Leveraging the family brand: Using brand management to highlight the advantages of family firms

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1 Leveraging the family brand: Using brand management to highlight the advantages of family firms Isabel C. Botero School of Communication, Illinois State University Campus Box 4480, Normal, IL , USA Tel: ; Fax: Abstract Anna Blombäck Jönköping International Business School Center of Family Enterprise and Ownership (CeFEO) Box 1026, SE Jönköping, Sweden Tel: +46 (0) Up to date research exploring the uniqueness of family firms has focused on internal characteristics of the organization that are valuable, rare, difficult to imitate, and difficult to substitute. One aspect that has been overlooked is the uniquenesses that can be obtained by leveraging the positive associations that stakeholders often have about products and services from family firms. We believe that branding offers scholars the opportunity to recognize unique family firm resources as they are viewed by external stakeholders. In this theoretical paper we argue that an increased understanding of how family firms brand themselves and reference their family association can represent a complementary approach to understanding the uniqueness of family firms. In this paper we introduce reputational capital as a unique characteristic that family firms can leverage to obtain competitive advantage. Introduction The development and maintenance of competitive advantage is a continuous struggle for companies. In a time where competition is fierce and the rapid advances in technology enables consumers to access information about products and organizations, companies face the challenge of creating a coherent perception about who they are and the advantages that they offer to consumers (Einwiller & Will, 2002). Brand management is one way of achieving such coherence (Hulberg, 2006). In recent years scholars have begun to use the branding framework to understand how family businesses market themselves in ways that enable differentiation between family businesses and other types of organizations (Blombäck & Ramirez-Pasillas, 2009; Craig, Dibrell, & Davis, 2008, Litchfield, 2008). To date, most research that explores family firm uniqueness concentrates on understanding resources that are based on intra-organizational features that are a result of the interaction between family and business. Familiness (Habershon & Williams, 1999) and different forms of family capital (Sirmon & Hitt, 2003) are examples of such unique resources. In this paper we suggest that brand management offers a lens to explore additional aspects of family firms uniqueness. In particular, we argue that by exploring the perceptions that stakeholders have about family firms and their products, as well as how family

2 2 businesses communicate family involvement, scholars and practitioners will be able to further understand the unique characteristics and resources of family firms. We call this the reputational capital of family firms. Understanding Brands and Brand Management The meaning of brand and brand management has evolved since the industrial revolution (Aaker & Joachimsthaler, 2000; de Chernatony & McDonald, 1998). In the early days of mass-production grocers and general stores were the main outlets for brand development. During these early stages, what we know today as branding was equated to the process by which manufacturers named products to identify their origin (i.e. distinguish the offers through a sign linking them to the manufacturing organization) and to inform customers of what product they were actually purchasing (Diamond, 1983). Back then, the purpose of branding was to inform customers about the functions of the product (O Guinn, Allen, & Seminik, 2009). In the past 100 years there have been major changes in the market and marketing of products (Kotler, Keller, Brady, Goodman & Hansen, 2009). For example, there has been an increase in the number of products offered, the number of organizations competing for customers attention and money, and the range and availability of information has changed dramatically due to technological progress (Kotler et al, 2009). In addition, consumers increasingly experience affluence and have developed sophistication in terms of consumption (Kotler et al., 2009; Werther & Chandler, 2005). As a result of all these changes, the patterns of consumption have also been transformed. In the expansion of mass customization, an explosion of subjectivity occurred implying that consumption increasingly is dictated by the individual s perceptions, thoughts, and feelings rather than product attributes and user needs (Addis & Holbrook, 2001, p. 51). Consequently, creating competitive edge today requires more than a focus on intrinsic product characteristics (Meenaghan, 1995; Moynagh & Worsley, 2002). In line with this development, the meaning and role of brand and brand management has changed from a sign of identification to one of differentiation (de Chernatony & McDonald, 1998, Riezebos, 2003). That is, today brands are recognized as both the means to obtain a competitive edge and the element that helps influence customers in their buying behavior (Kotler et al., 2009). Literature in marketing and communication has emphasized the strategic importance of brands and brand management to create unique and favorable impressions in the minds of consumers about companies and their products (Anisimova, 2007; Balmer & Gray, 2003). In a general sense, a brand can be defined as a name, term, sign, symbol, or design, or

