Family Business and Family Change:
Individual Autonomy,
Democratization, and the New Family
Business Institutions
Michael Gilding
The renewed attention to family business in western societies is usually attributed to a past lack of
attention to the subject because of its private character and to the resurgence of family business in
the context of economic restructuring. This paper argues that there is a third reason for the renewed attention to family business, namely, the changing character of the family institution. In
particular, there are broad trends toward the pursuit of individual autonomy and democratization
in family relationships. A qualitative study of high-wealth stakeholders in Australian family businesses found that the principles of individual autonomy and democratization presented challenges
for family business solidarity and continuity. These challenges gave rise to new family business
institutions designed to facilitate communication and trust. These institutions are at the center of
the renewed attention to family business in western societies.
Introduction
Since the 1960s, a fast-growing literature
concerning family business in western societies
emerged along with specialist family business
organizations representing the distinctive
interests of family business. Universities, family
business professionals, service industries
(especially in the financial services sector), and
large family businesses all played a key role in
these developments.
The growing attention to family business
occurred first in the United States. The
pioneering articles of the 1960s examined typical
problems facing family firms, such as succession
planning (Danco, 1967). In turn, during the 1970s
and 1980s, business academics and psychologists
(often drawing on their consultancy experience)
began to apply their models and concepts to
family businesses, placing family business issues
in a wider framework (Gersick, Davis, Hampton,
& Lansberg, 1997). From the mid-1980s,
universities, industry groups, and large family
businesses facilitated the establishment of
specialist family business organizations, research
centers, and tertiary programs. By the early
1990s, there were nearly 100 colleges and
universities in the United States providing special
education programs for families in business
(Aronoff, Astrachan, & Ward, 1996).
Australia lagged the United States, but there
was a similar trajectory. In the early 1990s, several
universities formed family business centers. The
financial services sector funded pioneering
research on family businesses by family business
consultants, business academics, and
psychologists concerning the scale and dynamics
of family business (Connolly & Jay, 1996;
Smyrnios, Romano, & Tanewski, 1997). In 1998,
large family businesses played a leading role in
the formation of a national family business
FAMILY BUSINESS REVIEW, vol. XIII, no. 3, September 2000 © Family Firm Institute, Inc.
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Gilding
organization, Family Business Australia.
A common explanation for the burgeoning
interest and activity around family business was
that family businesses dominated the economy
but were overlooked because of their orientation
toward privacy. For example, the influential
American commentators John L. Ward and Craig
E. Aronoff observe:
No one knows exactly how many family
businesses there are in the U.S. According to various estimates, from 75 percent to 95 percent of U.S. companies are
family firms, and they generate from 40
percent to 60 percent of the gross national product (Ward & Aronoff, 1996,
p. 3).
Similarly, Graham Connelly and Christopher Jay frame their survey of Australian family
businesses in terms of “the hidden world of family business.” They estimate “that family business constitutes about 70 per cent by number of
the total of Australian companies, employs more
than half of the private enterprise workforce, and
provides the majority of growth and employment
increase in the Australian economy” (Connolly
& Jay, 1996). Yet, a “large proportion of successful family business owners believe they have excellent reasons for staying out of the limelight”
due to industrial disputes, family expectations,
and the tax office. Accordingly, they described
family businesses as “stealth wealth.”
Occasionally, commentators observed a
second reason for the burgeoning interest in
family business. From the late 19th century – the
period that is sometimes described as the second
industrial revolution – the American-style
corporation, professionally managed and
impersonally owned, was the major source of
dynamism in the economy. In the United States,
General Motors was the exemplar of this new
style of organization. In Australia, the exemplar
was the mining giant Broken Hill Propriety
Limited. In this context, a variety of scholars –
first in the United States and later in Australia –
documented the triumph of “managerial
240
capitalism” and the decline of “family capitalism”
(Berle & Means, 1968; Bell, 1960; Wheelwright,
1957). In turn, family businesses were viewed as
anachronisms.
