Kennesaw State University researchers find family business is world's economy secret driver of success
KENNESAW, GA, (May 27, 2015) –The world’s most successful family businesses integrate…
Georgia (May 27, 2015) — KENNESAW, GA, (May 27, 2015) –The world’s most successful family businesses integrate practicality and innovation, strategy and strong commercial acumen, along with nurturing and care, to create a lasting legacy of entrepreneurial success, long-term growth and family unity. This is according to a recent report conducted by the Cox Family Enterprise Center in Kennesaw State University’s Michael J. Coles College of Business for EY, which surveyed 25 of the largest family businesses in each of the 21 top global markets.
The importance of family businesses to the global economy is undeniable. This report provides insight on their impact by focusing on seven success factors that make family businesses tick: succession; women in leadership; governance; communication and resolving conflicts; branding; corporate social responsibility, philanthropy and sustainability; and cybersecurity.
Findings show family businesses are fit and strong
In the report, Staying Power: How Do Family Businesses Create Lasting Success, respondents said they remain entrepreneurial and committed to innovation, even into their second generation and beyond. And they aren’t complacent — most have their eyes on growing by investing in new talent, increased production and better systems. The report provides insight into the noteworthy practices, characteristics, and success factors that make these family businesses successful and long-standing.
Carrie Hall, EY Americas Family Business Leader, said:
“Overall, the companies surveyed manage to remain entrepreneurial and committed to innovation. Even the oldest family business surveyed, in its ninth generation, does so. What’s more interesting is that these companies honor their legacies without being stuck in the ways of the past. Given 64% of the family businesses predict expanding into other markets in 2015, it is apparent they are hungry for growth. To accomplish it, they are investing in new talent, increased production and better systems.”
Key best practices for achieving lasting success:
· 87% have clearly identified who is responsible for succession.
· 70% are considering a women for their next CEOs.
· 90% have boards of directors.
· 90% have regular family or shareholder meetings to discuss business issues.
· 76% refer to themselves as family businesses in their branding.
· 81% engage in philanthropic activities.
· 83% expect spending on cybersecurity to increase.
Family businesses are vital to the global economy. They account for more than two-thirds of all companies globally, count many leading household names among their number and provide between 50%-80% of all employment, so it’s important we know what are the noteworthy practices and characteristics of the largest among them.
Joe Astrachan Ph.D., Professor of Management and Entrepreneurship, Kennesaw State University, said:
“The characteristics and practices of large, long-lived family businesses serve as a model for other family businesses as well as other companies that aspire to maintain an entrepreneurial spirit, innovate and grow consistently.”
Seven top-line findings emerge from the report:
· Embracing succession:Succession is arguably the most critical and difficult business issue a family business has to face. More than 87% of the respondents have clearly identified who is responsible for succession, implying that processes to handle traditional transitions as well as potential emergencies are well in place.
· Women leaders welcome: Globally, 70% of the world’s largest family businesses are considering women for their next CEO. They average five women in the C-suite and four being groomed for top leadership positions. More than half (55%) have at least one woman on their boards. The survey also shows those family businesses that have women in leadership positions correlate with better business performance.
· In governance, family is first: Nearly all (90%) of the world’s largest family businesses have functioning boards of directors and most of those boards are made up of family members. Nearly 50% are exclusively family members, and only 28% have an equal number or greater of non-family voting members on their boards. Family members are considered by far the most trusted advisors with parents heading the lists, followed by spouses and then accountants.
· Healthy communication, healthy conflict, healthy business: The family owners of the world’s largest family businesses report they care deeply about one another (81%). Participants in our survey report that 90% have regular family or shareholder meetings to discuss business issues, 70% have regular family meetings to discuss family issues and 64% have family councils that meet regularly.
· From our family to yours: family business branding builds trust:The world’s largest family businesses are proud of their companies and their families — 76% report they refer to themselves as family businesses in their advertising, websites, social media, press releases and other promotional materials.
· Sustainability: leveraging family legacy to build a better future: Survey participants value and implement corporate social responsibility (CSR) and sustainability practices with more than 50% reporting a high commitment to CSR practices, and an impressive 81% engaging in philanthropy. In addition, 85% have codes of ethics, compared to only 57% of the world’s largest companies overall. Around the world, 47% of respondents have family foundations and 37% report that they will increase their philanthropic activities in 2015.
· The specter of cyber risk: Even with the near-constant news of breaches, leaks and billions of dollars in lost revenue due to cybersecurity lapses, the family businesses surveyed appear to be worryingly self-assured in their abilities to identify and respond to ever-evolving cyber threats. The majority (75%) say they are confident or very confident that their businesses are effectively addressing these risks. Most of the participants (83%) report they expect spending on cyber security to increase. Some family business leaders (25%) don’t know how cyber risks affect their businesses. Among those that are enlightened about cyber risk, 55% believe the risk is moderate to high.
Future insights on survey topics coming soon
EY will be releasing a series of in-depth explorations of the key topics covered by this survey. The future insights will delve more deeply into the data and will explore the differences of countries,regions and developed and emerging markets in each of the following topics:
• Women in leadership
• Communication and resolving conflicts
• Corporate social responsibility, philanthropy and sustainability
Kennesaw State University is the third-largest university in Georgia, offering more than 100 undergraduate, graduate and doctoral degrees. A member of the University System of Georgia, Kennesaw State is a comprehensive university with more than 32,000 students from 130 countries. In January 2015, Kennesaw State and Southern Polytechnic State University consolidated to create one of the 50 largest public universities in the country.Staying power: how do family businesses create lasting success?
A leader in innovative teaching and learning, Kennesaw State University offers undergraduate, graduate and doctoral degrees to its nearly 43,000 students. With 11 colleges on two metro Atlanta campuses, Kennesaw State is a member of the University System of Georgia. The university’s vibrant campus culture, diverse population, strong global ties and entrepreneurial spirit draw students from throughout the country and the world. Kennesaw State is a Carnegie-designated doctoral research institution (R2), placing it among an elite group of only 6 percent of U.S. colleges and universities with an R1 or R2 status. For more information, visit kennesaw.edu.