The Crisis Opens Up Great Opportunities
The current financial and economic crisis opens up crucial issues for firms. Rather than wondering how to reduce the negative effects of the unfolding recession, companies should focus on seizing the entrepreneurial opportunities opened up by the crisis itself.
The constant pursuit of business initiatives is essential for corporate survival, growth and value-creation. This is particularly true for family-owned companies, in which capital and family constraints, and the weight of history and tradition can put a brake on entrepreneurial innovation.
The STEP (Successful Trans-generational Entrepreneurship Practices) international applied research project has explored how entrepreneurship gets transmitted across generations. Ten European universities, including Bocconi, along with Boston's Babson College have participated in the project, seeking concrete answers to these aspects. The study compared 40 case of family companies characterized by different levels of entrepreneurship and ascertained the emergence of certain common factors. These were openly discussed and refined in the course of three international symposia, which brought together university researchers and the companies under consideration.
There are three key variables that allow family-controlled firms to open their gates to innovation: culture and values, strategy, and governance. Firstly, the social objectives and company values held by the controlling family are essential propelling factors in determining business choices. In particular, a strong customer-oriented culture, cultivated through networks of contacts maintained by family members, is essential in locating and pursuing new entrepreneurial initiatives.In addition, a company culture oriented to the personal and professional development of members of the controlling family, rather than to the commitment of the directives coming from the top or the company's founders, favors the emergence of business ideas and the development of entrepreneurship.
Secondly, entrepeneurial renewal is always constrained by the strategic paths of innovation followed by prior generations. The most dynamic and innovative business strategies have been implemented by the newer generations who had more vividly absorbed the culture and values of the founders. Thirdly, the lifetime cycle of the controlling family and the relations among family members deeply affect entrepreneurial dynamics. However, the most dynamic families have highlighted their superior ability to shape company governance by isolating business decision-making from family decisions. The evolution of the family company from unitary entity to portfolio of several firms, each characterized by its own strategic and entrepreneurial objectives, has often been observed.
If it is true that the ways of keeping the entrepreneurial spirit alive in family companies are not the same as in public companies, it's also true that the entrepreneurial dynamism of the former can be effectively managed by resorting to adequate solutions with respect to organization, strategy, and governance.