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Family businesses face a number of challenges, including wether they remain informal entities and who will eventually take over the reins.
Three Mississippi State University management professors laid out details on these and other issues in a seminar on family business Tuesday at the Greater Starkville Development Partnership.
â€ś...Most organizations in the world are family businesses,â€ť said Dr. Jim Chrisman, an Adkerson Notable Scholar at MSU and the director of the universityâ€™s Center of Family Enterprise Research. He added that family businesses are the oldest form of business in the world.
â€śFamily firms have many strengths and weaknesses and the interesting thing about them ... both their strengths and their weaknesses come down to the people that are involved in them and the relationships among those individuals,â€ť he said.
In his presentation, Chrisman said that succession is a â€śprocess that involves people with different perceptions and goalsâ€ť and is important for a firmâ€™s success.
â€śTherefore, the political and planning aspects of succession are as important as picking the right person to lead the firm,â€ť he said in the presentation.
Chrisman says COFER is number one in the world in family business
research over the past decade â€śso weâ€™re kind of proud of that.â€ť
Dr. Allison Pearson â€“ the W.L. Giles Distinguished Professor of Management, an Adkerson Notable Scholar and John Grisham Master Teacher â€“Â outlined the issue of professionalizing a family business.
â€śProfessionalizingâ€ť means making a business more formal and more official in terms of policies, procedures, legal documentation, job titles and similar matters, she said. â€śWhen do we move it into that corporate model, if at all?,â€ť she asked in explaining her topic.
â€ś... Sometimes we see families that donâ€™t want to make the decisions because itâ€™s going to ruffle feathers. ... But if we donâ€™t, sometimes the business wonâ€™t survive beyond that point ...,â€ť she said.
In her presentation, Pearson said some characteristics of start-up family businesses include that they are founder-directed, are small, informal and entrepreneurial.
She also noted some of the challenges, which include growing, surviving and generating revenue.
Expansion-stage family businesses are those where product or service demand is solid and growing, production and employment are in growth mode, revenues and expenses are on the rise and additional family members are joining the businesses, she sad in her presentation.
The challenges businesses face in the expansion stage include more employees to manage, more issues to face within the family and a single, dominant founder is no longer in charge, Pearson said during the presentation.
Dr. Tim Barnett is the Richard and Mary Puckett Notable Scholar and a COFER fellow. He provided details on leadership and business ethics.
â€śNothing about leadership in and of itself says anything about ethics, or morality or right behavior. ... Itâ€™s a neutral concept,â€ť Barnett said.
A person working within the construct of ethically responsible leadership is â€śsomebody that doesnâ€™t see a conflict between business goals and business ethics. ... I donâ€™t really think theyâ€™re in conflict for most of us, most of the time. ... Being that type of leader typically is associated with success,â€ť Barnett said.
But he added that â€śbeing a nice person and an ethical person and an ethical leader in and of itself does not ensure business success.â€ť
â€śThere are a lot of very nice people that go broke. Youâ€™ve got to have a good product, youâ€™ve got to provide good value to your customers, youâ€™ve got to be a competent manager... ,â€ť Barnett said.
Barnett says heâ€™s been reading a book entitled â€śToo Big to Failâ€ť to understand the market collapse in recent years.
â€śYou know what it all boils down to? People not doing the right thing. People knowing better and doing the wrong thing anyway (and) ... doing stuff that their Mama told them not to,â€ť he said, adding that he was not trying to oversimplify, but rather this was the essence of what happening.
The program was sponsored through the Technology Resource Institute at MSU and the GSDP. The seminar was part of the GSDPâ€™s Blue Ribbon Business Resources Series.