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Boundaries and the Functioning of Family and
Business Systems
Zanita Zody
Douglas Sprenkle
Shelley MacDermid
Holly Schrank
Purdue University
ABSTRACT: The purposes of the present study were to: (1) examine connections be-
tween performance success and the boundaries between families and the businesses they
own and (2) explore whether boundary-performance links were mediated by satisfaction.
Tests of the mediation hypothesis revealed that family satisfaction partially mediated
connections between boundaries and family functioning. Business satisfaction fully
mediated connections between boundary characteristics and business strengths, but did
not mediate the relationship between boundary characteristics and cash flow problems.
Although previous literature suggests that permeable boundaries (i.e. enmeshment) are
especially problematic for family firms, this appears to be only partially true.
KEY WORDS: boundaries; disengagement; enmeshment; family business; spillover.
A common thread found in much of the literature on family firms is
what will be collectively referred to in this paper as the boundary
hypothesis. Structural family therapy, which is based on systems
theory, suggests that boundaries regulate the closeness and proximity
between systems (Minuchin, 1974). The same idea is a building block
for much of the literature and emerging theories on family businesses.
The boundary hypothesis suggests that many of the unique challenges
Zanita Zody, Department of Child Development and Family Studies, Purdue Uni-
versity, 1200 W. State Street, West Lafayette, IN 47907-2055, USA; e-mail:
zzody@indy.rr.net.
Douglas Sprenkle, Department of Child Development and Family Studies, Purdue
University, 1200 W. State Street, West Lafayette, IN 47907-2055, USA; e-mail:
sprenkled@cfs.purdue.edu.
Shelley MacDermid, Department of Child Development and Family Studies, Purdue
University, 1200 W. State Street, West Lafayette, IN 47907-2055, USA; e-mail:
shelley@purdue.edu.
Holly Schrank,Department of Consumer Sciences & Retailing, Purdue University, 812
W. State Street, West Lafayette, IN 47907-1262, USA; e-mail: schrankh@purdue.edu.
Journal of Family and Economic Issues, Vol. 27(2), Summer 2006 Ó2006 Springer Science+Business Media, Inc. 185
DOI: 10.1007/s10834-006-9017-8
facing family owned firms flow from the overlap between the systems
that comprise them and that the boundaries between the systems
function to regulate that overlap (e.g. Bork, Jaffe, Lane, Dashew, &
Heisler, 1996; Davis & Stern, 1996). Based on anecdotal evidence,
family business researchers and consultants have also suggested that
extremes along the boundary continuum (which Minuchin describes as
being either rigid or diffuse) may be associated with adverse conse-
quences for family business owners (e.g. Davis & Stern, 1996; Mar-
shack, 1998). Applied to the family firm, a diffuse boundary might
suggest family dynamics inappropriately encroaching on the running
of the business. A rigid boundary might suggest a ‘‘Berlin Wall’’ that
deprives the business of the family’s positive values. In contrast, Al-
drich and Cliff (2003) argue that family and business should be viewed
as inextricably entwined and studied together.
Although much of the literature on family businesses discusses the
role of extreme boundaries, systems theorists in the family domain
have proposed that satisfaction with family boundaries may mediate
the relationship between boundaries and various family outcomes (e.g.
Olson & Wilson, 1992). Therefore, while extreme boundaries may
perpetuate adverse consequences in some instances, subjective
expectations regarding boundaries may ameliorate those conse-
quences in others (Masuo, Fong, Yanagida, & Cabal, 2001). Despite
their prominence, a review of the family business literature revealed
no direct tests of these ideas about boundaries. Clearly, an empirical
understanding of the relationship between boundaries, satisfaction,
and the performance of both the business and the family is of signif-
icant practical and theoretical importance.
Boundaries and Family Businesses
Minuchin (1974) suggested that ideal family functioning occurs
when boundaries are clear, permitting a balance of connection and
autonomy. ‘‘Like the membrane of a cell, boundaries need to be strong
enough to protect the healthy development’’ of the system while still
allowing a constant flow in and out of that system (Colapinto, 1991).
Applying these ideas to the family firm, Bork and colleagues (1996)
suggest that one of the keys to family business success is the estab-
lishment of clear boundaries. By establishing clear boundaries, the
authors suggest that families may learn to differentiate between
family and business sub-systems.
A small body of literature on the use of resources by family busi-
nesses offers good reasons for clear financial boundaries between the
186 Journal of Family and Economic Issues
systems. For example, household financial assets are more often used
to support the business than the reverse, placing disproportionate
financial burdens on family members (e.g. Haynes, Walker, Rowe, &
Hong, 1999). Families often provide both paid and unpaid workers to
their businesses who may or may not be the best-qualified individuals
for the positions, thus impeding the financial success of the business.
