Family business: Entrepreneurship and soul

This article is part of the ‘Inspiring Transformations’ series promoted by Esade Entrepreneur Institute for its 30th anniversary. 

Family businesses offer a unique perspective on entrepreneurship, diverging in fascinating ways from the conventional approach to starting and running a business. In today's conventional entrepreneurial thinking, the focus is on identifying a business opportunity and mobilizing resources to transform it into a venture that aligns with existing or emerging market needs. 

The success of these entrepreneurial ventures is often measured by market value, shaped by a combination of factors, including the sophistication of investors willing to support businesses in various stages (from seed capital to growth), the rapid evolution of technologies that can create 'winner-takes-it-all' scenarios, and the prevailing mindset prioritizing speed and financial gain. 

In stark contrast, family businesses represent a fundamentally different approach to entrepreneurship. They intertwine two of society's most critical institutions: family and business. When managed effectively, this fusion yields a synergistic relationship that benefits not only the family but also the entire community. 

Beyond mere business 

Family businesses typically originate from the entrepreneurial endeavors of individuals, sometimes with family ties and sometimes not. Their primary aim often extends beyond pure wealth accumulation; instead, they see their business activities as fulfilling goals in their own right.  

Family entrepreneurs are driven to develop and sustain their businesses over the long term

Economic rewards are supplemented by the joy and pride derived from the company's mission and its tightly connected self-identity and business identity. Consequently, these entrepreneurs are driven to develop and sustain their businesses over the long term, often with the intention of passing them down to the next generation. 

While opportunities in conventional entrepreneurship often revolve around market needs, those in the context of family businesses tend to emerge from a different perspective. They are rooted in the resources at hand – individuals who possess specific expertise, engage in particular activities, leverage specific technologies, and possess knowledge of distinct markets. Entrepreneurs in family businesses build their ventures upon these existing foundations. 

The future of family business 

Our activities for family businesses within the Esade Entrepreneurship Institute focus on assisting family businesses in their strategic renewal to prevent them from becoming complacent with past successes by connecting them to current and emerging technologies, preserving the essence of their businesses, and fostering collaborations between family businesses and with other investors and entrepreneurs. These alliances can help seize opportunities that require speed, substantial investments, or high levels of risk. 

Family businesses have occasionally been criticized as old-fashioned, conservative, or nepotistic. While some may fit these descriptions, entrepreneurial family businesses might just be the type of companies our society needs. They are well-equipped to confront today's challenges with agility, professionalism, and a commitment to the common good. 

References and recommended readings 

• Gimeno, A. & Parada, M.J. (2022) Nobleza de Espíritu en la Empresa Familiar: Su importancia. Harvard Deusto Business Review, 326, 44-46. 
• Gimeno, A. & Parada, M.J. (2023) Nobleza de Espíritu en la Empresa Familiar: Cómo Cultivarla. Harvard Deusto Business Review, 326, 54-56. 
• Parada, M., Gimeno Sandig, A., Samara, G. & Saris, W. (2022). The adoption of governance mechanisms in family businesses: An institutional lens. Journal of Family Business Management, 12. DOI: http://doi.org/10.1108/JFBM-07-2019-0054. 
• Dawson, A., Parada, M. & Gimeno Sandig, A. (2020). Growth through Innovation and Internationalization: Exploring the role of family business identity through narrative analysis. In A. De Massis & N. Kammerlander (Eds.), Handbook of qualitative research methods for family business, pp. 270-283. Edward Elgar. 
• Parada, M. & Dawson, A. (2017). Exploring institutional entrepreneurship in developing countries-Copreneurs in the tourism industry: A Bolivian case. In M. Ramirez-Pasillas & M. Markowska (Eds.),E. Brundin, Contextualizing entrepreneurship in emerging economies and developing countries, pp. 194-210. Edward Elgar. 
• Parada, M. & Gimeno Sandig, A. (2016). Understanding characteristics of long-term value creating family business. Effective Executive, XIX (4), pp. 43-54. 
• Gimeno Sandig, A. & Parada, M. (2015). Parenting and next gen development. In P. Sharma, N. Auletta, R. DeWitt, M. Parada & M. Yusof (Eds.), Developing next generation leaders for transgenerational entrepreneurial family enterprises, pp. 212-237. Edward Elgar. 
• Gimeno Sandig, A. & Parada, M. (2013). Professionalization of the family business: Decision making domains. In P. Sharma, A. C. González, R. Nason, K. Ramachandran & P. Sieger, Exploring transgenerational entrepreneurship. The role of resources and capabilities, pp. 42-61. Edward Elgar. DOI: http://doi.org/10.4337/9781781003626.00009. 
• Parada, M., Nordqvist , M. & Gimeno Sandig, A. (2010). Institutionalizing the family business: The role of professional associations in fostering a change of values. Family Business Review, 23 (4), pp. 355-372. 
• Bieto Caubet, E., Gimeno Sandig, A. & Parada, M. (2010). Dealing with increasing family complexity to achieve transgenerational potential in family firms. In M. Nordqvist & T. M. Zellweger (Eds.), Transgenerational entrepreneurship: Exploring growth and performance in the family firms across generations, pp. 167-194. Edward Elgar.