Moderating Role of TACIT Resources in the Relationship Between Communication Flow and Decision-Making in Malaysian Family Businesses

Abstract

In the context of family businesses, most prior studies have treated resources as control variables rather than as potential moderators shaping organizational processes. The moderating role of resources in the impact of communication on decision-making is underexplored. The study examined the moderating effect of resources on the relationship between communication flow and decision-making of family businesses. The objectives of the study are to: 1) describe the characteristics of the family businesses; 2) describe the perceived levels of communication flow, decision-making participation, and access to resources in family businesses. 3) examine the relationship between communication flow and decision-making in family businesses; and 4) determine whether resources moderate the relationship between communication flow and decision-making in family businesses. A survey of 291 respondents working in family businesses in Sarawak was conducted using purposive sampling. The questionnaire elicited data on characteristics of family business, communication flow, decision-making, and resources. Almost half (46%) of the family businesses had been operating for more than 20 years. While some founders aged over 70 continued to manage their companies, 28.9% were led by second-generation and 11.3% by third-generation family members. Respondents perceived communication flow, involvement in decision-making, and access to intangible resources to be at a moderate level. Using partial least squares structural equation modelling (PLS-SEM), the study found that communication flow positively influences employees’ decision-making, and this relationship is moderated by the availability of resources. Employees with greater access to resources, particularly intangible ones such as trust, loyalty, and competence, benefited more from clear communication of company procedures and essential information, resulting in more active participation in decision-making. These findings suggest that family businesses should consider better sharing of company procedures and tacit knowledge as resources to benefit from employee experiences in decision-making.