Anecdotal evidence suggests that consultants working with families
in business suggest that they should strengthen not just the financial
but also the social and interpersonal boundaries between the subsys-
tems (e.g. Marshack, 1998; Rosenblatt, de Mik, Anderson, & Johnson,
1985). This practice seems to move the family business more toward
the disengaged side of the continuum. For instance, Rosenblatt and
colleagues suggest that consultants may want to help family members
see the benefits of establishing an office outside the home or observing
strict rules about the use of a home-based office, or only discussing
business issues at work and family issues at home. Marshack (1998)
describes a ‘‘healthy’’ system as one with firm boundaries, where
family members never talk about work at home and discuss business
issues only at the office. Little attention is given to the possibility that
some families may desire or thrive on more fluid interpersonal
boundaries, freely discussing home and work issues throughout the
day no matter what the location.
As mentioned above, family business literature seems to advocate
rigid boundaries, keeping the two systems as separate as possible in
order to avoid the possibility that family problems will affect business
performance at some point in the future (Weigel & Ballard-Reisch,
1997). Most of this literature stems from work with family firm owners
to resolve issues which have arisen in family firms such as nepotism,
family members who take advantage of their employment in the firm,
and management transition or ownership transfer (commonly referred
to as ‘‘succession’’). In contrast, work-life researchers, who focus on the
perspectives of employees rather than owners, have long argued that
greater flexibility on the part of business is needed in order for
employees to balance their sometimes conflicting work and family
responsibilities. Work-life scholars have advocated a variety of flexible
boundary strategies including flex time, job-sharing, child-care, and
family leave as possible means to enable employees to manage their
family responsibilities as well as contribute effectively to their jobs
(Roehling, Roehling, & Moen, 2001).
One primary difference in these two bodies of literature is the
underlying fact that owners have business property that has value,
while employees generally do not own part of the company in which they
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 187
work. Obviously business property adds complications when it comes to
ownership and succession. However, from an owner’s viewpoint, is
there a difference in the success of the business or the family when
boundaries are rigid compared to when they are permeable or diffuse?
The present study elucidates these issues by examining the rela-
tionship between boundaries and system performance in both the
business and the family systems. Satisfaction will also be examined for
its potential as a mediating variable in these relationships. In addi-
tion, because there are very few assessment tools designed specifically
for use with family businesses, several instruments that were de-
signed for families and have established reliability and validity will be
adapted for use in the current study. Doing so should contribute to the
field by offering a preliminary test of their utility in the field of family
business research and consultation.
Boundaries
The goals and objectives of the family and the business systems are
generally quite different (Weigel & Ballard-Reisch, 1997). Problems
often arise when these objectives conflict and are forced into compe-
tition with one another. Following this logic, these objectives may
become intermingled when ambiguity characterizes the boundaries
that separate the family and the business. In fact, at least one author
has suggested that one of the most common problems for family firms
is the establishment of boundaries that are too diffuse, resulting in the
enmeshment of the systems (Bork et al., 1996).
Diuse Boundaries: Enmeshment
When boundaries are diffuse, systems become enmeshed and their
respective needs and values become difficult to distinguish (Minuchin,
1974). For families that own or manage businesses, this may result in
business decisions that are made in accordance with what is perceived
as best for the family or vice versa. Probably the most commonly ob-
served application of this is nepotism (Vinton, 1998). For instance, when
family values guide business practices, parents may bring their chil-
dren into the business and, without intending to, create career oppor-
tunities for their adult children for which they would not have qualified
in the open market or might not otherwise have chosen for themselves.
The consequences of enmeshment can also be seen when conflicts
carry over from one system to the other. For example, an argument
188 Journal of Family and Economic Issues
between family members at home in the morning may permeate the
entire workday. Other employees or family members may pick up on
the tension and feel obligated to pick sides, act as if nothing is wrong,
or try to smooth over the conflict (Kaslow & Kaslow, 1992). Diffuse
boundaries may result in an unpleasant work environment in which
private matters become public and interfere with business matters.
Alternatively, if work-related disputes are carried over into the family
system, the caring and mutual respect that may have led these indi-
viduals to go into business together can slowly erode, with ‘‘family
feuds’’ erupting as a result (Kaslow & Kaslow, 1992). Therefore, when
boundaries are diffuse, the needs and objectives of the two systems
may become inextricably intertwined.
Rigid Boundaries: Disengagement
Although anecdotal evidence suggests that diffuse boundaries are
more common than their opposite counterpart, problems can also
emerge when the boundaries separating the systems become too rigid
(e.g. Davis & Stern, 1996). As a result, business decisions may be
based almost entirely on the best interests of the firm and family
decisions made without regard to the business. Each system becomes
primarily concerned with its own wants and needs (Minuchin, 1974).
Conflict may emerge when those needs are treated as though they are
in competition with one another. For instance, family members in a
family business that adheres rigidly to policies regarding work
schedules and vacations may feel qualities such as flexibility are all
but lost.
