Family businesses make numerous, critical contributions to the economy and to family wellbeing. This is both in terms of money / income and such intangibles as time, flexibility, control and personal expertise …
... that’s if they work. When they don’t, family businesses can be difficult to manage and painful experiences, at best.
What is a family business?
Any business where more than one member of one or more families has shares / ownership and / or significant commitments towards the overall wellbeing of that business can be termed a ‘family business’. Walmart, Ford, Samsung, Tata Group, German multinational mass media corporation Bertelsmann, US regional supermarket chain Wegmans, Taiwanese multinational electronics contract manufacturing company Foxconn, Panda Energy International (which constructs, maintains and operates environmentally friendly power plants) and even The Trump Organization are some of the examples of successful family businesses.
The path to success for any business can follow many routes
Family businesses add the complexities of family life to business challenges, expanding the range of issues, personalities, needs and potential solutions for every decision. Knowing something about family types, communication patterns, managerial styles and the amount of support members can expect from their families may be as important to entrepreneurs as knowing how to reach a market or managing cash flow.
The connection between entrepreneurship and family business appears to be widely unrecognised
An entrepreneur is often defined as someone who specialises in making judgmental decisions about the coordination of scarce resources, is institution free, deals with the factor of risk, and has influence over the flow of information. Although the literature often portrays the entrepreneur as a single individual, family business literature strongly suggests that families are vital and supportive environments for entrepreneurial behaviour. Put simply, entrepreneurship is the start and heart of most family businesses, and the phenomenon of an entrepreneurial family fosters, subsidises, and enhances the efforts of its members who engage in entrepreneurship. Family business is merely the ‘wider-lens’ view of entrepreneurship as the initial business efforts of one or more family members grow and change over time.
There are many aspects of managing an established family business, both on a day-to-day basis and planning for succession to the next generation: values, life cycles, growth strategies, succession, conflict resolution, governance and cultural change.
The role of the founder and the entrepreneur, intergenerational succession, going outside the family, managing conflict and strategic management of the family business are all topics which feature prominently on the BGP.
Many thanks to Dr Muhammad Azam Roomi, Senior Lecturer in Entrepreneurship and Business Growth, Cranfield School of Management for this Blog Content.