Substantial economic restructuring in
advanced capitalist societies took place during the
1970s. This restructuring has been
conceptualized in a variety of ways, for example,
in terms of the “information revolution,”
“flexible accumulation,” “post-Fordism,” and
“the third industrial revolution” (Jones, 1982;
Harvey, 1990; Thurow, 1999). This restructuring
involved a reorganization of industrial enterprise
(Clegg, 1990). The historic decline of small- and
medium-size business bottomed out in the early
1970s. Thereafter, the growth of large
organizations stalled (Sampson, 1996), “personal
forms of ownership and control” reasserted
themselves at the top levels of business (Carroll
& Lewis, 1991), and small- and medium-size
businesses surged (Collins, Gibson, Alcorso,
Castles, & Tait, 1995; Revesz & Lattimore, 1997;
Marceau, 1990). In this context, there was a
resurgence of family business.
There is no doubt concerning both the
hidden importance of family business and the
resurgence of family business. This paper
suggests a third reason for the renewed interest
in family business in western societies: the
changing character of the institution of the family
in western societies.
It is curious that researchers have almost
completely overlooked the relationship between
family business and family change. After all, the
resurgence of interest in family business occurred
concurrently with dramatic changes in the
institution of the family in western societies. Family
change was especially pronounced in the Englishspeaking societies, including the United States and
Australia. Yet the literature on family business and
the literature on family change largely grew
alongside each other, with almost no crossfertilization. The implication was that the two
subjects were largely unrelated. This paper argues
that, on the contrary, family change had a substantial
bearing on family business, contributing to the
growing attention to family business.
Family Business and Family Change:
Individual Autonomy, Democratization, and the New Family Business Institutions
This paper first identifies the dimensions of
family change since the 1970s and the broad
patterns of family change. In particular, it
emphasizes the trends toward individual
autonomy and democratization in families.
Second, it introduces qualitative data from a study
of large family businesses in Australia. It shows
how changes in the family, notably the principles
of individual autonomy and gender equality,
introduced new dilemmas for family businesses.
Finally, the paper considers how these dilemmas
contributed to the emergence of new family
business institutions designed to facilitate
communication and negotiation in family
businesses. It also shows how these dilemmas and
institutions were intrinsic to the rising profile of
family business.
Family Change
Since the 1970s, wide-ranging changes in the
structure and organization of families in western
societies have taken place. The main dimensions
of family change are well known. They include a
decline in the marriage rate, a delay in the age of
marriage, the growth of informal cohabitation,
an increase in workforce participation on the part
of married women with children, a decline in the
fertility rate, a rise in the ex-nuptial fertility rate,
the growth of formal and informal child care, a
sharp rise in the divorce rate, an increase in sexual
relations outside marriage, and a rise in the remarriage rate. In general, there was an increasing proportion of households consisting of single
people, couples without children, sole-parent
families, stepfamilies, and groups. There was also
a declining proportion of households consisting
of married couples and their children. There were
substantial variations and anomalies in these patterns from one society to another. Nonetheless,
the changes have generally occurred across western societies as well as in some nonwestern ones
(Gilding, 1997).
The underlying patterns of these changes are
more controversial. In general, there were two
broad shifts. First, there was increasing individualism in family relationships. Peter McDonald,
an Australian sociologist, describes the changes
in terms of the “pursuit of individual autonomy”
(McDonald, 1988). He draws attention to a growing emphasis on personal fulfilment at the expense of community and familial constraints.
Similarly, the American sociologist William
Goode describes a shift whereby people have
“moved somewhat toward the belief that (emotional and economic) investments in oneself are
likely to be more profitable over the long haul”
than investments in the family (Goode, 1993).
In the postwar decades, family structure and
relationships were largely taken for granted. It
was expected that people would get married and
stay married and that they would have children.
