Tackling global crises one family business at a time: A toolkit for responsible ownership
Family businesses have it in their power to be at the forefront of finding solutions to the world’s challenges. Estimates place family businesses as 70-90% of all businesses worldwide, but these aren’t just mom-and-pop shops. Billion-dollar family businesses are being minted every year, and the 500 largest family businesses generate USD 7.28 trillion in revenue.
But family businesses deploying their resources to address global crises is only going to happen if they tackle how the bonds of kinship can take priority in damaging ways over the bonds that they have with their stakeholders: employees, individuals along their supply chain, and the communities in which their extraction, production, and distribution has a footprint.
That is my finding from three years of anthropological research learning, socialising and travelling amongst some of the world’s wealthiest and most discreet families.
The entwinement of business and family interests are tropes in literature, theatre, and cinema, from the Bible to ‘Succession'. But the hard business questions for this class of owners are more urgent than ever.
It can be understandable that the multi-generational owners of family businesses with revenues above $1 billion are reluctant to speak to outsiders or remain guarded and on-script when they do. Their billion-dollar businesses are high-profile, their wealth and perceived power inspires both scrutiny and voyeurism, and the entwinement of business and family interests are tropes in literature, theatre and cinema, from the Bible to 'Succession'.
But the hard business questions for this class of owners are more urgent than ever: with wealth inequality cemented by the intergenerational transmission of property (in this case, large businesses), are large, multigenerational family businesses the starkest example of familial self-interest harming social well-being? Or, might a family’s values and commitment to purpose allow their businesses to be more committed to social and environmental well-being?
My multidisciplinary colleagues on The Ownership Project and I have been using the tools of our fields to answer these questions, from developing hand-collected quantitative data sets, to formal interviews, to usage of text analysis software. Following our three-year study, I have used the tools of economic anthropology to explore where the myths and stories family business owners tell themselves to assert their superiority in the business world are useful—and where they fall apart. To help family business owners to walk their talk, I have developed a Toolkit for Responsible Ownership to help owners and their advisors bridge gaps between aspiration and reality.
Large business-owning families tell strikingly consistent narratives about themselves ... regardless of whether they are true or false.
It became evident to me that large business-owning families tell strikingly consistent narratives about themselves. These narratives manifest in the speech, actions, and rituals of family owners and their service providers, and work to create a clear and aspirational vision of owners as actors who care for their communities and workers in ways that non-family-owned businesses do not. These narratives are consequential because—regardless of whether they are true or false—they become the basis for actions in the world, from political lobbying regarding inheritance taxes to corporate marketing campaigns to a family’s complacency regarding the impacts of their business on the world.
Ultimately, I identified seven narratives that continually surfaced in conversations, sidebars, business meetings, peer learning events, and communications (social media posts, webinars, reports, first-person published narratives) written by and for the large family business community.
The narratives are:
- Family business is a force for good
- We have a long-term orientation
- Family owners are uniquely agile
- Employees prefer working in a family-owned business and our employees are like family
- I consider myself a steward of the business for the next generation
- We care about our community
- Shirtsleeves to shirtsleeves in three generations
These narratives, among the billion-dollar business demographic, transcended geography and sector. They constituted a grammar that family members drew on to explain themselves to themselves, to each other, and to the outside world. But global challenges — from climate change to wealth inequality, to pandemics — require not just aspiration, but empirical proof of responsibility from the families’ core operating businesses. And not only was reliance on empirical proof to uphold or justify the narratives a glaring “social silence,” but the narratives were bolstered by a number of assumptions and logics that contained important clues to the family’s values, beliefs, and practices – and where there is scope for change.
Family business owners do have the ability to drive change by evaluating and rethinking their own narratives. Bold and even radical changes to improve their performance on environmental, social and governance (ESG) issues are needed. But such radical change is not without precedent: my observations also yielded examples of bold or idiosyncratic practices of family businesses and professional service providers that can serve as inspiration to others.
In the Toolkit for Responsible Ownership, every narrative is matched with action items to bridge the gap between aspiration and reality.
Three examples of narratives and actions
One, to realise the aspiration of being a force for good and start addressing inequalities their ownership has benefitted from or is exacerbating, family owners can:
Excavate and acknowledge complicated histories at the core of your business and link them to current and future business strategies. Change requires awareness and acceptance. In the context of family businesses, this means knowing your full legacy and integrating it into your present-day actions. Whether it was family engagement with, or business profits derived from dictatorial regimes, slavery, wars, genocides, or other violent events – family businesses with long histories may well have unsettling and problematic pasts. Commissioning studies or archival investigations can help you make new corporate and philanthropic commitments and allow your family to have a more honest understanding of its legacy.
Two, if leveraging the long-term potential of family ownership is a genuine goal, families can:
Create an ESG or sustainability strategy for the holding company and the family governance apex body to ensure a long-term orientation across the family’s full portfolio. Families cannot plausibly claim to have a long-term orientation or to think in generations when parts of their ownership portfolio explicitly contradict this. Large families and large enterprises are complex, and their arrangement and management will always be unique. Knowing this, sustainability mandates should be implemented within the appropriate ownership and family governance apex bodies, to ensure application of the strategy across the entire enterprise.
Three, family owners often say, “I don’t consider the business as something that belongs to me. I consider myself a steward of it for the next generation.” But ownership accrues profound benefits and these benefits come with responsibilities, which require as a starting point:
Knowledge of what one owns. Create a plan to inform the next generation of the assets they currently own or will inherit. The absence of a plan to inform the next generation of the assets they currently own or inherit is surprisingly common. Considering oneself a steward presumes the eventual readiness of the next generation to inherit and serve as stewards themselves. This is difficult to-impossible when next generation members do not know what they are stewarding. Future inheritors must be fluent in upcoming forms of ownership and what these forms enable and constrain.
As the realities behind family narratives become increasingly scrutinised, families with billion-dollar companies and their service providers need new ways of approaching intergenerational ownership, including assumptions and taboo topics. The Toolkit for Responsible Ownership offers a starting point.