Dierentiation
Without clear boundaries, two systems can become enmeshed. If
driven too far into separation, however, they might become disen-
gaged. When appropriately clear boundaries are established, differ-
entiation can occur. Differentiation, the cornerstone of Murray
Bowen’s theory of therapy, is a process of separating oneself from one’s
family (paradoxically while remaining connected) and developing an
autonomous identity (Bowen, 1978; Kerr & Bowen, 1988). Kerr and
Bowen (1988) have defined differentiation as the interplay between
togetherness and individuality. The process of differentiation there-
fore creates a balance in which togetherness and separateness can
exist in harmony with one another (Kerr & Bowen, 1988; Wiseman,
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 189
1996). It allows individuals the ‘‘freedom to agree, disagree, or just
think differently’’ (Rosenblatt et al., 1985, p. 49).
When applied to the family firm, differentiation describes the ability
of an individual to define his or her own life goals and values apart
from the business. Further, it is the ability to say ‘‘no’’ to the business
while still staying connected to it (Wiseman, 1996). Several
researchers have suggested that the process of differentiation may be
more difficult for members of a family firm than it is for individuals
whose vocations are distinct from the family because of the overlap or
enmeshment between the two systems (Kepner, 1983; Swogger,
Johnson, & Post, 1988).
When enmeshment occurs, family members may feel a great deal of
‘‘togetherness pressure’’ from the family and the business, which they
may find difficult to balance with the individual needs of their per-
sonal subsystem. In a typical business, individual employees answer
to their supervisors and leave their work at the office when returning
home. In some family firms, however, employees are not only
answering to their supervisor but simultaneously to their parents,
spouses, or other family members. Disappointment at work can per-
meate the household. Consequently, members of the business may
perceive more pressure to perform and succeed. Because of this, they
may care enormously about the thoughts, opinions, actions, or well
being of those people with whom they live and work. In the process,
they may neglect their own needs or fail to distinguish them from the
needs of others.
When boundaries are characterized by rigidity, family members
may, on the other hand, become preoccupied with their own wants and
needs. Within these systems, the threshold for stress is enormous and
a great deal is often required before members mobilize mutual support
for one another. Because of this, family members may feel isolated and
alone (Minuchin, 1974). In contrast to diffuse and rigid boundaries,
clear boundaries have obvious intuitive advantages for family busi-
nesses. In short, by promoting differentiation, they may thwart many
of the potential sources of conflict seen in these firms.
Work-to-Home and Home-to-Work Conflict
Huang, Hammer, Neal, & Perrin (2004) examined work-to-home
and home-to-work conflict among couples where at least one family
member worked full time, they had children at home and they were
providing elder care. They utilized the definition of conflict proposed
190 Journal of Family and Economic Issues
by Kahn, Wolfe, Quinn, Snoek and Rosenthal (1964), the ‘‘simulta-
neous occurrence of two or more sets of pressures such that compliance
with one would make more difficult compliance with the other’’ (p. 19).
Job-family conflict was cited as a source of stress that could have
negative effects on either home or job, or both. The results of this
stress would appear in the form of absenteeism, lateness to work,
intention to quit one’s job, and poor work performance. One of the
conclusions the authors drew from their study was that organization
supports that decrease home-to-work conflict will have benefits for
family life in the form of less family distress and more family satis-
faction. Further, efforts to decrease work-to-family conflict will have
the benefit of decreasing home-to-work conflict over time. Our broad
interpretation of these conclusions is that boundaries that are per-
meable may benefit both the business and the family, reduce conflict,
increase satisfaction and reduce stress.
Missing Links
The boundary construct has not been operationalized within the
family firm literature or the consultation field, there are no known
measures designed to assess this potentially significant component of
family businesses. The lack of investigation of the boundary hypoth-
esis represents a fundamental void in the literature. In addition, al-
though satisfaction has been hypothesized to be a mediating variable
in the relationship between boundaries and family functioning (Olson
& Wilson, 1992), this concept has not been explored in the family
business literature. An investigation of the presence and impact of the
boundary construct and its relationship to satisfaction and functioning
in the family firm is warranted. A diagram of the relationships to be
tested appears in Figure 1.
Methods
The data for this project were collected as part of a study of 187
family businesses in a Midwestern state. The interdisciplinary re-
search team was composed of faculty and staff with backgrounds and
expertise in the study of the various systems that comprise the family
firm. In its entirety, data collection for the research project was di-
vided into three phases. For each phase, a questionnaire was mailed to
potential family business owners throughout the state. These phases
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 191
were designed to assess the business, the family, and the interaction of
the business and the family, respectively.
Measures
All but one of the family measures used in this study consisted of
well-established subscales containing multiple items. Since these
measures are among the widely used and well-validated indicators of
systems functioning in the family literature (Fischer & Corcoran,
1994; Olson, 1999) and tap generic systems dimensions like ‘‘cohesion’’
and ‘‘adaptability’’ (Olson et al., 1989) it seemed reasonable that they
would also be applicable to the functioning of family business systems.
