All in the Family: Entrepreneurship as a Family Tradition

ABSTRACTFamily businesses are an important part of most economies. In the United States, they account for 90% of all businesses (Small Business Association, 2011) and are said to generate approximately 64% of the nation's GDP (Laird Norton Tyee, 2007). Across Europe, 70-80% of businesses are family businesses, including both SMEs and large businesses (MandL, 2008). Many people who grew up in family businesses or around family members who were self-employed eventually choose to start new businesses. In addition, more and more family businesses are now being passed to daughters, rather than to sons (Resources of Entrepreneurs, 2011). This study examines the proportions of men and women in a variety of countries whose motivation for starting a business was based on a family tradition for self-employment. The results show that, in several countries, more women than men state that this tradition was a motive for entrepreneurs hip.INTRODUCTIONSMEs form a large part of the global economy, with a significant proportion of SMEs also being categorized as family-owned. According to the Small Business Association (2011), 90% of all businesses in the United States are family-owned. Approximately 64% of the US GDP is generated by family-owned businesses (Laird Norton Tyee, 2007), as are 78% of new jobs and 60% of overall employment (Resources for Entrepreneurs, 201 1). A somewhat similar picture is seen in Europe, where 70-80% of companies are family businesses, mostly small and micro (fewer than 10 employees) in size. Together they provide almost half of European jobs (Mandi, 2008) and 35-65%» of GNP of the European Union member states (PricewaterhouseCoopers, 2007/2008).Family businesses are not just businesses in which the owners happen to be family. As Mandi (2008) states, there is a strong interrelationship between the family and business such that the family is at the center of the business. People who grow up with a self-employed parent or in a family business environment usually learn the advantages and disadvantages of being self-employed. In families whose businesses survive through more than one generation, joining the family business or starting one's own business may be viewed as a family tradition. This study examines this situation by comparing the proportions of men and women in a variety of European countries who stated that following a family tradition was a motivator in their decision to start a business. The following section provides a brief review of some issues in family businesses. The results of this study are then presented.FAMILY AND BUSINESSThe strong interrelationship between families and family businesses creates a situation in which the long-term health and survival of the business (including transition of ownership) is often given considerable importance. Transition to the next generation has become a problem for many family businesses. Only one-third successfully transfer the business to the next generation due to lack of interest in the business by the succeeding generation, problems that develop after initial transfer or other reasons (Resources for Entrepreneurs, 201 1).In addition to the transfer of business and market knowledge, social, cultural, and financial capital are frequently passed from one generation to the other over a long period of time (Longenecker & Schoen, 1978; Mandi, 2008). As stated by Fletcher, Helienek and Zafirova (2009, p. 369), "The real strength of the family embeddedness perspective of entrepreneurship...is the signaling of family transitions." These generational transfers include work values and attitudes as well as resources (financial, human, labor, information). Values passed from one generation to the next include honesty, credibility and respect, which are important for long-term success in dealing with customers, co-workers and communities (Aronoff & Ward, 2001; Koiranen, 2002; Mandi, 2008; Stewart, 2003). These values also often include a personal commitment to the long-term survival of the business rather than an emphasis on short-term profits. …