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The purpose of this study is to test the role of familiness-related team forces induced by the CEO of family firms. In particular, we report on the effects of the transformational leadership style of CEOs on their respective top-management team (TMT) and firm performance when viewed through a familiness lens.

Survey measures were taken from a snowballed sample of 72 CEOs of German family firms as well as from 245 members of their TMTs. We tested the aggregated firm-level data with objective performance indicators of the firms they led.

Support was obtained for the three hypothesized team-force mediations and the four-path mediation model. The relationship between CEO’s transformational style and high family-firm performance is found to be serially mediated by TMT cohesion, behavioral integration and efficacy. Together, these three types of collective forces are assumed to be the familiness effect of a family-member CEO with a transformational leadership style.

With our model, we quantitatively tested familiness-type forces vis-à-vis firm performance. Theoretical and practical implications of these findings are discussed.

Family businesses have a dual objective of profit making and providing opportunities for family members. This duality leads to a conflict that may bring poor team work and communication, which is difficult to reconcile. Thus, the study looked into how the performance of family enterprises is affected by family dynamics. Additionally, it examines the relationship's ability to be mediated by effective leadership.

The study adopted a quantitative, explanatory research approach. The study population was family-owned enterprises in KwaZulu-Natal's South Durban Basin, of which 236 were chosen using a snowball and convenience sampling technique. Data was analysed using various descriptive and inferential statistical techniques, namely, multiple regression and the standard deviation.

The finding of the study shows that family dynamics significantly influenced business performance both directly and indirectly through effective leadership. Besides, the family firms with larger employee sizes have better effective leadership that positively contributes to the business performance.

The study recommends that family businesses should train their members to ensure leadership effectiveness.

This study is unique in that it was conducted in Black Townships and focusses mainly on businesses owned by families of Indian descent that need to prepare for leadership/ownership. It also contributes to academic literature on family dynamics and will encourage families to recognise the importance of strong leadership in controlling family dynamics to improve business success.