家族かぞく経営けいえい企業きぎょうが依然いぜんとして経済けいざい基盤きばんとして機能きのうし続つづける本質的ほんしつてき理由りゆう

William Lui is known as a philanthropist and podcast host, and he is also the fourth-generation heir of Kowloon Motor Bus Company in Hong Kong, which was established in 1921.

Even in the modern era, when giant corporations like Apple, Microsoft, and Amazon are experiencing rapid growth, it is noteworthy that many companies around the world still continue to exist as family-run businesses.

Family-run businesses support the development of the global economy and also contribute to reducing unemployment rates.

According to a 2021 article in the Harvard Business Review, approximately 85% of companies worldwide have simultaneous or ongoing management involvement by multiple family members.

Furthermore, many family-run businesses are among the oldest companies in the world, including Nishiyama Onsen Keiunkan in Japan.

Since its founding in 705, management had been passed down through 52 generations of the family, but only recently did it finally transition to non-family management.

Also, the Château de Craon in Frances Loire Valley has been maintained mainly by the same family for about a thousand years, but they temporarily lost control of it only between 1788 and 1858.

However, alongside this rich historical heritage, in recent years, excessive family involvement in the board of directors has often been viewed as problematic.

In fact, only about 30% of family-run businesses survive to the second generation, and just 3% continue beyond the fourth generation.

According to a 1971 article in the Harvard Business Review, one of the main reasons family-run businesses fail is that the founders ego hinders growth and innovation.

Furthermore, a 2014 survey indicates that family-run businesses particularly struggle to secure outstanding talent.

However, why have so many family-run businesses survived for such a long time up to today?

When I looked into it, I found that Kenjiro Kono, the current chairman of Nishiyama Onsen Keiunkan, said that he received the lesson from the previous chairman: It is precisely when you start to succeed that you are more likely to fail if you branch out into other fields.

Many family-run businesses have survived for long periods while maintaining a strong focus on their business field since their establishment.

The Walton family are the founders of Walmart, and since its establishment in 1945, they have focused more on mass sales and low prices rather than profit margins. Even today, as a multinational retail corporation, they maintain a similar management policy.

Furthermore, while it goes without saying that change and innovation are essential for a companys survival, it is equally important not to sacrifice the essence of the company for short-term profits.

Hoare & Co. has been family-owned in the UK for 12 generations, and has built a unique culture that values personal trust and exceptional customer service.

This company continues to value personal relationships with customers and adapts values such as “integrity, empathy, excellence, and social responsibility” to fit the modern era.

Another characteristic of family-run businesses is their high resilience in the face of uncertainty.

According to research by Deutsche Bank Wealth Management, during the pandemic, the decline in stock prices of family businesses was lower than that of non-family businesses, and their recovery was also faster.

The reasons are the emotional attachment to the company based on family and heritage, a stable financial foundation due to conservative policies, and the ability to make quick decisions through concise and focused processes.

From my personal experience as well, I deeply feel the importance of leaders trusting others and quickly delegating authority.

Family-run businesses value their commitments to customers and employees, and by carefully building relationships, they establish personal trust based on long-term and sustainable promises.

These values also lead to confidence in utilizing external talent and delegating authority.

Acting based on sincerity, responsibility, and obligation is a business philosophy unique to family businesses.

Modern leaders are required to reconsider how they build relationships and learn from the ways family businesses build organizations with a long-term perspective.

A long-term philosophy shows that the continued existence of family businesses is becoming increasingly valuable in an ever-changing world.

Although family-run business models can be difficult to manage, they have the potential to bring long-term rewards and a sustainable legacy.