Family Business Review

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Family FIRO Model: An Application to Family Business

Sharon M. Danes, Martha A. Rueter, Hee-Kyung Kwon and William Doherty
Family Business Review 2002; 15; 31
DOI: 10.1111/j.1741-6248.2002.00031.x

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http://fbr.sagepub.com/cgi/content/abstract/15/1/31

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Family FIRO Model: An
Application to Family Business
Sharon M. Danes, Martha A. Rueter, Hee-Kyung Kwon, William Doherty
This study applies the Family FIRO model, one of interpersonal dynamics and change, to family
businesses (specifically, to family farming couples). It empirically tests the developmental sequence
of three dimensions of the model: inclusion, control, and integration. Findings indicate that both a
sense of inclusion in a family business and the manner in which control issues are managed have
important influences on family business integration. Because inclusion predicts control dynamics,
effective control may not be diminished without adequate levels of inclusion. The study offers
practitioners a theory-based approach to working with the complex dynamics within family busi-
nesses. Family businesses will remain more resilient in times of change if the leaders understand
and reassess patterns of inclusion when change is initiated.

Introduction grated nature of family businesses, they are a

Relationships in family businesses are dynamic
and interdependent because what occurs in the
family may have effects on the business and vice
versa (Danes, Zuiker, Kean, & Arbuthnot, 1999;
Marshack, 1998; Stafford, Duncan, Danes, &
Winter, 1999). Furthermore, management is
sometimes a concern in family businesses because
ways of interacting among family members may
interfere with business financial decisions
(Levinson, 1991). These ways of interacting, in
turn, can divert limited resources from targeted
family business goals (de Vries, 1996; Jaffe, 1991).
They may further lead to short-term decisions
that are not good for long-term sustainability of
the family business (Danes et al., 1999; Stafford
et al., 1999; Ward, 1997).
The long-term health and sustainability of
any family business depend on its ability to an-
ticipate and respond to change (Ward, 1997).
Whether responding to normative transitions or
non-normative crises in either the family or the
business component of the family business, new
patterns of interaction are needed for a family
business to remain healthy when these changes
occur. Because of the interdependent yet inte-
unique group with a range of complexities that
occur at the intersection of the two systems.
Stafford, Duncan, Danes, and Winter (1999)
propose the Sustainable Family Business model
to address these complexities. This model is a
general theory that provides the “big picture” in
guiding research on the sustainability of family
businesses. It recognizes that certain resource
transactions and interpersonal relationships oc-
cur solely in the business system and others oc-
cur only in the family system. However, one of
the key features of the model is its attention to
the interface between the family and the busi-
ness systems. It further recognizes that there are
processes that occur at the interface of these two
systems when changes arise that disrupt the usual
flow of transactions or interactions.
There is still a need, however, for a more
focused theoretical model that would serve as a
guide in understanding the linkages between
family dynamics and business dynamics during
times of change in a way that positively affects
the sustainability of the family business. The
overall goal of this study is to propose such a
model and to offer preliminary empirical sup-

FAMILY BUSINESS REVIEW, vol. XV, no. 1, March 2002 © Family Firm Institute, Inc. 31

