Family-run businesses account for about half of the Dutch GDP and employment. But research about family firms and knowledge dissemination have fallen behind. The Erasmus Centre for Family Business (ECFB) is among the first in the country to translate advanced research into strategic and business planning tools to improve family firms’ governance and performance.
“Everybody who is interested in family business should know what the Centre is about.”
– Pieter Pelt, The Stike Groep BV
The Netherlands boasts about 260,000 family-run businesses, which provide about 49% of total employment and contribute 53% of the country’s GDP. Family firms typically have a long-term focus, are characterized by a culture of integrity, and are more resilient to economic downturns. These characteristics make family firms a major driving force for the Dutch economy, and their prosperity is crucial for the country’s welfare. Optimising management within the family business setting is therefore important, yet it is complex because it features intrinsic problems that greatly differ from those of traditional corporate enterprises. A family firm requires a tailored approach to problem solving, and this is where the ECFB can provide critical information and skills to enhance managerial performance.
Despite the undisputable social and economic relevance of family firms, research and education have not received adequate attention. Studies to determine the key factors for improving performance have been rather focused on widely held businesses and thus have failed to address family businesses’ peculiar needs. The ECFB was launched in 2013 to serve the community of family-run firms. Its scholars passionately develop strategies and tools to better understand the mechanics governing family businesses and use their high quality, rigorous, and internationally recognized research to assist these firms. The ECFB also has become a safe meeting point for family firms to network and talk about the distinctive issues they face.
At ECFB events, family business owners openly talk about sensitive issues that are unique to their business segment. These issues – for instance, conflict among relatives – are not often discussed with professional services providers due to their sensitive and personal nature. Imagine having a father who is your CEO, and in the evening you have dinner with the person you report to – but the two of you have fundamental disagreements regarding how the company should be run. These kinds of topics often emerge from events, such as the roundtable dinners, during which researchers present their most recent findings to family business leaders, who in turn provide feedback and assistance in data interpretation. In the words of one of the participant owners, “Sound research on these subjects keeps us sharp. At the same time, we can contribute to the research by giving our experience and practical input. We thereby keep researchers on the right track.”6
Other themes discussed during these events include the role of external advisors in family firms and the difference between the ways family business leaders operates when compared to nonfamily chief executives.7 These are highly sensitive topics because they directly relate to the involvement of non-family executives in governance, and eventually, to business succession. The founding generations, for instance, tend to deliberately exclude outsiders from management and ownership. Research, however, has shown that this approach can be detrimental to family business viability over time.8 Based on ECFB research evidence and consequent feedback, the centre launched a partnership with Rabobank and the top accounting firm BDO. This collaboration aimed to study more than 15,000 Rabobank and BDO clients to unravel the risks associated with lack of external input in family firms’ governance. The information garnered provides better understanding of family businesses’ requirements for success. It will also be used to design specific programmes to train BDO consultants and Rabobank managers to enable them to carry out a better dialogue with their clients.
ECFB researchers also use the feedback they receive from family business owners to validate their research and interpret data. The role family firms play within ECFB research is therefore essential in pursuing the goal to promote synergy between research and practice.
The ECFB also offers an elective course (Leadership of Family Firms) in the executive MBA programme and a new stand-alone programme targeted at the next generation members of family business leaders.
7 V.M. Strike (2012). Advising the Family Firm. Reviewing the Past to Build the Fuure, Family Business Review, 25 (2), 156-177. DOI: 10.1177/0894486511431257