Family businesses may have owners who are not family members. Family businesses may also be managed by individuals who are not members of the family. However, family members are often involved in the operations of their family business in some capacity and, in smaller companies, usually one or more family members are the senior officers and managers. Many businesses that are now public companies were family businesses. 2.0 Importance Of Family Business
According to the Institute of Family Owned Business’s website, over ninety five per cent of all businesses in the United States are family-owned. Although many family firms are small, many are major corporations including one third of the Fortune 500. Family businesses produce about half of the US gross national product and generate half of the wages paid in this country. Those are impressive statistics. They underscore the importance of family businesses to US economy as well as to our world economy. Besides, family businesses are reckoned as one of the engines of the post-industrial growth process since they are credited for nurturing across generations entrepreneurial talent, a sense of loyalty to business success, long-term strategic commitment, and corporate independence (Poutziouris, 2001). Ram (1993) notes that it is the family business that lie at the heart of firms’ social networks. Family business provides the entrepreneur with a unique form of “social capital” that has been shown to be important to the establishment, development and “competitive advantage” of businesses. Family businesses are encouraged to do because it can “break out” of traditional sectors and diversify or move into more profitable areas where markets are not so competitive and economic returns for the entrepreneur and the local economy can be improved. This issue is particularly important given the current interest in the perceived link between diversity and city competitiveness and the potential for enterprise to offer a route out of social exclusion by creating employment for disadvantaged communities. (Ram and Jones, 1998; Smallbone et al., 2007). Furthermore, family business does provide a safety shelter to family members. This sense of responsibility towards the family is deeply embedded within family business (Bagwell, 2006). With family business strong family ties can exist across a wider family grouping and transcend national boundaries. Where an entrepreneur’s “strong ties” are situated in a completely different country and culture they can provide access to a wider range of ideas and information that may benefit the business and encourage innovation. The entrepreneur may also be able to draw on additional expertise or “human capital” from within his/her family network, and this may help compensate for his or her own limited knowledge or contacts. This suggests that in such situations it is necessary to look at the nature of the social and human capital within the extended family rather than just those of the individual entrepreneur. (Greve and Salaff, 2003; Klyver, 2007)
3.0About Family Business
Family business are the primary engine of economic growth and vitality in free economies all over the world. Being unique in their attributes, they are also unique in the assets and vulnerabilities that they being to the marketplace. Family business constitute the whole gamut of enterprises in which an entrepreneur or next-generation CEO and one or more family members influence the firm via their participation, their ownership control, their strategic preferences and the culture and values they impart to the enterprise.
Family business that have been built to last recognize the tension between preserving and protecting the core of what has made the business successful and promoting growth and adaptation to changing competitive dynamics. Family meetings and family councils are reliable forum for the education of family members about...