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Danes, Rueter, Kwon, Doherty
port for one of its core postulates.
The Fundamental Interpersonal Relation-
ship Orientation (FIRO) model is a theoretical
model of interpersonal dynamics and change that
sets the stage for studying the complexities of
family businesses at the interface of the family
and business systems. The original FIRO model
(Schutz, 1958) is a theoretical model of group
development that applies to groups of unrelated
individuals. The Family FIRO model (an adap-
tation of Schutz’s model) developed by Doherty
and Colangelo (1984; further developed in
Doherty, Colangelo, & Hovander, 1991) is a
theoretical model of family interaction (related
individuals). This study further extends the FIRO
model by applying it to family businesses. It aims
to demonstrate the utility of the FIRO model for
use in research and practice in the area of family
business.
The Theoretical Model
The FIRO model (Schutz, 1958) and the Family
FIRO model (Doherty & Colangelo, 1984;
Doherty et al., 1991) offer a systemic view that
integrates various typological depictions and pro-
vides for priority setting across a full range of
family business changes and dynamics. The
models articulate three core dimensions of group
and family interaction: inclusion, control, and
affection/intimacy (Figure 1). These dimensions
constitute a developmental sequence in the for-
mation and history of groups and families. That
is, issues of inclusion (such as membership and
boundaries) are the initial priorities for any group
or family, followed by issues of control and power,
and then by issues of deep interpersonal connec-
tions. The main difference between the FIRO
and Family FIRO models lies in the nuances of
groups with related vs. nonrelated members.
Because family businesses involve both personal
family dynamics and more impersonal business
dynamics, this study combines the original FIRO
model and the Family FIRO model.
Inclusion refers to interactions that concern
membership, organization, and bonding. Inclu-
sion within family businesses defines the family
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business’s core makeup. It defines who is in and
out of the family business, how the family assigns
roles to its members, how bonded its members
are, and how it defines itself in relation to the
outside world (Doherty et al., 1991). Inclusion
has three subcategories: (a) structure, (b) connect-
edness, and (c) shared meaning (Doherty et al.,
1991). Issues of inclusion often surface in family
businesses when there are differing perceptions
of who should be involved in running the busi-
ness and making business decisions. One mem-
ber may feel a sense of unfairness about being
excluded from aspects of the business. Financial
arrangements lead to inclusion tension when ei-
ther spouse is dissatisfied with his or her own
involvement in financial decisions that are con-
sidered critical or with the spouse’s involvement
in those decisions and/or when financial values
and beliefs clash.
Control refers to family interactions that con-
cern influence and power exertion during family
conflict. Control interactions usually take place
in families when members experience compet-
ing needs and, overtly or covertly, attempt to
address these conflicts. Applied to family busi-
nesses, control issues come to the forefront of a
couple’s daily interaction when frequent disagree-
ments occur.
An important distinction should be made
between this control dimension and the concept
of power that is well represented in the family
sociology literature. Szinovacz (1987) suggests a
growing consensus about the separation between
power structures, which concern hierarchy and
role patterns, and power interaction, which deals
with negotiations, influence strategies, and con-
flict management processes. Integrating these
concepts of power structures and interaction with
the Family FIRO model, family issues and inter-
actions concerning structural/role clarity (power
structures) belong within the inclusion domain.
The domain of control (Doherty et al., 1991)
captures those issues related to working out ten-
sions that develop, i.e., conflict management
(power interactions). This dimension is com-
posed of three major types of control interactions:
dominating, reactive, and collaborative. The lat-
 Family FIRO Model: An Application to Family Business

Figure 1. Family FIRO Conceptual Model Applied to Family Business

Inclusion Control Integration

• Structure • Dominating • Achievement of

- Boundaries - Confrontation family business goal
- Role organization - Coercion - Good family income
- Alliance - Manipulation - Harmonious family
- Membership - Dictating relationship
- Position - Discipline - Balance of family
togetherness and
• Connectedness • Reactive apartness
- Nurturance - Resistance - Secure retirement
- Involvement - Rebellion resources
- Commitment - Submission - Long-term viability
- Belonging - Withdrawal of business
- Affiliation - Disobedience - Adequate capital and
credit
• Shared Meaning • Collaborative
- Identity - Negotiation
- Loyalty - Compromise
- Rituals - Balancing
- Values - Give and take
- World view - Working through

ter is considered the most constructive because
parties aspire to a balance of influence rather than
unilateral power imposition or reactive under-
mining of the other’s power attempt (Doherty et
al., 1991). Metz (1993) refers to this latter con-
flict mode as assertive.
In this study, integration—rather than affec-
tion or intimacy as used in the original FIRO and
Family FIRO models, respectively—applies to
family business interactions. The change in terms
is intended to capture dynamics specific to busi-
ness dynamics rather than to general family dy-
namics. Integration means to make a whole by
bringing all the parts together. It brings together
the interactions among family members and the
financial decisions and goals of the business. It
is characterized by individual and collective cre-
ativity used to solve problems and get work done.
There is planning for change and a willingness
to take risks. There is also a sense of community
in the workplace. When these characteristics are
present, they lead to the well-being of the whole
system and the achievement of goals (Danes,
Zuiker, Kean, & Arbuthnot, 1999). Integrated
family business connotes an environment of trust
and creativity that brings a higher level of open-
ness to interactions about both family and busi-
ness issues that influence achievement of goals.
Ward (1997) indicates that a healthy company is
the foundation of family business continuity, and
family and business goals are forces that steer each
family business through predictable patterns of
growth and change.
There are two postulates of the FIRO and
Family FIRO models that make particular con-
tributions to work with family businesses. First,

