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Woods, Jeremy AlanGottschall, RichardCarsrud, AlanMatthews, Chuck.  United States Association for Small Business and Entrepreneurship. Conference Proceedings; Boca Raton  Boca Raton: United States Association for Small Business and Entrepreneurship. (2016): JA1-JA22.

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Outside advice can expose decision-makers to more information, and this information can help these individuals to make better decisions. However, in small family firms - one of the world's most common forms of business organization - decision-makers often isolate themselves from outside advice. It may be possible for these decision-makers to improve the quality of their decisions without sacrificing their preference for insularity in their decision-making by getting more involved with their industry associations. This research presents results which suggest that such involvement tends to discourage certain types of bias in decision-making and improves the financial viability of certain types of decisions.


What Do We Know?

When small family business decision-makers expose themselves to outside advice, they often make better decisions. Outside advice exposes decision-makers to more information (Ocasio, 1997). Outside advice also challenges decision-makers' existing assumptions (Greitemeyer, Schulz-Hardt, & Frey, 2009). Many small family business decision-makers have a preference for insular decision-making (Gersick, Davis, Hampton, Lansberg, 1997). This leads many small family business decision-makers to have an aversion to the use of formal outside boards of advisors (Jaskiewicz & Klein, 2007; Pieper, Klein, & Jaskiewicz, 2008; Woods, Dalziel, & Barton, 2012). There is a very high failure rate for small family businesses (Lee, 2006), and this is often due to poor decision-making.

What Don't We Know?

While use of a formal board of advisors is one of the most common ways that firms access outsize advice, it is not the only way in which the leaders of small family businesses can expose themselves to outside advice. Another way they can do this is via their involvement in industry associations. The study of industry associations is a somewhat new and unique contribution to the family business governance literature on decision-making. A search by the authors in Google...