From Parent to Child
Last week we talked about a number of things. Elbow and Ortega (not the Mexican wrestler!)
We also continued to look at the impact of loneliness and wellbeing on entrepreneurs. This week we carry on that theme and focus on the entrepreneur within the family business and what happens when it comes to handing over the reins.
We know, because it says it in the literature(!) that family businesses have a good deal of replication of Bandura’s social learning theory; those being attention, retention, reproduction and motivation. But what we also know about family businesses is the conflict of succession.
What does this mean and how does it compare to non-family businesses? Well, families have hierarchies, but they have hierarchies without a business involved. Think Royal Family but don’t get into it! We also know that family businesses prefer a financial stewardship exit model (Koladkiewicz et al 2022). But how does that manifest when you get the prince and the king in the same business, both with very different ideas?
Michael Hogg’s Social Identity Theory is a good place to start. One of the challenges facing all entrepreneurs, and you might say leaders, is the social standing they hold both internally and externally of the business. How society perceives them as well as how the business perceives them. This provides capital worth but diminishes as the business is handed over, as the dynamics shift from old guard to new guard. Getting the balance right to ensure the transition is both socially and economically sound is a tricky one, right from the off. How does the young pretender succeed in the throne? How does it change the leadership dynamics? How does the business, and family, especially when there is potential internal conflict and strain, support the outgoing steward (who normally takes some kind of chair role)?
The focus is quite rightly on the success of the business. The support and help for the outgoing family member starts to diminish. Their self-worth starts to slide. The concept of stewardship is just that but how does that balance become a healthy norm?
Like all social science there is no answer. Just thought creation, constructs, models and hypothesis for challenge. We know there are limited avenues for entrepreneurs to explore when they think about exit. There are pretty much zero outlets for family business owners, and entrepreneurs, when they have left the business to discuss social worth, engagement and how you fill the gaps left behind from what is usually many years of social and emotional investment.
The more case studies we can do with departing entrepreneurs, both in family businesses and non family businesses, the more we will understand not just the process challenges but the emotional challenges both pre, during and post exit.