33

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Danes, Rueter, Kwon, Doherty
when a family business faces challenges stemming
from major or ongoing stressful events, its pat-
terns of inclusion, control, and integration will
require reconstruction. Two, embedded in these
models is an optimal sequence for managing
major challenges. More successful adaptation will
ensue, if family businesses address their issues in
priority sequence. It is suggested that inclusion
is the sine qua non for successful resolution in
the control and integration areas (Doherty et al.,
1991). Without effectively addressing the inclu-
sion issues, control dynamics cannot be ad-
equately addressed, thereby precluding the de-
sired effect of integration.
When families and practitioners view the
core problem only as one of control or power,
they are likely to lose sight of the belonging, con-
nectedness, and fairness issues that are often at
the heart of family business conflict. The devel-
opmental approach from the FIRO and Family
FIRO models allows for structural issues such as
identity, role, and justice to be viewed not merely
as content of a conflict to be addressed rationally
and logically through usual conflict resolution
approaches. Rather, these structural issues can
begin to be understood as the root of each
spouse’s sense of couplehood, or the essence of
what it means to be a family member working
within the family business. It is about testing,
questioning, and reaffirming one’s sense of be-
longing, responsibility, and entitlement—namely
inclusion—in the couple relationship as embed-
ded in the interrelated family/business system.
In the study, the Family FIRO model applies
to couples who operate farm family businesses.
It is the initial empirical test of the Family FIRO
model as applied to family business couples. In-
clusion issues in this study focus on the struc-
tural dimension of family business financial de-
cision making. The control dimension focuses
on the use of the collaborative conflict mode in
family businesses. Integration focuses on both
the interactional qualities of family and the
achievement of family business goals within the
family business—the outcome of sound inclusion
and control dimensions.
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Literature Review
Inclusion: Financial Decision Making. Decision-
making processes in families, and particularly in
family businesses, often include both partners of
a couple. When two decision makers within the
family share the same decision, an emotional in-
terdependence evolves. It is important to inves-
tigate the impact of that emotional climate on
decision-making processes (Danes, Fitzgerald, &
Doll, 2000; Danes & Rettig, 1993; Godwin &
Scanzoni, 1989; Scanzoni & Szinovacz, 1980).
However, few studies on financial decision
making include emotional and perceptual fac-
tors. Godwin and Scanzoni (1989) indicate that
differences across decision content areas sug-
gest that the family decision-making process is
contingent on situational factors. In studying
financial decision making in farm family busi-
nesses, we are looking at a time of change, when
conscious decision making is at the forefront.
Individual perceptions influence decision pro-
cesses (Godwin & Scanzoni, 1989; Gallagher &
Delworth, 1993). In fact, Gallagher and
Delworth (1993) indicate that family conflicts
could arise as farm women’s financial input from
their off-farm employment empowers them to
participate more often in financial decisions re-
lated to the farm family business.
Involvement in financial decision making by
farm wives is tempered by the degree of tension
that exists over finances; it also empowers wives
to use more constructive, engaging modes of con-
flict (Danes et al., 2000). The latter finding was
also found to be true for farm husbands. In a
study of resort family businesses, imbalance of
decision making within the family business be-
tween couples (either feeling left out or having
one-sided or excessive decision responsibility)
created greater conflict intensity (Stewart &
Danes, 2001).
Control: Family Business Conflict. Conflict
is inevitable whenever there is an environment
in which boundaries between family and busi-
ness are not clear. There is a potential for even
greater conflict under harsh economic conditions
when the tensions between family and business
goals can be high (Danes & Rettig, 1993;
 Family FIRO Model: An Application to Family Business
Rosenblatt, 1991). Conflict management is a
special concern to those in family businesses for
maintaining long-term viability (Kaye, 1991).
Constructive conflict can drive the family
business system toward its objectives, whereas
sustained and/or unaddressed conflict can mire
the system (Ward, 1997). Planning for change
may not occur because of conflicts within the
business (Kaye, 1991). Too much conflict can
threaten the survival of the family business or the
family itself; members may leave the business, di-
minishing its capacity, or a needed change may
not be made within the business at a crucial re-
generation point.
Although it is normal to have conflict in re-
lationships, what repeatedly surfaces as the criti-
cal factor in affecting relationship satisfaction is
how a couple manages those conflicts (Bowman,
1990; Epstein & Baucom, 1989). Assertive modes
of conflict (positive, constructive, and engaging