3 3 combination of them which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors (Kotler, 1991; p. 442). The different components which help stakeholders identify and differentiate the brand are also referred to as brand identities (Keller, 1993) or brand elements (Keller, 2008; Keller, Apéria, & Georgson, 2008). Brand elements are essential to highlight desired characteristics of the brand. On the other hand, brand management (i.e., branding) is the process and efforts that organizations and individuals engage in to obtain and maintain differentiation among stakeholders in order to achieve positive business performance (Kotler et al., 2009; LaForet, 2009). The value of brands Brands are valuable for the brand owner (de Chernatony & McWilliams, 1989) and consumers (Keller, 1993). For example, brands can help customers deal with issues like increased costs of products, variety of products available in the market, and changes in technology (Keller, 2008). Similarly, developing a strong brand can help organizations work with the complexities of today s savvy customers and highlight the uniqueness that they can provide to customers given the increasing competition and media fragmentation (Keller, 2008). Similar to other authors, we believe that ultimately successful brands can help an organization achieve good performance as a consequence of the brand s ability to connect to and influence consumer behavior (Chauduri & Holbrook, 2001; Da Silva & Alwi, 2006; Esch, Langner, Schmitt, & Geus, 2006). From the customer s point of view, the value of a brand lies in the bundle of information that they represent (LaForet, 2009). As sources of information, brands help consumers identify the maker of the product (de Chernatony & McWilliams, 1989; Keller & Aaker, 1998), they provide means for simplifying product decision (i.e., they serve as heuristics about products and organizations; Keller, 2008), they help as devices protect or enhance the self image of the consumer (Balmer & Gray, 2003), and they help reduce risk in product decisions (Roselius, 1971). Brands also serve as a primary source of identification so satisfied consumers can identify and purchase branded products that they like again while dissatisfied consumers can know what they dislike (de Chernatony & McWilliams, 1989). Thus, brands have both functional (e.g., help in selection of products, helps identifying products that the customer trusts) and psychosocial (e.g., the brand as a means to buyer s identity, or the brand as a way to maintain connections with important groups) advantages for customers.

4 4 From the brand owner s (i.e., organization s) perspective the benefits of brands and their management can be seen through the impact that they have on several dimensions of company performance. Riezebos (2003) suggests that these potential benefits can be grouped based on the financial, strategic, and managerial implications of the brand to the organization. From this perspective, the financial benefits of brands include the ability of a brand owner to add value to the firm and obtain more sales if the positioning of a brand is successful. The strategic benefits include having a strong position in relation to retailers, new market entrants and the labor market (Riezebos, 2003). In a similar way, a strong brand can influence the company s reputation and competitive position as employer (Cable & Turban, 2003; Davies, 2008; Greening & Turban, 2000). Finally, managerial benefits refer to the advantages a previous well-developed and positioned brand offers a company when they seek to launch new product offers (Riezebos, 2003). In general, it can be argued that the value of a brand for both consumers and organizations centers on the idea that brands help create sources of differentiation. However, to achieve differentiation, a brand must represent something of added value to the consumer or to the brand owner (i.e., the organization or individual). The value of a brand for the owner is inextricably linked to the meaning of the brand among consumers (Aaker & Biel, 1992; Keller, 2008; Riezebos, 2003). The term brand equity is often used to describe and compute the value of a brand and can help clarify the inherent connection between the perceptions that consumers have and how they translate into a benefit for the brand owner. In the next section we explain the idea of brand equity and how it works. Brand equity summing up brand value There are two perspectives used to understand brand equity. The first approach is financial and deals with how the monetary value of a brand can be calculated for a company. Numerous models for assessment are available based on either the consumer perceptions about the brand or book-keeping principles (reflecting cash-flow or earnings) (Keller et al., 2008; Riezebos, 2003). From this first perspective, brand equity is the amount of financial benefit that a brand represents to a company. A second approach to brand equity is known as the behavioral approach. From this second perspective brand value is assessed in terms of how the brand adds to the competitive advantages and financial performance of a firm based on the responses that consumers have to the brand (LaForet, 2009). Ideally, brands create differentiation in the mind of the consumers. However, differentiation alone is not sufficient to create value for the brand. Thus, to create brand equity consumers must have a positive attitude towards the brand and these attitudes should translate into behaviors toward the brand

