Consider this, most companies around the world are controlled by their founding families, including more than half of all public corporations in Europe, and more than two-thirds of those in Asia. Even in the United States, where ownership dispersion is at its highest, founding families exercise a significant degree of control over more than half of all public corporations.
Like siblings, startups and family-owned businesses have more in common than you might think. For one thing, the success of each is extremely dependent upon relationships.
“Relationships are key and a true engine to entrepreneurship because all founders need others working with them to succeed,” said Daniel G. Van Der Vliet, the Executive Director of the Smith Family Business Initiative (SFBI) at Cornell University.
“Nearly 48% of all entrepreneurs came from a family business – they learned how to run a business first hand, at home. In addition, nearly 85% of all entrepreneurs engaged their family in some meaningful way in the first three years of business,” Van Der Vliet continued.
“I was 14 when I started working in the family business,” said Adriano Campos, MBA ’19. “At age 19, while pursuing my undergraduate degree, I started working at General Electrics in Brazil. It was there that I noticed that people make the company. I came to Cornell to because of its high rankings, the number of investment courses, and the emphasis on family business. It was here that I starting thinking about succession planning.”
Adriano Campos, MBA ’19 – Adriano is a second generation of Fundimig, a 33-year old foundry specializing in cast iron parts for automotive and agriculture industry. His family also owns Collortex, paint stores founded by his mother. Adriano co-founded AB Campos, a group of franchise stores in Brazil.
As family members become eligible to come into the business, there needs to be a process for managing those changes, explained Van Der Vliet. “30% of family businesses make it to the second generation, 12% make it to the third generation, and less than 4% make it past the fourth generation. As businesses go through and succeed from generation to generation, they start to become a little more complex,” said Van Der Vliet.
Christina Chen, MBA ’19, was born into a large, complex, family-owned conglomerate. Her role, and that of her siblings was assigned, by her father, to fill a specific niche.
“Among my most valuable experiences at Cornell, was attending a [SBFI sponsored] Women ’s Round Table in NYC, followed by taking a Women’s Leadership course. [These experiences] helped me resolve how to talk about biases in society which may overlap with family pressures about what role a daughter may play in the company,” said Chen. Bridging her MBA studies with the family hospitality business, Chen is now starting a consulting company focused on efficient hotel operations.
Christina Chen, MBA ’19 – Born and raised in Los Angeles, Christina’s family business is the Xianglu Dragon Group which owns and operates several subsidiaries in: petrochemicals, resin, chemical fibers, real estate, and hotels in Asia and the United States.
“Like all entrepreneurs, family business owners need to innovate, change, and stay current,” said Ben Rashbaum, MBA ’19, who is a current member of eLab and founder of Strauss. His startup will modernize his family’s life insurance brokerage business by making it easy for people to purchase life insurance online.
Ben Rashbaum, MBA ’19 – Is a third generation Cornellian and the fifth generation to enter the family’s life insurance brokerage business – The Strauss Agency. While at Cornell, Ben participated in eLab, a year long course that helped him develop his new business idea which he hopes to take back to his family business – or launch his own new business.
Margarita Tsoutsoura, the John and Dyan Smith Professor of Management and Family Business at the Samuel Curtis Johnson Graduate School of Management joined Cornell in 2018. In addition to several on-going research projects studying family firms and privately held firms, she teaches NBA 6720 Managing Family and Privately Held Firms
“The course provides students with exposure to the unique finance, governance, and management issues faced by family firms, and ways in which these issues can be addressed,” said Tsoutsoura. “As an MBA elective, it is designed for students who may be considering working for, or who are already involved in, family firms and closely held companies. In some cases, the student’s career will place them in a position to do business with family firms, consult to them, invest in them, work with them in private wealth management, mergers, and acquisitions, banking, consulting, etc.”
“What is important to understand, is that entrepreneurship and family business are not mutually exclusive. The role of family in developing entrepreneurs, from start-up through each level of growth, is well researched. As well, any future generation of a family business needs to be thinking about how to constantly be an agent for change and adaptation to keep the enterprise successful and growing.”
Written by Debra O. Eichten, excerpted from ESHIP Magazine – Spring 2019