LONGEVITY

LONGEVITY OF FAMILY BUSINESSES


The term ‘transgenerational’ is used to describe research into cross-generational aspects that contribute to the longevity of family businesses. Succession processes don’t just start when the son or daughter enters the firm; plans begin to be made inside the family as soon as he or she is born. Succession therefore occupies the business and the family continuously. And succession is not the only aspect that contributes to longevity. There are fundamental questions about how the relationship between the family and company can be organised permanently for the benefit of both. This entails numerous academic lines of enquiry, such as: how is the education of the next generation envisaged? How are succession arrangements negotiated and implanted? In what form are shares transferred to the children? To what extent are all these family strategy decision-making processes considered and structured? – and so on. This topic entails a number of cross-generational challenges that business families address with varying degrees of professionalism.

LONGEVITY AS A CHALLENGE TO ACADEMIC RESEARCH


Ever since it was founded in 1998, the Witten Institute has been looking at the question of why businesses endure. Its first big project was about precisely that: which successful templates enable family businesses to remain in family ownership over multiple generations, to the benefit of the business and the family. Longevity was also the focus of a second major project which aimed to provide an overview of how Germany’s large, long-lasting companies (a hundred years and older) are structured from a business and a family point of view. The ‘Family strategy over generations’ project was designed as a ‘journey of learning’ in which some of Germany’s largest and most important family businesses each clearly presented and discussed their own family strategy regulatory systems. This was completed in 2017 with the drafting of a system theory of the business family. This work sums up the findings of almost twenty years of family business research in Witten. The current ‘Large dynastic families’ project examines particular issues that need to be addressed by companies that have a large group of shareholders (around 80 shareholders or more, often well over a hundred). WIFU collaborates closely with ESADE Business School in Barcelona. The ‘Mental Models’ concept developed by Professor Dr Alberto Gimeno, who is also a visiting professor at WIFU, helps differentiate between the varying logics of family businesses (patriarchal logic), the model of the operative family, the active proprietor family model and the investment family) and is used by us in many ways as a foundational structural model.

FAMILY STRATEGY AS
A PRACTICAL APPROACH


This term collectively describes the efforts made towards shaping the relationship between family and company positively over the long term. This involves examining numerous crucial issues, since linking such disparate social systems as families and businesses demands constant diligence. While families focus on relationships between their members, their feelings and their wellbeing, the logic of a business focuses on how the things that are currently happening affect the company’s ability to make decisions and its cash flow. These two logics clash at various points, and there is a need to formalise and organise family processes. The family sets itself rules (but what happens when they are broken?), forms consultative bodies (this begs the question of who is appointed to them, with which qualifications, and by which selection procedures), and so on. The most serious threat to family businesses is from the market, it is the extent to which conflicts inside the family impact on business, which is why effective conflict management in business families is a such a priority.

LITERATURE (SELECTION)


RESEARCH PROJECTS


  • Multi-generation family businesses (2000-2005)
  • Large German family businesses (2007-2011)
  • Conflicts in family businesses (2011-2013)
  • Family strategy over generations (2011-2017)
  • Large dynastic families (since 2017)

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