What is a family business?
Within every major economy, a great factor in providing the energy of the core of the nations economy is the small and medium enterprises. These cluster of firms are what provide new economic activity, new innovative products and services, along with growing employment and in general a crucial system in ensuring the economy is at a stable growth level. With a majority of this activity stemming from family controlled or managed businesses, the focus on developing a global and long term perspective for these firms are ever growing in importance because of the global perspective entrepreneurship has started to take.
A family business refers to a company where the voting majority is in the hands of the controlling family; including the founder who intend to pass the business on to their descendants (IFC, 2013). Just like all other companies, family businesses are strategically planned and are also innovative thus they have the capacity to accomplish internal growth and stability. A family business can be successful through innovation. Innovation is a group of elaborated connected procedures of search and unearthing, carrying out tests, simulation and implementation, expansion, and promotion of new services and goods (Hisrich, 2013). This paper explores entrepreneurship and family business in the international perspective.
Nonetheless, those who are not direct members of the family can also handle a family business. Family members are frequently taking active involvement in the business operations, and members of the family tend to take up top positions within the organization, but this is dependent on the succession strategy within the business. Some family businesses turn into public companies in order to continue the growth of the business, although, again, various succession strategies are used depending on both the business and family nature. Family involvement as owners or managers can reinforce the company since members of the family are often committed and loyal to the business, thus ensuring any fundamental characteristics of the founders are still implemented. On the other hand, family business can also present some problems since the motivations of the business structures are often imbalanced and can alter direction from generation to generation.
It is an established fact that family businesses are at the foundation of a strong and growing national economy, with Family businesses creating an estimated 70% to 90% of global GDP annually. Moreover, these companies are typically pillars of their communities, providing both jobs and, often, philanthropic support to local populations (FFI, 2012). Historically, family businesses have also been drivers of innovation, introducing a steady stream of products and services that have helped to redefine business practices. Perhaps most important, in today’s business climate, family businesses can offer a direct path to wealth, providing evidence that anyone can achieve...