(See Table 1 for a direct comparison of sample items). Business items
were examined by all members of the research team to make sure that
they were parallel in meaning to the family items. Although the family
business measures, adapted from the Family Adaptability and Cohe-
sion Scale and related family assessment instruments, are new to this
study. However, since they directly parallel the family scale items, and
center on well-validated generic systems properties, a case can be
made for their face and content validity. While construct validity will
only be established through future research, the fact that these
adapted scales are internally consistent (see Table 2) is encouraging.
A limitation of this study, which is typical of much family research
(Fisher, 1982), is that systemic properties are based on the perception
of one individual respondent.
Individual
Boundaries
Family/Business
Boundaries
Family/Business
Satisfaction
Family/Business
Functioning
FIGURE 1
Hypothesized Relationships
192 Journal of Family and Economic Issues
TABLE 1
Original Olson Family Scale Items and their Adapted Family
Business Versions
Original item Adapted item
Family members rarely depend on each
other Family members in the business rarely
depend on each other
We feel too connected to each other We feel too connected to the business
It is important to follow rules in our
family It is important to follow rules in our
business
We need more rules in our family We need more policies and rules in our
business
We share similar values and beliefs as a
family We share similar values and beliefs
about the family business
There are few unresolved conflicts in our
family There are few unresolved conflicts in our
business
Family members express affection to
each other Family members employed in the
business express affection to each other
Family members discuss their beliefs
and ideas with each other Family members discuss their beliefs
and ideas about the business with each
other
How satisfied are you with your
marriage? How satisfied are you with your family
business?
TABLE 2
Description of Measures
Number of
items Mean
Possible
range (raw)
Observed
range (raw)
Cronbach’s
alpha
Family boundaries
Enmeshment 6 1.4 1–5 1.0–3.5 .78
Disengagement 6 1.6 1–5 1.0–4.7 .86
Individual boundaries
Work-to-home
negative spillover
5 3.2 1–5 1.4–5.0 .88
Home-to-work
negative spillover
5 2.1 1–5 1.0–5.0 .90
Business boundaries
Enmeshment 6 1.9 1–5 1.0–4.5 .79
Disengagement 6 1.7 1–5 1.0–4.5 .82
Satisfaction
Family satisfaction 10 3.5 1–5 1.0–4.8 .94
Business satisfaction 10 3.7 1–5 1.0–4.8 .90
Family functioning
Family strengths 12 3.9 1–5 1.4–5.0 .95
Business functioning
Business strengths 12 4.0 1–5 1.0–5.0 .94
Business performance 1 3.9 1–5 1.0–5.0 na
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 193
All items used a Likert answer format with five answer options.
Cronbach’s alphas for multi-item scales all were acceptable, ranging
from .78 to .95. Table 2 summarizes information about all measures.
For all multi-item scales, mean scores were used for subsequent
analyses.
Individual boundaries were measured by 10 items from the 1997
National Study of the Changing Workforce, divided into two subscales
(Bond, Galinsky, & Swanberg, 1998). The first subscale, labeled work-
to-home negative spillover, was composed of five items designed to
assess the frequency with which the business has a negative impact on
the respondent’s personal life. The second subscale, home-to-work
negative spillover, consisted of five items designed to assess the fre-
quency with which respondents reported their families or personal
lives negatively affected their job productivity. For both subscales,
high scores suggested more permeable boundaries.
Family boundaries were assessed by the 12 items that make up the
family cohesion subscale of FACES IV (Olson, Tiesel, Gorall, & Fit-
terer, 1996). This subscale is further divided into two sets of six items
written to assess the extremes of enmeshment and disengagement
within the family. Conceptually, enmeshment can be thought of as the
outcome of permeable boundaries whereas disengagement is the out-
come of those that are rigid. Answer options ranged from ‘‘does not
describe our family at all’’ to ‘‘describes our family very well.’’ High
scores indicated permeable or rigid boundaries, respectively for
enmeshment and disengagement.
Business boundaries were adapted from the 12 items that make up
the family cohesion subscale of FACES IV. Each item from the family
cohesion subscale was reworded to reflect cohesion within the family
business. Both scales were suggestive of within-system boundaries
such that high scores on the enmeshed and disengaged scales indi-
cated diuse and rigid boundaries within the business system. The
business boundary subscales were scored in the same manner as the
family boundary subscales.
Family satisfaction was operationalized using the family satisfac-
tion scale from the Family Assessment Package (Olson & Wilson,
1992). The instrument was designed to assess an individual’s satis-
faction with the constructs assessed in the scales that comprise the
Circumplex Model. Thus, this measure provides a specific assessment
of boundary satisfaction as well as a more general assessment of
family satisfaction. Very high scores suggest that respondents ‘‘feel
positive and happy most of the time. Life is enjoyable, interesting and
free of tension...the future looks promising.’’ On the other hand, very
194 Journal of Family and Economic Issues
low scores suggest that respondents ‘‘feel unhappy about life and often
experience pressures and problems.’’
