Keeping up with the Waltons: Business-owning Family Socialization
It is widely recognized that family businesses tend to orient decision making around maintaining control of their firm, which may result in a range of “economically irrational” strategic behaviours, such as suboptimal human resource practices, governance, corporate diversification, and R&D investment, in comparison with their non-family counterparts.
However, this conservative depiction of family firms stands in stark contrast to accounts documenting the economic dominance of business-owning families around the world who may develop a portfolio of businesses. We refer to business-owning families as coalitions of kin-based decision makers, who control the strategy and future of at least one firm.
Consider for instance the Buffetts, the Waltons, or the Kuoks – one of Malaysia’s richest families who owns the Kuok Group and founded the internationally renewed Shangri-La Hotel chain. While a member of the second generation currently leads the Asia division of the luxury hotel chain, another son leads Asia’s largest operator of offshore oil-and-gas exploration vessels, PACC Offshore Services Holdings, and a third son is director at Kerry Logistics. A younger member of the family has used family resources to co-found Wilmar International, a giant in the palm oil industry.
“The integration of next-generation family members in decision making reduces the uniformity of interests, values, and beliefs, and simultaneously urges some degree of open discussion and exchange between existing and newly admitted family members. This discourse, in turn, by combining alternative perspectives, de-anchors the business-owning family from a focus on the past and facilitates the identification and pursuit of future opportunities.”
Compass for Entrepreneurial Families is an educational program developed by Business Families Foundation to provide business families with a better understanding of fundamental, contemporary concepts.
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