Conflict is a natural part of life, especially in entrepreneurial families where business, legacy, and personal relationships are tightly connected. While some disagreements are healthy and lead to growth, unresolved conflicts can harm family harmony and business success. The good news? With the right approach, most conflicts can become opportunities for stronger relationships, better decision-making processes and through that a better decision overall.  In this article, we offer a practical guide to resolving conflicts in entrepreneurial families, drawing on research insights and proven methodologies.

Step 1: Understand the Nature of the Conflict

Before jumping to solutions, take a moment to ask: What kind of conflict is this? 

This idea comes from Michal Alberstein, a legal scholar known for her work on how cultural, emotional, and identity factors shape legal and social conflicts. She suggests that understanding the type of conflict helps you choose the right approach (Alberstein, 2007).

  • Is it about business decisions (strategy, money, leadership roles)?
  • Is it about family values and traditions (legacy, purpose, recognition)?
  • Is it a matter of personal identity and emotions (feeling heard, respected, or included)?

In Summary:

  • Legal conflicts ask: What’s fair under the law?
  • Emotional and identity-based conflicts ask: How do we heal relationships and restore trust?

Step 2: Recognise How Each Person Handles Conflict

We all approach conflict differently. The Thomas-Kilmann Conflict Mode Instrument (TKI), developed by Kenneth Thomas and Ralph Kilmann, is a popular tool for understanding personal conflict styles. It categorises conflict-handling styles based on two dimensions: assertiveness—the extent to which an individual attempts to satisfy their own concerns—and cooperativeness—the extent to which an individual attempts to satisfy the concerns of others (Kilmann and Thomas, 1974).

It identifies five common ways people respond to conflict:

  • Avoiding (Low Assertiveness and Cooperativeness): Sidestepping the conflict.
  • Accommodating (Low Assertiveness, High Cooperativeness): Yielding to others’ points of view.
  • Compromising (Moderate Assertiveness and Cooperativeness): Finding a mutually acceptable solution that partially satisfies both parties.
  • Collaborating (High Assertiveness, High Cooperativeness): Working together to find a win-win solution..
  • Competing (High Assertiveness, Low Cooperativeness): Pursuing one’s own concerns at the expense of others.

In families and family businesses, people often fall back on their default style. The challenge is recognising when a different approach might lead to a better outcome. 

Step 3: Choose the Right Conflict Resolution Strategy

Once you understand the type of conflict and how people are approaching it, select a strategy that fits the situation.

Assign Strategies Based on the Type of Conflict:

Legal issues require practical solutions.

When a conflict is centred around legal questions—such as inheritance rights, ownership shares, or contractual obligations—it’s best addressed using clear, structured, and objective methods. These are known as rights-based approaches, which focus on laws, formal agreements, and established rules.

In these cases, bringing in legal advisors, reviewing contracts, or involving formal mediators or arbitrators helps clarify what is legally fair and enforceable. While emotions may still be present, the resolution focuses on facts, evidence, and what is right (and enforceable) under the law.

Example: If there’s a dispute over business ownership percentages, the conversation should start by reviewing shareholder agreements or succession documents.

Emotional or identity-based conflicts need empathy.

When conflicts are rooted in feelings of exclusion, lack of recognition, clashing values, or generational misunderstandings, applying a purely legal solution can feel cold or dismissive. These are relationship and identity-based conflicts, and they require a more human-centred approach.

  • Narrative Approaches: Encourage each person to share their story. This helps uncover deeper motivations, experiences, and unmet emotional needs behind their position. Often, people want to feel seen, heard, and understood more than they want to “win.”
  • Cultural Sensitivity: Family members may come from different cultural or generational backgrounds, as would the in-laws or in diverse or internationally connected families. Being mindful of these differences can prevent miscommunication and help bridge gaps in expectations.
  • Emotional Reconciliation: Offer space for emotions to be expressed and acknowledged, without rushing to solutions. Sometimes, simply validating someone’s feelings can ease tensions and open the door to constructive dialogue.
  • Restorative Justice: Focus on healing relationships rather than assigning blame. This involves asking: What harm was done? What does each person need to feel whole again? How can the family move forward together?

Example: If one sibling feels overlooked in succession planning, the solution isn’t just to review documents but to explore why they feel left out. Listening to their experience and working together to find a meaningful role—whether in the business or in family governance—can lead to a more lasting resolution.

Divide Responsibilities Based on Individual Approaches 

While some TKI conflict styles may seem more constructive than others, the truth is that each style has its ideal time and place. Effective conflict resolution is about selecting the right style for the situation. For example:

  • Avoiding a small, low-stakes disagreement might preserve focus on bigger priorities.
  • Competing is appropriate when a quick, decisive action is needed.
  • Collaborating is best when a long-term, sustainable solution is the goal.

Family members can consciously adapt their approach to suit the specific conflict at hand—or, in some cases, it may be wiser to let those who naturally possess the most effective conflict style take the lead.

