Keywords
Citation
(2001), "Out with tradition and in with entrepreneurship, say family businesses", Industrial and Commercial Training, Vol. 33 No. 2. https://doi.org/10.1108/ict.2001.03733bab.002
Publisher
:Emerald Group Publishing Limited
Copyright © 2001, MCB UP Limited
Out with tradition and in with entrepreneurship, say family businesses
Out with tradition and in with entrepreneurship, say family businesses
Keywords: Family firms, Entrepreneurialism
Family firms are abandoning the motto, "keep it in the family" and opening their doors to outsiders, according to a new survey. The research among over 150 UK owner-manager directors of well-established family businesses was commissioned by the Family Business Network (FBN) and conducted and analysed by Dr Panikkos Poutziouris of Manchester Business School.
The survey confirms that, far from totalitarian regimes, family businesses today favour relinquishing an element of both financial and management control to non-family members to ensure the continuing success of the firm. The survey indicates that this is partly in response to the demands of the new economy. Ranking areas central to strategic development, the five key platforms are: charting a long-term strategy, succession planning, R&D, HR management and entrepreneurship. Maintaining tradition was ranked less important than these five areas.
Dr Panikkos Poutziouris, Fellow of Small-Medium Enterprise Management at Manchester Business School, who directed the survey, said: "Family firms are credited with long-term strategic vision but often criticised for their "conservative" corporate philosophy, which can hamper their business growth potential. Yet it is a mistaken cliché to say that families put family concerns ahead of the needs of the business. They place their future stategy ahead of maintaining tradition. Our survey shows that successful family firms recognise the need to balance their corporate heads and family hearts".
Eighty-five per cent of those surveyed said that a member of the family currently runs their business. However, responding owner-manager directors say this is changing or set to change in the future. The sample predicts that, in the future, four out of ten owner-manager directors will not be members of the family.
Those surveyed also came out firmly in favour of family members gaining external experience before joining the family business. Half of the owner-manager directors surveyed said that their firms operate a policy relating to the outside experience expected of new family members before joining the business. The average requirement is five years, but most expect at least three to four years' external experience.
Peter Leach, National Chairman of the Stoy Centre for Family Business, commented: "Research suggests that family firms make up between 65 and 75 per cent of all UK businesses in the private sector; the caveat is that less than a third of these firms make it to the second generation. Family firms that do make it are expert at adapting to new developments in the economy".
Thirty per cent of family businesses surveyed report that they have already developed an e-commerce side to their business; 12 per cent say that they are planning to do so.
Leach continued: "The best family firms recognise that they may not have the necessary mix of skills in-house. As a result, they ensure family members gain external experience and try to recruit non-family experts into the business. They are also appointing non-executive directors to bring tried and tested expertise into the firm".
Family Business Network (FBN) was founded in 1990 in response to an expressed need to have a worldwide association devoted exclusively to increasing the quality of leadership and management of family-owned enterprises. It organises activities and provides educational and networking opportunities for family businesses, with the help of world-renowned consultants and academics, in order to create and disseminate knowledge, exchange experiences and build relationships.
Today, FBN has over 1,900 members from 58 countries. Over 70 per cent of the members come from family businesses. The headquarters and the information centre are located in Lausanne, Switzerland. http://www.fbn-i.org