5 5 (e.g., buying, using, & talking about the brand; Keller, 1993; Riezebos, 2003). From this perspective, a positive brand equity results from favorable reactions of customers when they identify a brand while negative brand equity is a product of less than positive reactions to the identification of a brand. These differences in attitude towards the brand are a result of consumer s knowledge about a brand (i.e., what they have learned, felt, seen, and heard about a brand as a result of their experiences over time) and what resides in the mind of the consumers (Keller, 2008). Given this understanding about the brand there are two important implications of brand equity. The first implication is that responses to a brand often reflect past experiences of the consumer with the brand. And, the second implication is that creating brand knowledge is the first step to develop brand equity (Jones, 2005). Thus, to be able to better understand brands and brand management it is critical to identify what constitutes brand knowledge, and how brand knowledge affects the equity of brand. Brand knowledge is a term used to describe what comes to mind when a consumer thinks about a brand (Keller, 1993). There are two types of information that are relevant when developing knowledge about a brand: Brand awareness and brand image. Brand awareness refers to the likelihood that a given brand will come to mind given a certain need (i.e., strength of brand in memory) and it is based on the recognition that an individual has of a brand and the ability to recall the brand from memory (Keller, 1993). On the other hand, brand image represents the cognitive summary of impressions related to a brand and their translation into a set of associations (Keller, 1993). The brand image is formed through interactions a person has with a branded entity. These interactions can come through direct experience with the brand, information about the brand that is received from different sources (e.g., word of mouth, opinions of friends, etc.), from assumptions or inferences an individual makes, and/or from associations that are created as part of the branding process (Keller, 2008). In general, the type of, the favorability, the strength, and the uniqueness of these brand associations (i.e., brand image) are the dimensions of brand knowledge that play an important role in determining the differential responses that enable the creation of brand equity (Keller, 1993). Building positive brand equity requires that consumers are both aware of and have a general positive impression of the branded entity. It is only under these conditions that a brand owner will find value in their brand. Therefore, understanding how brand equity is developed can function as a guideline for brand management and can provide a better rationale as for why brand management can play an important function for organizations. We now turn to explaining brand management.

6 6 The practice of brand management Given the importance that brands can have for organizations, it is critical for brand owners to develop and manage their brands. As recognized earlier, brands function as cultural symbols that oftentimes relate to the consumer s self-identity, created and reinforced by social dialogue. As mentioned earlier, brand management or branding describes the effort by brand owners to develop positive brand equity, which in turn derives from brand knowledge; a combination of brand awareness and image (Jones, 2005; Keller, 1993). Thus, the primary aims of brand management are to achieve brand identification and to establish favorable, strong and unique associations among audiences (Keller, 1993; Kotler et al., 2009). Strategic brand management (i.e., the process of converting brand responses to customer loyalty and relationships; Kotler et al., 2009) is a way to achieve this strategic purpose. Although strategic brand management involves decisions about price, place, product, range of brands, and brand extensions, for the purpose of this paper we are primarily interested in the cognitive component of brand management (i.e., what can brand managers do to create recognition and positive feelings toward a brand). To create recognition and have a foundation for brand associations, it is necessary to identify or select some fundamental brand elements like the brand name, logotype, packaging, or other identifying trademarks (Keller, 1993). Likewise, it is crucial for the brand management process to distinguish the brand s identity (Aaker, & Joachimsthaler, 2000; De Chernatony, 1999). As defined by Aaker and Joachimsthaler (2000, p. 43) Brand identity is a set of associations that the brand strategist aspires to create or maintain. Brand identity then can be seen as an internal tool that clarifies the essence of the brand and what associations should be conjured in the consumers minds when they are in contact with a brand element (LaForet, 2009). To ensure a consistent brand message, brand management must maintain focus on the brand identity while planning marketing communications and marketing programs that support the aspired brand meaning (Keller, 1993). Even in the selection of brand element or trademarks, the brand identity should ideally be considered. For example, a brand that aspires to have a low-cost profile preferably should not have a brand name or logotype alluding to luxury. After an organization has determined the brand identity that they want to project and have brand elements to use, they are ready to engage in the strategic component of brand management. This process starts when organizations try to develop a positive brand by using inductive or deductive inferences in the branding process (Riezebos, 2003). Inductive inferences rely on brand associations that are formed through direct encounters with the

