The role of familiness in customer loyalty: a mixed-methods study of family-owned small businesses

Purpose We investigate how small family business (SFB) entrepreneurs employ family resources to improve familiness and the effects of familiness on customer satisfaction and loyalty. Design/methodology/approach We conducted two studies using a mixed-methods design. The first used a grounded theory approach with semi-structured interviews with 22 SFB owners in medium-sized Brazilian cities to identify SFB entrepreneurs' perspectives on their competitive strategies based on familiness. The second examined the roles of SFBs' competitive strategies stemming from familiness in customer satisfaction and loyalty from the customers' perspectives. Findings From the entrepreneurs' point of view, we identified the resources that make up familiness: (1) family influence (i.e. family involvement and business longevity), (2) the resulting managerial strategies that SFB entrepreneurs adopt to achieve superior performance (i.e. customer orientation and quality assurance) and (3) the resultant customer response, namely family business equity (i.e. firm reputation and customer trust). From the customers' perspective, we show that SFBs' managerial strategies have positive effects on perceived family business equity that lead to positive customer outcomes in terms of satisfaction and loyalty. Originality/value We identified SFBs' resources that make up familiness and how they influence managerial strategies and resultant customer responses. Although these concepts may not be novel in the literature, our contribution lies in grouping them into high-order categories in the unique contexts of SFBs in a developing economy, identifying their relationships and attesting to the positive roles of the SFBs' strategies on customer satisfaction and loyalty.