Friday, 18 October 2019: 2:00 PM
The family business literature suggests that only 30 percent of family-owned businesses survive the transition from founder to second generation leadership (Collins et al. 2016). Only 3 percent of all family-owned businesses worldwide remain in business for more than three generations. If there is a lack of governance within the family members, the family can become a burden on the business and can run the risk of causing the demise of businesses (Baus, 2013; Suess-Reyes, 2017). Family governance can be defined as a process to educate and facilitate communication between family members which also provides a forum for constructive discussion, problem solving and decisions about the family as it relates to the business, as well as, how the business relates to the family. Constructing a family constitution which is the most important step towards corporate governance in family businesses, documents the values and principles that will underpin the integrity of the family business and define strategies with which the family will make decisions about the possible conflicts based on compromise. The aim of this paper is to explore the role of family constitutions for transgenerational entrepreneurship in family businesses by examining how family governance and business family identity can contribute to strengthening the transgenerational entrepreneurship. Transgenerational entrepreneurship is defined as “the processes through which a family uses and develops entrepreneurial mindsets and family-influenced resources and capabilities to create new streams of entrepreneurial, financial and social value across generations” (Habbershon et al. 2010). This paper also aims to examine and understand the role and influence of the family in reaching entrepreneurial, financial and social performance, which assures generation-spanning business activity. Qualitative research is planned pending receipt of permission to conduct in-depth interviews at a family business.