7 7 brand and exposure to planned communications for the brand in question. From this inductive approach there are several important tools (e.g., advertising, direct or event marketing and sales promotion) in brand management. Based on the inductive approach, brand managers need to consider questions of what, where, how and when to communicate with audiences, whether messages support the brand s identity, and how messages might influence brand knowledge to develop a strong brand (Keller et al., 2008). Deductive inferences, on the other hand, rely on brand associations that are formed by connecting the brand in question to other brands or entities, which have established images (Riezebos, 2003). The goal from this approach is to achieve a transfer of image in which associations are deduced from a source to a target (Gwinner, 1997). We refer to this as the leveraging of secondary brand associations (Keller, 1993; Keller et al. 2008). The deductive inference can either be used to enforce or to complement the brand s current image (Keller et al., 2008). Either way, when seeking secondary brand associations, brand managers must consider to what extent the other brand (or entity) carries clear associations among the target audience. In the section above, we have introduced some of the basic elements of a brand management process. We recognize, though, that each branding process is different and agree that the involvement of consumers can neither be excluded nor generalized. In the next section we turn explore how branding has been examined in the area of family business. Branding and Family Business One of the primary focuses of family business research is the understanding of how family firms differ from non-family firms, and what the unique characteristics that family businesses offer are. In the last decade brand management has been used as a framework to understand and highlight the uniqueness of family firms. The exploration of branding in family firms has primarily focused on two lines of research. The first line of research has explored the perceptions that non-family stakeholders have about family firms and their brands. The second approach has explored what family businesses do to manage the family brand and the benefits that this management brings to the family firm. In the paragraphs below we summarize these two approaches. Stakeholder Perceptions of Family Firm Brands One of the assumptions in research on branding and family firms is that customers often have positive associations with family owned brands (Blombäck, 2006, 2009; Craig, et al., 2008; Frost, 2008). The belief is that family-owned brands are emblems of success and prestige which lends customers to trust products that come from family firms (Frost, 2008). Thus, family firms are in a unique position that allows them to leverage their family

8 8 ownership to build sustainable competitive advantage (Poza, 2010; Ward, 1997). In general, the research exploring stakeholder perceptions of family brands can be divided into three areas: Effects of family-ownership on perceptions of customer service, effects of family ownership on perceptions of quality of products and services, and effects of family ownership on attractiveness to work for family firms. In the area of customer service, the work of Lyman (1991) and Cooper and colleagues (2005) highlights that family firms differ from non-family firms in the type of customer service experience they offer to the customer. In particular family businesses that can create and maintain superior customer service enjoy the competitive advantage brought by customer loyalty, goodwill and perceptions of trustworthiness (Biberman, 2001). As a result, the customer services of family firms are often perceived as being better than those of non-family organization. A second set of studies have explored stakeholder s perceptions of brands that allude to family firm ownership and aim to better understand the image the brand holds for consumers. In a set of three studies Litchfield (2008) explored whether using the term family-owned business in messages to consumers could create strategic advantage for an organization. Her results suggest that participants had both positive and negative perceptions about family-owned businesses. On the positive side respondents associated the term family business with high quality products and services while on the negative side the term family business was associated with internal conflict in firms. In general, perceptions about services offered by family-owned businesses were positive and this was significantly related to intention to buy from a family-owned business. A third set of studies has explored the perceptions that stakeholders have about the family brand and how it affects attractiveness to and intentions to work for family firms. In this area, the research from Covin (1994) suggests that participants in her study indicated a strong preference to working in family firms, especially when this firm was part of their own family. In particular, those that were more attracted to family firms indicated a stronger need for jobs that provide variety of duties and activities and were more likely to be females. Findings from a study conducted by Michael-Tsabari and colleagues (2008) suggest that when applicants to managerial positions are asked about their perceptions of family firms they tend to have negative associations about work experiences in family firms and are less likely to express interest in working for a family firm. On the other hand, in a study conducted in the US, Botero, McKenna, and colleagues (2009) found that there was no difference in perceptions of attractiveness and willingness to work for family and non-family

