Details

  • Industry: Financial Services, Industrial Markets, Consumer Markets, Information, Communication and Entertainment, Infrastructure, Government and Healthcare, Funding Agencies, Private Equity
  • Type: Business and industry issue, KPMG information
  • Date: 7/25/2011

The Competitive Advantage of a Family Business 

As consumers and business leaders, we still attach some kind of mystic to family businesses based on the perception that they are friendlier, better employers and more caring and therefore must produce a better product. Recognizing this marketing advantage, many family businesses continue to promote this aspect of their business. But it is more than just mystic or perception—it is a reality based on the fact that a family business has access to unique ingredients that can provide a lasting competitive advantage.

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“The authors argue that the same attributes that have long been vilified as weaknesses of family businesses—stable strategies, clan cultures, lifetime tenures—have actually created formidable competitive advantages for many of these firms … these family owned businesses not only dominate their markets for twenty years to hundred plus years but did so by defying most aspects of modern management practice.” 

Managing for the Long Run: Lessons in Competitive Advantage from Great Family Businesses

 

As you might have suspected, the unique ingredients stem from having “family” as part of the business equation. The benefits derived from being a family in business will vary depending on the makeup and size of the family and its stage of evolution (i.e. first, second, third generation). The following are some of the benefits that differentiate family businesses and can provide a significant competitive advantage.