Family-owned business & performance

Written on 07 November 2014.


 

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What makes family business so special?

 

 

The main purpose of this research was to find if there are areas that can explain the performance of family business: are they more performant or less performant than non-family businesses? More information regarding the research might be found here>>

 

 

We looked up for these characteristics, we defined the main challenges and some of these are related to the long term vision. For instance, family businesses are less interested in the short term compared to a usual business, they don’t have to report to their shareholders every three months… so they have a much more long term vision.

For family-owned business, what is important is continuity and transmission to the next generation.

We put together all these analysis about all the most important papers in the last twenty years about the performance of family firms compared to non-family firms. We have found two main messages for family businesses: first, it is important to keep some of the features that the founded family put in the firm. Firms that still have founding members in their board performance better. And second, the governance environment helps performance better. So companies who want to improve their performance should start improving their governance since it helps bring capital, investors are less reluctant to bring their resources and investments.

EDHEC Family Business Centre advice for family businesses

Based on our research, family-owned firms have a triple requirement: first, Strategic Entrepreneurship Imperative; they have to think of being competitive; second, Family Dynamics Management, they have to have very efficient governance and third, Family Business Leadership, they have to have excellent leadership. Find out more about the triple requirement here>>

 

 

 

 

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