Family businesses are different. For most of us, the term evokes a picture of a mom-and-pop store, or some other small enterprise catering to a local market. 바카라But they could also be unimaginably big,바카라 says Arvind Nigam, an INSEAD graduate who바카라s with Zoho. Take for instance India바카라s Tata group, the Future Group, Wal-Mart and even Porsche. Even in such behemoths, decisions are often taken by close-knit groups. Management gurus say that such businesses inevitably face the same problem: when and how to pass the baton to the next generation. When should heirs be given full executive powers? Sometimes, the problem lies at the opposite end of the spectrum: reluctant heirs, who have their own plans. And when the next generation does take over, the biggest challenge that lies ahead of them can be how to expand and where. Should they remain core-business focused or should they diversify? When is it good to go from private to being publicly traded? All this really boils down to a single issue: how do family-run enterprises differ from publicly traded, board-run businesses, and do the scions of such families require special training that takes these differences into account? Business schools now tout MBAs for family businesses as the answer.
Before examining the details of these programmes, it is important to address the first half of the question; that is, we must acquire an understanding of the substantive differences between family-owned and non-family-owned firms. One of the best answers comes from a 2012 study by Nicolas Kacha-ner, George Stalk Jr., Alain Bloch and Sophie Mignon, published in the Harvard Business Review. Conventionally, they say, it is assumed that family-owned firms have a structure that gives them a 바카라unique ownership structure바카라 that 바카라traditional public firms often lack바카라. Yet, until their study, there was very little to say how family businesses differ from non-family ones when it came to their economic behaviour, their investment decisions and their broader goals.
The researchers studied 149 publicly traded but family-controlled businesses drawn from seven countries. They selected their samples in such a way as to account for a variety of national economic environments. Each of the businesses they selected had a family that owned a significant stake and were involved in management decisions. Their results show illuminating insights that confirm what has long been believed: family businesses are different. When the larger business and political economy environment is bright, family firms don바카라t profit as much as 바카라companies with a more dispersed ownership structure바카라. During slowdowns, on the other hand, the former outperform the latter. Analysing data from 1997 to 2009, the researchers find that 바카라average long-term financial performance바카라 was far more efficient for these firms in each of the seven countries.
바카라The simple conclusion we reached is that family businesses focus on resilience more than performance,바카라 they write. Other distinguishing features identified by the study include the following. Family enterprises invest and spend in a more measured way in both good and bad business environments. They make more efficient use of capital expenditure (capex) and save more for bad times. Their average debt levels tend to be lower than those of non-family firms, and they don바카라t go on acquisition sprees. They also tend to stay focused on their core business, and it is not common for them to diversify. Lastly, they are better at retaining talent.
Thus, family businesses are characteristically peculiar, and running them needs a tailored education. 바카라Family businesses are highly complex. They must continuously align the interests of the family with the ownership and objectives of the business,바카라 according to Joachim Schwass, a professor at IMD school바카라s Global Family Business Center. According to PwC바카라s 2016 Family Business Report, the challenge for such enterprises lies in the medium term바카라the need to have a strategic plan that links where the family is to where it wants to be. This is the so-called `missing middle바카라. As the report points out, 바카라With the biggest intergenerational transfer of wealth happening, it바카라s now more important than ever before to get succession right,바카라
A big stumbling block is succession, says Schwass. The presence of multiple children and heirs often leads to business-internal bickering. How can the firms apportion roles during succession and avoid disputes? That바카라s where MBAs tailored for such businesses come in.
바카라Complicated and sensitive family, business, ownership and financial issues can often present a tough challenge for family businesses. Family conflicts can flare up over a lack of clarity on the evolving roles of family members or diverging business visions. These issues present risks to both the family and the business,바카라 a statement on the IMD바카라s Global Family Business Centre site says. The Swiss school was one of the pioneers in this field, having launched the first 바카라Leading the Family Business바카라 (LFB) programme, helmed by professors John Davis, Ivan Lansberg and John Ward, in 1988. Today, most business schools offer allied programmes and MBAs for family enterprises.
Take for instance IIM Bangalore바카라s management programme for entrepreneurs and family businesses. The basic idea of the course is to prepare heirs for entrepreneurship, which will involve 바카라the process of creating or spotting a business opportunity, making substantial investment, often more than the financial resources available with the entrepreneur, formulating strategy to expand the business and continuously repeating the opportunity-investment-expansion cycle바카라.
As the course manual says, a family business is an existing business built by family members, 바카라who were entrepreneurs at some point of time바카라. How is the opportunity-investment-expansion cycle also relevant for such enterprises? The IIM-B programme seeks to 바카라provide inputs that are relevant for entrepreneurs and members of family businesses in creating and managing new business as well as existing businesses바카라. The programme is offered by the Nadathur S Raghavan Centre for Entrepreneurial Learning (NSRCEL) of IIM Bangalore.
Indian business schools say that their offerings in this area are a sell-out. The Indian School of Business offers a 15-month postgraduate programme in management for family business that it claims is 바카라contextualised to the needs of family businesses바카라. 바카라While each family business is unique, these best practices can be applied across family businesses,바카라 a spokeswoman said.
Overseas, similar courses are offered by institutions such as the UNC Kenan-Flagler Business School. Its MBA Family Enterprise Focus customises the curriculum to 바카라create a learning plan that will address the strategic vision of their family firms and that will build upon their individual strengths바카라. INSEAD also has an elective on 바카라Family Business Management바카라 for students from family-owned businesses. The Wendel International Centre for Family Enterprise is a Centre of Excellence at INSEAD dedicated to this field.
One of the electives offered at Harvard Business School is a course in the management of family businesses. It seeks to enable students to understand the dynamics of a family-run enterprise and how to give it a professional outlook, manage shareholder relationships and handle disputes. To receive a certificate of completion for the Family Enterprise Focus, students must complete a total of five courses. Similarly, the Kellogg School of Management offers the 바카라Family Enterprises: Success and Continuity바카라 programme. This course aims to educate those 바카라involved in family business on various topics including succession and family dynamics to continuity planning and strategic performance바카라. The suite at Kellog covers issues such as 바카라family business strategy, governance and succession planning to entrepreneurship, family offices and family business culture바카라.
Family businesses need to critically review their models as they face a hugely changed business environment, with challenges that range from e-commerce to start-ups to automation. Often, macroeconomic policies are geared more towards the interests of big, diversified corporations. Keeping such an outdated model running can itself be the biggest challenge. These dynamics have created a subfield of family business within the discipline of business administration. Customisable, tailored and individualised.
