Whats definition of the Institute for SME Research (IfM) for family businesses
family businesses are those “in which the ownership and management rights are united in the person of the entrepreneur or the entrepreneur's family”
Describe the picture “classification of companies bades in IfM research in family businesses
family-controlled companies: If the owning family is no longer directly involved in managing the company, but is still intensively involved in the business
Whats Zellweger’s definition for family businesses
“Dominantly controlled by a family with the vision to potentially sustain family control across generations”
The European Commission considers EU companies to be family businesses if the following four criteria are met
1. The majority of decision-making rights are in the possession of the natural person(s) who established the firm, or in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the possession of their spouses, parents, child, or children’s direct heirs.
2. The majority of decision-making rights are indirect or direct.
3. At least one representative of the family or kin is formally involved in the governance of the firm.
4. Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or their families or descendants possess 25% of the decision-making rights mandated by their share capital.
In the F-PEC model (for family, power, experience, and culture), the influence of the family is represented by three dimensions
Power dimension: extent of ownership, management control, and influence in management bodies (e.g., board of directors) by the family.
Experience dimension: number of generations in which the company has already been under family control.
Cultural dimension: cultural overlap between the family and business systems, i.e., the overlapping of values.
Describe the Two-circle Model of the family business system
This black and white representation represents simplifications that should also be viewed critically
Describe the three-circle model of the family business system
with the roles and typical motives and concerns
describe the shares of family business in 1998 and 2014 by legal structure (chart)
typical strenghts and weaknesses of family businesses
summary
A family business is defined as a business where ownership and management are united in the person or family of the entrepreneur. A further distinction is made between owner-managed companies and family-controlled companies.
Globally, family businesses make up a significant proportion of the world’s businesses and account for a large share of employment and GDP generation.
Family businesses have considerable strengths, which stem from the orientation towards long-term goals and the provision of financial resources and manpower from the owning family. However, this can also lead to considerable weaknesses if, for example, some family members are not suited to work competently in the company.
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