Not everyone needs to be involved in every difficult conversation. Some family members may excel at calming tensions and finding common ground, while others might have the assertiveness needed to make tough decisions quickly. Think of it as playing to the team’s strengths, rather than expecting everyone to handle conflict the same way.

Use Wallensteen’s Approach for Complex Conflicts

Some conflicts are so complex and emotionally charged that simple conversations won’t resolve them. Peter Wallensteen, a leading expert in peace and conflict research, developed structured methods for resolving complex, multi-stakeholder conflicts, particularly in political and social settings (Wallensteen, 2018). His work can easily be applied to family business dynamics. Some of his various mechanisms and strategies for resolving conflicts include:

1. Conflict Resolution Mechanisms

Wallensteen defines conflict resolution as a process aimed at removing the underlying incompatibilities between conflicting parties and finding sustainable solutions that prevent the recurrence of disputes.

Application: When family members disagree over strategic decisions, leadership roles, or ownership matters, it’s essential to look beyond surface-level arguments and uncover what’s truly causing the tension. Is it about control, fear of change, financial insecurity, or emotional recognition?

Example: Two siblings clash over whether to diversify the family business. Instead of just debating business plans, a facilitator helps reveal that one sibling fears diluting the family legacy, while the other is driven by future financial security. Negotiation leads to a solution that addresses both emotional and business concerns.

2. Peace Agreements

Peace agreements are formal arrangements that address the root causes of a conflict, outline concrete solutions, and ensure that all stakeholders are included in the resolution process. Effective agreements create peace by clarifying rights, responsibilities, and future conflict resolution paths.

Application: In a business context, peace agreements translate to formal governance documents like family constitutions, shareholder agreements, and succession plans. These agreements prevent future conflicts by clearly defining leadership structures, roles, and exit strategies.

Example: After years of uncertainty, the family drafts a succession plan that outlines how leadership transitions will occur and how future disputes will be resolved. All key family members are involved in creating the plan to ensure that everyone feels heard and respected.

3. Third-Party Mediation

The role of third-party mediation is neutral intervention that helps conflicting parties communicate better, rebuild trust, and explore solutions that might not arise through direct negotiation alone.

Application: When emotional involvement is too high for productive dialogue, a neutral mediator—experienced in family business dynamics—can guide conversations and help family members find common ground.

Example: A longstanding dispute over how to divide a shared family property comes to a head. The family brings in a mediator who facilitates open discussions, helping the family separate emotional attachments from practical decisions. A mutually agreeable solution is reached, preserving family relationships.

4. Conflict Prevention in Family Businesses

Conflict prevention focuses on addressing the underlying structures and conditions that give rise to disputes, reducing tensions before they escalate into open conflicts. Prevention is often achieved through early dialogue, inclusion, and clear governance structures.

Application: By establishing regular communication forums (such as family councils, advisory boards, and structured family meetings), potential sources of conflict can be discussed before they become critical. Preventive governance and open dialogue help maintain trust and unity.

Example: The family sets up a Family Council that meets quarterly, providing a safe space for all members to voice concerns and share updates. This proactive measure prevents small disagreements from festering and ensures that everyone feels informed and included in business decisions.

Practice with the Rehearsal Method

The Interest-Rights-Power (IRP) framework is a modern approach using simulated scenarios to practice and improve conflict resolution skills. It categorises communication strategies based on whether they focus on underlying interests, legal rights, or power dynamics to help people choose the right communication style for each situation (Rehearsal Study, 2024). It partially overlaps with Michal Alberstein’s work, particularly her concepts around legal, cultural, and emotional dimensions of conflict, but it’s more practical and action-oriented. The study advocates for simulated practice: rehearsing conflict resolution techniques in a safe environment develops better communication and negotiation skills. It builds confidence and helps family members handle difficult conversations more calmly and effectively when the time comes.

Interest-Based Communication

Interest-based communication focuses on understanding the underlying needs and desires of everyone involved in the conflict. Instead of arguing over fixed positions, it encourages open dialogue to uncover what each party truly wants. It creates space for collaborative problem-solving and often leads to creative outcomes that strengthen relationships. Interest-Based Communication connects closely with Alberstein’s narrative approach. Both emphasise exploring the deeper stories, emotions, and personal needs behind a conflict. In family businesses, this often means helping members express how decisions impact their sense of belonging, recognition, or purpose

Rights-Based Communication

Rights-based communication focuses on what is legally fair and formally agreed upon. It’s most useful when disputes centre around contracts, ownership rights, or clearly defined rules. In these cases, discussions are guided by legal standards and formal agreements to clarify boundaries and responsibilities. While this approach can resolve disputes efficiently, it may not always address emotional concerns or heal relationships. The Rights-Based Communication directly aligns with Alberstein’s legal perspective. Alberstein warns that purely legal solutions can overlook the emotional and cultural layers that often sustain long-term conflicts.

