Family business

Family businesses are the most common form of enterprise in the world, and also in the Netherlands, the contribution of family businesses should not be underrated. As the name defines, family businesses distinguish themselves from others by the interaction or mutual overlap between two systems, and this interaction lays the foundation for the strengths and weaknesses of the company. The problem faced by many family businesses is that the two systems are not necessarily compatible, since families and businesses exist for fundamentally different reasons.

Early in 1993, Nyenrode Business Universiteit initiated a long-term research program into family businesses and the results of the studies are included in Nyenrode degree programs and executive courses, and have featured in a number of books and other publications.
The field is relatively new and is an integral part of the entrepreneurship course. One of the problems of a new field is the lack of a tight definition of family business. The Center for Entrepreneurship is dedicated to contributing to this interesting new field. Yearly new studies will be started in cooperation with the lead sponsor of the program.
There have been a number of discussions within the Center for Entrepreneurship at Nyenrode Business Universiteit on what comprises entrepreneurship and where family business fits in. Some define entrepreneurship as narrowly as the creation of new ventures only, whilst others include all activities that stimulate the entrepreneurial mind. At the Center for entrepreneurship the following twelve steps of the entrepreneurial process have been identified:
  • Generating ideas and identifying opportunities
  • Defining innovative elements
  • Assessing the viability of opportunities and their pursuit
  • Identifying the resources required
  • Aligning resources
  • Aligning finances
  • Starting-up
  • Professionalizing the venture
  • Building effective entrepreneurial team processes
  • Coping with setbacks
  • Transferring business and succession issues
  • Harvesting
New venture creation clearly takes place in the first six steps, whilst the family business field becomes more dominant after the start-up phase. Almost no entrepreneurs will start a venture based on the desire to start a family business. However, following the survival of the start-up phase, entrepreneurs are increasingly faced with business issues that also involve family interests. These issues can for instance include the employment of children in the business, or the use of family funds for business growth. The result is that the business will increasingly start to take on the traits of a family business. The early phases in entrepreneurship and new venture creation therefore become the foundation or breeding ground of new family businesses. Family business has arrived as a separate specialty in the growing field of entrepreneurship.