Spanish family firms must combine tradition with digital and sustainable transformation to ensure their viability, according to a study by Esade and Lansberg Gersick Advisors
Spanish family businesses must combine tradition with digital and sustainable transformation to ensure their viability. In other words, they must take risks and constantly develop themselves without forgetting the legacy that makes them unique. In addition, the five generations that can coexist in a family business need to work together to align on the strategic priorities and in the development and incorporation of the youngest. These are some of the main conclusions of the study 'Generational Perspectives in Spanish Family Businesses' published by the Global Business Family Initiative of the Esade Entrepreneurship Institute (EEI) and Lansberg Gersick Advisors (LGA). The report, for which 139 members of Spanish business families were interviewed, offers an x-ray of these firms. Family businesses represent 89% of Spanish companies and generate 59% of the GDP and 67% of private sector jobs.
Entrepreneurial orientation is identified as one of the drivers of business growth and transformation, but the report highlights that only 10% of business family members aspire to an entrepreneurial role. "To successfully manage future challenges, innovation and entrepreneurship must be among the main strategies. Entrepreneurship is one of the hallmarks of family businesses in their first generations; it is important to be able to transmit this spirit between generations," say the authors of the study, María José Parada, lecturer at Esade and academic co-director of the EEI's Global Business Family Initiative, and Neus Feliu, partner at Lansberg Gersick Advisors. The main challenges identified by family businesses are: changes in customer demands and behavior (27%); digitalization and adoption of new technologies (25%); and economic uncertainty (14%).
The report examines how different generations understand and perceive the family business and identifies digital transformation as an important aspect for everyone in the company. However, the millennial and centennial generations rank digitalization first in importance among the changes within the family business – and this perception is significantly lower among generation X, classics, and boomers.
Sustainability is the backbone of family business
"Although it is often thought otherwise, there are more similarities than differences between generations working together in the same family business. We have observed in this study that there is an important intergenerational alignment around the sustainable development goals (SDGs) linked to environmental, social, and governance aspects. Family businesses should take advantage of this convergence to build a stronger corporate purpose for the future," says María José Parada, co-author and researcher at the Esade Entrepreneurship Institute. SDGs already occupy a main place in the strategic agenda of family businesses and are already part of the corporate purpose of 86% of such businesses, according to the Esade and LGA study.
Expectations for leading family firms into the future
A large majority (82%) say they are preparing to take on the role they aspire to in the next five years. The younger generations (millennials and centennials) identify various initiatives that would enable them to develop and these include: enhancing 'soft skills' through coaching and mentoring (an option chosen by 39%); acquiring more business knowledge through formal training (36%); and having a succession plan within the family business (31%). In parallel to these priorities, the younger generations and future heirs to the business (millennials and centennials) identified the main actions that current family business leaders can take to enhance their development: transferring their practical knowledge of the industry and the company (44%); passing on a work ethic or ‘way of doing things’ such as values and culture (36%); and having a more open attitude towards new ideas for the business (36%).
"Understanding the interests, priorities, and perceptions of the generations that coexist in a family business is key to ensuring a common basis for the shared family project that enables the success of the company, succession, and its future viability. Dialogue, collaboration, and the constant education of shareholders are the key tools for reaching lasting agreements between generations and so face the challenges of continuity," said Neus Feliu, co-author of the report and partner at Lansberg Gersick Advisors.