9 9 firms in non-managerial positions. Although perceptions of organizational prestige, image and job security predicted attractiveness to a firm, there were no differences in the perceptions of these characteristics between family and non-family firms. Botero, Stuart- Doig, and colleagues (2009) conducted a similar study in china and found that in general, participants had positive perceptions about family firms and working for family firms, and these positive perceptions were positively associated to attractiveness to working in family firms. When these three sets of studies are taken together they suggest that references to family in brand management have positive effects when examining the perceptions that consumers have about the quality of customer relations, quality of product and quality of service of family businesses. Given these positive associations, we believe that referencing family associations when branding family firms can have positive effects for businesses that focus on services and products. On the other hand, the effects referencing family to attract applicants and promote working for a family firm has mixed results and future research should continue to be conducted to further explore whether there is a strategic advantage of highlighting the family association when recruiting employees into family firms. We now turn to summarizing research on how family firms manage the family brand. Managing the Family Firm Brand As mentioned earlier, one of the purposes of brand management is to develop positive associations in the mind of consumers. In the case of family businesses, one of the ways in which a positive image transfer is expected to occur is through secondary brand associations. Secondary brand associations represent links in the mind of the consumers that arise because of past experiences with a company with similar characteristics or any other similar attributes. Thus, mentioning that a company is a family firm or is family owned can serve as a way for the consumer to associate some characteristics of family firms with the organization that is trying to brand itself. This action is believed to help distinguish a family business from similar organizations. In general, it is believed that making associations to the family can act as important brand elements that can establish and provide recognition for a brand entity and add meaning to the brand in the stakeholder s minds. In the case of family firms, the term family business can be thought as an element of the brand that is used to elicit positive associations with the firm and the products it creates. In this case, it is believed that organizations use the term family business in their communication because they believe that it is perceive as a positive feature of the organization and it will help prime consumers to think about families to create positive

10 10 associations in the mind of stakeholders. These positive associations can, in turn, add value to the organization. Blombäck (2009) argues that the explicit choice to present family involvement as a business feature of a firm can be compared to other references like geographic origin ( we are an American company ), company philosophy ( we are a socially responsible company ), or company age ( 75 years in business ). In all these cases, the choice to add a reference suggests that this information reveals important characteristics about the business to stakeholders. Considering that past research has found that people have positive associations with the term family business (Litchfield, 2008), referencing that the organization is a family firm is expected to affect stakeholders in a positive way. Thus, it is expected that the family business reference works as a secondary brand that helps the customer establish a fuller picture of a company in the market and adds to the value proposition perceived among stakeholders (Blombäck, 2009). It is important to note that although the assumption is that consumers have positive associations with the term family business it is also possible that if the customer has had a bad experience with a family firm, the consumer will have formed a negative association with the term family business resulting in no added value to the organizations that brand themselves as a family firm. In the last five years a set of studies looking at how family businesses communicate their uniqueness to external stakeholders have been conducted. These studies use branding as a framework to explain how family firms can differentiate themselves from other organizations. A first set of studies by Blomback (2006) and Blomback and Ramirez-Pasillas (2009) claim that the explicit references of family business ownership in communications from family firms can be interpreted as the promotion of a corporate category brand (i.e. the family business brand). They argue that mentioning that an organization is a family firm can, in itself, be considered a brand and, consequently, expressions referring to family should not be overlooked as possible important keys for corporate brand management. In these projects fourteen CEO s or vice CEO s were interviewed by the researchers and asked why they used the expression family business in their external communication, what the expression meant to them, and whether they believed that family firms had special characteristics. Their results reveal that some of the organizations referenced family ownership as part of their planned strategic communication while others did it without consciously planning for it. They also indicate that reference to family ownership come in different forms. While some referenced ownership in the name (e.g., Mary & Sons), others mention it as part of a description of time (e.g., in the same family for the last 30 years), by highlighting the number of generations that have been part of the business (e.g., 5 th generation), or by saying that they are family owned

11 11 (e.g., we are a family company). Additionally, when asked why owners made reference to family ownership, the results supported that it made the owners feel more identified with the business. In addition, Craig, and colleagues (2008) have also investigated how the promotion of family-based brand identity influences competitive orientation (customer versus product) and performance in family firms. In their project they contacted 218 leaders from family firms and asked them whether their organizations promoted that they were family firms to customers, suppliers, and to their financiers, and which communication medium they used to promote family ownership to others (i.e., letterhead, websites, cars, or others). They also collected information about financial performance and explored how promotion of family ownership was related to the financial performance. In their results they found that maintaining a family-based brand identity (i.e., creating perceptions of trust and consistency in the minds of customers) can render positive effects in terms of financial performance. Their research clarified why it is important to further explore how family businesses promote themselves to customers. Firms, in which leaders reported that the organization focused on customers and promoted that they were family owned to suppliers, customers, financiers, and in their advertising materials, were more likely to perform (i.e., after tax return on total sales and total assets, market growth and sales growth) better than those firms that did not communicate that they were family owned. It is important to note that Craig et al. (2008) did not focus specifically on the nature of the brand involved, or the family component s position relative to other brand elements. While past research has shown the advantages of referencing family ownership, in a recent study Morgan (2009) found that very few family firms were likely to reference family ownership using their web pages (13% in home page and 35% in the about us page). When taken together, the results of these three areas suggest that referencing that an organization is family-owned can reflect positively in better sales and growth (Craig et al., 2008). In a similar way, indicating that an organization is family owned helps highlight owner s identification with the family (Blomback & Ramirez-Pasillas, 2009). And finally, although there have been positive results from creating secondary associations to the family firm brand, it seems that not many family firms are taking advantage of highlighting the family firm association (Morgan, 2009). After summarizing the research in branding and family firms, we now explain how we see the contribution of this line of research in helping researchers and practitioners