responses structured in a clear, direct, and
noncoercive manner) tend to promote beneficial
conflict resolution and, subsequently, satisfaction
(Metz, Rosser, & Strapko, 1994). The relation-
ship between the use of assertive modes of con-
flict and business goal achievement within farm
family businesses differs by gender (Danes,
Fitzgerald, & Doll, 2000). Occasions for con-
flict will increase to the extent that goals of the
family business members are both highly valued
and incompatible (Peterson, 1983). When people
are together on a day-to-day basis in a family
business, strife between them can become a mat-
ter of consuming concern, especially when con-
ditions of frequency are combined with those of
strength and duration (Levinson, 1991; Peterson,
1983).
It is important to recognize that family busi-
ness conflicts often have significant features that
do not fit the prevailing dispute-resolution mod-
els (Kaye, 1991). Deeper issues than those iden-
tified are usually the source of conflict. Often,
their reasons for sustaining the conflict are stron-
ger than their ostensible desire to resolve it. For
example, a major business decision about expand-
ing the family business may be hindered by sib-
ling rivalries within a two-child/parent partner-
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ship. What may be most financially advantageous
for the family business may be lost because one
particular sibling perceives that by compromis-
ing on his or her view, he or she may lose cred-
ibility in the eyes of the parent compared to the
other sibling. In this case, the deeper issue within
the conflict is the sibling competition rather than
the family business expansion options.
Integration: Family Business Goals. What
is currently known from the literature about fam-
ily and business goals is that (a) they differ among
family businesses (Isaacs, 1991; Rosenblatt, de
Mik, Anderson, & Johnson, 1985; Rosenblatt,
1991; Ward, 1997); (b) family businesses can be
lost through destructive levels of tension between
family and business goals (Rosenblatt, 1991); (c)
a strong family business calls for open commu-
nication about goals and a desire to resolve mis-
understandings (Isaacs, 1991); and (d) activities
among system subunits must be coordinated and
regulated to ensure the system’s stability
(McCullom, 1988; Miller & Rice, 1975).
The overlap of the family and business sub-
systems’ goals can strengthen the business but
also jeopardize it. The goal dynamic changes by
stage of the business life cycle (Churchhill &
Lewis, 1983; Robinson, Pearce, Vozikis, &
Mescon, 1984; Ward, 1997). Early in the life of
the business, the owner must spend his or her
time positioning the firm in the market, and as it
ages, owners redirect their energies toward man-
aging the entity. Under certain economic con-
ditions, destructive conflict between family and
business goals can impact the viability of family
businesses (Danes & Rettig, 1993; Rosenblatt,
1991). Wicker and Burley (1991) found that
couples who founded and sustained their busi-
ness over time had fewer conflicts over the goals
of the business.
The overlap of the family and business sys-
tems is highlighted in a study by Boles (1996). In
family businesses, work-family conflict was a pre-
dictor of job satisfaction, whereas for owners who
did not work with family members, income was
the predictor of job satisfaction. Churchhill and
Hatten (1997) further support that premise.
According to their findings, the transfer of
35
Danes, Rueter, Kwon, Doherty
nonmarket power within the family business is
dependent on the family roles and interrelation-
ships.
Hypotheses
Guided by the postulates from the Family FIRO
model (Doherty et al., 1991), this study exam-
ines the following hypotheses:
Hypothesis 1. High levels of structural
inclusion among family business couples
positively relate to high levels of collaborative
control.
Hypothesis 2. High levels of collaborative
control among family business couples
positively relates to high levels of integration.
Hypothesis 3. High levels of structural
inclusion positively and indirectly relate to
high levels of integration via collaborative
control.
Methods
Sampling Procedures. A random sample of farm
business couples was drawn from a list of farms
compiled by the Minnesota Agricultural Statis-
tical Service, excluding those that were consid-
ered “hobby” farms. This list is the most com-
prehensive list of farms in the state. The sample
represents counties from the entire state. It in-
cludes farm couples from all age ranges, income
levels, and types of farms located within the state.
A questionnaire was sent to both the husband and
wife of the farm family business. A postcard re-
minder was sent to those who did not respond
after two weeks. Follow-up telephone calls were
made to those respondents who had not returned
the questionnaire after three-and-one-half weeks.
The data from the study were compared to cen-
sus data for farm populations. That comparison
indicated that the demographic data from this
study closely resembled those from the overall
farm population. The sample size was 207 farm
couples.
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Sample Description. The average house-
hold size was 3.6. On average, these households
had two children younger than 18 years of age.
The average age of the husband was 51 years,
and 48 years for the wife. The couples were
