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Families Tend To Maintain Longer Investment Perspectives Than Other ...

Families tend to maintain longer investment perspectives than other shareholders, who cam make narrow investment decisions. This longer outlook of families implies it is vital for the survival among family firms.
With two thirds of all businesses in the industrialised economies being family businesses, and in some countries this accounts for 59% of employment as well as 49% of GDP, they should be the golden example of business. Although these statistics are ignored in management theory, and scarcely gets a mention in the leading journals of management discipline.
Therefore it can be assumed (from the statistics) that family businesses are the primary contributors to the economic and social well being in all capitalist societies. The problem is there failure to survive, it is estimated that, only 30% of family businesses survive to the second generation, while fewer than 14% make it beyond the third generation.
This is the essence of the problem, is on one hand family businesses are major contributors to economies of the world and on the other hand very little research has been conducted into the unique problems they face. This paper will discuss the reason for their failure, although there is only current literature to review that does not focus on the entity they are.
For the purpose of this paper four successful family businesses were reviewed. These have all made it passed the first generation, and against the odds one is planning the sixth generation of family ownership. The rationale behind this method of research is to identify what these successful family businesses are doing correctly to sustain their life span. All of the businesses have received recognition for their contribution to both the local and national economy.
The major problem these businesses face, is to remain a family entity, they have to promote within the family. Recruiting too many employees in management positions from outside the company would weaken the family control on the business, therefore changing the identity. There is a constant need for relatives that are willing and capable to take over the running of the business. From this it could be assumed that the failure of some family businesses is possibly the lack of suitable replacements from within to run the business.
Succession planning to continue family ownership can start when the sibling is quite young. Parents discuss at the table the business and the issues raised during the working day. This involves the children from a young age, although it is recognised that if the gain experience outside of the business this can bring new skills into the role.
The unsuccessful family businesses are evident from the statistics on failure; and to identify why they failed the economy, environment and the skills and commitment of the proprietor would have to be studied.

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