Power-Based Communication

Power-based communication relies on authority, status, or even coercion to influence the outcome of a conflict. This approach often leads to win-lose scenarios, where one side gets what it wants at the expense of the other. While it may bring quick results in situations that require decisive leadership, it can also harm trust and damage long-term relationships within the family or business. Power-Based Communication overlaps with Alberstein’s power dynamics analysis, where conflict outcomes are determined by authority and influence rather than dialogue. While sometimes unavoidable, she suggests that relying too heavily on power can lead to unresolved emotional tensions and future disputes.

Try practising key discussions using different communication styles—focus on interests (what people need), rights (what’s fair), and power (who has authority).

Apply Coleman’s Systems Thinking for Ongoing Issues:

Peter T. Coleman, a social psychologist at Columbia University, applies complexity science to understand and resolve intractable conflicts. He views such conflicts as complex dynamical systems characterised by feedback loops, attractors, and phase transitions. He suggests that entrenched conflicts are maintained by self-reinforcing mechanisms that resist change (Coleman, 2011). His key conflict resolution methods include:

Disrupting Malignant Attractors

In long-standing family business conflicts, it’s common to fall into repetitive patterns that keep the conflict alive—these are known as malignant attractors. The first step in overcoming them is to identify the feedback loops that fuel ongoing disagreements. This might involve recognising negative communication habits or recurring events that trigger tensions. Once these patterns are identified, families can introduce new, more positive narratives or change how they interact. Small adjustments in behaviour or reframing the story around the conflict can shift the system toward a healthier, more constructive state.

Improving System Complexity

Sometimes conflicts remain unresolved because they’ve been reduced to overly simple “us vs. them” thinking. Enhancing system complexity involves bringing more diverse perspectives and stakeholders into the conversation. Adding new voices and viewpoints (whether from different family generations, trusted advisors, or external experts) helps the family better understand the situation. It prevents oversimplification and opens up new ways of thinking about solutions that may have previously been overlooked.

Creating Positive Feedback Loops

One of the most effective ways to shift family dynamics is to create and reinforce positive feedback loops. This means encouraging actions and interactions that build trust, cooperation, and goodwill. Simple strategies include working on joint projects, setting shared goals, and openly recognising each other’s contributions. Over time, these positive interactions strengthen relationships and make it easier to navigate future disagreements.

Utilising the “Five Percent” Approach

Not every conflict can be resolved immediately, but even the most difficult ones often have a small opening for change. This is the heart of the “Five Percent” approach—focus on the small subset of conflicts that seem stuck but might be moved forward through innovative thinking. It can be seen as a form of conflict de-escalation through small, confidence-building successes. The root conflict shouldn’t be ignored, but recognised as complex and emotionally charged, which requires trust and positive reinforcements before bigger conversations can succeed. That way, the “Five Percent” approach becomes a strategic stepping-stone, instead of permanent avoidance.

If a conflict keeps resurfacing, examine the patterns that keep it alive. Small changes—like how and when discussions happen—can shift the dynamic over time.

Example: A Family Business Succession Conflict

Let’s say a family is struggling with who should take over the business.

Identify the Conflict Type

  • Is this really about leadership ability? 
  • Or about recognition and feeling valued?

Assess Conflict Styles

  • One sibling avoids the conversation entirely. 
  • Another is pushing hard to take control. 
  • A third wants everyone to compromise, even if it doesn’t feel right.
  • Do their individual approaches serve conflict resolution, and what would be the right approach to reach an ideal outcome?

Select the Right Method:

  • Bring in a facilitator, create positive feedback loops or set up a joint assignment.
  • Facilitate shared conversations focusing on shared goals.
  • Adjust the environment for these discussions to reduce tension and encourage openness.

Final Thoughts

By understanding the type of conflict, recognising how people approach disagreements, and choosing the right strategies, entrepreneurial families can turn challenges into opportunities for growth, personally and professionally. Handled the right way, conflict doesn’t have to divide a family, the key is to approach it with curiosity, openness, and the willingness to adapt.

References:

Alberstein, M. (2007). Pragmatism and Law: From Philosophy to Dispute Resolution. Ashgate Publishing. Available at: https://doi.org/10.4324/9781315246185

Coleman, P.T. (2011). The Five Percent: Finding Solutions to (Seemingly) Impossible Conflicts. PublicAffairs.

Kilmann, R.H. and Thomas, K.W. (1974). Thomas-Kilmann Conflict Mode Instrument. XICOM. Available at: https://doi.org/10.1037/t02326-000

Wallensteen, P. (2018). Understanding Conflict Resolution: War, Peace and the Global System. 4th ed. Sage Publications Available at: https://us.sagepub.com/sites/default/files/upm-binaries/71315_Wallensteen_Understanding_Conflict_Resolution_Chapter_1.pdf

Rehearsal Study (SIGCHI Conference). (2024). Rehearsal: Simulating Conflict to Teach Conflict Resolution. Available at: https://doi.org/10.1145/3613904.3642159.