SEARCH SEARCH tel. +44 (0)203 031 2900 CHALLENGE US MY FAVOURITES ACCOUNT LOG OUT HOME ABOUT IDEAS LIBRARY IDEAS BY INSTITUTIONS Home Ideas Library Family Business Ownership and the Next Generation 10.13007/174 Ideas for Leaders #174 Family Business Ownership and the Next Generation Key Concept Most owners of family businesses want to ensure that their firm stays in the hands of the family for generations to come. This is not impossible to achieve. In this Idea, some practical steps that senior managers can take to ensure next-generation members are committed to the family business are outlined. The key is to develop a sense of “psychological ownership.” Idea Summary There is a hotel in Japan — Houshi Ryokan — that has been run by the same family for approximately 1,300 years. Forty generations have managed to maintain control of the business, epitomizing what IESE Business School’s Josep Tàpies and Lucía Ceja refer to as “psychological ownership.” In their article published in IESE Insight, Tàpies and Ceja suggest that strong emotional ties that get passed down through subsequent generations, as well as a shared sense of mission, are the key components that make up psychological ownership — something that can help members identify more closely with the business and in turn, give their company a competitive advantage. They came to these findings through a qualitative study of various family- owned firms, narrowing down to three factors that enable the creation of balanced and positive psychological ownership: Firsthand knowledge: early exposure to the family business can help next-generation members acquire firsthand knowledge of operations and activities. On the other hand, a lack of information can lead to conflict or disaffection — something associated with negative and/or weak psychological ownership. Direct involvement: investing time and energy into incorporating next-generation members into the company, as well as providing them with structure and support aids the development of strong and positive ownership. Capacity to control: share ownership can be instrumental in allowing next-generation members to feel they have decision-making authority and a say over business matters. Alternatively, having a mentor can also help empower members. Overall, however, a healthy family climate is what will make a significant difference as to how the above are delivered; if a family deals with conflicts in positive and constructive ways, this contributes to a healthier family climate. Business Application Senior family members can play an important role in empowering their next generations. In this respect, Tàpies and Ceja offer advice, which includes the following: Generate trust by making yourself accessible to next-generation members, and create an Authors Tàpies, Josep Ceja, Lucía Institutions IESE Business School Source IESE Insight Idea conceived June 2013 Idea posted July 2013 DOI number Subject Sustainability Family Business Senior Leaders Psychology Haven't found what you need? Challenge us GO GO