Only 12 % of Family Firms make it to the third generation ! (PWC, 2014)
Why does this phenomenon happen?
Based on the book ‘Patient Capital: The Role of Family Firms in Sustainable Business’ and extensive research on family firms and sustainable innovation from Dr. Sanjay Sharma and Dr.Pramodita Sharma, professors at the Grossman School of Business, University of Vermont,USA, this phenomenon begins when executives do not realize that non-family and family firms are different in nature and require different approach of management.
The following are five characteristics that family firms tend to be more…
# 1 Long-term outlook
Sustainable Innovation requires long-term patient investments in resources, organizational change, and building capabilities that do not pay back in the short-term. Unlike non-family firms that are more focused on short-term results, family firms balance the socio-emotional health and wealth of the family with business profitability and hence have a longer-term outlook on strategy and investment.
#2 Interested in sustainability
Next and future generations of family members are more interested in sustainable businesses that solve societal problems rather than perpetuate the damage to society and the environment.
#3 Embedded in the community
Family firms are more embedded in their communities as compared to non-family firms and have a greater propensity for community and environmental stewardship as compared to non-family firms.
Family firms are able to embed a sustainable innovation mission in their firm faster than non-family firms due to the melding of the family’s and firm’s identity.
Decison-Making, resource allocation and capability building for driving sustainable innovation in family firms is faster as compared to non-family firms due to shorter lines of communication between the family members and the top management decision-making team.
To enhance sustainable innovations in family firms, family members should understand the processes that allow them to tap the entrepreneurial acumen of the business family for developing long-term strategies and capabilities for the future competitive advantage via sustainable innovation.
P. (2014). Bridging the gap: Handing over the family business to the next generation. Next Generation Survey. Retrieved June 4, 2019, from https://thaipublica.org/…/uploads/2014/05/nextgen-survey.pdf.
Sharma, S., & Sharma, P. (2019). Patient capital: The role of family firms in sustainable business. New York: Cambridge University Press.
Would you like to learn more about Sustainable Innovations for Family Business?
For the first time in Thailand, Dr. Sanjay and Dr.Pramodita Sharma are going to share their extensive knowledge and workshop at Sasin School of Management during July 18-19, 2019.
For more information and registration, please go to http://info.sasin.edu/ee-familybusiness2019
Call : 02-218-4001-7 EXT 162-167 ExecutiveEducation@sasin.edu
The seats are limited!