Different strokes on transgenerational entrepreneurship

Article based on research by Nonyelum Lina Eze, Mattias Nordqvist, Georges Samara & María José Parada

Family businesses have gained a reputation as the most prevalent form of business organisation worldwide, employing both family and nonfamily members and making a significant contribution to GDP. Family businesses have been pinpointed as an important engine for entrepreneurship in most economies. Therefore, it makes sense to ensure the sustenance of family businesses.

Transgenerational entrepreneurship has been on the front burner as a process for sustaining family business across generations by combining the unique bundle of resources that stem from family involvement (i.e., familiness) and the entrepreneurial mindsets of the next generation (i.e., entrepreneurial orientation).

However, to take transgenerational entrepreneurship as a strategy for sustaining family businesses across generations, it becomes imperative to deepen our understanding of factors that can drive or constrain it.

Entrepreneurial legacy, anticipated future, religion and traditions: keys to transgenerational entrepreneurship

A strong entrepreneurial legacy, derived from stories of successful entrepreneurial endeavours of past generations, instills entrepreneurial attitudes among future generations through strategic education, entrepreneurial bridging, and a strategic transition leading to transgenerational entrepreneurship.

Again, family businesses in which the next generation can anticipate the future by being forward-looking can prompt, sustain, and foster transgenerational entrepreneurship.

Contextual features such as national culture and, in particular, prevailing subregional religion and traditions have effects on transgenerational entrepreneurship. Evidence obtained from analysing interviews with 30 informants (family and nonfamily members) in top-level management positions in 18 multigenerational family businesses, as well as one family business expert, informed this posit.

Prevailing subregional religion and traditions have effects on transgenerational entrepreneurship

Interviews were conducted in Nigeria, a developing country where different religions are practiced, both Christianity-based and Islam-based, depending on the subregion. The authors found that the heterogeneity of these subregions has implications for transgenerational entrepreneurship.

Family factors leading to business practices with concomitant implications for transgenerational entrepreneurship

Religion and traditions in the subregion where family businesses operate have shaped the family structure (marriage arrangement and family size), family functioning (role of wife and transfer of values to next generation) and family mindset (risk-taking orientation and the feasibility of primogeniture), which has led to unique sets of business practices that influence transgenerational entrepreneurship.

Family structure, functioning, and mindset have differential impacts on business practices that in turn foster or hinder transgenerational entrepreneurship

The varying use of these business practices aids in understanding the differences in transgenerational entrepreneurship of family businesses that are either Christian or Muslim in Nigeria, as explained below:

1. Using valuable resources provided by a wife

Whereas the Muslim business families in the north of Nigeria, where polygamous marriage arrangements are predominant, did not involve their wives, the Christian business families included wives in various family business functions. Resources provided by a wife, especially when she is competent and capable, will add to the total amount of family resources available for the business, catalysing transgenerational entrepreneurship.

Underutilising or failing to use the valuable resources that a wife provides reduces family businesses’ capacity for transgenerational entrepreneurship.

2. Attaining unified business decisions

The cohesiveness and efficiency within Christian family businesses in the east and some parts of the west put them in a good position for entrepreneurial activities. In contrast, the divisiveness present in Muslim family businesses in the north and part of the west jeopardises their decision-making, limiting their capacity for transgenerational entrepreneurship.

Since effective decision-making enables continuity in a family business, the ability to attain a unified family business decision, shaped by the family size, influences transgenerational entrepreneurship.

3. Exploiting entrepreneurial opportunities

While Christian family businesses from the eastern and some western parts of Nigeria tend to exploit business-sustaining entrepreneurial opportunities, leading to transgenerational entrepreneurship, their counterpart Muslim family businesses in the northern and western parts of the country exploit entrepreneurial opportunities with difficulty. 

The constraint to the Muslim family businesses from the north is the fear of jeopardising the status quo; therefore, they tend to explore family-sustaining entrepreneurial opportunities. For Muslim families from the west, their overwhelming family size limits their exploitation of entrepreneurial opportunities (family-limiting). These family features negatively influence transgenerational entrepreneurship.

4. Deploying resources at transition

Christian family businesses in the east adopt consolidation, which enables the retention of family business resources under the control of one member of the next generation (primogeniture). This provides the necessary background for transgenerational entrepreneurship.

How the family business passes its family resources on at the point of transition influences intergenerational value and wealth creation

On the other hand, Muslim family business in the north adopts disintegration, allowing for the distribution of family business resources to all family stakeholders (Sharia inheritance norm). Disintegration leads to the depletion and fragmentation of the family business resources, eventually inhibiting transgenerational entrepreneurship. 
Consequently, how the family business passes its family resources on at the point of transition influences intergenerational value and wealth creation—transgenerational entrepreneurship.

Religion and traditions within subregional contexts can be drivers or inhibitors of transgenerational entrepreneurship. Transgenerational entrepreneurship is affected by the business practices that derive from the family structure, functioning, and mindset permitted by subregions’ religion and traditions.

Understanding these idiosyncrasies could help chart an intervention effort geared towards addressing perceived gaps within these regional settings to sustain family businesses.

Original research publication: Eze, N. L., Nordqvist, M., Samara, G., & Parada, M. J. (2020). Different strokes for different folks: The roles of religion and tradition for transgenerational entrepreneurship in family businesses. Entrepreneurship Theory and Practice, 00(0), 1–46. https://doi.org/10.1177/1042258720964428