Tacit Knowledge Sovereignty: Are Some Small Family Businesses Reluctant to Relinquish Their Smallness?

Abstract

It is a conventional understanding that all businesses desire to grow and expand in terms of revenue, bottom-line profit margins, and employee count. In an apt environment, growth is natural, and all small businesses – including family businesses -  desire to scale up into medium and eventually large firms. Nevertheless, despite supportive macroeconomic factors, some family businesses deliberately choose to remain small. This research aims to identify the reasons behind this counterintuitive but conscious decision of some small family businesses to remain small. Specifically, this paper challenges the conventional development framework of small family businesses and questions the assumption that all small family business owners desire their firms to grow. The purpose of this paper is to explore the reasons for maintaining such intentional resistance to expand and also to generate research propositions that support the implausible argument that at least some small family business owners deliberately remain small for varied reasons. A qualitative grounded theory method was used with small family business owners who were willing to participate in the study. Purposive sampling was used to identify small family business owners, and unstructured, in-depth interviews with 12 such participants were conducted, recorded, and transcribed. Open and axial coding identified two major and three minor themes. A major inference was an unwillingness to share tacit knowledge outside their family. The participants revealed that, as they did not want their embodied family knowledge to lose its boundaries and to maintain tacit knowledge sovereignty, they opted to stay small while remaining content with the growth of their business. Another major reason was to ensure the members’ well-being, making succession planning easier. In addition, three minor themes emerged to explain why they are reluctant to relinquish their smallness: core skill focus, relinquishing authority, and compliance overhead. The identified themes were validated through member checking, thereby enhancing the credibility of the findings. Research propositions are developed from these themes and could fuel further research.