Transferring Power in the Family Business

Abstract

Should a family business stay in the family? The question is really academic, since families appear to be in business to stay. But, when the management moves from one generation to the next, the transition is often far from orderly. In addition, as the company develops, there is a need for a management style that goes beyond survival thinking, and entrepreneurs tend not to be reorganizes. In fact, while a sometimes bitter power struggle is peaking, the fortunes of the company may be sliding downhill. In other cases, power struggles are part of a healthy transition. According to these authors, family and company transitions will be more productive when they are simultaneous. The eternal problem involves the older generation's making use of the flexibility and new ideas of the succeeding generation. Third party involvement may help to prevent irreparable family rifts and company stagnation. Dialogues between all the parties–family managers, relatives, employees, and outsiders–can also help.