Are Children in Family Businesses Really Greedy?
Disproving myths about succession in family-owned businesses.
Posted June 14, 2022 | Reviewed by Lybi Ma
- Family businesses thrive on family unity, according to empirical studies.
- Family unity does not eliminate disagreements; relationships are strengthened by the ability to resolve conflict.
- The thinking that only one family member can successfully control a family business has long misdirected family businesses.
In HBO’s hit series, Succession, members of the scheming Roy family, owners of the failing Royco corporation, desperately attempt to hang onto their family business and their wealth. All four siblings alternately support and undermine each other as they plot to become the favorite of their autocratic father and thus be chosen as the successor of the family business. While at times the siblings act as though they want loving relationships with each other, they ultimately appear to be driven by greed.
In real life, stories of family business siblings who battle for leadership and ownership of their family’s business are dramatized to make the front pages of newspapers, books, and magazines. Frequently, the family members are depicted as “entitled” and “greedy,” as they pursue self-agendas that lead to lawsuits and break up the family.
What the Research Says
Research on family businesses, however, reveals a radically different explanation for these festering conflicts: the siblings’ views about successful business succession are misguided. Chasing individual interests may seem rational, as it may appear the family pie is not large enough to satisfy everyone’s financial needs, but research demonstrates that family unity is a key success factor that allows family businesses to thrive through generations.
The widely used textbook, Family Business, explains why self-interest is destructive to family business continuity. It states:
When the disagreements are about pay, perks, and the presidency, the path of least resistance often leads to win-lose situations and zero-sum dynamics. And families cannot support zero-sum dynamics because the losers will eventually get their chance to harm the winners, even if it means the destruction of the company and family.
Intra-family power grabs waste energy and resources, whereas conflict resolution strengthens family relationships and promotes family harmony that allows siblings to focus more on productivity and growth.
In The Journal of Family Business Management, the study, Vision, Leadership, and Emotional Intelligence Transforming Family Business, illustrates the power of positive emotional relationships in reimagining and rebuilding a fading family business. This case study asserts that emotions are contagious and when empathy, teamwork, and other positive emotions are aroused, they inspire hope and belief in new possibilities.
The study also spotlights the importance of resolving conflict, as it leads to a shared sense of purpose, strengthening family bonds and determination, rather than long-term rivalries. More remarkably, this research study shows how emotional and social intelligence, including factors such as emotional awareness, understanding, self-control, and inspiration can assist in unraveling disagreements and clarifying similar interests that will unite the family.
In 2016, a study published in The Family Business Review, Successor Team Dynamics in Family Firms, revealed that high-performing successor teams are characterized by cooperation among team members. This study included interviews with 48 participants from 19 different family businesses and all participants were members of the business-owning families.
While all participating family businesses reported disagreements between family members about substantive matters, the high-performing successor teams focused on, business issues, and did not allow the conversation to, spill over into relationship differences and personal conflict.
Commitment to getting along and resolving business conflicts enabled the high-performing successor teams to problem-solve and make informed group decisions that led to business continuity. In contrast, the study showed that unresolved conflicts in successor teams led to dysfunctional behavior such as theft, sabotage, and withholding job effort. The study concluded that family businesses experiencing dysfunctional behaviors either, “exploded,” and closed, or “burned out slowly over time,” but harmonious family business owners succeeded over time.
Change the Narrative
Conventional wisdom incorrectly promotes the belief that family businesses can only succeed if there is one owner and one person with power and authority. Such notions may stimulate greed and self-interest among family business inheritors. However, empirical research during the last decade contradicts these assumptions and demonstrates the power of family unity. Circulating this knowledge should help business-owning families understand that it is indeed in their best interest to value one another.
If the domineering father in Succession, Logan Roy, had fostered a business environment that supported family cooperation and respect, rather than competition and deceit, a prosperous future for the business and all family members may have ensued. Going forward, in real life, family business owners will recognize there are better paths to success and succession.
Daugherty, M. S., Poza, E. J. (2013). Family Business. Mason: South-Western Cengage Learning.
Boyatzis, R. E., & Soler, C. (2012). Vision, leadership and emotional intelligence transforming family business. Journal of Family Business Management, 2(1), 23–30. https://doi.org/10.1108/20436231211216394
Cater, J. J., Kidwell, R. E., & Camp, K. M. (2016). Successor Team Dynamics in Family Firms. Family Business Review, 29(3), 301–326. https://doi.org/10.1177/0894486516656255