Family Business Wiki's Town Square

Family Business Wiki's TOWN SQUARE

Society changes Families and Families change Business

The following is a summary of an article I am publishing, which can be sent to interested readers:


Key idea: From the Middle Ages to Present Times, families need the law, and professionals, to safeguard the family legacy from external forces, and from untrustable family members. Medieval entailments were, in Europe, the key legal tool that protected this legacy from generation to generation against bad family stewards or against bad luck, or war, or bankruptcy. Kings and lawyers respected written contracts of entailment of wealthy families against bad times, until at least the 19th century. During the 20th century the State substituted kings as family protectors, but democracy was not always interested in families and the transference of their legacy from one generation to another. Therefore, dynasties in the 20th century had to design innovative tools and lobbies to have protective laws and guardians. A good example is the experience of the Rockefeller family during the 1960s


Consultants with management training often underestimate the strong  influence of path dependent, inherited environmental factors in the structure and strategies of family businesses. Historians are in general much more aware of such influence. For instance, have you ever considered why family offices and family business consultants have expanded in numbers in the last three decades in the world? Historical research in Europe and the U.S. is revealing the importance of social, ideological and legal general changes in both areas of the world. The Rockefellers´ third generation led a national movement towards separating ownership and control from philanthropic societies traditionally managed by family members of a family business, due to a combination of external pressures on their junior members. During the 1960s and 1970s the U.S. experienced a surge in the number of divorces, single parent families, female incorporation in the labor force, increased pressure to broaden rights of women and "sexually deviant" individuals. Society was giving in the U.S. many more rights to individuals, to fight against the group, their elders, and traditional sources of authority fixed in that country after world war II. Women from the fourth generation of the Rockefeller family divorced in great numbers, many wanted to hide their last name when they went to school or university, some of them bitterly attacked their parents for different opinions regarding the Vietnam war. Family businesses suddenly realized, particularly enduring dynasties, that uncertainty and risk were growing in deciding WHO and HOW would manage, and for WHAT ENDS, the family legacy. Not just in terms of wealth. Also, in terms of values. Baptist values of the founder (discipline, austerity, solidarity, obedience to elders, accountability, sense of stewardship) were almost forgotten at the end of the third generation of Rockefellers, and buried by the fourth and fifth generations. The third generation observed the changes, and promoted with their political influence new legal tools that finally forced, in all kinds of foundations and trusts where the family legacy was protected, the professionalization of management and a complete separation of family members from them. Trust, that traditional value of old family dynasties, was something no longer possible to deposit in family members. Laws, and professional salaried managers, had to protect the future of old dynasties.

Views: 53


You need to be a member of Family Business Wiki's Town Square to add comments!

Join Family Business Wiki's Town Square


© 2018   Created by Donald Levitt.   Powered by

Badges  |  Report an Issue  |  Terms of Service