As mentioned in the Financial Times, even though the family-owned business model is not praised in modern economies, it is worth noticing how these companies outperform their competitors in adverse circumstances, whether we talk about the mom-and-pop shop or large multinationals like Mars, Ferrero or L’Oréal. In order to overcome turbulent periods, two distinctive characteristics of family businesses – resilience and adaptability – play a key role, together with a long-term vision, financial prudence, a strong connection with the local area and a solid link between the owners and their businesses in terms of loyalty and values. These particular entrepreneurs combine in-depth knowledge of the market and their business structure with other overlooked yet fundamental assets which have an equally important impact.
Along with careful management, lower average debt and a propensity to invest, the financial safety net provided by family wealth can help these companies weather the storm unscathed or, at most, with limited damage. Together with Luciano Ciravegna (King’s College and INCAE), Liena Kano and Alain Verbeke (Haskayne School of Business), I looked into another characteristic which has allowed Frescobaldi, wine producers for over 700 years, and other family firms to survive revolutions, recessions and wars, i.e. their ability to create a strong network of relationships and a superior social capital – social relations that have productive benefits – through “corporate diplomacy”: by aligning their corporate values with societal value systems and by promoting mutual engagement between the family, employees and customers who embrace their mission and vision, these companies have been recognised as value-creating partners in broader society
Family-run businesses have the opportunity to play an important role in all European Union countries, greatly contributing to their rebirth. Today, they face two major challenges: one in terms of size, given the increased competition in global supply chains and the impact of technology; and one in terms of evolution, since the current circumstances require different skills from those of the past generations, as well as solid values, vision and dedication.
Whilst in the past the training of young members bound to take up the baton took place mainly within the company, it is increasingly necessary to have a wider set of experiences, soft skills, knowledge and relationships that go beyond the local context of the company itself. For this reason, international business schools are one of the best places to train new generations of leaders who are able to recognise and embrace the specific corporate culture to ensure a long life for the family business. Like Matteo Frescobaldi…
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