The business satisfaction measure was adapted from Olson & Wil-
son’s (1992) family satisfaction scale for the purpose of this study.
Each statement was reworded to reflect satisfaction in the business
context. The response options for the original instrument range from
‘‘very dissatisfied’’ to ‘‘very satisfied.’’ In the version adapted for this
study, the response ‘‘does not apply’’ was added to the range of po-
tential answers because pilot testing of the instrument suggested that
these items might not apply to all family business owners. Responses
indicating that the item ‘‘does not apply’’ were not included in the
calculation of the scale score for this measure.
Family functioning was assessed using the family strengths scale
from the Family Assessment Package (Olson et al., 1996). This scale
was developed in an effort to operationalize healthy family function-
ing. The family strengths scale used in the current study consisted of
12 items where answer options range from ‘‘does not describe our
family at all’’ to ‘‘describes our family very well.’’ Scale scores were
calculated by summing participant respondents on each of the 12
items. Higher scores indicated better perceived functioning of the
family.
Two indicators of business functioning were used. The first was the
business strengths scale, which was an adaptation of the Olson et al.
(1996) family strengths scale. This item was designed to tap subjective
and intangible business strengths. Each of the 12 items from the ori-
ginal scale was reworded to reflect strengths within the business, with
answer options ranging from ‘‘does not describe our business at all’’ to
‘‘describes our business very well.’’ High scores indicated better re-
ported functioning.
The second indicator of business functioning was a single item cre-
ated by the research team. The item was designed to assess percep-
tions of the problems associated with business finances by asking
respondents to indicate the frequency with which there were cash flow
problems in the business during the preceding year. Answer options
ranged from ‘‘every week’’ to ‘‘never.’’
Examination of the distributions of scale scores revealed unac-
ceptably high levels of skewness for all variables except work-to-
home negative spillover and the satisfaction variables. The affected
scale scores were transformed to bring skewness to acceptable levels.
A square root transformation was used for business enmeshment
and cash flow problems, a log transform was used for all other
variables.
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 195
Participants
For the purposes of this study, a family business was defined as a
business in which at least one member of the family worked as his or
her primary source of livelihood and in which at least one other family
member was actively involved, whether paid or unpaid. To qualify for
participation, each respondent had to be an active owner of the busi-
ness. This definition is clearly more restrictive than others (e.g. Win-
ter, Fitzgerald, Heck, Haynes, & Danes, 1998) in that it requires the
active involvement of at least one other family member.
Compiling a sampling frame of family businesses is always chal-
lenging, and especially so when the goal is to locate businesses
involving multiple family members. One common strategy is to ask
randomly-dialed householders if they are involved in a family busi-
ness, but this strategy yields a plethora of home-based one-person
businesses which were not the focus of this study. As a result, we
compiled our own list of approximately 1000 businesses in our state.
Telephone directories, magazines, newspapers, and personal networks
were used to compile a list of 985 businesses in all regions of a mid-
western state that were thought or known to be family-owned, based
on their advertising or personal referrals.
Data were gathered via a survey administered in three parts be-
tween June and November 1999. The survey was sent to each of these
businesses. In the first wave, 187 (19%) businesses responded. In
Wave 2, 139 (74% of Wave 1) responded, and in Wave 3, 104 (75% of
Wave 2) responded. This rate of response compares favorably to pre-
vious family business studies (i.e. the response rates in the most re-
cent Mass Mutual studies were 3 and 10.3% in 2002 and 1997,
respectively) (Mass Mutual Financial Group, 1997, 2003).
To assess representativeness, we compared the sample in the
present study to that of a national random sample of family businesses
(Winter et al., 1998). The national study used a more inclusive defi-
nition of family businesses than the present study, specifically because
it included one-person businesses. As a result, we expected that the
businesses in the present study would be older and larger, and this
turned out to be true, 89% of the businesses in the present study were
founded at least 10 years ago compared to 53% in the national sample
and 58% of the businesses in the present study employed more than 10
people compared to 14% in the national sample. The respondents
themselves, however—the business owners/managers—were quite
similar: in both samples, over 70% were male and over 70% had
completed education beyond high school.
196 Journal of Family and Economic Issues
Of the 187 respondents to phase one, 147 (78.6%) were male and 40
(21.4%) were female. The average age was 52.40 (SD=11.33). A
majority of the respondents were married (n=165, 88.2%). One
respondent (0.5%) did not finish high school, 41 (21.9%) obtained a
high school diploma, 43 (23.0%) completed some college work, 58
(31.0%) completed college, 16 (8.6%) completed some graduate work,
and 28 (15.0%) obtained a graduate degree. Respondents who had
been in business longer were significantly more likely to complete the
three phases of the present study, this was the only dierence from
those who dropped out.
