The Power of Inclusion in Family Business

Cover of The Power of Inclusion in Family Business
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Table of contents

(15 chapters)

Prelims

Pages i-xxii
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Part I: Love, Learning and Freedom: Enabling Women to THRIVE in the Family Business

Abstract

How do families-in-business deal with intergenerational female succession in their company’s corporate governance structures, i.e., the board of directors? How is female boardroom capital built up? This chapter explores the boardroom immersion processes and mentorship programs followed by 44 Mexican and Spanish next-gen women owners of 2nd, 3rd, and 4th generation, privately-owned, national and international firms, who were appointed for the first time to their family business’ board of directors between 2005 and 2020.

Our outcomes show that intergenerational female corporate governance succession is driven more by particular families-in-business matters, like the inheritance of ownership rights, than by corporate governance codes or soft legislation. We discovered that next-generation women owners are more likely to be appointed for the first time to their family business boardroom when they’re between ages of 38 and 47. Ninety percent (90%) of them will be appointed at or before 57. Our findings also reveal that 4th generation female owners are immersed in the boardroom at a younger age.

When analyzing the immersion processes, we noticed too that due to limited business socialization during their upbringing, some of these well-­educated, professionally qualified females had to cope with holding legal ownership (potestas) in the family firm but missing business decision-making legitimacy (auctoritas) in the governance structure. Based on our results, we developed a families-in-business female boardroom capital development framework to help them achieve both: potestas and auctoritas, as well as to facilitate next-generation women owners’ boardroom incorporation in family enterprises.

Abstract

A typical Japanese family firm tends to be small and resilient over generations. Some of the activities and practices of such firms provide valuable information about the persistence of family businesses. Through the narratives of a couple who run a 100-year-old family firm in Japan, this chapter explicates how and why they succeeded in the bold transformation of their business during times of adversity.

The couple proposed two different stories about the four business model innovations throughout the firm’s history. Even though this innovation process can be explained as “entrepreneurship,” it is more deeply understood by focusing on the social aspects of “family.” The couple innovated their business using householding practices that supported their kin, employees, and community, with an ideal of perpetuity rather than of the maximization of profit. These practices gave meaning to the firm’s existence and its need to survive.

The household is a competing term for family, being broadly defined by the dimensions of its forms, activities, and values. This study focuses on the householding perspective, showing how and why householding practices drive business model innovations in Japanese settings. To conclude, the distinctive inclusiveness of householding, in terms of membership and leadership, is also explored.

Abstract

This chapter explores various structural, socio-cultural and economic factors that have precipitated the significant change in the supply of free family firm workers, specifically women’s unpaid labor. To investigate these concerns, we use longitudinal data from the U.S. Current Population Survey (CPS) and the Bureau of Labor Statistics (BLS). We provide a general overview of critical social, cultural and economic factors impacting women’s opportunities since 1948, with an emphasis on recent historical changes between 1994 and 2020.

We find that, among other factors, the deinstitutionalization of marriage, changing rates of educational attainment, fluctuating labor force participation, economic recessions and women’s rights movements have led to a steep decline in unpaid female family workers. We further assess the distribution of unpaid family workers by industry and by age of worker to build a more nuanced picture of this trend. We sought to determine where these unpaid female workers went --to industry jobs, government work or self-­employment.

Given that complex national-level factors will continue to impact women’s life choices, family firms should consider the short- and long-term impact of the changing social value of women and their roles in family firms. We suggest family firms: ensure appropriate financial compensation for talented women, provide a range of supportive options for work-family balance to increase retention, and consider differential work opportunities for women at the start of their professional lives and those who may be interested in contributing to their families’ business in the later years of their careers.

Abstract

The objective of this chapter is to understand the negotiation experience of women in the context of the family business. The study is based on interviews of 12 women in leadership or senior positions in their family firms. This investigation looks at how women overcome negotiation challenges and turn them into opportunities when negotiating in their family enterprises.

The study finds that principal challenges are (a) lack of recognition of legitimacy, (b) lack of negotiation power, and (c) role conflict. The challenges faced by women in negotiations in a family business are consistent with the extant literature. Women in leadership positions in a family business overcome these challenges by adopting strategies that help them handle a specific situation more strategically and enhance their overall negotiation skills. The main strategies adopted by women are (a) forming alliances, (b) showing evidence of competence, (c) formalization of the negotiation processes, (d) negotiating from the perspective of the family and the future, (e) having role models, and finally (f) employing positive stereotypes about women in the negotiation.

The author recommends that family businesses can become more inclusive and empower their female members by grooming them from an early age to become leaders, by formalizing negotiation processes and thereby reducing the influence of personal biases and, by exposing female members of the family, from a young age, to inspiring role models.

Part II: Acceptance, Confidence and Collaboration: Enabling Women to ACHIEVE in the Family Business

Abstract

In this chapter, we address challenges and constraints to sharing negative emotionally-charged events in the family business context, and how this has an effect on ownership or manager identity. We examine the specific structural and social characteristics of family businesses that can undermine the benefits of socially sharing emotions. We provide illustrations of sharing emotions with external and internal partners of family businesses. We specifically point out the difficulty of sharing due to the deeply personal nature of the emotional events involved, the complexity of relationships, lack of trust, bullying, exclusion, and family expectations.

We conclude that women may be disadvantaged in different ways, such as being exposed to more emotionally challenging events than men, having a limited and crippled network of confidants within and outside the family business, and perceiving themselves as having signs of weakness. All these constraints hinder women from building a solid ownership or manager identity.

