By Prof. Dennis T. Jaffe and Dr. James Grubman

Every business family has a unique character. Yet, each family business springs forth from a cultural tradition that expresses the values, thinking, and behaviours of its homeland. Enterprises achieving success often expand to new environments, encountering families and businesses with different values from diverse cultures. What they most value and how they build relationships, solve problems, and negotiate may be radically different. To prosper, the business must cope with these differences, developing cross-cultural competencies.

Affluent business families also encounter outside cultures as they travel, establish international residences, and especially, send children to other countries for education and work experience. The younger generation absorbs the ways of foreign cultures, with an inevitable desire to introduce these to the family at home. Older generations – unhappy with new ideas straying too far from traditional ways – may in turn respond sceptically. Cross-cultural pressures within family life then require their own form of negotiation and compromise.

It is crucial that business families are aware of predictable stresses likely to surface as the enterprise expands beyond their home culture. We offer a new perspective on the changes advocated by the rising generation, exposed to a cross-cultural education, and what families can do to adapt successfully to this challenging process.

The Powerful Influence of Culture

Cultures in different regions of the world generate various patterns influencing business families as they integrate personal relationships, parenting, and commerce:

“Culture is the unique character of a group. Individuals have personalities; groups have cultures. You can see culture in the pattern of people’s beliefs, attitudes, norms, and behaviours as well as in the nature of the social, economic, political, legal and religious institutions that structure and organise groups. Anthropologists suggest that culture emerges because people are faced repeatedly with similar social problems.” Jeanne Brett, noted specialist in cross-cultural negotiation

Cultural differences influence how people act within the family and the business, what they expect from the next generation, and how they talk to each other.

The Three Major Global Cultures

While every country and ethnic group has a unique character, cultural theorists have defined three broad global patterns of family culture. Each tradition incorporates cultural patterns that influence the expectations, practices, and behaviour of family enterprises in those regions (see map at the top).

Individualist Culture: Rational Thinking and Personal Dignity

Northern Europe, North America, the United Kingdom, and Australia share a style steeped in individualism, rationalism and the promotion of human dignity. The individual is pre-eminent, with business and family supporting personal independence and dignity. The purpose of the family is to help each member develop a fulfilling life, maximizing potential; children are praised for accomplishments and expected to seek their own path. Individualist culture is about meritocracy, accountability, individual achievement, rationality, and visible success through hard work.

Leadership exalts the lone individual operating within a strong team of competitive but committed peers. The leader’s legitimacy must be earned via the trust of his followers or risk removal. A leader’s authority is tempered by the overriding rule of law that guides decision-making, insures fair dealings, and counters overzealous attempts to grab power. Men and women are presumed to be equal. Business communications are to be rational and non-emotional, though within relationships the open expression of feelings, thoughts, and ideas is widely accepted. The business informality of the US demonstrates egalitarianism where people eschew titles in favour of using first names.

Transparency, sharing of ideas, and valuing of innovations from the rising generation is encouraged – the voices of youth can be heard and heeded. The rising generation feels entitled to question elders rather than dutifully accepting guidance. Stanford University professor T. M. Luhrman notes:

Americans and Europeans stand out from the rest of the world for our sense of ourselves as individuals. We like to think of ourselves as unique, autonomous, self-motivated, self-made. As the anthropologist Clifford Geertz observed, this is a peculiar idea. People in the rest of the world are more likely to understand themselves as interwoven with other people — as interdependent, not independent. In such social worlds, your goal is to fit in and adjust yourself to others, not to stand out. People imagine themselves as part of a larger whole — threads in a web, not lone horsemen on the frontier. In America, we say that the squeaky wheel gets the grease. In Japan, people say that the nail that stands up gets hammered down.

The major risk is that, by embracing youth, individualism, and innovation, Individualist culture risks devaluing tradition, loyalty, and established wisdom. The authority of elders and family may be neglected. Individuals are less willing to compromise for collective goals, so long-term family objectives can be lost. The call to remain united as a family is weaker, since each member can choose whether participating in the family enterprise is in their self-interest. Other cultures view Individualism as too “me-oriented,” lacking focus on the collective “we.”

From Traditional to Blended Cultures: How Family Enterprises Manage Transitions Across Generations
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Collective Harmony Culture: A Focus on Family, Tradition, and “Face”

Collective Harmony cultures, evolving over three millennia in East Asia including China, Hong Kong, Singapore, Korea, and Japan, are premised on Confucian principles elevating loyalty and obligation to family, respect for parents and other authorities, knowing one’s place, and supporting the whole group rather than one’s individual position.

The concept of “face” is central to Collective Harmony culture. It contains elements of prestige, honour, respect, reputation, and influence, but it is much more socially-derived and – connected than Individualist concepts of self-worth, shame, embarrassment, or social position. People respect their long heritage which has led to rules of order and harmony, not to be challenged lightly. The first question asked of any new proposal is, “What does this mean for everyone – country, community, company, family?”. People are seen as interwoven, part of a greater collective or clan.

Identity is defined by family and role. One’s task in life is to honour one’s family and live one’s assigned role elegantly. Every son and daughter has an obligation to protect and nurture the family, respect the long history of traditional wisdom, and bring distinction to the family and its reputation.

Elders are venerated. The patriarch derives authority from his place in the family order and from acting in a wise, benevolent manner. Women are respected in their assigned roles, as are young people who are to wait their turn patiently for roles of responsibility. When called upon to work for the family business, next-generation members feel obligated to respond without first discussing compensation, ownership responsibilities, or status. They would swallow any reservations about working in the family business that their Western counterparts would feel freer to question.

Communication and behaviour in Collective Harmony culture are oriented to sustaining relationships and mutual respect. Anything that disrupts family relationships is to be avoided. Language is much more ambiguous and indirect than in the West. This allows everyone to feel comfortable by not spelling out issues or concerns directly. Assertive explicit communication may tear the social network if not handled carefully, especially in families.

Strengths of Collective Harmony are its connectedness, stability, predictability, and social support. These also create its challenge: slow innovation and change. Elders may hold too tightly to traditional ideas, leaving fewer options for handling crises or seizing opportunities. They also discourage the communication and collaboration necessary to adapt in a changing world. In turn, the younger generation may hesitate to share feelings or ideas with parents and elders.

From Traditional to Blended Cultures: How Family Enterprises Manage Transitions Across Generations
Image via GettyImages