Entrepreneurs are Integral to Canada’s Economy — This Smith Professor Explains How Family Dynamics Impact Generational Entrepreneurship
Sarah Burrows, an assistant professor of strategy at Smith School of Business, Queen’s University, discusses the nuances of family-owned businesses.
By Sarah Kelsey
For many, the term family business is synonymous with images of the local contractors, retail shops and restaurant operators; small entities that have built a reputation and loyal following within their communities. Though not inaccurate, it’s a picture that doesn’t fully capture the scale and impact of this sector on the world’s economy.
In fact, families own and manage the majority of businesses worldwide, from small startups to large firms like Walmart, Ford Motor Company and Estee Lauder. Together, the world’s largest family businesses generate over trillions in revenue and employ millions of people, and so their effective succession planning isn’t just a matter of family legacy but of economic prosperity.
Sarah Burrows, an assistant professor of strategy at Smith School of Business, Queen’s University has some unique thoughts when it comes to how family-owned businesses can attain longevity. Leveraging her background in psychology and her Ph.D. in management, she researches how family dynamics influence firm management and entrepreneurship across generations.
Her first bit of advice is for founders to not put off thinking about their long-term hopes and dreams for the company. Those who do risk the long-term viability of their business and their family’s legacy.
“Founders often view their organizations as their babies, Sarah says. “They have a huge emotional attachment to the business, so it can be very difficult to disentangle their identity from that. But the long-term success of a company or family name depends on having early conversations around succession and what that might look like.”
Navigating these conversations can be tricky. Is there anyone who wants to take over the business? Are there multiple parties interested in taking the reins? This is where a family council or advisory board can help.
“An outside source as a mediator can help kick-start critical conversations among family members,” Sarah says, noting that as a neutral third party, they can help with settling arguments and providing objective counsel on big decisions. “Research suggests that families in business that engage in more open communication tend to experience less conflict and are more harmonious.”
But even well before these conversations take place, founders are unwittingly influencing their future succession planning efforts. Sarah explains that how children of an entrepreneur interpret the experiences they’ve had growing up with a business owner as a parent impacts their desire to carry on a family legacy.
For example, a child who associates entrepreneurship with family sacrifice may decide they want nothing to do with being an entrepreneur. “They may have seen their father or mother completely absent from the home and aren’t willing to make those same sacrifices with their family,” Sarah says, adding that these individuals may also feel pressure to ‘succeed’ or ‘conform’ to the wishes of the founder parent and, in turn, may rebel.
Then there are those kids who enthusiastically want to start their own business and may only tend to think of the benefits when they reflect on their experiences growing up. Other siblings still may view their experiences as neither negative or positive and are focused on pursuing a career they are passionate about, which may or may not involve entrepreneurship.
Sarah says coming from a family of business owners can be particularly difficult on the family system. Making a conscious effort to dedicate a few hours every day to the family unit can help foster strong family bonds. Founders should also talk openly to their children about their experiences living in an entrepreneurial family and make space for their children’s feelings.
And while current literature defines success as passing down a business to the next generation, the most visionary founders have outpaced current research and have come to understand the value of passing down the passion to be an entrepreneur. “There is a common theme in my research of founders wanting their kids to be happy on their own terms,” Sarah says.
The conversation then becomes less about a founder’s personal success — or society’s interpretation of it — and more about the family’s success overall. These founders understand that by talking to their children and empowering them to become entrepreneurs their legacy will live on, what they’ve taught will live on, and their name will live on. They emphasize the ‘family’ in ‘enterprising family.’