KPMG Private Enterprise and the Successful Transgenerational Entrepreneurship Practices (STEP) Project Global Consortium surveyed 2,439 family business leaders across 70 countries to examine why family businesses succeed from one generation to the next, and how different companies are managing both tradition and change successfully.
The survey found there are three characteristics that help sustain a family business’ success, including a strong entrepreneurial orientation across generations, family connection and attachment to the business, and ambitious, next-generation leadership.
Entitled The regenerative power of family businesses: Transgenerational entrepreneurship, the report assesses overall entrepreneurial orientation based on innovation, proactiveness and risk taking. “The report also identified a second asset, defined as socio-economic wealth, which refers to the non-financial value and benefits family members derive from the business,” they write. “The emotional value gained from the connections between the family and the business is a significant driver of longevity and performance,” adds KPMG’s partner and family office national leader, Yannick Archambault.
When looking at insights from the Canadian portion of the survey, researchers found that 54 per cent of Canadian family businesses are entrepreneurial, compared to 27 per cent in Europe, 37 per cent in the Asia Pacific region, and 47 per cent in Africa and the Middle East.
More, they add that 54 per cent of Canadian family businesses identified a high level of risk-taking, relative to 25 per cent of European family businesses, 37 per cent of Asia Pacific family businesses and 40 per cent in the Americas as a group.
As for steps that a family business can take to improve performance, KPMG encourages businesses to strengthen bonds between the family and the business by leveraging family capabilities. They also advise companies to put strong governance frameworks in place. The report suggests that in Canada, only 40 per cent of family businesses have a formal board of directors, compared to 59 per cent of family businesses globally. Only 12 per cent in Canada said the family had a business council, notably lower than the 24 per cent globally who said the same.
The report also looks at share ownership – in Canada on average, 90 per cent of company shares were owned by the family. The number of individuals owning the family businesses surveyed were 3.93 in Canada, compared with 5.15 people owning the family business’ shares on average across businesses surveyed, globally. The report also assesses leadership styles and examines entrepreneurial capabilities in more depth.