Family firms represent two-thirds of businesses in the UK and account for approximately half of the economic activity and private employment. The picture is similar in most countries throughout the world.
The diversity of family businesses and their behaviour make them an important field of study and one which is naturally multidisciplinary, involving sociology, economics, management theories, culture and history. Understanding family firms requires the analysis of the complex interaction of family and firm, the forces underlying family values and the way these shape the business culture, behaviour, and capabilities of firms.
Our research has shown that different types of family firms can be identified and that high-performing family firms are an outlier group that differ in size, ownership and management structures from the stereotypical ‘average’ family firm.
Family firms tend to be older than non-family firms and many of the longest surviving firms are family-owned or controlled. It is often said that innovation is crucial to the survival of firms. These longstanding family firms provide interesting lessons for others on how to sustain innovation across generations. Intergenerational succession lies at the heart of the longstanding family firm. Succession has in it the potential for change and regeneration of the firm, based upon a bedrock of shared experience and history.
It is this potential for change and regeneration described as ‘interpreneurship … intergenerational entrepreneurship leading to transformation’ which powerfully links family business with the study of entrepreneurship. The future prosperity of any family business, and indeed its ability to survive, is inextricably linked to the succession process and the way it is handled.
This interplay between the continuities of past experience and the need for change lie at the heart of the family business. They mean that the decisions to innovate and change, made by later generations, are every bit as entrepreneurial as the original decision to found the business.