Most of the respondents (n=107, 57.2%) were first generation own-
ers, 53 (28.3%) were second generation, 20 (10.7%) were third gener-
ation, and 7 (3.7%) were fourth generation or more. The mean
proportion of the family business that was owned by the respondent
was 75% (SD=30). The average participant was 27.17 years of age
when s/he started working in the business (ME=25.00, SD=11.81).
Of the 187 respondents, 176 (94.1%) considered their business to be
a family venture. This question was asked to obtain the respondent’s
subjective opinion about the family nature of his or her business. The
oldest business was begun in 1837 and one was started during 1999,
the year data were collected. The mean year in which business began
was 1962.
The average number of employees in the business was 56.75
(SD=211.37), although there was a great deal of variability in terms of
the total number of employees working in the business (the median
was only 12). A few very large firms participated in the study while a
majority of the businesses were relatively small. Similar dierences
were also observed when the number of employees was assessed in
terms of full- and part-time status.
Analyses and Results
Data analyses consisted of a series of regressions designed to test for
the presence of direct relationships between boundaries and func-
tioning, as well as indirect relationships mediated by satisfaction. In
order to test the mediation hypothesis, Baron and Kenny (1986) sug-
gest that a series of standard regression models be estimated. First,
the mediator should be regressed on the predictor variables. A con-
dition for mediation is that the relationship between the predictor and
the mediator is statistically significant in this equation. Next, the
outcome variable should be regressed on the predictor variables. As in
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 197
the prior equation, the relationship between the predictor and the
outcome should be significant. Finally, the outcome variable should be
regressed on both the predictors and the mediator. In this equation,
the relationship between the predictor and the outcome should be
weaker than in the first equation. If the relationship between the
predictor and the criterion is no longer significant, perfect (as opposed
to partial) mediation is said to exist (Baron & Kenny, 1986).
Model 1: Family Strengths
To test this model, family satisfaction (the hypothesized mediator)
was regressed on the four predictor variables, two indicators of indi-
vidual boundaries and two indicators of family boundaries. These re-
sults are shown in Table 3. The boundary variables accounted for a
statistically significant 37.4% of the variation in family satisfaction.
Standardized regression coefficients were negative and statistically
significant for one indicator of family boundaries (disengagement) and
one indicator of individual boundaries (home-to-work negative spill-
over). Based on non-significant regression coefficients in this analysis,
it would not be possible for family satisfaction to mediate the rela-
tionship between the outcome variable of family strengths and the
predictor variables of family enmeshment or individual work-to-home
negative spillover.
Next, the measure of family strengths (the outcome variable) was
regressed on the predictor variables with and without family satis-
faction, these results are shown in Table 4. Both analyses accounted
for significant proportions of the variation in family strengths,
TABLE 3
Relationships Between Predictors and Mediators
Predictor variables
(boundary subscales)
Mediator: family
satisfaction
Mediator: business
satisfaction
bb
Enmeshment .068 ).023
Disengagement ).607
***
).341
***
Work-to-home negative spillover ).048 ).020
Home-to-work negative spillover ).172
***
).407
***
F-test 21.7
***
9.3
***
Adjusted R
2
.374 .272
n139 90
*
p<.05,
**
p<.01,
***
p<.001.
198 Journal of Family and Economic Issues
TABLE 4
Relationships Between Predictors and Outcomes, With and Without Mediator
Predictor variables
boundary subscales
Outcome variable: family strengths
Model 1
Outcome variable: business
strengths Model 2
Outcome variable: cash flow prob-
lems Model 3
Without mediator With mediator Without mediator With mediator Without mediator With mediator
bbbbbb
Enmeshment
a
.047 .009 ).144 ).115 .223
*
.205
Disengagement
a
).646
***
).313
***
).310
***
).184 ).082 ).062
Work-to-home
negative spillover
.032 .058 .018 .053 .177 .204
Home-to-work
negative spillover
).153
*
).059 ).245
**
).098 .225
*
.238
*
Mediator variable
Satisfaction
a
.549
***
.386
***
).043
F-test 25.191
***
42.013
***
6.749
***
7.881
***
5.536
***
4.775
***
Adjusted R
2
.412 .598 .188 .279 .155 .175
n139 139 100 90 100 90
*
p<.05,
**
p< .01,
***
p< .001.
a
In model 1, where the dependent variable is family strengths, the disengagement variable is family disengagement, the enmeshment
variable is family enmeshment, and the satisfaction variable is family satisfaction. In models 2 and 3, which focus on business outcomes,
the disengagement, enmeshment and satisfaction variables are all within the business domain.
