Family businesses make numerous, critical contributions to the economy and to family well-being both in terms of money income and such intangibles as time, flexibility, control, and personal expertise – if they work. When they don’t, family businesses can be difficult to manage, painful experiences at best. Any business where more than one member of one or more families have shares/ownership and/or significant commitments toward the overall well-being of that business can be termed as a “family business”. Wal-Mart, Ford, Samsung, Bertelsmann, Tata Group, Birla Group, Trump Organization, Wegmans, Foxconn, and Panda Energy International 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 beginning entrepreneurs as knowing how to reach a market or managing cash flow.
The connection between entrepreneurship and family business appears to be widely unrecognized. An entrepreneur is often defined as someone who specializes 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 behavior. Put simply, entrepreneurship is the start and heart of most family businesses, and the phenomenon of an entrepreneurial family fosters, subsidizes, 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.
This time, Paul Burns discusses with me different aspects of managing an established family business, 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. We talked about the importance of family businesses, the role of the founder and the entrepreneur, intergenerational succession, going outside the family, managing conflict, and strategic management of the family business. We also discussed cultural issues affecting the performance of family businesses in the Middle East and South Asia including India, China, UAE, and Saudi Arabia. We welcome your comments and suggestions for further discussion topics.