Example of institutionalization of a family business: EKA NDT Gözetim Müm. San. Tic. Ltd. Şti.

173 KİTOD 2(4), 2024, Kış/Winter Dilay AYDÖNER & Belis GÜLAY For citation / Atıf için: AYDÖNER, D. & GÜLAY, B. (2024). Example of institutionalization of a family business: EKA NDT Gözetim Müm. San. Tic. Ltd. Şti.. Kastamonu İnsan ve Toplum Dergisi – KİTOD 2(4), 173-186. https://doi.org/10.5281/zenodo.13928401, https://dergipark.org.tr/tr/pub/kitod Example of institutionalization of a family business: EKA NDT Gözetim Müm. San. Tic. Ltd. Şti. 1 Bir aile şirketinin kurumsallaşması örneği: EKA NDT Gözetim Müm. San. Tic. Ltd. Şti. Dilay AYDÖNER 2 Uzman; Maltepe Üniversitesi, İSTANBUL. E-mail: [email protected] ORCID: 0000-0002-3838-0112 Belis GÜLAY Dr. Öğr. Üyesi, Maltepe Üniversitesi, Meslek Yüksekokulu, İSTANBUL. E-mail: [email protected] ORCID: 0000-0002-0204-5507 Makale Türü / Article Type: Araştırma Makalesi / Research Article Gönderilme Tarihi / Submission Date: 30/07/2024 Revizyon Tarihleri / Revision Dates: Edtör r.: 09/09/2024, Minör r.: 17/09/2024, Editör r.: 18/09/2024 Kabul Tarihi / Accepted Date: 20/09/2024 Etik Beyan / Ethics Statement ✓ Bu makalennin üretildiği teze Maltepe Üniversitesi tarafından 16.06.2019 tarihli “Etik İlke ve Beyanlara Uyum” izni verilmiştir. ✓ The thesis on which this article was produced was granted “Compliance with Ethical Principles and Declarations” permission by Maltepe University dated 16.06.2019. Araştırmacıların çalışmaya katkısı / Researchers' contribution to the study 1. Yazarın katkısı: Makaleyi yazdı, verileri topladı ve sonuçları analiz etti/raporladı (% 50). Author contribution: Wrote the article, collected the data, and analyzed/reported the results (50%). 2. Yazarın katkısı: Makaleyi yazdı, verileri topladı ve sonuçları analiz etti/raporladı (% 50). Author contribution: Wrote the article, collected the data, and analyzed/reported the results (50%). Çıkar çatışması / Conflict of interest Yazar(lar) bu çalışmada olası bir çıkar çatışması olmadığını beyan ederler. The author(s) declare(s) that this study has no potential conflict of interest. Benzerlik / Similarity Bu çalışma iThenticate programında taranıştır. Nihai benzerlik oranı % 5’tir. This study was scanned using the iThenticate program. The final similarity rate is 5%. 1 Maltepe Üniversitesi, Sosyal Bilimler Enstitüsü, İşletme Anabilim Dalında Haziran 2019’de tamamlanan “Aile Şirketlerinde Kurumsallaşma Ve Kurumsal İletişim: Eka Ndt Gözetim Müm. San. Tic. Ltd. Şti. Örneği” başlıklı Yüksek Lisans tezinden üretilmiştir. 2 Sorumlu yazar / Corresponding author 174 Example of institutionalization of a family business case: Eka Ndt Gözetim Müm. San. Tic. Ltd. Şti. KİTOD 2(4), 2024, Kış/Winter Example of institutionalization of a family business case: Eka Ndt Gözetim Müm. San. Tic. Ltd. Şti. Abstract Today, we see that most businesses in our country and many countries are family businesses. Family businesses significantly support the growth of the country's economy. Family businesses are essential for societies due to their functions. However, it is difficult for family companies, which play an essential role in the country's economy, to last long. Family businesses need institutionalization to successfully transfer their assets to the next generations and survive in harsh competitive conditions. Corporate communication is critical for organizations to grow and differentiate themselves from others. This study investigated the relationship between institutionalization and corporate communication in family businesses. This study will discuss the concept, importance, and characteristics of family companies. The concept of institutionalization, the importance of institutionalization in family companies, and the importance of corporate communication will also be discussed. EXTENDED ABSTRACT Family businesses are critical in both economic and social life. They constitute an important part of the country's economy in terms of employment and business volume. Their unique management systems and structures are necessary for both economic and social life. However, their lives are concise. According to the research, the biggest reason is that they need to be more institutionalized and pay the necessary attention to this issue. They need to be managed professionally and institutionally to extend their lifespan. Since family businesses cannot be institutionalized, small and medium-sized enterprises (SMEs) need help maintaining sustainability. This study investigated the relationship between institutionalization and corporate communication in family businesses. Corporate communications helps the company grow by professionalizing both internal and external communications. Information about the demographic characteristics of the study participants was tested with the help of frequency analysis. Demographic characteristics consist of gender and educational status variables. Participants think that institutionalization is a necessary and critical