Addresses Issues in Trans-Generational Success
INSEAD, the leading international business school, today announced the publication of a new book co-authored by Morten Bennedsen, André and Rosalie Hoffmann Chair of Family Enterprise, Professor of Economics and Academic Director of the Wendel International Centre for Family Enterprise at INSEAD; and Joseph Fan, Professor of Accountancy and Finance, Director of Institute of Economics and Finance, The Chinese University of Hong Kong. The book, The Family Business Map: Assets and Roadblocks in Long Term Planning, provides an actionable roadmap to help family firms unlock potential for trans-generational success.
Family firms make up two thirds of all businesses in the world today, contributing an estimated 70 per cent to 90 per cent of global GDP. However, only 13 per cent of family businesses survive to the third generation and four per cent to the fourth generation . The Family Business Map will help family firms across the globe, in particular in emerging markets, by offering new paradigms for ownership design, long term planning and succession and exit considerations.
Morten Bennedsen, author of the book said: “While every family business is unique, most family firms around the world today have much in common; and they all account for a significant proportion of their nations’ economic output and value. However for their common successes, there are common failures. The saying that ‘wealth does not survive three generations’ was borne out by our research in Europe and Asia, where we observed that many family firms had failed to flourish when handed on to the next generation.”
Bennedsen continued: “Family firms in emerging markets in particular face tremendous challenges in transitions across generations. Although family businesses in Africa, China, India and many other Asian markets all have unique challenges, our research has found that they can all be helped by a structured approach to long term planning based on sharing these experiences.”
Much of the family business planning guidance available to date, particularly for emerging market firms, has been based on selling a Western-only approach. The Family Business Map takes the observations and lessons learned from family firms operating in many different countries, environments and cultures world-wide to develop one unified approach to identifying opportunities, challenges and sustainability.
Global demand: local nuances
In Europe, some established family enterprises have been working for over 100 years to keep the family and the business moving forward together. As the baby-boomers reach retirement age, thousands of small- and medium-sized family firms are anticipating such a transition in the coming decade.
In China, where private companies have existed only since the 1980s, a majority of founders are now in their fifties, many of them with sizeable businesses employing numerous workers. In another ten years, they too may be thinking of retirement. In India, where many family firms are in first- and second-generation hands, there is increasing pressure to design succession models in accordance with cultural values as well as often complex family structures.
In the Middle East, thanks to the oil wealth accumulated since the 1970s, a huge number of first- and second-generation family firms are approaching transition. Conversely, in many African countries, the absence of long-term planning around business and families often has catastrophic consequences for business development.
Assets versus roadblocks
Providing a blueprint for families in business to assess their unique assets – such as value driven leadership, the family network, religion and culture – against specific roadblocks, the FB Map will help families identify, plan and cultivate more appropriate business and governance strategies for success.
The critical issues faced by family firms world-wide are addressed in the book on three levels:
• Family level – Concerns over the ownership design of the family, career path selection for future generations, conflict management and resolution.
• Market level – Ownership structure and control of the firm, market challenges that impact business continuity.
• Institutional level – Pertaining to cultural values and societal norms – for example, the Chinese one-child policy of 1974 means that today there are serious succession issues.
The launch of the book coincides with the 10th anniversary of INSEAD’s Wendel International Centre for Family Enterprise. Founded in 2004 as a Centre of Excellence, the Centre is a leading knowledge and experience sharing platform for families in business from around the world. It promotes family businesses as sustainable business models largely representing the backbone of the world's economies; and encourages all families in business to focus on tailored governance solutions and healthy family relations.
The Family Business Map is derived from courses, interventions and research conducted over a number of years. It presents a unique framework as well as a novel hands-on approach to planning that has successfully been used with hundreds of family firms on every continent. Unlike books based simply on Western experience, its global comparative approach encompasses family businesses worldwide. The framework and recommendations are based on large-scale research, much of which has been published in leading academic journals over the last two decades.
Published by Palgrave Macmillan, The Family Business Map: Assets and Roadblocks in Long Term Planning is intended for families in business, banks and consultants that deal with family firms, and leaders that want to work or deal with family firms, across continents.
For additional information on The Family Business Map and Professor Morten Bennedsen, please visit www.familybusinessmap.com
For more information on the INSEAD’s Wendel International Centre for Family Enterprise
http://centres.insead.edu/family-enterprise/.
