Topics of Family Business Governance by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9783030580193
Publisher: Springer International Publishing

6 From Enterprise to Entrepreneurship: Reintegrating Entrepreneurship

Matching these development needs is quite an achievement. Successfully doing so can result in a well-established, sizable, multinational enterprise. As the company matures, organizational routines are established and markets are saturated. In this life cycle phase, growth rates often stagnate or decline. However, some mature and well-established firms show growth spurts even in this stage of the life cycle. Through our examination of the 100 biggest Family-Owned Companies in Germany, we see that 20% of them showed growth spurts even in later generations, primarily in the third generations, but some even in later generations.

Up until now, we have only preliminary indications on the causes enabling such mature companies to experience growth spurts. One must assume that later acceleration of the growth development requires an increased entrepreneurial effort. Typically, it implies reaching out to “new” areas—which include new know-how base and innovation of new business models. We can also observe opportunistic acquisitions of available unrelated companies that can open up new routes of further development.

Pursuing such growth initiatives is a long-term effort. This needs to be supported by a long-term perspective of the top management. For a non-family executive, the expectation of a long tenure is necessary to create a long-term perspective. Combining the long tenure with an appropriate incentive system and virtual share options might lead to higher commitment and support the realization of entrepreneurial orientation. The long tenure is equally important when employing family members. Family members in management or on the board with emotional engagement and entrepreneurial attitude can be vital to promote the renewal.

Besides willingness, another important factor in promoting growth spurts is financial resources. Therefore, freedom from shareholder value pressure by financial markets is necessary.

The search for growth opportunities is an emerging field with an intensified focus in practice and science. Research and consulting topics such as innovation strategy, design thinking, intrapreneurship, reorganizing the innovative potential of the organization are all indicators of an increased emphasis on strategy.

All these trends and initiatives could be interpreted as efforts to integrate entrepreneurship at the management level.

In conclusion, the demanding challenge in the long-term strategy of a Family-Owned Business is developing the growth path. There is not a simple key success factor enabling a family and its company to pursue a growth path. It requires a particular mindset and a fit in four major dimensions: Willingness, Need, Options, and Capabilities as well as their realization on the management and employee level. It is worthwhile exploring the interplay of these influences.

Bibliography

Achtenhagen, L., Naldi, L., & Melin, L. (2010). “Business growth”—Do practitioners and scholars really talk about the same thing? Entrepreneurship Theory and Practice, 34(2), 289–316.Crossref

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.