The Application of Conflict of Interest for Value Creation in Family Businesses

Abstract

Introduction: Family-oriented small and medium businesses have a greater contribution to the economy of Sri Lanka as they account for approximately 80 percent of all businesses. Murzina et al. (2020) have elaborated that there are two types of values namely terminal values (preferred, ideal states of existence, end-state of existence) and instrumental values (preferred mode of conduct). Crosscultural studies are integrated to identify the value orientation (VO) of family businesses in various countries (Iaia et al., 2019). The preferences of the next successor in line to get engaged with the family business and the capability of the founder and successor to avoid conflicts are considered the catalysts for the business continuity of family businesses (Merchant et al., 2018). The triumph of family businesses is dependent on the strategic planning articulated to achieve value creation. Family involvement stimulates conflicts at three interfaces, namely family business, family ownership, and family business ownership, and in the overall context, they are defined as family-related conflicts (Qiu and Freel, 2020). Deep insights into family values and how they stimulate value creation are extremely important for family businesses (Pradhan and Ranajee, 2012).