Family-Enterprise Management

Wordle: Untitled

“Business management” and “Family-Enterprise management” are two distinct concepts, even though they are closely related. The former refers to the management of business in general, while the latte

r refers to the management of specific types of firms, i.e. family firms.

Surely you think that firms are firms and that there is no need to differentiate between those that are family owned-managed and those that are not family owned-managed.

Let’s think about the business objectives. The aim of any firm is to earn money because positive results are the oxygen that allows firms to survive. Any firm, no matter it is family owned-managed or not, should earn money. So far, this is nothing new, and all firms seem to look alike.

But a different thing is to consider the maximization of results as an aim, the point where firms get their maximum results. The maximization of results, as an objective, stems from shareholders who have invested their own money and they demand the return of this capital; the greater the result of the company means the better the return of the capital.

But as we know, the motivations of the shareholders are not exactly the same. Personal objectives regarding the firm may be different and may not be only related to maximizing benefits. In such context, considering the firm as an institution formed by people, their objectives can vary depending on who are the part of the economic project.

The motivations and objectives of those who are behind the organization represent the point in which “traditional business management” and “family-enterprise management” split, like two highways that go in the same direction but face different obstacles.

The family behind the economic project affects the way an organization is governed and managed. This happens due to the fact that the motivations of the individuals are transmitted to the firm, and the objectives are realigned to adapt both the business system and the family system. Accordingly, the management and the governance of family firms are not exactly the same as in the firms that are not family owned and managed. The governance and management of family firms take into account the interaction of both systems. The family-enterprise management emerges from this interaction.

Although many academics and professionals disagree with this idea, proclaiming that family firms are just like any other firms and the traditional vision of Management should be applied to them, the reality is much ampler than what traditional Management has taught us. Let’s take an example, the Añaños family, the leader of a major Latin American company. The journalist Mr. Saiz reports that the family participates actively in relevant business decisions and if there isn’t unanimity within the family there are two alternatives: either to convince those who don’t agree or let themselves be convinced by those of a different opinion.

How can a family such as the Añaños compete successfully in the market and be a threat for big multi-national companies such as Coca-Cola or Pepsi? Can a firm compete successfully in the market thinking that decisions should preserve family unity? Is survival possible for family business beyond some generations? These and many others are the questions that the “Family-Enterprise Management” attempts to answer.

Advertisements
%d bloggers like this: