Knowledge Management and Traceability of Decisions for Value Creation in a Family Firm

Family firms are the most common corporate form in the world today. Family firms are a unique organizational form where the relationship between family owners and family employees is often characterized by reciprocal trust and informal communication. Family firms play an important role in Iceland in the fishing industry, which is one of the main pillars of the Icelandic economy. The purpose of this paper is to examine how Icelandic family firms can benefit from implementing knowledge management procedures in their operations to improve value creation through the increased traceability of decisions. The examination is based on a case study that was conducted at a family firm in the fishing industry that had been the recipient of the Knowledge Organization of the Year award in 2018, the first within the fishing industry. The aim of the research questions was to study how personal and emotional attachment effects knowledge management processes in a family firm and to examine how different members of the family influence the strategic direction of the firm by leveraging control via ownership or board involvement. The case study contains interviews with family and non-family members of different generations and with different positions within the firm along with board members from within the family and an independent chairman of the board. The findings support the notion that a family with strong ethics and reciprocal trust can support the general business. Trustful family relations and an emphasis on informal communication can help provide business opportunities for family firms and increase job satisfaction. Nevertheless, it can be challenging to support the stability and traceability of decisions without a systematic documentation of vital information by board members and the CEO. It is important that family firms practice information and knowledge management and avoid favouritism among family members or incoherent decision making. The results show that the previous experience of systematically documenting detailed information on seafood production influenced and increased the documentation of executive decisions, which added great value to the operational success if the firm.