opportunities. It is not a problem to be sometimes proud when you are successful, but you must not get arrogant and must always stay alert.”

CD: “I look for myself mostly several years ahead. I always think about the next step in life. If I complete something, I already thought about the next step. But when I was twenty-five years old, I was not concerned about where I would stand on my 50th_{. But I've been working at Hemmink for twenty-five}

years now, and for the next twenty-five years I have no intention to leave Hemmink. I do not expect that I will make a move to another company.”

The citations of the directors are essential to determine whether the LTO is changing over time. The management has only been active at Hemmink for a short time, so we do not expect it to have adopted the family firm’s LTO. If we evaluate both quotes, we can conclude that they are both relatively long-term oriented. This is in conflict with the beginning part of the second sub-question. So over time they changed their LTO. And therefore we can conclude that LTO can change over time and that it is possible that the family has a major influence in the LTO of management. Now that it has been determined that LTO can change over time, we wonder how the family firm can influence the executives to adopt the time orientation of the family during their careers. This transformation must be a result of some process that is controlled by the family. We are interested to learn how the family is influencing the LTO.

5.3 Influence of management control systems and incentives on executives’ long-term orientation

19

Own: “Everybody has nine yearly targets. These targets consist of three personal target, three division targets and three organizational targets. The objectives are monitored by performance appraisals by management. According to these nine targets, we determine the variable compensation. For every function we look at how much influence an individual has on the targets. For example, a DT member is more monitored on organizational targets, while somebody lower in the company would be monitored more on personal targets… I chose also to include three personal targets because Hemmink has a culture of training and development. I really want to stimulate this because I think this is important for our organization. There are many cases of employees who join the organization and get many promotions within the organization. A nice example is the CD. In football terms, you can say that he is a home-grown talent.”

The owner designed the control system on three different levels. But the main focus of this control system is to stimulate the employees to develop themselves. It is possible that this has influenced the LTO of the executives. The variable compensation is developed to motivate the employees to achieve the target. The weight of several goals differs from one another to determine the incentive. This is to give extra motivation to the employees for specific targets. The owner can determine which are the most important of the nine goals. The MCS focusses only on accounting-based performance measures, and therefore type I agency problems are less likely to occur in this firm. Hemmink has a culture of training and development, and this is also reflected in the MCS. The owner speaks proudly about his home-grown talent pool in which many employees have developed themselves and have been promoted to higher functions. He believes that it is important to educate the personnel to bring them to a higher level. If the employees are motivated to study, they will receive higher incentives. This will motivate them even more, and the firm thus creates a nice environment in which loyal people are highly educated. This environment is a nice example of how the family is stimulating the LTO in the firm.

FD: “We try to connect the reward system closely to the development and performance of employees. The hard side, like salary and incentives, is linked to the soft side, like behavior, skills you show and training you follow.”

MM: “Everyone has their own description of what task Hemmink expects from us. The reward system consists of this job description, personal, department and organizational goals. This is how we control the functioning of the personnel. We do not control on a daily basis because we prefer to put responsibilities as far as possible in the organization. As manager, I do not know whether every process goes well. We do not have a specific mechanism for a daily control, and I am glad about it! …I think it is good that Hemmink works with clear targets. You know exactly what Hemmink expects from someone. It is a commercial company so you may expect that employees perform well. But Hemmink also gives a lot of autonomy to his employees.”

The FD underpins the idea that the focus of the MCS is on personal development. The MM says that Hemmink does not control employees on a daily basis and gives them lot of freedom and autonomy. And on the other hand, he said that the targets are clear and that you have to perform well. The MM argues that daily control is not desired in the firm. This indicates a high degree of decentralization. This also corresponds with the literature, according to which highly centralized firms more often use financial controls whereas firms with LTO tend to employ strategic controls.

SM: “All targets of my staff have a maximum time horizon of one year. My opinion is that goals must not be further ahead than one year. It's sometimes said that, “you should not put the flag too far away, otherwise people are not able to see the flag.” If you put the flag too far, employees lose their attention. But my own goals have a longer time horizon because they also include strategic goals. It is my responsibility to think about the future and the directors hold me accountable for it.”

20 goals can be compared with internal business processes, and learning and growth has many similarities with the personal development. Only the customer perspective is not possible to link directly, but the MM indicates that Hemmink is a commercial company so you can expect that the customer perspective is included in the organizational and department goals. The CD wants to add something about how the firm is stimulating the LTO.

CD: “We are encouraging management and employees to think about their own futures, and we let them come up with ideas about the roads they should take. You must not only focus on your own function today but also need to look at where you want to stand in three to five years. Only a few have a specific answer to this question. We encourage the others to think about this subject. A next question would be: What can Hemmink do to help you with realizing your goals, and what will you do to achieve it? This is highly appreciated among employees, because we are encouraging people to continuously develop themselves. This is a win-win situation, because it brings Hemmink to a higher level and employees are more satisfied.”

The direction encourages the LTO of their management by asking them to think about it. For lower functions in the firms, the MCS and incentives are not directly linked to future aspects because they focus only one year ahead. But during the performance appraisals they try to stimulate the LTO through conversation. The CD confirms the idea of the owner that the culture of Hemmink is about training and development, and that this results in a win-win situation for the firm and the employees.

We end this section by answering the last sub-question. We tried to find out if the MCS and incentives are tools that can help to develop the LTO of executives. The systems Hemmink uses do indeed stimulate the LTO. The family does this to include various elements in the MCS. First of all, the personal training and development is a main aspect. Also the autonomy is respectively high in the firm, and the opportunity to get promoted is a variable that extends the time orientation. The nine targets are spread out of different levels. This causes employees to deal not only with their own functions, but also to think firm-wide. By answering the third sub-questions we can conclude that MCS and incentives can stimulate LTO. However, there are a few conditions. A firm must take into account that it takes some time to develop LTO, the firm’s structure must be decentralized, it costs much effort to train and develop the employees and the firm must give them the opportunities to be promoted.

6. Discussion and conclusion

The aim of this research is to contribute to the understanding of the time orientation of managers at family firms. This is done by concentrating on the role of managers and their development of the LTO. Therefore we formulated the main research question: “How can the long-term orientation of the family

firm be transferred to the management of the family firm?”

To support the main research question, we formulated three sub-questions. The first sub-question deals with differences and similarities between the LTO of executives and family. We have made a distinction between how the executives and family value the past, present and future. As reported in the results section, we found that the family has a LTO and that many long-term values correspond between the family and the executives of Hemmink. The orientation of the directors corresponds quite closely to that of the family, and the managers exhibit only minor differences. The managers review some aspects slightly differently, like the degree of result-orientation and the risk-averse behavior of the firm. To conclude, similarities can be found between the owner and the directors and partly between the owner and managers.