12 12 understand and strategically use the uniqueness of family firms. We do this in the next section. Contribution of Branding to the Family Business Field As highlighted by Sharma (2004) the ultimate goal of family business research is to improve the functioning of family firms. She highlights that to be able to achieve this goal, scholars need to create and disseminate knowledge that is useful for scholars and practitioner s alike. Therefore, in this section of the manuscript we want to highlight what we see as the main contributions from the current research about branding in the family context. We also want to highlight some areas for future research. Contributions from branding to the family business field Organizations have two types of resources that play an important role in their ability to gain competitive advantage: company skills (i.e., what the company can do) and assets (i.e., what the company owns; Aaker, 1989; Hall, 1992; Petrick, et al., 1999). While skills are by definition intangible, assets can be both tangible (e.g. machinery and facilities) and intangible (patents and registered designs) (Hall, 1992). We believe that the contributions that branding can offer to the family business field are linked to both to what companies can do to present themselves to stakeholders as well as the understanding of an intangible asset based on the perceptions that stakeholders have about an organization. The branding perspective adds to the existing discourse on family business resources because it enables the distinction of a kind of uniqueness that has not yet been highlighted. This uniqueness is based on the associations that can be added to an organization through referencing family ownership. This implies a combination of an existing family business reputation (intangible asset) and the ability to promote family ownership in a suitable way (skill). Research into associations/ image and attitude reveals uniqueness beyond that which happens inside the family business, that is, it allows us to explore intangible assets that are not directly managed by the company. Below we summarize the research on the unique resources of family firms and explain where we believe branding is adding to our understanding of family firms. Research exploring the unique resources of family firms has primarily focused on the resources that are based on intra-organizational features that come from the interaction of family and business (Blombäck, 2009). In the family business literature these resources have been labeled familiness (Habershon & Williams, 1999; Sirmon & Hitt, 2003). As defined by Habershon and Williams (1999), familiness is a unique bundle of resources that are the product of the interaction between the family and the business. To identify these unique resources family business researchers have primarily used the principles of the resource-

13 13 based view (RBV) theory of the firm (Sharma, 2004). Based on this theory, family businesses are said to perform better than other businesses because they have resources that are unique, valuable, rare, and difficult to imitate (Andersson & Reeb, 2003; Castillo & Wakefield, 2007; Westhead & Howorth, 2006). Sirmon and Hitt (2003) present a theoretical model in which they describe five unique and salient characteristics that differentiate family from nonfamily business. First, they present Human capital as a major strength. Their argument is that, family firms have an advantage over other type of organizations because they can acquire a lot of their human capital from the family and this can enable the transfer of tacit knowledge (Lane & Lubatkin, 1998). The second form of capital, social capital, describes the networks of relationships between individuals or between organizations (Burt, 1997). For family firms the strength of social capital lies on the resources (both actual and potential) that are embedded, available, and derived from these networks (Nahapiet & Ghoshal, 1998). The third type of capital, patient financial capital, indicates that family firms are able to pursue more creative and innovative strategies because the family often has the financial means to invest thinking about long term, and not having to worry about short term success (Sirmon & Hitt, 2003). Survivability capital, the fourth type of capital, describes the personal resources that family members are willing to loan, contribute, or share for the benefit of the family business especially in hard times (Haynes, Walker, Rowe, & Hong, 1999). Lastly, the governance structure and costs suggests that family firms have an advantage over other types of firms because their structures and family bonds reduce governance cost (Sirmon & Hitt, 2003). In recent years an additional form of capital unique to family businesses has been discussed: Family capital or family social capital. Hoffman and colleagues (2006) argue that family capital is a special form of social capital that is limited to family relationships. Family capital has its origin in the relationships between family members and manifests through the restrictions and expectations on certain behavior and responsibilities, which the established bonds and norms of the family imply (Arregle, Hitt, Sirmon, & Very, 2007; Pearson, Carr, & Shaw, 2008). This family capital gives rise to social control and trust within the family, which provides fertile grounds for competitive advantage (Hoffman, Hoelscher, & Sorensen, 2006). Additional, family social capital is believed to affect the development of organizational social capital through the effects that family has on the structure and relationships that organizations form with individuals and other organizations (Arregle et al., 2007).

