Legacy in the family business: Identity, values, and purpose for continuity
For a family business to thrive, its legacy must evolve and adapt to new generations. In doing so, this distinctive mark of identity becomes a lasting competitive advantage.
Family businesses occupy a central place in the global economy: they account for a significant share of employment, innovation, and community development. Their strength lies in their commitment to continuity. Unlike other types of organizations, family businesses think in the long term, seek to transcend generations, keep control in the hands of the family, and pass on not only a business, but also a life project and a set of values.
Within this context, legacy becomes a central axis—both symbolic and emotional—of family continuity. It represents the bridge between past, present, and future; the thread that connects the founders’ history with the aspirations of their successors.
Understanding and consciously managing legacy is essential to ensuring intergenerational sustainability and maintaining a balance between tradition and innovation.
The role of legacy in family continuity
Legacy can be defined as the set of values, stories, practices, and decisions transmitted from one generation to the next, shaping the identity of both the family and its business. It is far more than a material inheritance: it represents the connection between past, present, and future. It includes the founder’s legacy—the imprint of their vision and character—the family legacy—shared values and traditions—the business legacy—the organization’s reputation and culture—and the entrepreneurial legacy—the spirit of innovation and risk-taking that drives continuity.
Legacy is not inherited automatically; it is built and continually renewed
This legacy is positive because it unites and provides direction, but it can also be constraining. It is a source of identity, trust, and cohesion, yet when it becomes a dogma, it can hinder innovation. It is in this tension between preservation and transformation that the true challenge for business families lies: keeping the legacy alive without becoming trapped by it.
Building legacy: values, stories, and virtues
Legacy is not inherited automatically; it is built and continually renewed. Each generation should interpret, expand, or redefine it according to its circumstances and the challenges of its time. This transmission takes place through family practices—education, role modeling, storytelling, governance—and business practices—mentoring, rituals, symbols, and organizational culture.
Among the most powerful transmission mechanisms is family narrative. The stories told within the business and the family—about the founder, critical moments, or shared achievements—not only preserve memory; they build identity. These narratives answer the question “who are we and why do we exist?”, and they must be rewritten as the context changes. Through them, different generations are given a voice and consensus is built to sustain continuity.
However, the transmission of legacy does not depend solely on structures or discourse, but on lived examples. As research on values and virtues in family businesses shows, intergenerational prosperity rests on four cardinal virtues: prudence, courage, temperance, and justice. Prudence guides wise and sustainable decisions; courage drives innovation and ethical action; temperance moderates ego and fosters humility; and justice ensures fairness within both the family and the business. These virtues, embodied in the behavior of leaders, constitute the true DNA of legacy.
As a result, legacy is not merely a memory of the past, but a living practice of shared values that strengthens organizational culture and consolidates family identity over time.
Legacy as a compass for the future: purpose and renewal
Every business family faces the paradox of legacy: what provides stability can also slow evolution. The key is not to break with the past, but to reinterpret it to make it relevant. As Davis argues, leaders must distinguish between the values that deserve to be preserved and the practices that need to be transformed. In this way, legacy becomes a source of innovation rather than rigidity.
Purpose is the tool that resolves this paradox. Beyond economic profit, purpose expresses the company’s “why”: its reason for existing and contributing to society. According to Hollensbe and colleagues, when purpose is clearly defined and aligned with family values, it acts as a strategic compass. It inspires younger generations, reinforces internal trust, and projects a reputation grounded in integrity.
When purpose is clearly defined and aligned with family values, it acts as a strategic compass
Understood in this way, legacy is not a relic to be preserved, but an energy to be transformed. When lived through purpose and virtues, it becomes a lasting competitive advantage: a mark of identity, trust, and meaning.
Ultimately, business families that succeed in linking their past to a vision of the future build living legacies—capable of adapting without losing their essence. Their greatest inheritance is not what they leave behind, but what they inspire: a way of acting, deciding, and serving with purpose, generation after generation.
