What differentiate family firms from non-family firms? A recent study by our INSEEC Professor, Mariateresa Torchia, based on survey data on Finnish family firms, identified a set of differentiated family owners’ goals which have both a non-economic and economic nature. The study find out that family owners’ identification goals are the ones which are contributing to business growth and continuity.
This studies contributes to the debate which aim at better understanding the process through which family owners shape, define and contribute to family firms’ growth and continuity and to understand what motivates and drives their behavior. In particular, the study suggest that a careful assessment of family owners’ goals helps defining strategies which are sustainable and realizable but also shared and well received which would sustain the continuity and growth of the family firm.
This study also offers an interesting discussion point on the importance to design, implement and communicate a proper family ownership strategy. Strategy on organizational level can be considered as teleological process, where desired outcome and goals are fundamental. We add also to the debate on defining goal setting in the context of family firms as previous research often simplifies the ownership related goals into one, for example into monetary surplus, or into two, for example business related goals and family related goals in the family business research. We suggest that adopting a more nuanced approach we could better catch variations in ownership related goals and consequently in family firms’ behaviors.
This study also has practical implications. Indeed, it suggests that in the family firm context, ownership strategy should include elements like present and future ownership structure (e.g., number of owners, amount of owned shares), and classes of stocks (especially voting rights for each class). Also contractual elements like partnership contracts, and contracts of buying or selling shares could be parts of the ownership strategy. The distribution of tasks between different family members could be determined in family ownership strategy, including tasks of key persons (like incumbent, successor and key managers and directors) whether they are employed in the family business or not. Finally, probably the most important parts of the family’s ownership strategy would be the vision of the family as a business family as well as the action plan to accomplish it.
Torchia Mariateresa, Rautiainen Marita, Calabrò Andrea, Ikäheimonen Tuuli, Pihkala Timo, Ikävalko Markku (2018). Family Ownership Goals and Socioemotional Wealth: Evidence from Finnish Family Firms. Journal of Enterprising Culture, 26 (02), 207-224