Stabilizing a family business: the transformation of family through the adoption of the family constitution

This qualitative study explores why and how family firms adopt a family governance mechanism-the family constitution-and how the family system transitions while navigating through this process. Using family system theory, we build a theoretical framework that suggests that family businesses proactively or reactively initiate the process of developing the family constitution to transform the family system under existing stress or anticipated stress. The family constitution development process involves collective sensemaking of the situation, emotional unburdening, family rumination, and clear boundary definition for family members in a family business. This transformation results in a stable family system with higher family cohesion and a sense of fairness among family members.