For example, in the early 1970s, an Australian
sociologist Lyn Richards researched marriage,
asking couples why they got married. She was
met with incomprehension. Most of the people
she interviewed clearly regarded it as a novel
question and, on consideration, gave replies that
amounted to “It was the thing to do” (Richards,
1978).
Since the 1970s, family relationships have
become much more negotiable. There is now a
widespread view that a happy family is one that
allows individuals to develop through choice.
The emphasis on choice and self-fulfilment applies to every aspect of families. At the most
obvious level, getting married and having children are no longer taken for granted. Sociological surveys that ask couples why they got married or why they had children find that couples
can answer the question in an elaborate way
(Gilding, 1997). In other words, they do not take
marriage and children for granted. Often, the
answers are themselves framed in terms of selffulfilment and personal growth.
The second fundamental dynamic in family
change is democratization. The English sociologist Anthony Giddens, for example, declares
“there is only one story to tell about the family
today, and that is of democracy.” Democratization in the family, he argues, “implies equality,
mutual respect, autonomy, decision-making
through communication and freedom from violence” (Giddens, 1998).
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Gilding
Democratization in the family most obviously manifests in the relations between husbands
and wives. In the 1950s and 1960s, it was generally assumed that the man was the head of the
household. The bride promised to love, honor,
and obey her husband. The groom promised to
love, honor, and cherish his wife. Australian research in the 1950s identifies the most common
authority structure in the family as patriarchal.
It identifies an emerging structure that was more
democratic – described in terms of “partnership”
– but observes that partnership marriages were
often unstable (Fallding, 1957).
Women’s workforce participation played a
critical role in shifting the relationship between
women and men. It meant that women could be
economically independent. This independence
provided women with more leverage in marriage
– especially in the context of new ideas about
choice and self-fulfilment. There was less pressure to get married at any cost. Marriage became
a choice. The vow to honor and obey became
less common. There was more room for negotiating the terms of marriage.
It is revealing that the ideas of partnership
and commitment in marriage became mainstream
during the 1970s and 1980s. In turn, there was
less pressure to stay married at any cost. It is also
revealing that in the 1970s, for the first time in
Australian history, more women than men started
to leave marriages. Studies show that women are
more likely to see problems early in a marriage.
They are more likely to walk out of a marriage.
In the aftermath, they are less likely to regret the
breakdown of the marriage (Jordan, 1988).
There is an enormous amount of controversy
and uncertainty around these changes in the institution of the family. Some commentators are
deeply critical, framing the changes in terms of
“family breakdown” and “family dismemberment” (Eastman, 1989; Popenoe, 1993; Dennis
1993). Others celebrate the changes in terms of
“flexible families,” “diverse families,” and “democratic families” (Inglis & Rogan, 1994; Stacey,
1993; Giddens, 1998). Whatever is the case, calls
for the reinstatement of the traditional family are
implausible. As Giddens observes, “we are deal242
ing with profound processes of change in everyday life, which it is well beyond the capacity of
any political agency to reverse” (1998). After all,
western governments have adopted diverse types
of family policies in response to family change,
but the overall trends are much the same across
societies (Gauthier, 1998).
In this context, there is increasing emphasis
on the quality of relationships in families. Patriarchal authority and collectivist family values are
no longer enough to hold families together. It is
revealing that when men and women are asked
to explain marital happiness nowadays, they place
heavy emphasis on companionship and little
emphasis on marital roles, such as success as a
breadwinner and performance of marital duties
(Evans & Kelley, 1990). Family solidarity depends
increasingly on voluntary commitment and, in
turn, communication, negotiation, and trust.
There is substantial scope here for very rewarding family relationships as well as for family divisions and instability. These dynamics necessarily
have a bearing on family business structure and
processes.