Our suggestions to family members and external partners alike are to work on continuous awareness and consciousness building where everything that is mentionable is also manageable, to strengthen relationships through so-called “check-ins” to develop effective communication skills, and to openly discuss family expectations.

Abstract

This chapter expands our understanding of daughters’ inclusion in family business succession, analyzing why and how it can and does take place. Our work reveals that things are much more complex and diverse than research tells us in terms of daughters, their families, and their businesses.

Daughters are not only “in” or “out” of the family business. They can be included in a variety of ways, at different moments, following different paths, in a diversity of contexts. Based on 10 years of qualitative research data on family business succession, we explain and discuss how gender dynamics in the family and the business systems affect succession practices and outcomes, beyond the individual level analysis.

We used six selected and contrasted cases to illustrate the influence that gender, birth order, family inherited culture, business hierarchies and history, interpersonal relationships (parents-heirs-other stakeholders), as well as ownership transfers, governance rules and management procedures have on intergenerational succession, and particularly in daughters’ family business inclusion. From our findings, readers can draw practical recommendations for family business owners, managers and successors.

Abstract

What are the unique challenges for daughters who inherit ownership in family enterprise? How does their path to ownership influence their impact? What dilemmas are associated with their ownership roles? How can women best respond to the challenges of ownership? This chapter offers preliminary answers to these questions, including suggestions for enhancing the ability of women owners—especially daughters—to engage constructively with the businesses they inherit.

We focus on daughters serving in three distinctive roles: (1) as “operating owners” working in the family company and pursuing careers and leadership roles in management; (2) as “governing owners” serving as chairs or directors on the board of the business, or as members of other governance forums such as a family council, an owners’ council or the board of the family’s philanthropic foundation; and, (3) as “engaged owners” who are neither in operational or governance roles but are keenly connected to the enterprise’s success and continuity.

Our fundamental thesis is that the active participation of daughters as operating, governing or engaged owners enhances the continuity of the enterprise by expanding the pool of managerial and governing talent available to the business and by fostering inclusion, commitment and unity among the owners. We conclude by describing three interventions that can facilitate the dilemmas daughters face as owners and empower them to engage constructively with the family enterprise: (1) education, (2) mentorship and network support, and (3) well designed structures and roles.

Part III: Collegiality and Co-Evolution: Enabling Women to BECOME Leaders and Stewards

Abstract

This chapter offers insights into how sibling dyads manage to prevent falling into the trap of conflicts and decision-making paralysis. The study draws on the case study of a family business that was co-founded by a married couple and is currently led by their daughter and son. The family business is 50-years-old.

The case provides inputs on how the three factors identified by Bövers and Hoon (2020) emerge in a duo-shared leadership and are influenced by the siblings’ personal relationship’s evolution since infancy. It also provides details into the role other family members and the family stories play in nurturing and strengthening relationships. Furthermore, it explores how some dimensions related to masculinity and femininity that can be at the origin of quarrels and conflicts between gender-diverse siblings can weaken or challenge the stability of the dynamic equilibrium of a siblings’ duo-shared leadership.

In addition, the case offers helpful examples into how the board of directors can help prevent conflict escalation, as well as on how triangulation can facilitate a dialogue between two family members who have different communication styles that cause difficulties in their direct interaction. Takeaways and recommendations close the chapter.

Abstract

Family offices are growth-promoting organizations that support multigenerational business families to preserve and grow their wealth. Women inclusion in leadership positions of family firms is increasing, but females are still under-represented, especially in the family office activities.

The purpose of the chapter is to explore trust building in the context of Finnish single-family offices (SFOs). Trust building means both trust development and trust repair. We focus on how seven experienced Finnish female business owners who are actively involved in their SFOs, went through the process of trust building in the SFO activities.

Our findings indicate that social interaction connected with stewardship attitudes and behavior (i.e., being altruistic, collectivistic and pro-organizational) helps to build emotional and cognitive trust in the SFO activities. We also realize that the development of trust skills requires the need for specific family values, circumstances, and processes (doing, learning, experiencing and influencing). A conceptual model describing the trust building process in SFO activities is suggested for forthcoming studies. To conclude, practical recommendations and insights are offered for business families and their SFO executives.

Abstract

This chapter explores how next-generation women owners participate and contribute to their families’ single-family offices (SFOs). To examine this issue, we analyze 12 SFOs from Europe, North America, Latin America and Asia Pacific.

Our results show that daughters actively participate in philanthropic efforts, community-based entrepreneurship projects and family council meetings. Yet, they are rarely involved in the SFO investment committees or board of directors. Moreover, female next gens are less likely to propose new business ventures to the family council or SFO board of directors. Apparently, daughters are not as encouraged as sons to create their own for-profit start-up. Family inclusive values and culture, parental influence and/or sibling’s encouragement, the presence of female role models, and the existence of a gender-diverse SFO top management team positively influence the way women owners relate to and connect into the SFO.

We realize, too, that when women owners are not involved in the family council, less family-related activities are promoted. Occasional family-related activities are associated with the family council limited operation and null vision of intergenerational wealth transfer. Further findings are grouped in five major themes: (1) Motivation to set up the SFO, (2) SFO activities, (3) New business ventures, (4) SFO governance structures and (5) SFO strategy and vision. Based on the SFO strategy, vision and activities, we identified four types of SFOs: The SFO as a Legacy School, as an Entrepreneurship School, as a Community School, and as a Decorative-Investment Arm.

Index

Pages 227-231
Content available
Cover of The Power of Inclusion in Family Business
DOI
10.1108/9781801175784
Publication date
2022-02-14
Editors
ISBN
978-1-80117-579-1
eISBN
978-1-80117-578-4