married, on average, 26 years, and 94% were in
their first marriage. The average education level
for both farm men and women was high school
graduation. About 20% of men and women had
vocational school training, 11% of men and 19%
of women had some college education, 7% of
men and 9% of women had a bachelor’s degree,
and 2% of men and 3% of women had a gradu-
ate degree. The average size of the farm family
business operations was 472 production acres.
Respondents report having a wide range of com-
modities: 40% had beef cattle, 18% had hogs,
20% had dairy, 6% poultry, 4% sheep, and 77%
of the farm businesses had field crops.
Analysis. To test the applicability of the
Family FIRO model to family businesses, two
statistical models were tested. The first model
examined the direct relationship between inclu-
sion and integration. Because the theory pro-
poses that inclusion and integration are linked
via control, the first model was expected to pro-
duce a statistically nonsignificant relationship
between the two factors of inclusion and inte-
gration. The second model added the control
construct. The theory would be supported if the
second model produced statistically significant
relationships between inclusion and control and
between control and integration.
The two models were tested using structural
equation modeling (SEM) procedures (Joreskog
& Sorbom, 1999). This statistical technique is a
form of path analysis. It is most applicable to
tests requiring the simultaneous estimation of
relationships among several variables. To esti-
mate the relationships, SEM makes use of mul-
tiple regression. However, SEM includes sev-
eral features that make it more powerful than
regression. For example, SEM allows a re-
searcher to test models that include several de-
pendent variables. Also, SEM combines factor
analysis with regression, allowing the researcher
to create latent variables (factors) using several
 Family FIRO Model: An Application to Family Business
measures of concepts that are not directly ob-
servable.
In both SEM models, all variables were latent
variables. Each latent variable was assessed using
two measures—one reported by husbands and
one reported by wives. Each model also specified
both dependent and independent variables. In
the first model, for example, integration served
as a dependent variable and was regressed on
inclusion and couple cohort; inclusion served as
both a dependent and independent variable, and
inclusion, as a dependent variable, was regressed
on couple cohort; and couple cohort served only
as an independent variable. The regression
relationships estimated for the second model are
depicted in Figure 2.
SEM analyses use goodness of fit tests to
determine whether the patterns of variances and
covariances in the data are similar to those speci-
fied by the tested model. A good-fitting model
produces a statistically nonsignificant chi-square
statistic, a goodness of fit index (GFI) between
.9 and 1.00, a critical N value (CN) larger than
200, and a root mean square error of approxima-
tion (RMSEA) less than .05. Additionally, t-val-
ues of 1.96, 2.58, 3.30 or higher were considered
statistically significant at the .05, .01, and .001
levels, respectively, for all model parameters
(Bollen, 1989).
Measures. Each factor specified in the sta-
tistical models was assessed as a latent construct.
The three dimensions of the Family FIRO model
were the latent constructs of the study. Each la-
tent construct had two indicators—one for the
husband’s report and a second for the wife’s re-
port.
To measure the latent construct of inclusion,
husbands and wives independently responded to
nine questions. The first set of seven items asked
the husband or wife to rate his or her involve-
ment in financial decisions. They were asked how
much (1 = not at all to 6 = very much) they were
involved in decisions about (1) how the record
keeping is to be done, (2) whether to borrow
money, (3) which farm operation bills to pay, (4)
whether to buy or sell land, (5) whether to im-
prove the house vs. invest in the business, (6) how
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much money is allocated to family living, and (7)
which family living bills to pay.
The second question asked how often the re-
spondent was involved in managing family finances
(1 = not frequently to 5 = very frequently). In the
third question, husbands and wives reported the
level of the tension and disagreement around fi-
nancial decisions (1 = none at all to 6 = a great deal
of tension). This variable was reverse coded so that
it represented a shared meaning about the finan-
cial role structure. Responses to all nine items
indicating the inclusion construct were standard-
ized and summed. The alpha reliability for the
nine-item measure was .81 for husbands and .85
for wives. The higher the value for the inclusion
construct, the higher the role involvement with
the finances of the family business.
To measure the control dimension of the
Family FIRO model, husbands and wives were
asked seven questions about how they typically
react when they experience events that might lead
to a disagreement. This dimension refers to in-
teractions that relate to influence and power ex-
ertion during family conflict (Doherty et al.,
1991). The responses ranged from “never” (0)
to “very often” (6). The seven questions were:
(1) calmly ask your partner to talk, (2) discuss