The Research and Its Method
The research involved 50 interviews with
individuals who were included in the 1999 “rich
lists” published by the Australian business
magazine, Business Review Weekly. Based on public
information, the rich lists are an annual
compilation of the 200 or so largest personal and
family fortunes in Australia. They were inspired
in the first place by the Forbes rich lists in the
United States. There is no question that the
accuracy of the lists is problematic. Nonetheless,
given the limitations of public information, the
lists provide the best available profile of the
largest private fortunes in Australia (Gilding,
1999).
The businesses and fortunes included in the
rich lists are self-evidently not typical of family
businesses. By definition, the individuals and
families listed on the rich lists are unusual on
account of the scale of their wealth. Nonetheless,
the individuals and families listed on the rich lists
Family Business and Family Change:
Individual Autonomy, Democratization, and the New Family Business Institutions
highlight issues in the articulation between family
business and family change. This is because
family members become stakeholders in the
business, irrespective of personal inclinations and
ambitions. They have no choice but to engage in
the issue of family business continuity across
generations. In contrast, the long hours and hard
work involved in small family businesses often
make carrying on the business unattractive to
children. In such circumstances, family businesses
operate as vehicles of social mobility, with
children moving into the professions (Collins, J.,
Gibson, K., Alcorso, C., Castles, S., & Tait, D.,
1995).
This paper draws on qualitative techniques
for three reasons. First, researchers have largely
overlooked the articulation between family
change and family business. Qualitative
techniques allow for an exploratory approach, in
contrast to the more closed-ended character of
quantitative techniques. Second, the articulation
between family change and family business
involves relatively sensitive issues, such as
inheritance provisions. Qualitative techniques
provide the scope for dealing with sensitive issues
and generating high-quality data. Moreover,
qualitative techniques allow a fuller and richer
exploration of context, as opposed to the more
narrow attention to discrete variables associated
with quantitative techniques. Finally, the focus
on large, wealth-holding individuals and families
makes a representative sample impractical. The
interviewees are essentially “key informants”
whose accounts are not representative, but
provide insights into underlying processes and
issues.
The population on which the qualitative
survey was based consisted of 210 individuals and
families listed in the 1999 rich list. Of these 218
individuals and families, I approached 130
individuals and family members for interviews.
The full population was not approached due to
resource limitations and the intensive nature of
the interviews. Of the 130 people approached,
50 individuals (24% of the population) agreed to
interviews, subject to interview protocols. These
protocols included advance notice of the
interview schedule, a copy of the completed
transcript for alteration or correction as
appropriate, and confidentiality, if required.
Interviews were taped, with one exception (as
required by the respondent), where notes were
taken.
Of the 50 respondents, 43 were men and
seven were women. Respondents ranged in age
from their 30s to their 80s, with a median age of
56 years. Thirty-four of the respondents were
entrepreneurs who are largely responsible for
accumulating the fortune in the first place. Of
these entrepreneurs, 13 inherited a family
business that became the basis for a much larger
business. Another eight recruited secondgeneration family members into the enterprise.
The other 13 entrepreneurs did not have family
members working in the business, although
family members invariably had an ownership
stake in its future. The remaining 16 interviews
were with second- and third-generation family
members who have an ongoing stake in the family
enterprise.
A few interviews were about 45 minutes in
length. A few were three hours. Most of the
interviews were between one hour and one and
one-half hours. Interviews addressed wealth
accumulation and succession planning, with
particular attention to family relationships.
Interview questions were both detailed and
flexible, designed to give the people being
interviewed a real chance to get across ideas and
experiences. The interview data were rich,
complex, and diverse.
Individual Autonomy
Among the people I interviewed, the issue of
individual autonomy was most salient in relation
to family business continuity and succession
issues. Some respondents described an earlier
regime that assumed that family members would
join the business. One man, for example,
described without rancor how “I was more or less
told that that was what I was expected to do.”
Another described “the beginnings of a psychotic
depression soon after I joined the company, which
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Gilding
I think was really triggered by a feeling of
hopelessness and a lack of mentoring.” He went
on to discuss the problem of becoming
psychologically “a prisoner of the system” and
virtually unemployable outside the family
business.