14 14 As can be seen from this short summary, research on the unique features of family firms has primarily focused on characteristics that emerge from internal factors of the family that are brought into the business component. We believe that although this internal focus is important much can be learned from an external and perceptual focus. In particular, we perceive that a resource that has not been explored is the perceptions that stakeholders have about family firms. This asset is different from the others because rather than being internal to the firm it is held externally and organizations have the choice of highlighting it or not. Therefore, we believe the branding literature helps in understanding how family firms are different than non family firms. In the next section we develop our ideas. Leveraging the family business brand a reputational resource In the above section we identified unique characteristics of family firms which enable a favorable position in regards several types of capital. The discussion indicates that family firms achieve some of these particular resources simply by being family business. That is, the human and social capital, which derives from the overlap of family, ownership and management, and ties between family members. Meanwhile, the patient financial capital, survivability capital, and the governance structure and costs, reflect that family firms achieve particular resources by behaving in a certain way, that is, acting like family business. The introduction of brand management to family business research reveals another potential resource, which only appears as a result of the projecting of family business. Given that a key to successful branding is the ability to differentiate and create strong associations, we propose that referencing family ownership creates a distinction that reflects a reputational resource. This reputational resource can be leveraged by revealing that an organization is indeed a family business and especially highlighting the positive associations that family ownership brings to mind for consumers. To better explain what we mean by reputational resources we need to first define what reputation is and how branding is related to reputation. Reputation can be defined as an asset and intangible resource (Hall, 1992). Scholars normally elaborate on reputation as something that reflects one particular organization. They refer to corporate reputation as a perceptual representation of a company s past actions and future prospects that describes the firm s overall appeal to all of its key constituents when compared with other leading rivals (Fombrun, 1996, p. 72). Thus, a company s reputation can vary from good to bad, and stakeholders do not need a direct experience with the company to have a perception of a company s reputation. Reputation then is a concept that points at an aggregate of associations or images towards the entity in question. Building on this idea we think that using a branding approach to understanding family business allows

15 15 researcher to view the family firm as an entity which represents different images to different individuals and has a general reputation. Therefore, in situations in which stakeholders have positive perceptions about family ownership, referencing this ownership in marketing and communication efforts will allow companies to tap into the reputation that family firms have and link it to their corporate or product brand image; representing a form of secondary brand associations (Keller et al. 2008) and allowing for the development of a reputational capital. Petrick and colleagues (1999) define reputational capital as that portion of the excess market value that can be attributed to the perception of the firm as a responsible domestic and global corporate citizen (p. 60). Therefore, reputational capital is an example of the financial value of intangible assets (Fombrun, Gardberg, & Barnett, 2000). In line with our previous description of brand equity, we believe that reputation as capital implies that we recognize there is a value in reputation which goes further than the mere recognition of a company. Thus, rather than viewing the reputation of family business as a judgment we see it as an asset that can be employed by companies if they choose to do so (Barnett, Jermier & Lafferty, 2006). The fact that firms can choose to reference their family ownership and thereby highlight any positive reputation linked to family business can be seen as an additional unique resource associated with being a family firm. We believe that in this sense, family brand references or association enable competitive advantage, because in this sense this association or reference is valuable, rare, difficult to imitate and non-substitutable (Barney, 1991). To summarize, we believe that exploring the uniqueness of family firms using a branding framework helps researcher and practitioners better understand uniquenesses that emerge from the perceptions that external stakeholders have about family firms. We argue that these perceptions can represent another form of capital for family firms which we term reputational capital. Our arguments are based on the belief that reputation works in a similar way to brand equity in the sense that they both communicate to others something about the perceptions of the company and its chances to be successful in the future. However, we argue that reputation is different in that it can function as an asset when branding a company and organizations can choose whether to use it or not. We also argue that the inclusion of reputation and brand management into our understanding of family firms outlines external audiences as active publics in the creation of family firm uniqueness; shifting the focus from such uniqueness residing solely in internal dimensions of family-owned enterprises. Finally, we believe that by applying brand management to create reputation capital we highlight that

