In traditional economic-based views on governance, owners are often portrayed in a somewhat passive role, with an emphasis on the incentive structures they install to motivate employees and other key stakeholders. Under these frameworks, owners provide financial resources, while management–driven by the right incentives–execute day-to-day operations to create value. Yet this perspective fails to fully […]
How employee incentives drive innovation in family firms
Innovation is the name of the game in today’s hypercompetitive markets: in order to survive, companies need to continuously innovate their products, processes and operations. Based on conventional wisdom, family-owned firms are at a disadvantage in this regard, with risk aversion, conservative attitudes, organizational rigidity and limited capital commonly cited as obstacles to innovation. At […]
The ripple effect of trust and the family firm
When searching for a new supplier, investor or manager, what’s your number one criterion? Industry reputation? A core metric? Economic cost or benefit? While all relevant criteria, there is another that trumps them all: trust. Defined in academic literature as the willingness of one party to be vulnerable to the actions of another, trust has […]
Trust and family firms: what do we know?
Recognized by UNESCO as Intangible Cultural Heritage of Humanity, castells are human towers whose origins date back to the early 18th century in Catalunya. At a recent teambuilding event with other IESE faculty, I had the chance to discover their history – and experience first hand! – what it takes to build a castell. They […]
Succession in family firms: navigating the power paradox
Many family business leaders hold two conflicting emotions as they near retirement: on one hand, the desire to pass the baton to their children, and on the other, the desire to retain control for as long as possible. These opposing aims can significantly affect the parent-child dynamic and result in a paradox in which the […]
Finding the best external equity investor: one size doesn’t fit all
The market is currently flush with cash waiting to be invested, with no signs of a slowdown in sight. In this context, many privately-held family businesses are considering external capital to drive their corporate and family objectives. In their search for the optimal investment partner, family businesses need to make sure everyone’s objectives align – […]
The COVID-19 crisis: a unique window to reflect on succession planning
The COVID-19 pandemic has sparked an unparalleled healthcare and financial crisis, inspiring many of us to reframe and recalibrate our priorities, as well as rethink our definition of happiness: what to hold onto and what to leave behind. For the owners of family-controlled firms, the coronavirus crisis also offers a window of opportunity to plant […]