By Prof. Lorraine Uhlaner, Professor Entrepreneurship & Family Business, EDHEC Family Business Centre
In many family businesses – especially small or first generation companies – the lines often blur between the roles of family, ownership and management. But as the number of owners increases, especially when some of those owners are no longer actively managing the firm, it becomes increasingly important to understand the responsibilities of ownership as distinct from management. This understanding becomes all the more defining as a family firm advances to second and later generations, especially when the number of non-managing or passive owners, those not involved in day-to-day affairs, begins to multiply.
Our research confirms that responsible ownership is clearly linked with a firm’s success, from better mobilisation of owner resources for the firm’s benefit, to innovation and financial performance. In this article we explain the collective mindset needed to be an effective owning group, the four key behaviours of responsible owners and three steps that can lead to better owner groups.