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 199
although including the mediator almost doubled the percent of ex-
plained variation. The regression coefficient for family disengagement
was negative and statistically significant in both models, although
weaker by more than half when the mediator of family satisfaction
was included—this result indicates partial mediation. The negative
coefficient for home-to-work negative spillover was also reduced by
more than half when the mediator was included, and fell below sta-
tistical significance. This result indicates perfect or full mediation by
family satisfaction of the relationship between the individual bound-
ary indicator of home-to-work negative spillover and the outcome of
family strengths. As before, the coefficients for enmeshment and
Work-to-home negative spillover were not significant, indicating that
these variables were not related to business strengths in either a di-
rect or a mediated fashion. Thus, perceived family strengths were
greater when satisfaction was higher, when disengagement was lower
(a relationship both direct and mediated through satisfaction), and
when negative spillover from home to job was lower (a relationship
fully mediated through satisfaction).
Despite the high proportion of explained variance, conclusions about
mediation must be drawn cautiously. Disengagement (one of the
predictor variables) and family satisfaction (the mediator) were quite
strongly related to one another, as the standardized regression coef-
ficient of ).**607 in Table 3 reveals. Given their shared variance, it is
not surprising that including family satisfaction in the models shown
in Table 4 would reduce the strength of the relationship between
disengagement and the outcome of family strengths.
Model 2: Business Strengths
The mediation hypothesis was then tested for business functioning.
Two outcomes were tested, business strengths and cash flow problems.
Following the same analytic sequence, we first regressed business
satisfaction on the two indicators of individual boundaries (home-to-
work and work-to-home negative spillover) and the two indicators of
business boundaries (disengagement and engagement). This model
accounted for a statistically significant 27.2% of the variation in
business strengths. As with the test of family satisfaction, the coeffi-
cients were negative and significant only for disengagement and for
home-to-work negative spillover (see Table 3). The non-significant
coefficients indicate that the relationships between business strengths
and enmeshment or Work-to-home negative spillover were not
200 Journal of Family and Economic Issues
mediated by business satisfaction. As before, we then regressed busi-
ness strengths on the four boundary indicators, with and without the
mediating variable of business satisfaction. The adjusted R
2
was .188
when the mediator was excluded and .279 when the mediator was
included. The regression coefficient for disengagement was smaller
and significant only at the level of a trend, indicating partial media-
tion, and the coefficient for home-to-work negative spillover fell from
significance, indicating perfect mediation, when the mediator was
included in the regression equation. Coefficients for enmeshment and
work-to-home negative spillover were not significant in either model,
indicating no direct or mediated relationships with business strengths.
Thus, perceived business strengths were greater when satisfaction
was higher, disengagement was lower (a relationship both direct and
mediated through satisfaction), and when negative spillover from
home to job was lower (a relationship fully mediated through satis-
faction).
Model 3: Business Performance
The same analytic sequence used above was replicated using cash
flow problems as the outcome indicator of business performance. The
test of the relationship between business satisfaction and the predictor
variables is the same as reported above for model 2. The results of the
regressions with and without the mediator are shown in Table 4.
Statistically significant variation in business performance was ac-
counted for by model 3. Unique to this model was a non-significant
regression coefficient for the hypothesized mediator of business sat-
isfaction, indicating that none of the relationships between the pre-
dictors and the outcome were mediated, and that satisfaction with the
business was not related to the frequency of cash flow problems. The
only significant regression coefficient, with or without the satisfaction
mediator, was for home-to-work negative spillover, indicating a direct
and positive relationship between negative spillover and the frequency
of cash flow problems. Enmeshment was also significant, but only with
the satisfaction mediator.
Finally, all of the analyses just described were re-run to determine
whether the inclusion of demographic control variables would alter the
findings. Three additional variables were included in each regression
equation, entered in a block before all other variables, education, age,
and marital status. All findings were robust to these controls.
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 201
Discussion
This study examined the relationships between several measures of
boundaries and family and business functioning. It also considered the
extent to which satisfaction mediated these relationships.
In the family system, satisfaction mediated the negative relation-
ships between home-to-work spillover and family functioning (indi-
cated by family strengths), and disengagement and family strengths.
Family satisfaction fully mediated the contribution of home-to-work
spillover, indicating that satisfaction was more important than spill-
over for family strengths. In contrast, satisfaction only partially
mediated the relationship between disengagement and family func-
tioning. The two other boundary measures, work-to-home negative
spillover and permeable family boundaries (enmeshment), were not
related to family strengths either when mediated through family
satisfaction or when considered alone.
Model 2 presented some interesting parallels and discrepancies.
This model tested the relationships between business boundaries,
business satisfaction and business strengths. Two of the four bound-
ary measures—home-to-work negative spillover and disengage-
ment—were negatively and significantly related to business strengths.
When the mediator was entered into the multivariate equation, it fully
accounted for the prior relationship between spillover and strengths,
and accounted for all but a trend-level relationship between disen-
gagement and strengths. Once again, work-to-home negative spillover
and enmeshment were not related to either satisfaction or to
strengths.
