Families are the cornerstone of societies and more so for entrepreneurial families. Family dynamics are represented by the relationships, interactions, and interdependencies among family members in a family business. These tend to be complex, ever evolving and driven by emotions. When family dynamics are healthy, they can lead to trust, cooperation, and commitment among family members. This proves as a strong foundation for the business. However, when family dynamics are unhealthy, they can be a source of disagreements and instability in the business.
Numerous factors influence the family dynamics like socio economic factors, geographic origins, size of the family, unique situations faced by a family (sudden growth in business, natural calamities, medical conditions of family members, financial stress, sudden passing away of a member etc.)
Culture plays a significant role in shaping family dynamics. Different cultures have distinct values, norms, and expectations that influence how family members interact. In some cultures, collectivism is vital, emphasizing close-knit relationships and communal support. For example, the collectivist culture in Asia.
In some families there are individualistic cultures that prioritize personal independence and autonomy. These cultural nuances influence communication patterns, decision-making processes, and the roles family members play within the unit.
Joint families have been more conventional in Indian family businesses. They serve as a strong foundation of trust and loyalty, thus being an advantage. However, they have their own set of challenges to manage. Over time, however, nuclear families are becoming increasingly common in the Indian family business ethos.
The collective experiences, traditions, and beliefs of the family members influence the discovery of shared values.
The values and principles practised by the founding generation through narratives and experiences serve as a guide for next generations.
Family traditions, rituals, and customs are repositories of shared values.
The way family members communicate and interact with each other shapes their understanding of the family's core values.
Family leaders who embody the values and exhibit the relevant behaviour serves as role models for the younger generation. Their actions greatly influence how values are perceived and embraced within the family business.
In a family business survey conducted by PWC (2019), Maltese family businesses reported that the values and purpose have framed their company’s vision and are communicated on an ongoing basis to employees.
The values and purpose stemmed from those running or owning the business and have become stronger over the years.
"The Maltese people are characterized by their use of the Maltese language and adherence to Roman Catholicism, they trace their origins to a diverse mix of colonists from Sicily and Calabria who repopulated the Maltese islands."
Mr. Luiz Alexandre Garcia, the third-generation Chairman of Brazil’s Algar Group described it in this way: “Algar Group has operated for 90 years in many different fields and the business has changed a great deal in that time. But the principles, purpose and values of the company have never changed. That’s our primary legacy. It is what has brought the company to its position today and what will carry us into the future.”
Source: KPMG- The enduring legacy of business families 2021
Mr. Luiz Alexandre Garcia, the third-generation Chairman of Brazil’s Algar Group described it in this way:
“Algar Group has operated for 90 years in many different fields and the business has changed a great deal in that time. But the principles, purpose and values of the company have never changed. That’s our primary legacy. It is what has brought the company to its position today and what will carry us into the future.”