Family entrepreneurship
Family Entrepreneurship: The Backbone of the Global Economy
When we think of startups, we often imagine a lone wolf in a garage. But the data suggests a different reality: most businesses are a family affair.
"75% of entrepreneurs in 48 economies around the world said that their family was involved in starting their businesses, either as co-managers or co-owners. The vast majority of startups around the world are, in fact, family businesses."
— Babson College
Beyond Succession: Pooling Resources
Historically, research focused on Succession—the passing of the torch from one generation to the next. While legacy is important, modern theory recognizes that family entrepreneurship is also about the creation of new ventures.
Chrisman et al. (2003) argue that the true power of families lies in their unique ability to pool resources. Families can mobilize labor, capital, and social connections faster than non-family teams because of high trust and shared goals.
[Image of Three-Circle Model of Family Business]New Frontiers: Copreneurs and Teams
Randerson et al. (2015) propose that the field is expanding beyond the traditional "Father-Son" shop. They identify several emerging areas of research:
- Copreneurs: Couples living together and running a business together (romantic and business partners).
- Entrepreneurial Teams: Groups of relatives (siblings, cousins) forming teams to launch new ventures.
- Corporate Family Entrepreneurship: How families handle high-level strategic decisions like mergers, acquisitions, and spinoffs.
- Transgenerational Entrepreneurship: How value is created not just for the current quarter, but across decades.
The Modern Reality: The "Shrinking" Family
How does the changing definition of "family" affect business? Aldrich et al. (2021) introduce the Family Embeddedness Perspective (FEP).
This perspective recognizes that the "Corporate Family" (the large, multi-generational dynasty) is in decline. Modern families are smaller, women have increased occupational opportunities outside the home, and there is a growing proportion of childless adults.
The FEP uses a Life Course Perspective, examining entrepreneurship over long lifespans rather than single points in time. It brings a normative lens to difficult questions, such as the pressure to join the family business or "coerced resource pooling" (when family members are guilt-tripped into providing cheap labor).
Video: Family Business Dynamics
References
Chrisman, J. J., Chua, J. H., & Steier, L. P. (2003). An introduction to theories of family business. Journal of Business Venturing, 18(4), 441-448.
