chapter  9
Family context and new venture creation
BySHARON M . DANES
Pages 28

Launching new business ventures creates extensive financial, time, and energy demands on resources of entrepreneurs and their families. Discrepancies between demands and resources that are used to meet those demands is a major component contributing to the liability of newness for venture-creating families (Danes & Morgan, 2004; Van Auken & Werbel, 2006). In fact, increasing evidence indicates that operating a small business creates more strain within families than other types of employment (Rahim, 1996; Jamal, 1997; Dolinsky & Caputo, 2003). Conceptual literature about venture creation has suggested that family support for the decision to start a new venture and communication about the new venture significantly influences successful formation and performance of those new ventures (Aldrich & Cliff, 2003; Van Auken & Werbel, 2006), but little empirical work has investigated this proposition. Both empirical analyses and theory about the decision context in new venture creation are this chapter’s focus. A significant part of an entrepreneur’s immediate decision context is family, specifically interactions within the entrepreneurial couple relationship and resource flows between spouses to assist with the liability of newness of a new venture. In a decade review of marital stability research, Bradbury, Fincham, and Beach (2000) noted that many marital interaction scholars adhere to the position that meanings and implications of couple interactions and resource flows between them cannot be fully understood without consideration of the broader decision context in which those interactions occur. In the case of new venture creation, the couple relationship context impacts choices, opportunities, and challenges that entrepreneurs experience during venture creation in addition to the entrepreneur’s business expertise (Dimov, 2007). The availability of human and financial capital stocks, however, has been where the entrepreneurship discipline has focused. Although entrepreneurship research has examined the impact of social context on venture creation, it has done so without specific regard to the spousal relationship (Boden & Nucci, 2000; Carter et al., 2003; Gupta & York, 2008; Renzulli, Aldrich, & Moody, 2003). Metaphorically in the ocean of entrepreneurship, discounting the decision making processes of venture-creating couples is like traversing that ocean filled with icebergs. The dimensions of human and financial capital are vital to new venture viability, but these dimensions represent only the section of the iceberg that is above the water line. A huge section of the iceberg is hidden below the water line and that huge section represents the reciprocal influences of family on new venture and new venture on family. Discounting what is below the water line can be disastrous to entrepreneurial success because doing so ignores the social

capital that creates resilience in entrepreneurs. “Family” is a structure but to understand its full impact, one must get beyond its structure to capture the processes that occur within that structure to combat the liability of newness of new venture creation. Couples are the smallest decision making unit of the family science discipline, a discipline that has a long research history that can inform Family Entrepreneurship endeavors. The couple decision making context is ripe with a myriad of values, beliefs, expectations, goals, and emotions that must be traversed in moving toward mutually shared decisions. If entrepreneurs have a strong couple relationship as they create new ventures, that relationship strength can provide a reliable stock of resilience capacity that can be drawn upon to combat the liability of newness of new ventures (Danes, Matzek, & Werbel, 2010). Couple interactions are not only the foundation for such things as spousal commitment and support for the new venture, but, over time, solidarity or eroding of that relationship as the couple traverses the liabilities of newness can impact business achievements in the short term and business sustainability in the long term (Danes et al., 2010; Hall, 2005; Rogoff & Heck, 2003; Oughton & Wheelock, 2003; Van Auken & Werbel, 2006). The study that serves as the foundation of this book chapter contributes to the literature in a number of ways. First of all, it is a longitudinal study capturing decision processes from prior to business launch to approximately one year after the business began operation. Second, the sample is composed of multiinformants with responses from entrepreneurs and their spouses within venturecreating couples. These multi-informants facilitate the collection of data across family and business systems and the collection of data about couple decision making and interaction processes. Third, the study is grounded in the Sustainable Family Business Theory (SFBT) allowing for conceptual development of such core concepts as copreneurial identity (Danes & Jang, 2013), conceptual precision in that individual and organizational effects are distinguished, and conceptual extensions in that not only are standard procedures considered in times of stability but exception routines (Stallings, 1998) are considered in times of change while creating a new venture. SFBT serves as the organizing guide to the chapter.