Establishment of smoothly working interrelationships among the business family, business ownership and business management is one of the challenges as well as strengths of a family business. In the first generation these groups invariably have all the same players. But as generations pass the picture can become significantly more complex. To help with visualizing the interdependence of the three overlapping groups, or subsystems, comprising the family-business system, Renato Tagiuri and John Davis developed an organizing framework in simple graphic terms (below).

Their Three-Circle Model provides a basis for understanding the seven interest groups that emerge, each with its own legitimate perspectives, dynamics and goals. The long-term success of the business depends on their independent functioning, interdependent relationships and mutual support.