16 16 family owned companies can take advantage of the reputation by means of secondary brand associations and this could help family firms further communicate their uniquenesses. Future Research and Conclusions To conclude this paper we would like to identify some areas for future research to continue enhancing our understanding of the unique resources that result from referencing family ownership in the branding process. We here present a number of concerns that need further exploration, involving family business and brand management in view of the previously identified reputational capital. Alike other resources, reputational resources do not guarantee unconditional rewards. Depending on context and circumstances, the benefits of referencing family ownership will vary and there may also be potential downsides to this practice. Consequently, we want to highlight the need for research in several areas to better understand when reputational capital will translate into benefits for family firms. The first area for future research that we highlight is the need for intercultural understanding of branding in family firms. In particular, one area that needs research includes how referencing family ownership might work differently based on the country in which this association is highlighted. It may be that the association of firms and families, and the reputation of family businesses, differs depending on what country we consider. Thus, in some countries associations to family firms might be related to positive connotations and expectations while in other countries this might not be the case. Similarly, the effect of family firm references might differ between countries depending on the recognition of and attention paid to the family business format in each country. Given this, we believe that there is a need to better understand how people in different countries perceive family firms and family firm associations. A second area that also needs exploration is whether firms from different industries reference their family ownership different ways and in which industries these references might bring positive benefits for the organizations. Anecdotal evidence suggests that companies in certain industries are more likely to reference their family ownership than others. The food industry, for example, is one example where many organizations communicate their family association. Therefore, there might be some industries in which ties to family would influence consumers and their purchase intentions while in other industries this might not be the case. The understanding of the relationship between industry and referencing family ownership can also help researchers better understand whether using the family business for secondary brand associations is related to what the company is selling, to the importance of family business, or a matter of tradition.

17 17 To complement our previous idea we also suggest that it is important to analyze different types of customers. A common division of customers in marketing literature is that between private consumers (business-to-consumer markets) and professional buyers (business-to-business markets). While both groups, for example, rely on previous experiences and impressions for decision-making in situations of uncertainty there are also differences in their buying behavior. Business-to-business markets more commonly involve team purchasing, precise product requirements, and a search for long-term relationships (Ford, et al., 2002). Moreover, in the business to consumer context, the purpose of buying normally relates to home and family life, which is not the case in business-to-business contexts. Therefore, to learn more about the potential of family business in brand management we suggest research initiatives that investigate whether the chances to reap the family business reputational capital among customers varies depending on whether they are acting as private individuals or professional buyers. People, however, do not only pay attention to firms as customers. Bearing in mind that people approach companies for different reasons (as customers, suppliers, competitors, investors, employees, neighbors) we also raise the question of whether individuals objectives for interacting with a certain company impacts the role of family business reputation. That is, if we acknowledge that in any given market there is such a thing as a family business reputation, which is made up of customer, employee, community and investor images (Fombrun, 1996, p. 37); does this reputation - good or bad, weak or strong - affect all constituent parties of a given company in the same way? Given this, we suggest that more research needs to be conducted to be able to better understand when reputation capital can be used. References Aaker, D. A. (1989). Managing assets and skills: The key to a sustainable competitive advantage. California Management Review, Aaker, D. A., & Biel, A. (1992). Building strong brands. Hillsdale, NJ: Lawrence Erlbaum Associates. Aaker, D. A. & Joachimsthaler, E. (2000). Brand leadership. New York, NY: The Free Press. Addis, M. & Holbrook, M. B. (2001). On the conceptual link between mass customisation and experiential consumption: an explosion of subjectivity. Journal of Consumer Behaviour, 1(1), Andersson, R. A., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S&P 500. The Journal of Finance, 58(3), Anisimova, T. A. (2007). The effects of corporate brand attributes on attitudinal and behavioural consumer loyalty. Journal of Consumer Marketing, 24(7), Arregle, J.-L., Hitt, M. A., Sirmon, D. G., & Very, P. (2007). The development of organizational social capital: Attributes of family firms. Journal of Management Studies, 44(1), Balmer, J. M. T. & Gray, E. R. (2003). Corporate brands: what are they? What of them? European Journal of Marketing, 37 (7/8),

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