"The study and research of the role of family values and their impact on the creation of values is relevant not only in terms of family-owned business, but the corporate world as a whole," states IESE Dean Jordi Canals in the prologue to the book Family Values and Value Creation: The Fostering of Enduring Values Within Family-Owned Businesses, which was launched at the Fourth International Family-Owned Business Conference.
The long-term vision of the family-owned company is in stark contrast with the short-term pressures that rule other kinds of businesses. Family-owned businesses are also characterized by a sound value system, whether implicit or explicit, which impacts all of its activities, its strategy and way of doing things, as Kellogg Prof. John L. Ward explains in the book's introduction.
This is why, at a time when executives, investors and even public opinion bemoan the lack of values in the corporate world, family-owned businesses are shaping up to be the role models to watch.
In an attempt to reconcile theory and practice, the book's 11 chapters review existing research in the field and then correlate it with real-life issues that family-business executives face every day.
Future Challenges
The "timid" nature of family-owned businesses, which tend to guard their privacy, has to a certain extent limited in-depth study of the field, with most of the research conducted in recent times. Despite this limitation, clear evidence has emerged that family-owned businesses do play an important role in developed economies. And for this reason, the authors call on family-owned businesses to open up more and face up to the challenges of today's globalized business environment.
If there's one thing the book makes clear, it's that every family-owned business is one of a kind. Hence, there is a great deal of interest in discovering a typology that can be used to classify and describe the many different kinds of family businesses.
Some propose a classification according to the level of involvement of family members. This is complex, with over 70 categories. John A. Davis of Harvard Business School distinguishes eight categories encompassing every possible family system.
Another key aspect to take into consideration is the role of the family business owners, whom IESE Prof. Josep Tàpies describes as the "heart of the business." Elsewhere, IESE Prof. Miguel Ángel Gallo describes the careful balance of power that the owner must strike.
Dealing With Touchy Aspects
Several authors address the emotional and relational factors that influence performance and organizational structure. Emotional intelligence has an impact on various aspects of the family business, from equity processes to succession. These emotional attachments are something very real and important, even for members of the family who have no financial interest in the company.
Generational transition continues to be a major area of growing concern. Succession must be seen as a future opportunity and part of an ongoing process, rather than a one-off event that must be done. To avoid some of the common pitfalls of succession, family business owners are advised to set clear boundaries between property, business and family, and to promote a merit-based culture, which helps avoid nepotism.
Money is a touchy subject in any family, let alone a family business. To reduce this kind of tension, it may be useful to resort to a Single Family Office, which is designed to manage family assets. Heinrich Leichtenstein and M. Julia Prats (IESE), together with Raffi Amit and Todd Millay (Wharton), did a groundbreaking study of Single Family Offices, finding how these offices deal with matters such as the education of family members and philanthropy, as well as managing major assets.
Values Make the Difference
Yet the best tool in the family business kit is, without a doubt, its values, which "shape the culture of the family-owned business," states Ward. How are these values different? They tend to be "more human, more emotional," says Ward, adding that family businesses place special emphasis on collectivity, making gains by analyzing the past and always looking beyond the present to the future.
For this reason, family-owned businesses must be seen not only in terms of assets but as a combination of property and values. That is, family businesses have implications that involve more than merely serving a financial purpose; they are a means of sharing certain values and providing a service to the community in which it is integrated, Tàpies concludes.