FAMILY FAVOURITES Past research has painted a general picture of how greater family influence leads to lower business growth rates. But these studies have tended to think of family management – whether owner or manager – as all the same. We wanted to look at the nuances, to see what effects different kinds of family ownership would have: the presence of non-family shareholders, passive family members asmajority shareholders, as well asmultigenerational involvement in ownership. Our study drew on information from 587 multigenerational family companies from 35 countries who had taken part in the STEP ( Successful Transgenerational Entrepreneurship Practices) survey, completed in 2015. We sawhowdifferent types of involvement by familymembers in senior roles have different effects on family businesses’ pursuit of their growth strategies. Non-active familymembers who aremajor shareholders – as well as non-familymembers –who sit on boards and are part of topmanagement teams, push for profit and encourage growth. They increase entrepreneurial drive within companies, and so encourage growth. This happens because nonfamilymembers andmore passive family members are less concernedwith emotional ties to the company, with looking after the socio-economic capital. Instead, they favourfinancial reward. Our conclusion, fromobserving the behaviour of thesefirms, is that these groups provide a level of objectivity not seen among familymembers. Active family members, those with the largest roles in terms of day-to-day management of operations, had less desire to grow their company. Protecting thefirm from risks and shocks, the jobs of family members and that wider ‘family’ community of staff , was a higher priority. Organisations that were most risk averse were those with multiple generations of the same family involved in management: the older generation pushes the younger generation to defend their values. Financial decisions become secondary to a confining sense of legacy and the many ways in which the family and the business are interwoven at a personal level. Interestingly, given the diversity of business cultures, sectors and structures of governance across the 35 countries, thefindings were consistent: the resistance to pursuing growth came from the same groups of active family members. RESPONSIBLE OWNERSHIP The lesson is that it isn’t just the daily managerial tasks that are important for business performance and growth. There needs to be responsible ownership, a balance between objectivity in decision-making and the heart; the essential qualities that can make family businesses so successful. Growth can be dependent on the composition of top management teams, who are doing most of the talking. There needs to befine-tuning of the ownership and management structure in the familyfirm in order to foster entrepreneurial orientation and growth. Appointing more non-active family members, and non-family members will encouragefinancial motives to be more influential when it comes to strategic decisions. In ourfindings, we saw how there is a steadily detrimental effect of an increasing number of family members relative to non-family members active in a senior leadership group. There should also be attention to succession plans. Often there can be clear intention to pass on ownership to the next generation, even if they are not yet working in thefirm, if they are still in education. This, in itself, serves to strengthen the arguments against risk-taking, a cross-generational hardening of attitudes towards the potential consequences of growth. Dr Giovanna Campopianois Senior Lecturer at the Centre for Family Business. The study, Does Growth Represent Chimera or Bellerophon for a Family Business?: The Role of Entrepreneurial Orientation and Family Influence Nuances , was coauthored with researchers at the University of Bergamo and the CYFE, in Italy, and published in European Management Review. g.campopiano@lancaster.ac.uk FIFTY FOURDEGREES | 37 ʼʼ Active family members, those with the largest roles in terms of day-to-day management of operations, had less desire to grow their company. Protecting thefirm from risks and shocks, the jobs of family members and that wider ‘family’ community of staff , was a higher priority. ʻʻ
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