component for businesses. In order for an institution to grow, provide job opportunities for future generations, benefit the country as an investment, work systematically, progress, and develop its services and products, institutionalization is necessary, and noninstitutional companies have less chance against their competitors and may be easier to grow and develop they said. In family companies, corporate communication, an effective organizational chart, managers should act impartially and fairly, management consultancy should be obtained, training should be organized, the processes in the performance of work should be written and traceable, kinship relations should not be used and assigned duties should be carried out correctly. Corporate communication improves the company vision, speaks the same language with its employees and competitors, demonstrates the same quality, and increases employee motivation. It also ensures the coordination of work. It increases employees' awareness of responsibility and eliminates unnecessary information pollution. Eliminating the hierarchy within the family prevents unauthorized persons from interfering with the procedure and enables companies to achieve their goals. Institutionalization can work through corporate communication, recognizing deficiencies, and improvement. Every company that wants to become institutionalized must use corporate communication at every step. The research aims to determine the elements required to determine and increase the institutionalization levels of family companies. The relevant case study is thought to shed light on other future studies. 175 KİTOD 2(4), 2024, Kış/Winter Dilay AYDÖNER & Belis GÜLAY Corporate communication is exchanging ideas regarding common goals between individuals and groups working in an organization. This allows the development of creative power, solving problems, and sustaining actions. Communication forms the basis of effective management. Corporate communications can help companies keep up with rapidly changing competitive and environmental conditions. Keywords: Family companies, Institutionalization, Corporate communication INTRODUCTION Family businesses are critical in both economic and social life. They constitute an essential part of the country's economy regarding employment and business volume. Their unique management systems and structures are necessary for both economic and social life. However, their lives are concise. According to the research, the biggest reason is that they need to be more institutionalized and pay the necessary attention to this issue. They need to be managed professionally and institutionally to extend their lifespan. Since family businesses cannot be institutionalized, small and medium-sized enterprises (SMEs) need help maintaining sustainability. This study investigated the relationship between institutionalization and corporate communication in family businesses. Corporate communications helps the company grow by professionalizing both internal and external communications. THE IMPORTANCE, STRUCTURE AND DEVELOPMENT OF FAMILY BUSINESSES Family businesses comprise many companies worldwide and play an important role in countries' economies and workforce production. According to a report published by the European Commission in 2008, approximately 60% of companies worldwide are family businesses, and more than 70% of companies in Europe are family businesses (Aksoy, 2018, p. 7). Additionally, family businesses there make up nearly half of the European workforce. According to a report published by PwC in 2016, 95% of companies in Türkiye are family businesses, and 75% of publicly traded organizations are family businesses. This indicates family businesses' impact on the global economy (Aksoy, 2018, p. 7). Family businesses cause internal conflict when they cannot balance family members' logic and emotions (Ak, 2010, p. 52). The events from establishing family companies to their operations are called "phases." A family company consists of eleven stages (Fındıkçı, 2017, pp. 41-48). Starting a business, achieving success, growth, expansion of ownership, satisfaction, waiting for old successes, searching for system and professionalization, transferring to new generations, and liquidating. 