In contrast, the “new regime” was more open
ended. Respondents expressed the full gamut of
views on family succession in management. At
one extreme, some first-generation entrepreneurs
completely rejected nepotism in favor of
professionalism. They rejected nepotism on
account of its effects on the business and the
family. For example:
Once you’ve introduced somebody without the skills simply because he’s your
son or daughter it creates a totally different environment…. Now everybody
here, on every level, knows that it’s their
own skills that will get them their promotion and nothing else….
The second thing in terms of succession, and so on – I believe that the best
thing you can do for your children is a
good education and some help, which I
have done and am doing. They need to
have their own skills and they need to
have their own sense of value for themselves, because you’re not doing them a
service. If you look at the Gettys and various other families who went totally
discombobulated, you know, resulted in
disasters for the individuals.
At the other extreme, some respondents
expressed an overwhelming preference for family
succession in management. One man, for
example, described how his father promoted him
in the family business and “lost good staff” as a
result. In the same way, he said that the business
would “mean nothing to me” without the
involvement of his children. “Succession is
everything,” he declared. At the same time, he
acknowledged that he “had a bit of a job” actually
persuading his children to join the business. In
his words: “I’ve said to them, ‘Well, you’re going
244
to have such a big stake in the business that you
need to be involved’.”
Most commonly, people took a view
somewhere between these extremes. Family
succession in management was conditional on the
abilities and preferences of individual children.
For example:
I have a lot of family in this business –
not just my family, but my wife’s family
and other people who have come into
the business and their families. The nature of the business is such that it’s very
conducive to bringing family into it. But
as far as my views on dynasties, family
succession, I think that everyone’s an
individual, and they should do whatever
they want to do. If you said to me,
“Would you rather your son or daughter took over the business?” Mmm, yeah,
probably, but if they didn’t want to, that
wouldn’t mean a thing to me. I mean,
I’d just say, “As long as they’re happy in
doing what they’re doing, who cares?”
That’s the most important thing – we’re
all individuals.
The common thread in respondents’ views
on management succession was the emphasis on
individual autonomy and self-fulfilment over and
above family business continuity. Even the
entrepreneur who was most strongly committed
to family succession recognized that he had to
persuade his children to come on board. The
children had a choice. Individual autonomy
prevailed over family obligations.
Interviewees placed even more emphasis on
individual autonomy in relation to ownership
succession. Interviewees overwhelmingly planned
to leave their wealth to their children on an equal
basis. In turn, this principle prevailed over a
commitment to keeping the family business
intact. One man, for example, described how the
personalities and preferences of the next
generation had partly motivated the sale of a
long-established family company.
Family Business and Family Change:
Individual Autonomy, Democratization, and the New Family Business Institutions
They’re all going to want to do their own
thing. Some will want to go into the
business; some will want to go and do
other things. We believed that, in the
longer term, it wasn’t fair to have them
all dependent on one family business and
have some working in it, some not in it.
The potential problems of that! We
didn’t know what they’d be, but we saw
that there would be potential problems
in the future.
In more general terms, another respondent
distinguished between “tight” and “loose”
structures:
The worst situation would be the family farm. You’re stuck on it. You all have
to work there and wait until Dad dies or
something. You’ve got to work together.
All the capital is there, and there is no
income…. So then you’re really stuck.
But a lot of family shareholdings are like
that.
Instead, he advocated loose structures as “the
best chance of going forward.” Loose structures,
operating as “investment companies” outside the
original business, provided the flexibility to deal
with family conflicts, such as divorce.
The most profound family business conflicts
that interviewees described were associated with
tight structures, whereby family business
continuity prevailed over individual autonomy.
One man, for example, described how he “ran
the company autocratically” in his time, ignoring
shareholders and ploughing dividends back into
the business. He eventually faced a family revolt.
He was not impressed with the outcome. “The
more the shareholders are told, the more
dissatisfied they become,” he complained.