the issue with your partner, (3) try to talk about
it constructively, (4) listen to your partner’s feel-
ings, (5) try to cooperate, (6) try to work it out
with your partner, and (7) try to find a positive
solution to the disagreement. The questions
compose the assertive conflict style within Metz’s
The Styles of Conflict Inventory (1993). The higher
the score, the more the husband or wife reported
collaborative behavior being the mode of con-
flict used.
Such an indicator of the control dimension
of the Family FIRO model fits the interpreta-
tion of Doherty, Colangelo, and Hovander
(1991). They indicate mutually shared control
interactions or collaborative control interactions
in which the parties aspire to a balance of influ-
ence rather than unilateral power imposition or
reactive undermining of the others’ power at-
tempt. The mean score for the seven responses
were summed to create the control indicator. Al-
37
Danes, Rueter, Kwon, Doherty
pha reliability for the summed measure was .82
for husbands and .84 for wives. A high value for
the control construct indicated that collabora-
tive conflict behaviors were more often utilized
when there were disagreements.
The integration dimension of the Family
FIRO model reflects the depth of interactions
within family businesses that are characterized
by creativity in problem solving, trust that leads
to a willingness to take risks, and fellowship
among the family members who are part of the
business. A likely outcome of successful integra-
tion interactions is the achievement of family
business goals.
Integration was measured using seven ques-
tions designed to assess the husbands’ and wives’
ratings of their ability to reach family and busi-
ness goals. The questions tap both the interac-
tional qualities of family life and the level of
achievement of family business goals. Responses
ranged from “have achieved very little” (1) to “have
achieved almost entirely” (5). The seven goals that
were rated were: (1) good family income, (2) har-
monious family relationship, (3) balance of family
togetherness and apartness, (4) secure retirement
resources, (5) business profit, (6) long-term viabil-
ity of business, and (7) adequate capital and credit
(Rosenblatt, 1991). The mean scores for the seven
items were summed to create the indicator for in-
tegration. Alpha reliability was .83 for husbands
and .81 for wives. A high value for the integration
construct reflected a high level of achievement of
family business goals.
In addition to the theoretical constructs, each
statistical model included a factor intended to
account for the potential effects of age differences
among the couples. This factor, couple cohort,
was developed because, as described above, the
sample used for these analyses included couples
crossing a wide age range. Conceivably, cohort
effects could influence each factor in the statisti-
cal models. For example, differences in an older
vs. younger couple’s attitudes about gender roles
could affect inclusion, or the length of a couple’s
working relationship could affect control and
integration factors. The couple cohort factor was
assessed using two indicators—one for the
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husband’s age and the second for the wife’s age.
In both statistical models, couple cohort was ex-
pected to be directly related to all other factors
in the model.
Results
Prior to testing the statistical model, several pre-
liminary statistical procedures were conducted to
ensure that the data adhered to SEM assump-
tions. Using the PRELIS procedure in the
LISREL 8.3 program (Joreskog & Sorobom,
1999), it was first determined that the data were
within acceptable limits of multivariate normal-
ity. Each dependent variable was regressed on
each respective independent variable, entering a
quadratic and cubic term into each analysis to
test for nonlinear associations. In each case, only
linear associations were found. Finally, two
couples whose extreme responses to the couple
cohort variable were identified as outliers and
removed from the data.
Theory Testing. Table 1 presents the cor-
relations, means, standard deviations, and ranges
for all study indicators. Strong correlations
within sets of indicators (see Table 1) suggest that
each indicator pair is fairly connected and suit-
able for measuring the latent concept. The cor-
relations across indicator pairs suggest initial sup-
port for the theory. According to the Family
FIRO model, inclusion should be directly related
to control which, in turn, would be directly re-
lated to integration. However, inclusion should
not form a direct relationship with integration.
As can be seen in Table 1, the correlations among
the inclusion and control indicators are statisti-
cally significant, as are the correlations among
the control and integration indicators. However,
the correlations among the inclusion and inte-
gration indicators are not statistically significant.
Figure 2 presents the results of the testing
of the full theoretical model. Although not de-
picted in Figure 2, the theoretical model was
tested controlling for couple cohort. As expected,
couple cohort was negatively associated with in-
clusion (b = -.21, b = -9.34, t = -2.04), indicating
that older couples report less family business in-
clusion. Also, as expected, couple cohort influ-
 Family FIRO Model: An Application to Family Business