176 Example of institutionalization of a family business case: Eka Ndt Gözetim Müm. San. Tic. Ltd. Şti. KİTOD 2(4), 2024, Kış/Winter ▪ Starting a Business Phase: In this process, called "zero point" in family businesses, the entrepreneur starts the business. To achieve success, one must work hard and strive for it passionately, and it is very important to keep up the work. ▪ Achieving Success Phase: The entrepreneur, who works in a busy work tempo, takes his family members with him and ensures continuity in the workplace. Families' business choices also shape growth. ▪ Growth Phase: The family, whose business ventures are successful, is financially comfortable. This mutual interaction between work and family ensures the progress and development of the business. It is essential to achieve controlled growth during this period. ▪ Ownership Expansion Phase: While family companies work with an intense work tempo, grow, and develop, their turnover and profits increase in this period. There was greater company ownership during this period, and the assets of the entrepreneurial family increased. ▪ Satisfaction Phase: In general, companies that have established a business, become successful, grow and develop, and expanded in terms of ownership have reached the saturation point. What they do and where they go from this point on is very important. ▪ Waiting for Old Successes Phase: In the life curve of family businesses, the satisfaction phase usually marks the top point. After this point, businesses will begin to decline. Businesses that cannot develop a new initiative, a leap, a new initiative, or an innovative idea will fail. During this period, the entrepreneur is generally retrospective. There is nostalgia. ▪ System Search and Professionalization Phase: The necessity of institutionalization is realized. At this point, entrepreneurs should take institutionalization seriously, eliminate their complex structures, and bring their companies into systematic order. ▪ Transfer to New Generations: The last stage of family businesses is transitioning to new generations. Entrepreneurs have now started to hand over their companies to the new generation. This process can be like the revival or reboot of a company. ▪ Liquidation Phase: It is usual for companies to emerge and grow. Family businesses need to have a lifespan as long as possible. The liquidation phase is the most brutal phase of establishing and growing family businesses. There is a sharing of property among family members. Family companies have different structures as they go through different stages of development since their establishment. Family companies can be categorized according to their partnership structure and development stages (Karpuzoğlu, 2004, pp. 93-124): 177 KİTOD 2(4), 2024, Kış/Winter Dilay AYDÖNER & Belis GÜLAY ▪ First-Generation Family Companies Owned and Managed by the Entrepreneur: First-generation family companies are where the control of a single boss is dominant, and most of the shares and control are in the hands of the entrepreneur (Ateş, 2005, p. 26). Management and ownership are fundamental. Spouse partnership may be possible, but it is generally a result of procedures on paper. The founder makes Management practices and decisions (Çalışkanel, 2018, p. 21). When an entrepreneur dedicates himself to every job, he gets more customers. Company efforts will soon increase, and work will become busier. An entrepreneur transfers some of the existing business to new managers from his family or outside because he cannot manage on his own due to the intensity of the work. A sibling partnership is when two or more siblings have company control and the majority share in growing and developing family businesses. Sibling partnership may be another type of family business (Ateş, 2005, p. 28). ▪ Growing and Developing Family Businesses (Partnership of Siblings): Sibling partnerships are generally seen in small and medium-sized businesses. Although this is not said directly, the family's values affect the child's background and make him feel he should be a part of the company. The company has neither initiated a formal process nor established a publicly known system. Work serves only as a tool to strengthen, protect, and integrate family ties (Karpuzoğlu, 2004, pp. 102-103). ▪ Complex Family Companies (Cousin Partnership) and Continuing Family Companies: In complex family companies, many shareholders are partners, and the separation of employee shareholders is more evident (Ateş, 2005, p. 31). Formalization is necessary because the management of such businesses is more professional and complex. Departments to collaborate with, authorities, and responsibilities are determined. Essential Characteristics of Family Businesses Family businesses have specific characteristics that make them different from others. Karpuzoğlu (2004, p. 20-21). These features have in common that a single family dominates the management and control of a significant part of the company. Family businesses continue because family values are more important than business values. When family businesses survive for a long time, they plan their activities to benefit society and maintain and improve their positive company image. It is more critical for the company as a whole to succeed than for individuals and departments to succeed on their own. Table 1. Essential characteristics of family businesses 178 Example of institutionalization of a family business case: Eka Ndt Gözetim Müm. San. Tic. Ltd. Şti. KİTOD 2(4), 2024, Kış/Winter Source: Karpuzoğlu, E. (2004). Institutionalization in Growing and Developing Family Companies. Hayat Publications, p. 20-21. Strengths and Weaknesses of Family Businesses When family