Values in the Family Firm

I recently attended two seminars on family businesses. The first was the annual meeting of the Family Business Network, an entity headquartered in Lausanne, Switzerland, which basically groups members of family firms. The second was the annual meeting of the Family Firm Institute, with headquarters in the USA, which is mainly an association of academics and consultants who work with family businesses. Attended by people from very different cultures, these two events lead to certain conclusions that leave little room for doubt.

The Role of the Family Business

Both the European and American specialists mentioned that when they were in college some twenty, thirty or even more years ago (such as veteran Léon Danco, considered "the father of family business", who graduated half a century ago), the family firm was completely ignored by the academic world, who saw it as an antiquated entity that was fading away, unworthy of study by the experts. Influenced by the academic world, the media developed a similar attitude. It is only during the last fifteen to twenty years, thanks to the pioneering efforts of Léon Danco (who graduated from Harvard with an MBA in 1947), that "politically correct" thinking gradually began to yield to undeniable evidence: the family firm is the greatest creator of wealth and jobs in the economy of any country based on free enterprise… such as the USA, the UK, Germany, France, etc..

Meanwhile, Brazilian Business Schools continue to follow the same lines of thought as their founders several decades ago. Brazil's longest-established business school - the Getúlio Vargas Foundation in São Paulo - was set up during the 1950s by a visionary group of pioneers who had completed their graduate studies in the USA and returned to establish this school. Forty years later, most of their followers have still not recycled their ideas, and continue to follow the trends of the 1950s. In a rare example of moving ahead of the private sector, the Brazilian Government has introduced mechanisms supporting what it calls "small and medium-sized enterprises". In fact, they are no more than embryonic family firms which, if successful, will develop into family-run businesses when the offspring of their founders decide to work with their parents.

Success is a Matter of Values

All experts on this matter, whether they come from the fields of management, psychology or the social sciences, declare unanimously that the success of a family-run enterprise extending through generations is possible only if the family is solidly based on strong, clear-cut values handed down to each new generation. These basic values are tied to love for the company established by parents or even earlier forebears, where higher priority is assigned to the interests and survival of the company than to the personal interests of its shareholders, with ethical values handed down from parent to child in a long-lasting manner.

Family Love

So far, little has been said that does not confirm ideas that already well known. The new factor on this trip was a personal meeting with the legendary Léon Danco, attending one of his lectures. At the age of 75, rich and famous, Danco is not in the least concerned about pleasing the audience, or with the impression that he may make. He says what he wants to, really speaking his mind. And what did he feel like saying? Instead of giving a sophisticated presentation using modern audiovisual resources, he showed some family snapshots on the overhead projector: his granddaughter, his grandson, his wife, his dog. Just as we were beginning to wonder if the old boy was going gaga he reached the key point that he wished to stress: the family firm cannot function unless love unites the family, and generally the guardian of this love is the mother, the matriarch. At this moment he was so moved that he had to pause to regain control of himself, and then closed by exhorting entrepreneurs to bring their womenfolk - wives, daughters or daughters-in-law - if not into the business itself, then at least into the dream, the long-term vision of union between the family and the firm. Skeptics and cynics may laugh, but seeing that veteran admired by all as the world's leading experts in this field, saying all that with such feeling, certainly affected me.

I have a question: how many Brazilian family firms have been able to hand down the dream of love for the company beyond the founder's generation?