Family businesses have been around as long as human beings have been cultivating land and raising livestock but it’s only in recent years that there’s been a growing recognition by universities that running a family business requires its own unique set of skills.
This month, a case competition at the University of Vermont highlighted the growth in family business studies.
Here’s a brief summary of one of the cases tackled by 16 teams of students from 10 countries:
At 37 years old, Andrea is at a crossroads. She’s got a teaching career, but for years she’s been moonlighting at the family business.
Andrea is interested in running the business when her father retires but he shows no sign of slowing down and he’s vague about how the business is run, keeping much of it in his head, rather than on paper.
There are also questions about what role her siblings would play if Andrea took over.
The students had to weigh tricky family dynamics alongside business considerations when they made their presentations to panels of judges.
Judge Lauren Curry is Executive Director of the Tarrant Foundation, a family run non-profit. Her family also owns an independent bookstore in New Hampshire.
She knows running a family business requires navigating both the black and white world of spreadsheets and the murkier realm of personal relations.
"There’s a lot to be said for that nexus of personal values and family sensitivities in a world that is squarely profit-driven and about bottom line dollars," says Curry.
In the UVM Global Family Enterprise Case Competition, teams of students considered several cases, huddling for three hours to brainstorm solutions to each one as the clock ticked.
Business school case competitions are nothing new, but UVM officials say this is the first one anywhere to focus on family business.
It’s an acknowledgement that this is a growing field of academic study within business schools.
Pramodita Sharma of the UVM School of Business Administration says a background in family business education isn’t just for students who come from families that own businesses.
"Family business advising is one of the fastest growing streams of consulting. The percentage of businesses that are family businesses ranges from 60 percent in some countries to about 98 percent in other countries," says Sharma.
Sharma says the key elements of running a business are important to family business studies, but there’s a strong behavioral side as well.
"It does involve a lot of psychology; things like sibling relations, intergenerational relations, intra-generational relations. What is the impact of a spouse in a family? What happens when you have a divorce in a family? We talk about law issues, those conversations which are really at the interface of business and family," she says.
Sharma says family business studies take a longer view than typical business plans, often spanning as many as five generations to anticipate how a business will evolve over a period of a century.
Sharma is considered one of the leading experts in the field of family business studies. She’s editor of Family Business Review.
She says it’s only in the last 25 years that family business has come into its own as a separate field of study.
UVM management professor Rocki-Lee DeWitt earned her business degree from NYU in the 1970s. At that time the emphasis of modern business education was based on public capital markets and corporate structure; not on family run businesses.
"I can remember doing the case method and I don’t think we looked at any cases that were family businesses. Yet certainly the Ford Motor Company was there at that time, Cargill was there at that time, Kellogg’s was there at that time. They’re all family businesses," says DeWitt.
UVM offers a single family business course, but lessons about the dynamics of running a family business are being incorporated in many other areas of business study. It’s an approach many universities are taking.
Others are developing full-blown majors in family business.
Stetson University in Florida was the first to do so.
Joe Horak, a visiting lecturer at Stetson, was in Burlington to help coach the school’s team in the competition. Horak says the school’s family business major is geared as much toward personal development as business education.
"In our first class there will be a lot of psychological assessment and the final product will be a life plan," says Horak.
"So, our students have this personal development and character development so when they’re graduating what we find from employers is that they say, ‘we want to hire your students because we can’t teach that’. We see that as the uniqueness of our program and the strength."
A family business class is part of curriculum at the John Molson School Of Business at Concordia University in Montreal.
Student Thao Nguyen said the competition is stressful, but working with the other students on her team teaches lessons that are similar to those in play in a family business: Making compromises and resolving disagreements.
"It’s a high pressure situation," she says. "You have three hours to put up a 20 minute presentation, so it’s not an easy process. Through disagreements we’ve come up with even better solutions than the solutions each person came up with."
Nguyen’s Concordia team came in third in the competition, which was won by a team of students from Barcelona, Spain.
UVM organizers are already planning the 2nd annual Family Enterprise Case Competition for next year.