Definitions: nothing exacerbates a conversation (statistical or otherwise) about family enterprise more than a lack of a definition of what it means to be a family enterprise. Over the years, it has become clear that there is no single definition and that the key to intelligent conversation is knowing what definition is being used.
As part of its research for the eBook Family Enterprise: Understanding Families in Business and Families of Wealth, FFI identified five classic definitions to help guide both informal discussions and academic research. Hopefully these will be helpful to you as you construct your own understanding of what constitutes a family enterprise.
Global data points: the accuracy of global data points is directly related to the definition being used, so again it’s “buyer beware” in the use and understanding of the almost daily influx of “new data” on family enterprise.
To help practitioners and family enterprise members sort through the data, the Knowledge Development and Dissemination Committee suggests using Definition 1 (from above):
Family firms are those in which multiple members of the same family are involved as major owners or managers, either contemporaneously or over time (Miller, LeBreton Miller, Lester, Canella, “Are Family Firms Really Superior Performers,” Journal of Corporate Finance, Vol. 13, Issue 5, 2007).
So… there you have it — definitions, global data points and classics in research – key to success and clarity. Stand by for one more June Bug in next week’s issue!
Yours in Practice,