businesses are compared to other companies, many differences stand out. Compared to other companies, family businesses grow faster economically. However, their lifespan is shorter. The speed of growth and extinction of family businesses is directly proportional to how they can use their strengths and eliminate their weaknesses. For this reason, family companies should make choices in this direction by knowing their strengths and weaknesses and putting these choices into practice in their management (Akça, 2010, pp. 30-35). Table 2. The strengths and weaknesses of family companies • In family businesses, the top manager and the owner of the company are usually the same person. Company founders do not think of giving their companies to others when they are in a good situation. BASIC FEATURES OF FAMILY BUSINESSES • Usually at least two generations of the family run the company. Mother-child partnerships, sibling partnerships, cousin partnerships, and continuing partnerships are family businesses that span at least two generations. Family businesses founded by husband and wife are considered family businesses due to their other characteristics, without generation differences. • Usually, the name and prestige of the family is paired with the name and prestige of the company. Therefore, the position of family members in society also affects the position of their companies. • The family usually supports the company's policies. Most family businesses were established to protect the existence and unity of the family. The family's beliefs and values are very important. • Working conditions in family businesses can be arranged in a way that does not endanger the health of employees, and flexibility can be provided regarding leave and working hours. • Family beliefs and values, relationships in the company, way of doing business. and affects other factors. This creates the company culture. • Family ties play an important role in selecting managers. Family members that the company owner likes and trusts are often close to the entrepreneur. • Children of executives are often involved in company management. Company owners want to get to know the business they intend to leave to their children. • The roles of family members in the company also affect their place in the family. Those who are strong in the company and family are more likely to be strong. • Family businesses appear closed because they are mostly founded by family members. When faced with financial difficulties, these businesses prefer to seek financial support from family members. It is essential not to share company information with others. • In family businesses, managers are usually chosen from relatives. In family businesses, reliability goes beyond expertise. Hiring staff from outside the family while family members are present is not welcome. Family members often have priority in selection and placement of staff. 179 KİTOD 2(4), 2024, Kış/Winter Dilay AYDÖNER & Belis GÜLAY Source: Fındıkçı, İ. (2017). Family Businesses. Istanbul: Alfa Publishing House, p.100. The purpose of determining the strengths and weaknesses of family companies is to protect their strengths and reduce the effects of their weaknesses. Without leaving the family format, which is essential for companies, They can be institutionalized and reduce their weaknesses (Fındıkçı, 2017, p. 99). INSTITUTIONALIZATION In today's business world, the concept of institutionalization is widely used. Globalization in the early 1990s also affected Türkiye. Institutionalization refers to the application of specific rules in all types of interactions. In other words, specific rules prevail in a person's individual life, family life, institutions and organizations, societies, and relations between societies. (Fındıkçı, 2017, p. 102). Institutionalization helps companies create an organizational structure that suits their goals, creates job and job descriptions, creates internal regulations, and authorizes the right people. This means transitioning to professional management (TKYD, 2011, p. 11). Institutionalization Process in Family Companies In family businesses, the family and the company attach importance to institutionalization. Family businesses, like other companies, carry out institutionalization as a process. Institutionalization in family businesses occurs in two stages. The first stage concerns the family's status, position, and company authority. The determination of the new generation, that is, the candidates who will become managers, and this harms the system. The power that comes from family unity and the rapid development of the concept of "we" WEAKNESSES Institutional problems arising from the involvement of company owners in the business, Boss's guidance hinders new directions, Failure or inadequate development of logics such as forecasting, planning, budgeting and reporting in the company, Bosses compete with professionals and tend to belittle them, Decreased attractiveness of the company. Determining