An issue of ‘Gender’ in Family Business

By Rodrigo Basco, Ph.D.

I thought I could share some thoughts about the role of women in family business succession. This is not only a complicated issue to discuss, but also a delicate one, since it may slide into sensitive territory. In fact, it is a topic that must be understood in the specific cultural and historical context.

I will make myself clear …

Tony Buddenbrooks would not be considered as the successor of her family business company ‘House Buddenbrook’ (in T.Mann novel). This restriction cannot be judged as good or bad, we should try to understand women’s role in the specific context like 19th century in Germany. But we shouldn’t look so long ago: even 40 years ago a father would not think of his daughter as a potential successor to the family business. Although this may seem absurd to us, women are not regarded as likely candidates to take up business leadership in many countries-cultures.

A while ago I heard a businessman said: ‘My daughters are too dumb to take any position in the company’, even when his daughters seemed to show more entrepreneurial spirit than their father. I thought ‘if this businessman had a son, he would say ‘my son is the perfect candidate to succeed me – but after my death –of course’, even if the child were a “spoiled kid with a cool pick-up truck”. In contrast, in a context with Anglo-Saxon roots, I heard an entrepreneur names his youngest daughter as his future successor because she had shown charisma and preparation to face the challenge to consolidate the firm around all family branches making up the capital.

These examples illustrate the extremes about how women can be considered in the family business (the reader can imagine multiple grey areas in between). But it is undeniable that the role of women as future leaders or successors in a firm depends on the family that owns and manages the firm. Family values are the reflection of what their members consider as the right status of women within family firm, i.e. allowing women to be part of the firm or not. I do not wish to criticize or praise the ways women are considered in the family and the business context. The above mentioned examples show the extreme positions that allow us to understand gender issues.

Even though we are on the way to build equal culture in the twenty-first century, the succession of the family firm is led by founders-successors who have created or taken command of the firm in the 1970s and 80s and who still perpetuate the idea that ‘a woman cannot take the leadership of the firm’ or have some favouritism to male heirs. There is a clear paradox in companies with these features: a culture within the firm (male chauvinist position) and another culture outside the firm (gender equality). These contrasting situations are likely to create problems sooner or later.

For example, a problem arises when the woman or women in the family are aware that they have been removed from the ownership and management of the firm, which in turn has been distributed among male heirs. These women are likely to believe that this situation is demeaning and causes not only economic but also moral injustice. This, in turn, may result in a wide gap between the different perceptions of reality in the members of the family, causing friction and emotional distance.

While one group in the family takes cultural tradition as a given fact (men inside) and avoids recognizing that cultural and affective circumstances have changed (because that would also mean sharing power and ownership with women), the other group (women) ends up feeling injustice and inequity. It is a difficult situation to deal with, but it a circumstance that transitional societies should handle: women need to realize that the role they play is not as mere spectators of what men decide in the family firm context, but as active participants in economic and business decisions, despite the fact that it could take a long time and effort to persuade other family members to accept the situation as customary and inevitable.

We cannot change the past but we can change the future. Families who are immersed in such a dynamic should reprogram the way their members interact and how they communicate with each other. Communication is the element that the family and the business systems use to reproduce themselves. In order to have changes, we need to face the past and set the new values that should prevail in the future. Without communication there is no understanding, and without understanding the only possible ending is the disintegration of the family or the family branches and, of course, the firm.

Rigor & Relevance Seminar

The family participation on the firm (family members in management and government posts) is necessary condition to explore the influence of the family on the firm but not sufficient to understand the consequences of the collision between family logic and business logic. Family effect on the firm should be understood in the decision-making, specifically answering the question: how does family influence the way an organization is governed and managed, i.e. Family-enterprise Management? Family-Enterprise Management is the way family firms balance the family-oriented and business-oriented decisions in four areas (board of directors, strategic process, succession, and human resource practices) in order to achieve better business results as well as family results.

Family-Enterprise Management. Is Family Influence an Asset or Liability?”

Basco R., Ph.D.

Witten Institute for Family Business

Lecture series on January 15, 2014.

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