Table 1. Correlations, Means, Standard Deviations, and Ranges for All Study
Indicators
1 2 3 4 5 6 7 8
Inclusion
1. Husband
2. Wife .27**

Control
3. Husband .15* .12
4. Wife .14* .21** .22**

Integration
5. Husband .11 .07 .31** .11
6. Wife .08 .14* .16* .15* .64**

Couple Cohort
7. Husband -.16* -.02 .02 -.08 .33** .26**
8. Wife -.17* -.02 .01 -.07 .32** .24** .96**

Mean -.05 .05 3.68 3.76 3.51 3.48 50.40 47.90

Standard Deviation 5.66 5.93 .53
Range — High -18.32 -15.55 2.17
Lo +8.62 8.60 5.00
*p< .05
**p< .01
enced the level of family business integration such
that older couples reported greater integration.
Couple cohort did not form a statistically sig-
nificant relationship with control.
As shown in Figure 2, the findings provide
support for the postulates of the Family FIRO
model. As expected, inclusion was linked to in-
tegration through its direct association with con-
trol (b = .52, b = .04, t = 2.08), lending support
for Hypothesis 1. High levels of inclusion were
related to high levels of control; when there was
high involvement in financial decisions and there
was shared meaning about them, disagreements
were characterized by more assertive behaviors.
Support was also found for Hypothesis 2,
which states that high levels of control are posi-
tively related to high levels of integration. It
was found that control was directly related to
integration (b = .51, b = 1.26, t = 1.97). Dis-
agreements characterized by a higher number
of assertive, constructive conflict behaviors were
related to a higher level of achievement of fam-
.57 .81 .82 11.67 11.64
2.43 1.57 1.29 29 25
5.00 5.00 5.00 77 77
ily business goals.
Furthermore, the findings of the study sup-
port Hypothesis 3. This hypothesis states that
high levels of inclusion positively and indirectly
relate to high levels of integration via control.
To test this hypothesis, it was necessary to per-
form a preliminary step and then compare it to
the model depicted in Figure 2. That step as-
sessed the direct association between inclusion
and integration using SEM. This model speci-
fied three factors: inclusion, integration, and
couple cohort. In support of the theory, the ex-
tent to which members feel included in the fam-
ily business was not associated with the business’s
level of integration (b = .23, b = .04, t = 1.29).
The measures of model fit shown in Figure
2 also support the representativeness of the theo-
retical model for the data. In all cases, the fit
measures suggest a good fit of the model for the
data, indicating that the theoretical model likely
represents the experiences of the family business
owners in this sample. The model has produced

39

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Danes, Rueter, Kwon, Doherty
Figure 2. Complete SEM Model Testing FIRO
Husbands Wives
.66 .41
.01 (.00, t = .04)
Inclusion
.52 (.04, t = 2.08)
Control
R2 = .26
.57
Husbands
a statistically nonsignificant chi-square (16.17),
a GFI between .9 and 1.00 (.98), a CN larger
than 200 (372), and an RMSEA less than .05
(.027) (Bollen, 1989).
Discussion
This study applied the Family FIRO model to
family businesses. It is the first empirical test of
the theory postulate about the developmental
sequence of the three dimensions of the theory:
inclusion, control, and integration. The find-
ings of this study support the model. They indi-
cate that both a sense of inclusion in a family
business and the manner in which control issues
are managed have important influences on the
integration of the family business. Specifically,
effective control appears to have the most direct
effect on integration (family business success).
However, because inclusion predicts the level of
control, effective control might not be diminished
without adequate levels of inclusion.
The study measure of inclusion captured the
40
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Husbands Wives
.92 .69
Integration
R2 = .39
.51 (1.26, t = 1.97)
.38
x2(14) = 16.17 (p = .30)
Wives GFI = .98 AGFI = .95
CFI = 1.00 RMSEA = .027
CN = 372.00 N = 207
level of mutual involvement in financial deci-
sion making for the family business. The con-
trol indicators captured the collaborative dimen-
sion of control. The integration measure cap-
tured both the interactional qualities of family
life and achievement of family business goals—
potential outcomes resulting from sound inclu-
sion and control. The results suggest that mu-
tual involvement in financial decisions of the
family business leads to more collaborative
modes of handling disagreements about finances
and, in this order of influence, create greater
levels of sustainability for the family business.
Implications for Research on Family
Businesses. The Sustainable Family Business
model proposed by Stafford, Duncan, Danes, and
Winter (1999) is a general theory that provides
the “big picture” in guiding research on family
businesses. One of its key features is its atten-
tion to the interface between the family and the
business systems. Many changes within the fam-
ily system occur at this interface. The Family
 Family FIRO Model: An Application to Family Business
FIRO model provides a further guide to under-
standing not only the interactional process that
occurs in times of change but also the develop-
mental sequence that is critical in addressing in-
evitable tensions and disagreements that tend to
arise during these times of change.
This study did not test every aspect of the
Family FIRO model. It focused on the struc-
tural category of inclusion and the collaborative
category of control. Additional research could
explore measures of the other categories of each
dimension. Also, this is the first empirical test of
the application of the Family FIRO model to fam-
ily businesses. Accordingly, these are preliminary
findings. Similar testing needs to be performed
on other types of family businesses.
Implications for Working with Family
Businesses. The Family FIRO model originally
was proposed as an assessment and treatment
model for therapists to use with families. How-
ever, it can also serve as a structure for educators
and consultants to assess the personal dynamics
occurring around change within family busi-
nesses. The structure also can serve as a prob-
lem-solving tool to assist the leaders of family
businesses in planning for change. The business
will remain more resilient in times of change if
leaders understand and plan for reassessing pat-
terns of inclusion when a change is initiated. If
those patterns haven’t been adjusted and prob-
lems arise in the control dimension, the model
provides an understanding that those conflicts
need to be tackled by acknowledging the devel-
opmental nature of the model. That means that
if the leader goes back to the dimension of inclu-
sion and addresses the problems in that dimen-
sion, then the probability of the control issues
subsiding will increase.
The findings from this study offer practitio-
ners a theory-based approach to working with
the complex dynamics of family businesses. Typi-
cally, a family business that requests outside as-
sistance is dealing with a range of family prob-
lems in the inclusion and control domains. But
what often stands out is the level of conflict/con-
trol over specific content issues, such as financial
expenditure. It is tempting for the consultant to
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focus on the particular control issues and miss
the underlying inclusion issue that may be feed-
ing it.
For example, a husband and wife might be
embroiled in a disagreement about expanding the
family business. But the underlying issue might
be the question of who has more authority to
make the decision. If the wife does not feel that
she has a full voice, she may assert her position
more strongly or disagreeably than she would
otherwise; in the same way, if the husband feels
that his legitimate leadership is being threatened,
he may be more stubborn than otherwise. The
result can be a stalemate and poorer family busi-
ness functioning. The consultant using the FIRO
models would be wise to begin by having each
member of the couple air his or her perceptions
and desires about who should participate, and
how, in the decision-making process. Achieving
clarity at this point, which may take repeated
conversations, can often lead to more collabora-
tive decision making and better outcomes. If the
consultant concentrates on the conflict (control
dimension of the Family FIRO model) rather
than addresses the issues representative of the
inclusion dimension, then planning for change
will most likely not occur (Doherty et al., 1991;
Kaye, 1991). In the long-term, an unaddressed
conflict could not only stalemate a decision that
could affect the health of the business—over time
it could mire the system (Ward, 1997).
In general, addressing inclusion issues fo-
cuses on clarifying who is in or out of various
family decisions and who has responsibility in
different areas. Rather than getting immediately
into the family business content, the consultant
should first ask the family to step back and re-
view their understanding of who the players are
in the decision-making process and what their
roles and responsibilities are. If there are dis-
crepancies here, the consultant should focus first
on bringing clarity to and arriving at consensus
on these inclusion issues and then proceed to the
content of the control struggle.
Determining Level of Involvement. Busi-
ness consultants addressing issues of conflict
within family businesses should be aware of such
41
Danes, Rueter, Kwon, Doherty
critical factors as their own (a) knowledge base,
(b) personal development, and (c) skill base. In
1995, Doherty developed a guide containing five
levels of family involvement to help profession-
als determine their readiness for that involve-
ment. The five levels of involvement are (1) in-
stitution centered, (2) information and collabo-
ration, (3) feelings and support, (4) brief, focused
intervention, and (5) family therapy.
Depending on their skills, most business con-
sultants should be operating at Level 2, with some
being able to be involved at Level 3. A business
consultant’s readiness for involvement in Level
2 includes: knowledge of both financial and busi-
ness content area, personal openness to engag-
ing families in collaborative ways, and a series of
skills, including eliciting pertinent information
through effective questioning, listening, commu-
nication, and problem solving.
Consultant readiness for Level 3 involve-
ment includes: knowledge of family development
issues and individual and family reactions to
stress, personal awareness of one’s own feelings
in relation to family members, and the ability to
tolerate family members’ feelings without flee-
ing or trying to fix them. Few consultants have
sufficient readiness to go beyond Level 3, and it
is at this point that additional training may be
needed or referrals to therapists should be made.
Limitations of the Study. The findings of
the study should be interpreted in light of their
limitations. First, the measures used to assess
each category of the Family FIRO model were
not comprehensive enough to include all subcat-
egories. The measures of inclusion were mostly
about structure and did not include connected-
ness and shared meaning. The control dimen-
sion was assessed by the collaborative subcategory
only. Second, although the Family FIRO model
was proposed to apply family process over time,
the cross-sectional design of the present study
limited the examination of the family business
process over time. The model needs to be tested
longitudinally in the future. Third, the measures
in the study were self-reports. The findings were
stronger because of the use of multiple informants
(both husband and wife within the family busi-
42
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ness) rather than only one respondent. Adding
third-party reports or observational methods
would further strengthen the findings.
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Sharon M. Danes is a professor at the University of Minnesota, St. Paul. Martha A. Rueter is an
assistant professor at the University of Minnesota, St. Paul. Hee-Kyung Kwon is a graduate student
at the University of Minnesota, St. Paul. William Doherty is a professor at the University of Minne-
sota, St. Paul.

This material is based on work supported by the Cooperative State Research, Education, and Extension Service,
U.S. Department of Agriculture under Agreement No. 95-37401-1820. Any opinion, findings, conclusions,
or recommendations expressed in this publication are those of the authors and do not necessarily reflect the view
of the U.S. Department of Agriculture.

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