Are Family Firms With Clear Purpose & Values More Likely To Successfully Survive?

Unlike publicly traded corporations and their nonfamily counterparts, family firms often prioritise a unique set of values that transcend mere profit maximisation. Family firms by their very nature are businesses deeply rooted in family and often a place, fostering a sense of tradition, continuity, and responsibility.

The purpose of a family firm extends beyond financial success, encompassing the preservation of heritage, the well-being of family members, and contributing to the broader community. As such, understanding the close relationship between purpose and values is crucial in navigating the complexities that arise within the dynamic context of family-owned enterprises.

We asked our Global Family Business Think Tank Panel if they thought that family firms with clearly defined purpose and values are more likely to survive as successful family firms than those without them.

The results:

The general consensus of our panel is that when purpose and values are tangible, authentic, real, and fully embedded within the culture of a family business that they make a difference and in the long term can help support sustainable businesses too.

THE THOUGHTS OF OUR ‘THINK TANK’ REPRESENTATIVES:

“It is important in any business to have clear goals, purpose and values and even more so for a family business where the relationships extend out from the boardroom and are impacted by the business family, some of whom may not work in or own shares in the business. Forward planning, clarity and transparency, using tools such as a family charter, help to secure future success and can assist in paving a smoother road to success by getting the business family on board.”

Joanna Millar

Legal Director, Anderson Strathern LLP

“The more the underlying aspects of things that shape behaviour are clearly defined, the more the family can align around those things.”

Leah Zimmerman

Owner & Family Business Coach, Stepping Stool Coaching

“A clear, shared purpose and value system orient and motivate productive behaviour in that direction. It is at least equally important however to be confident enough as a family to periodically assess and discuss whether the proclaimed historical purpose stull suits the current and future needs of the family and the business.”

Jasper Brinkerink

Lecturer in Entrepreneurship & Innovation, University of Edinburgh J

“I think purpose and values are really important but success comes down to a range of other factors including strong leadership, clear vision for the business and the ability to adapt as markets change.”

Mike Kane

Partner, Turcan Connell

“Organisations with a clear purpose and values often find it easier to attract and retain employees who resonate with their mission and culture. This is particularly relevant in family firms, where the preservation of family legacy and values can be a strong motivating factor for employees who feel connected to the ethos of the organisation.”

Tsitsi Mutendi

Co-Founder Nhaka Legacy and African Family Firms

“A compelling purpose is very helpful for building motivation and commitment from family members and employees alike.”

Joseph Astrachan

Chair, Generation6 Family Enterprise Advisors

“Clarity of values and purpose will keep the family on the same page. The real challenge is bringing these values and purpose to life in a day to day way when running the family business, including how the values and purpose impact the strategic choices that the business makes.”

Jean Santos

President, Business Consulting Resources

“A clear purpose and values system in a family business helps all family members align towards a common goal. It aids them in making clear decisions in alignment with their values and purpose. Family firms that have not clearly stated their purpose and values often struggle with diverse viewpoints and aspirations which can result in the loss of key resources and time spent just figuring out their next steps.”

Sunil Soni

Family Business Advisor, IFBN Consultants

“I agree that having a strong values foundation is essential for a business family to be able to successfully stay together over the long term, rather than just having a financial bond.” Anneleen Michiels

Associate Professor at Hasselt University and Adviser at Generation6

“Purpose and values are critical for survival. They provide the foundation of trust, understanding and communication and are the equivalent to the business vision, strategy and values.”

Susanne Bransgrove

Founder and Lead Family Expert, LiquidGold Consultants

“Family firms with clearly defined values and purpose are more likely to be successful, especially in uncertain times when the purpose becomes a clear compass to orient the behaviour of the different family firm stakeholders.”

Alfredo de Massis

Professor of Entrepreneurship and Family Business at the Free University of Bolzano (Italy) and IMD Business School (Switzerland).

“Most definitely. A clearly defined purpose and set of values will help to inform the business decisions you make, the company culture and how your people work together. They also have the potential to be a family business’s USP and help to diffentiate them in the eyes of their people, their customers, their suppliers and the wider market. However - be warned - just having a purpose and a set of values written down does not mean that they are lived by or relevant! They have to cascade down into the culture and the way that things are done on a daily basis. It has to be a lot more than just some values written on a poster on the wall.

Particularly during times of change, challenge or expansion it’s important for family businesses to review their purpose, values and culture to ensure that they are still relevant to the business in general and the people in particular. If you want your purpose and values to be your USP then you need to keep them constantly at the front of mind and be prepared to update or adjust them if they are no longer serving you.”

Beverley Mitchell

Founder & Director, Beverley Mitchell Consulting

Abirami Duraisamy Executive Coach For Family Businesses, Outshine Outplay

Find out more:

These results were part of the 2024 Global Family Business Think Tank Report that was published in Spring 2024. Check out the full findings in the report here