the new generation, that is, the candidates who will be managers, in advance and preparing them for this situation. Rapid development and growth trends, STRENGTHS High desire for success and the number of people who take their job seriously, Not to lose their amateur spirit, Mutual respect and obedience develop faster in top management, 180 Example of institutionalization of a family business case: Eka Ndt Gözetim Müm. San. Tic. Ltd. Şti. KİTOD 2(4), 2024, Kış/Winter The second stage is related to the company's workflow and operations. In the institutionalization phase of the family business, the family needs to solve its internal problems. The company becomes institutionalized by determining the job descriptions of its employees, determining the person or persons who will make the final decisions of the company, making company-specific rules become a habit, applying unique rules for company management, and applying overtime and holiday rules (Fındıkçı, 2017, pp. 104-105). Institutionalization can provide the change necessary for long-term success. The most important thing required for family businesses to survive is their institutionalization. Recently, they have made significant progress towards institutionalization. Companies that have completed the institutionalization phase comply with specific standards and procedures. Thus, institutionalized businesses become less dependent on individuals. Companies established solely for economic purposes will not resist these difficulties when they encounter difficulties in the future. Companies gain long-lasting life and power by determining their employees' behavior and continuity levels to make themselves a sustainable community (Koyuncu, 2015, p. 27). Family companies must have a say in their sectors, regions, and countries to maintain their existence in an age of intense competition. This is only possible with professional management (Altınkaynak, 2007, p. 61). In addition, when people working in family companies make decisions about the changes occurring in the company and the material and emotional consequences of these changes, it becomes challenging to make decisions due to the intense family relations in the company. In these cases, help from professionals is required to make a decision. This example may show the importance of institutionalization (Karpuzoğlu, 2004, p. 126). Corporate Communication Techniques We can divide corporate communication techniques into Formal and Informal communication. - Formal Communication: Formal communication defines who will communicate with whom within the institution and how, who has authority on which issues, who will obtain what kind of information, and how they will use this information (Vural & Bat, 2015, p. 144). The purpose of formal communication is to provide the necessary information and understanding for the groups, to create the necessary attitude for the employees of the 181 KİTOD 2(4), 2024, Kış/Winter Dilay AYDÖNER & Belis GÜLAY institution to be satisfied with their jobs, and to convey the information to the relevant people when needed (Vural & Bat, 2015, p. 144). - Informal Communication (Non-Formal Communication): Informal communication is a type of unofficial communication that occurs intra-institutional or inter-institutional. Since this communication is not official, it is not easy to regulate or control it (Çalışkan, 2016, p. 78). Corporate Communication Tools Written, verbal, audio-visual, social media, and electronic communication tools are known as corporate communication tools. The Importance of Corporate Communication in Terms of Institutionalization The ability of institutions to communicate effectively requires institutionalization. In institutions with a sound communication system, misunderstandings are eliminated, and healthy communication occurs. (Özcan, 2014, p. 41). METHOD The In-Depth Interview technique was used in qualitative research, and Eka Ndt Gözetim Müm was used. San. Tic. Ltd. Ltd. company was used as a case study technique, and the limitation of the research is that it consists of employees of the relevant company. In this context, • Is corporate communication important for institutionalization? • Is there a need for corporate communication methods and tools to ensure and maintain institutionalization? • What are the difficulties experienced in institutionalization in family businesses? • Can institutionalization in family companies be achieved through corporate communication management practices? Answers to your questions: It emphasizes the importance of corporate communication in family companies by reflecting the honest opinions of those who participated in the research during the in-depth interview. Purpose and Importance of the Research The research aims to determine the elements required to determine and increase the institutionalization levels of family companies. The relevant case study is thought to shed light on other future studies. Assumptions and Limitations of the Research