Family Business Characteristics and Types¶
Family businesses are unique entities characterized by their governance, ownership, and operational dynamics. Here's a breakdown of their key characteristics and the types of family businesses.
Characteristics of Family Businesses¶
- Members: Managed by individuals from the same family who own and run the enterprise.
- Position of Members: Roles within the business are often determined by family relationships.
- Control: Predominantly under family control due to major shareholding.
- Mutual Interest: Business policies are influenced by the mutual interests of both the firm and the family.
- Involving Multiple Generations: Management and operations are passed down through generations.
- Mutual Trust: Essential among family members, rooted in shared values, business ethics, and orientation.
- Integrity and Transparency: Defined by strong moral principles, commitment to business goals, and transparency in operations.
Types of Family Businesses¶
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1. Family Owned Business- Characterized by a significant controlling ownership stake held and controlled by family members.
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2. Family Managed and Owned Business- Ownership and control lie within a single family or individual member, allowing the family significant influence over objectives, policies, and methods.
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3. Family Led and Owned Business- Ownership may reside within the family, and at least one family member participates in the company's board of directors, influencing major strategic decisions.
Family businesses play a crucial role in the global economy, blending familial governance with corporate practices to create distinct operational and management models.
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