The Business Led By Families

A large chunk of the world business arena is contributed by family businesses. Various forms and typologies of these exist and often it has been difficult to fetch a single applicable definition of the family business system. The different aspects of this unique phenomenon involve its form and level of family influence, ownership and inter-generational succession.

The various structural elements of identifying a family business include a multi-generational influence of family on a firm’s policy, objectives and ownership control by members of a family. It may also include ownership by a single family or individual or majority ownership by single family. Famous global family businesses include names such as Cargill, Levi-Strauss, Marriott, Wal-Mart etc. All these companies have a strong presence in India as well.

There is also different organisational type such as family-owned and family-managed businesses. A family owned is for profit in which majority of shares are owned by members of a single extended family. In comparison, a family owned and managed business is one in which not only are majority of shares owned by family members but family members are in active participation in the top management. A family owned and led company goes a step ahead. It shows the former characteristics and also the business has active participation by at least one member of the family on board of directors. In such an enterprise family members have control and influence over the company’s goals, strategy and culture.

There are many other types of family business which do not come under any traditional model. Today there are many forms of family business which display tradition family, conflict family and entrepreneurial traits. Also the degree of involvement can range from royalist, mixed management to professional management. The culture of the organization may range from paternalistic to democratic to participative and finally professional. The management style is indicative of the generation running the business and passing the baton that is succession is always a major decision. The inter-generational goal congruence is a determinator of organizational success. Despite the various models and studies in this field, it remains a complicated subject and one that is evolving as various new designs of family businesses crop up with time. These new manifestations further extend the typologies and definitions of family businesses. These businesses have their own unique dynamics related to the emotional family unit, succession and leadership style. Top executive search firms cater to family businesses and their unique needs in providing them with the right talent and executive coaching to aiding succession planning.