How to Use Family Business History as a Strategic Resource

How to Use Family Business History as a Strategic Resource
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Ludovic Cailluet is Professor of Strategy and Business History and member of the EDHEC Family Business Centre at EDHEC Business School. In this interview, Professor Cailluet shares how family businesses can leverage their unique history as a strategic resource.

Why should family businesses engage in sharing their history?

We first need to distinguish whom family members want to share their history with. They may want to formalize it for internal or external use. Within the family community, history can be used to integrate new members and reinforce bonds between members, from younger generations to in-laws. This could be extended to non-family managers/executives or family office employees to strengthen the organizational identity. There is also a strong potential for value creation by using history to create inward commitment among employees and ease the transfer of knowledge by formalizing firm-specific practices during training.

Moreover, history can be used to address perceived expectations and demands placed on the organization by its environment in order to gain commitment with external audiences (clients, partners, suppliers, local communities…).

History is not only about the past. In order to strategize efficiently, family members and executives need to understand the constraints and the opportunities linked to the development path that was taken previously by their family and company

The value of history as a strategic resource rests largely in its ability to evoke and persuade. Most frequently, history creates that effective persuasion through the “pedigree effect”, the recorded lineage obtained from a long-standing presence in business.

Long-lasting family businesses can effectively use history to promote their services and products through historical narratives, retro-design or by re-launching iconic models.

How do family businesses narrate their history across generations?

It is hard to make a bold generalization. Some families have a very informal stance towards transmission and it is done from individuals to individuals. This process favors the transmission of quasi-mythological narratives between generation with a focus on heroic moments or turning points. It is heavily dependent on personal memory and is not immune to selective forgetting.

When they extend, or become multi-generational, with many cousins for instance, firms and families tend to be more professional in the process. They either hire an archivist to sort out archival materials and possibly a professional historian. It is important to study the history more rigorously of the family and the business; a professional historian will not be involved in the emotional dimension. The historian will be able to contextualize, to put the various events into a broader perspective, as well as developments within the family vis-à-vis the business. 

What parts of reality are emphasized, re-invented and created?

Family firms have been studied for their use of the past as a strategic resource and to develop their brand or corporate heritage. In that respect, history can be considered as a source of competitive advantage. However, one needs to understand that there is a strong difference between the past (or what you call “reality”) and history. History is a “social and rhetorical construction that can be shaped and manipulated to motivate, persuade and frame action both within and outside an organization” (R. Suddaby). Having this in mind, the writing of history is highly political and contingent within the family and the business. It changes over time and it depends on the present concerns of the people writing this history and their vision for the future.

“History can be considered as a source of competitive advantage”

To be more specific, a history of the firm written in a context of succession will emphasize on change. For instance, families in the mid-twentieth centuries were much less interested in emphasizing sustainability or professional opportunities for female members.

Failures are also rarely mentioned. This is a pity since companies can learn a lot from a rigorous post-mortem of a failed project! Naturally, families change a lot over time and the definition of who belongs to the family history could be a sensitive one. In a recent exhibition dedicated to the family business history, some cousins were removed from the family tree because they had sold their shares in the business after a family feud. History is a very plastic material.

We need to know more about the interactions between history and strategy in family business. In addition, historians are not always used to joint research with management or family business scholars. This is why at EDHEC Family Business Centre we have integrated history as one of our research objectives.

Scarce studies exist on the mutual influence between emotions and history and their impact on family business sustainability. This is why at the EDHEC Family Business Centre we have integrated history as one of our reserach objectives. In May, we are organising an international conference gathering historians, family businesses, practitioners and scholars to share and learn about this topic.

Ludovic Cailluet is one of the main contributors to the EDHEC 2017 Family Business Conference “Family business in the long run: The interplay between emotions and history”. The Conference takes place on May 11-12 2017 in Lille and Paris and will gather business historians, family business members, scholars, and practitioners.

To learn more about the conference, click here.