Another interviewee described the impact of
several property settlements arising from divorce
and other circumstances. One family member,
for example, wanted “her share out of the
business; she wasn’t patient enough to wait.”
It was really debilitating. It took a huge
amount of money out of the business.
Then we had to go cap in hand to the
bank to get them to support us so that
we could continue to operate without
going big – driven to go public – or
bringing in another equity holder.
Democratization
Among the people I interviewed, the issue of
democratization was most salient in relation to
gender equality in management and ownership
succession. Again, some interviewees with longstanding family businesses referred to an “old
regime” where succession favored sons over wives
and daughters. For example, one elderly
respondent described the earlier regime:
I’ve already passed on my wealth. I did that
before the abolition of death duties. One
cousin, who died in the 1930s, left £4 a
week to his wife, as long as she didn’t remarry. It’s amazing how things have
changed. As I said, my driving force was
death duties. I left my wife an income during the course of her lifetime. Otherwise,
the formula was two-thirds to the boys and
one-third to the girls. That was in the
1970s, and it was probably considered
normal then. There were two reasons for
this. First, the boys would want capital and
would be able to make full use of it. Out
there was a big world of business, and that
was for men. The second reason was that
the girls would be reasonably provided for.
Nowadays, things have changed. There’s
more of a view that boys and girls should
receive the assets equally. In the 1970s, it
was in more of a transitional stage.
The people I interviewed were often
uncertain about the rights of daughters in relation
to management succession. At the same time,
they consistently affirmed the rights of wives and
daughters in relation to ownership succession.
This comment by one of the older respondents
was typical:
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Gilding
In my will, my share – when I say my
share – my total assets are left to my wife.
Apart from three or four personal bequests, she controls the whole lot of it.
Then when she dies, it goes equally to
the two children [a son who is in the
business and a daughter who is not]. I
don’t know of any way better.
Interviewees justified the principle of equal
inheritance for sons and daughters on the
grounds that anything less caused family division
and conflict. In the words of one man, “If you
give it on the basis of anything other than equal,
I think that you create the breakdown of the
family of the next generation.” Another man
commented that if children are not treated
equally “this is where the whole structure starts
to bust down.”
At the same time, interviewees expressed
misgivings. The reasons were long-standing ones.
First, some respondents were concerned that
equal inheritance dissipated the ownership of the
business, thereby undermining long-term
continuity of the family business. Second, some
respondents expressed misgivings about the
principle of gender equality. One man, for
example, commented:
I still believe in the old adage that the
man should lead the household. So, if
you give a woman a large amount of
money, sometimes it can be a rather subjugated relationship. I’ll be accused, of
course, of having an old-fashioned, typical male view.
In this context, it is not surprising that some of
the people I interviewed were locked in family
conflicts arising from the distribution of inheritance.
One man described how his father brought him up
to take over the family business and left him the
better part of his business estate. He described the
aftermath of his father’s death as involving “a lot of
arguments and a lot of unpleasantness.” The family
arrived at a settlement, but the settlement “did break
246
the family.”
Similarly, one woman described how her
brothers were groomed for management,
whereas she was expected “to get married and
have babies.” When she was “offered an opportunity” to sell her units in a family trust, she requested clarification of the family estate. The
information was not forthcoming.
It struck me that perhaps there had been
a systematic marginalizing of me and my
interests for a very specific purpose. The
more I started delving, the more nervous
they became and the more irritated they
became with my attitude. How dare I
ask questions!
The woman recalled the “huge, overwhelming, almost life-threatening pain that I felt as rejection, abandonment, betrayal, but predominantly invalidation of my whole life.” She fought
for her fair share of the estate, leading to the complete breakdown of family relationships.