In both models 1 and 2, disengagement was related to family func-
tioning beyond the contribution of satisfaction, and the coefficients for
enmeshment were not significant. These results suggest that disen-
gagement was more important than enmeshment, in a negative way,
for system functioning. This finding is surprising given the conven-
tional wisdom that family business members should strengthen the
boundaries distinguishing the systems (e.g. Marshack, 1998; Rosen-
blatt et al., 1985). It may be that helping families delineate boundaries
that are less rigid and more fluid may have a more discernable impact
on systemic functioning—at least from a subjective perspective—than
strengthening those boundaries as commonly suggested.
In model 3, financial performance served as the criterion variable.
Here, enmeshment and home-to-work negative spillover were directly
related to business performance, not mediated through satisfaction.
These findings suggest that satisfaction may not be an important
202 Journal of Family and Economic Issues
component of systemic functioning when the functioning is defined
using a more tangible criterion such as cash flow. It is also interesting
that when financial performance was the criterion, then the more
traditional family business consulting wisdom about keeping family
boundaries distinct seemed to be more reasonable advice, given the
positive relationship between home-to-work negative spillover and
financial performance. Evidently, the rule may still apply when con-
cerns are related to the financial performance of the business.
The relationship between specific boundary subscales and systemic
outcomes warrants additional discussion. First, the home-to-work
negative spillover scale emerged as a significant predictor of systemic
outcomes in all three models—negative for strengths and positive for
financial performance. However, in the models using strengths as the
outcome variable, the relationship between spillover and strengths
became insignificant when the mediator was added to the equation.
These findings suggest that negative spillover from the home to a
family business is not negative for the functioning of either the family
or the business unless the respondent is dissatisfied. This was the
relationship that was hypothesized in the present study.
Rather than being mediated through satisfaction, the relationship
between home-to-work negative spillover and the financial perfor-
mance of the business was direct. Thus, independent of level of sat-
isfaction, when an individual’s family or personal life is perceived as
interfering with the business, the financial performance of the busi-
ness may be affected. Although we did anticipate it, this finding makes
intuitive sense. Practical limitations may impose a constraint on the
financial performance of the business. Satisfaction may not be very
important if the respondent simply has fewer resources to devote to
the business because of personal or family constraints, constraints
that may impede the financial performance of the business.
Contrary to our hypotheses, work-to-home negative spillover was
never related to system outcomes. At least for the current sample,
when individuals perceived that their business prevented them from
performing important personal and family responsibilities, neither the
functioning of the family nor the financial performance of the business
were significantly impeded. This finding was not only unexpected but
is inconsistent with the results of many studies of work-family rela-
tionships among employees, where negative spillover from work to
home more frequently emerges as significant. Our results generally
correspond to those of Hundley (2001), however, who found no sig-
nificant relationship between self-employment and work-to-home
spillover, except among fathers of pre-school children.
Zanita Zody, Douglas Sprenkle, Shelley MacDermid, and Holly Schrank 203
A potential explanation is that families may have more choices than
firms do in the way they adapt and adjust. Since firms generally
function in relatively orderly fashion following similar conventions
(e.g. accounting practices, government regulation, ‘‘generally accepted
business practice’’), families may have greater flexibility and adapt-
ability to manage negative spillover, thus reducing the impact of
negative spillover from work. It may also be that the work-to-home
negative spillover items did not adequately capture the experiences of
family business owners, given their ownership stake in the business.
Perhaps effects of work-to-home negative spillover would be more
evident if family functioning were measured in terms of the quality
and quantity of time that family members have to spend with one
another.
Conclusions
Three regression models were hypothesized in this study and each
was significant. In the first, scores on the five subscales predicted
59.8% of the variability in family strengths. In the second, 27.9% of the
variability in business strengths was predicted and in the third, 17.5%
of the variability in financial performance was predicted. The models
showed that boundaries are related to functioning in both the business
and the family system. Although the predicted variability in all three
models was significant, the predictive power of boundaries in the
family strengths model was particularly strong. This may be because
most of the scales were specifically designed to measure the constructs
of boundaries, satisfaction, and functioning in the family system.
This study was designed to address a gap in the family business
literature. Much of this literature has suggested that many of the
problems facing family owned firms are related to the overlap between
the family and the business and that boundaries function to regulate
that overlap. Several regression models were proposed to investigate
the relationships between boundaries and system performance. Sat-
isfaction served as a mediating variable.
Results of the study offered partial confirmation for the boundary
hypothesis. In particular, it appears that satisfaction mediates the
relationship between boundaries and performance when performance
was defined in subjective ways but not when it was defined in terms of
the objective cash flow measure. In addition, rigid boundaries (disen-
gagement) seemed more important to the prediction of subjective
performance while permeable boundaries (enmeshment) seemed more
204 Journal of Family and Economic Issues
predictive of objective performance. Taken together, these results
suggest that boundaries are dynamic and complex constructs and that
the impact of boundaries issues depends, at least in part, on how
success is defined.
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