To begin, what does family business mean? A study of family businesses finds 21 different definitions of family business. The definition that the book takes into account is: “ A family business is a company in which there are an entrepreneur or next-generation CEO and one or more family members. They influence the firm by their managerial decisions, their ownership control, the strategic preferences of shareholders and the culture and values family shareholders impart to the enterprise.” Working in a family business can bring valuable benefits compared to nonfamily businesses. However, there are a lot of problems, especially related to the management process of all employees (family members and nonfamily members are not treated in equity for instance.) We will see in this essay on the one hand that family businesses are generally more efficient than nonfamily businesses and on the other hand the problems related to family businesses.
Family businesses are the primary engine on economic growth. Indeed, they employ more than 75% of the working population over the world and they constitute 80 to 98% of all companies in the world. But, how come family businesses run the world?
Firstly, over the years, a family business acquires know-how on its field. This know-how is transferred across generations. Thereby, this company will provide goods & services quickly and with a higher quality, according to the knowledge and the skills that this one acquired with the passing years. Moreover, this enterprise will be more competitive, efficient and faster in the production and in the distribution process, which offers a competitive advantage to this one against others companies.
Secondly, there is a strong commitment by family members in family businesses. In other words, family members put a lot of themselves in “their” company by working more efficiently and in a better way. In fact, the result of their work influences on the company’s success. Nonetheless,...
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