Family Business Institutions
Together, the trends toward individual autonomy
and democratization in families makes ongoing
family solidarity and perpetuation of the family
firm more difficult. In the first place, the values
around family business are more open ended and
negotiable. There is uncertainty and diversity
concerning many aspects of family business; for
example, the desirability of family succession in
management and the role of daughters in the succession process. Moreover, there is a tendency
toward loose investment structures, providing full
scope for equal inheritance among sons and
daughters.
In turn, there are strong centrifugal (or
“splitting-off”) tendencies in family businesses.
In this context, many of those interviewed were
engaged in strategies to reconcile personal autonomy and democratization, on the one hand,
and family business solidarity and continuity on
the other. For the most part, these strategies
amounted to new family institutions. These in-
Family Business and Family Change:
Individual Autonomy, Democratization, and the New Family Business Institutions
stitutions include family retreats, family meetings, family assemblies, family codes of conduct,
and family councils. The common thread among
these institutions is that they were designed to
facilitate open communication and negotiation,
thereby creating an environment of trust and
common purpose.
One man, for example, described how the
family “meet together for one weekend a year to
talk through any issues about the business and
where it’s leading for everybody, and everybody
has a chance to have a say.” He elaborated:
I started off this process about eight or
10 years ago. The driver for me was really knowing that my children, who were
in their university years, were to still
make up their minds about whether they
wanted to come back into the business
or not. I was trying to avoid pushing
them into it. But I wanted them to know
and the whole family to know and understand that if they didn’t come back
into the business, there is still some benefit that comes with being a member of
the … family anyway. If they want to set
up their own business, how do they get
funding out of the existing business,
which really is due to them as a … family member, to start up their own business? So we put all those things on the
table and documented things that we
decided to do.
This man went on to describe how the most
interesting discussion had “been how you bring
the next generation into the existing business
without upsetting the existing staff.”
The new family institutions sometimes
became a focus of conflict themselves between
those committed to the status quo and those who
wanted a more inclusive family business. One
former chief executive, for example, had very little
patience with what he called “the family
approach” and described his frustration with
family meetings and family councils. Another
man – the leader of a multigenerational company
– commented that he attended family meetings
organized by a family member “to be polite
almost,” but he thought they were “that much
nonsense.” On the other hand, another
respondent described how he had spent most of
his life actively promoting a more consultative
governance structure to head off the implosion
of the family business.
Family Business Research
There is no question that the rising profile of
family business is partly a correction of the longstanding tendency to overlook the importance
of family business. It is also partly the result of
the resurgence of family business in the context
of the “third industrial revolution.” At the same
time, this is not the entire story. The renewed
interest in family business is also the outcome of
family change and uncertainty. Family business
owners are dealing with new issues, arising from
trends toward individual autonomy and
democratization in families. They are forging
new types of family institutions, designed to
facilitate communication and trust in family
business. The burgeoning interest and activity
around family business is partly the outcome of
these processes.
In more specific terms, the renewed interest
in family business research is a response to the
centrifugal tendencies in family business,
promoted through family change. John Ward,
one of the pioneers of family business research
in the United States, put it in the following terms:
The overriding challenge is how to integrate the need for business continuity
and the need for personal independence.
Many vehicles help reconcile this contradiction. Leading and governing this
process of reconciliation is the central
task for the family. Happily, committed
families can learn from other families
pursuing the same dream. (Ward, 1988)
The new family business research identifies
processes, such as high-quality communication
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Gilding
and succession planning, designed to reconcile
the need for business continuity and personal
independence. In turn, it identifies structures and
institutions to achieve these ends, such as family
meetings and family codes of conduct. These
processes, institutions, and structures lie at the
heart of the new family business research. In other
words, the new family business research partly
arises from family change and uncertainty, in
particular, the new emphasis in families on
personal autonomy and democracy. In turn, an
understanding of the role of family change and
uncertainty clarifies the forms of conflict in family
businesses, the emergence of new family business
institutions, and the renewed attention to family
businesses in western societies.
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Michael Gilding is chair of Social and Behavioral Sciences at Swinburne University of Technology, Melbourne,
Australia.
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