Coming into the family business course, I expected that it would
provide me is with straightforward directions or theories that will help me
with the family business. However, I didn’t know that the failure rate of
family business is too high in the second generation and very few make it to
the third, which made wonder if it’s worth it to get involved in the family
business and if people are better off starting their own businesses.
It is a tradition to take over the family business, where I come
from, and many don’t have the this knowledge that many family owned business
won’t survive to the second generation and many don’t make succession plans as
western countries, which makes it even harder.
However, I think that in developing countries such as Egypt,
the chance of family owned business survival to the second generation is higher
compared to western countries, due to some cultural and not as intense
competition and regulations factors.
I agree with you. What is interesting though is within my culture, family businesses tend to survive too long due to illegal persuasions and corrupt practices. So I wonder, what is worse, being encouraged to enter a family business that you feel cannot last longer than the third generation or being asked to enter a family business that you know involves unethical practices in order to sustain its duration?
ReplyDeleteWhat do you think?
i think it depends on the personality or values and principles of the person, for me it is a hard question, because in Egypt in order to get things done, it is a must to perform some unethical practices, like customs employees wont pass your products on time, even if it is perfect and has no issues with the regulations set, they will delay its clearance until you pay them some money, and due to penalties in contracts signed with the customers, it becomes a must to pay them to deliver the products on time to the customers. so I think its hard to determine what is worse, due to family pressure to succeed and take over, and also in order to get things done back home, you have to do some unethical practices
ReplyDeletei think it depends on the personality or values and principles of the person, for me it is a hard question, because in Egypt in order to get things done, it is a must to perform some unethical practices, like customs employees wont pass your products on time, even if it is perfect and has no issues with the regulations set, they will delay its clearance until you pay them some money, and due to penalties in contracts signed with the customers, it becomes a must to pay them to deliver the products on time to the customers. so I think its hard to determine what is worse, due to family pressure to succeed and take over, and also in order to get things done back home, you have to do some unethical practices
ReplyDeleteI personally think that any original business idea by an entrepreneur is worth pursing more than taking over a family business especially if the that person himself isn't dedicated enough towards the family business plus with the current rate of success of second generation management it wouldn't be wise for someone not to open his own business and make it one day more successful than his family's.
ReplyDeleteSecond generation family failure rates are more likely to fail because it is hard to find a successor in the family to take over the business. However, second generation families depending on their size is also a big factor to consider because if a second generation family is small the family as a whole feel more involved and overall feels more like a 1st generation family business succession. For big second generation families this makes it even more complicated because of the diverse personalities and views of each individual. Therefore, it is advised for most cases to either allocate each family member shares and appoint the most appropriate successor wether be a family member or a non family member.
ReplyDeleteGoing back to the statement you made about cultures is also true but i believe a strong relationship with your family is what dictates the future of family businesses and this can exist in all sorts of cultures.