Almost all around the globe , family business companies start by one pioneer person, in the family, who initially starts the business he likes and keeps on maintaining and developing this business for a long and continuous time .
At a certain stage, during the process of the business , other members of the family join forces with this pioneer entrepreneur and give him more support and necessary impetus to keep the business rolling , growing and expanding every day .
The leadership of the pioneer entrepreneur continues even after many family members join the family business and this continuation , in fact , is due to many factors including among other things the charisma of the entrepreneur .
It is almost established that almost all family business companies depend on the leadership of a single dynamic and business oriented entrepreneur perhaps with the assistance of relatives or children when they grow-up .
However, certain problems could come to light particularly in case of siblings who together own and run the second generation family business because the new comers may not follow the leadership style of the founding parent or senior brother .
After the expansion of the family business and continuation for long years the cousins …… , likewise , whose families share in the ownership in a later – generation family business could face more complex challenges . This situation could take them to adopt a different leadership and or management style .
With reference to family business , studies and research had revealed that there is a remarkable noticeable difference between what is known as necessity – based entrepreneurship and opportunity – based entrepreneurial activity .
The first type is represented in the case of the founding fathers who started business because most likely that other employment opportunities were limited at that time . Whereas , on the other hand , the second type is represented by the new generation who join the business after having the necessary educational and professional qualifications .
The education , professional qualifications and external exposure which has been obtained by the new generation focuses on a new type of leadership for the family business companies . The old guards , in case
they are still involved in the management , may resist the development or the change and this could jeopardize the interest of the family business companies.
To overcome such difficulties or problems we advice that the family company should be institutionalized
through adopting certain rules regarding the structure and strategy for the company . Institutionalization of the family business will help in the prudent management and wise leadership of the family company .
The author is a legal consultant on banking , investment & stock markets laws
Email : awarsama@warsamalc.com
