I spend most of my time running from one family business to another, preaching to them that they need to change. That they need to become more professional in their approach, that their leadership needs to become more strategic and less operational, that they need to become more data driven in the way they decide things and that they need to focus on how they can become more efficient in the way they operate. However, experience shows that for family business to really change, it takes a lot of time. I would not be exaggerating when terming it an “uphill struggle”. So the question I always ask myself is why do family businesses find it hard to change?

There is a tonne of research here and I will try to summarise what I believe is the most relevant.

Gilbert (2005) proposes that a distinction be made between resource inertia (resource rigidity) and routine inertia (routine rigidity) to better understand the phenomenon of organisational inertia. Inertia in relation to resources refers to the fact that family businesses may be less willing to invest in resources because of the need to face changes for two reasons. On the one hand, dependence on external resources that are not controlled by the family, such as bank loans and on the other hand, the fear of losing their present market position. On the other hand, routine rigidity refers to the persistence and inflexibility of the current routines of the company. Routines are defined as patterns of regular and predictable behaviour in companies (Nelson and Winter, 1982). Grant (1991) points out that these behaviour patterns are carried out as a sequence of actions coordinated by people. Nelson and Winter (1982) consider routines to be hereditary and selective, because they facilitate a better adaptation to change in organisations that have suitable routines. Routines are developed and maintained with experience (Grant, 1991). In some ways, organisations could be considered as developing routines that are a reflection of their capacity to act, using their resource endowments and capabilities (Wernerfelt, 1984; Barney, 1991), and following a particular strategy. In a process of change, some routines may be inadequate or cease being necessary. The organisation has to develop new routines that respond to new situations, replacing previous routines. However, the entrenchment of routines in the organisation makes their removal and substitution a challenge. Indeed, the unspoken nature of some routines makes them more difficult to deactivate (Gilbert, 2005).

On the other hand, König, Kammerlander and Enders (2013) analysed the effect of family influence on the adoption of changes. König et al. (2013: 422) highlight the role of five barriers they identified. These are:

• Formalisation, which refers to the degree to which an organisation has standardized its processes for detection, interpretation and response to environmental changes. Excessive rigidity in the formalisation of these processes can reduce the response capacity of the organization, as well an underestimation of the need for innovation.
• Dependence on resources from external capital providers. It is in the interest of family owners to reduce this dependency, prioritising long-term orientation of the family business as opposed to the more short-term perspective of non-family businesses.
• Political resistance. The changes to be implemented can be seen as a threat by some people or groups in the organisation, who feel that their position may be at risk, and do their best to delay and even obstruct changes.
• Emotional ties to existing assets. The emotional attachment of family business decisions makers to some assets, whether tangible or intangible, as well as to people, can differ and impede renewal decision-making.
• Rigid mind sets. Mind sets influence whether new routines, which are necessary for the development of the changes to be implemented, are adopted earlier or later. Given that there is less participation of external opinions, strong family influence can increase the level of rigidity of mind sets in the family business.

According to the analysis made by König et al. (2013), family influence reduces the effect of the first three barriers by reducing the level of formalisation in the company, the degree of dependence on external resources, and the political resistance of company members. Conversely, greater family influence would increase the decision makers’ attachment to existing assets in the company, as well as the level of rigidity of mind sets in the family business. This would leave less room for the family business to change due to change from outside the family business.

On the other hand, Rumelt (1995) identifies five frictions or sources of inertia for change within family businesses. These are:

• Distorted perception, which consists of not correctly interpreting the signals that indicate the imminence of change nor the opportunity of the change;
• Lack of motivation for change, when advantages are not found for undertaking a change process;
• Lack of creative response, in the sense that the direction that should be taken is not clearly perceived;
• Political barriers, with regard to internal organisational problems that prevent or delay the implementation of change. This is usually due to the resistance of individuals or groups that consider their position threatened by the change;
• Collective action problems, refers to the lack of unity in actions, a lack of leadership to move the process forward.

The five types of obstacles identified by König et al. (2013) are in line with other models of barriers to change. The existence of rigid mind sets can affect both the perception of the need for change and the development of routines for correct implementation of changes in family business.

When a family business does not correctly interpret the signs that indicate the need to undertake a change, or in the case of understanding that need, it does not perceive its advantages, for various reasons. At times, the need to undertake changes may not be perceived due to the confusion of family and business issues, derived from the duality of roles (Tagiuri and Davis, 1996) played out by family members in the family business. At times, there is a priority of family interests over business interests. Other possible sources of inertia specific to family business could be nepotism and paternalism. Nepotism carries the risk of promoting low-skilled people to positions of responsibility merely because they are family members (Kets de Vries, 1993). The perception of nepotism by external professionals significantly reduces the attractiveness of the family business as an organization to develop a professional career.

The difficulties of implementing a change processes in a family business can have various origins. Sometimes, despite recognising the need to undertake changes, they are not initiated due to the difficulty of finding a suitable new course. This could stem from internal differences. Some of these problems can originate from the characteristics of the generation leading the company. In this sense, a lack of adequate training and work experience beyond the family’s own company can negatively affect the creative capacity to respond to the demands of the environment (Miller and Le Breton-Miller, 2006), destroying entrepreneurial vision in the family business (Koellinger, 2008; Chirico and Norqvist, 2010). At other times, it may be that some family members are not interested in continuing the business, or do not want to acquire new knowledge (Le Breton-Miller et al., 2004). Furthermore, family conflicts and rivalries can lead to the organisation’s older members decreasing their transmission of information to the next generation (Lansberg, 1999; Zahra et al., 2009). Bigliardi and Dormio (2009) indicate that the inexperience of the generation in power, or their lack of qualifications and knowledge, can lead to an inadequate strategic vision. Pittino and Visintin (2009) found that founders tend to be more innovation-oriented, adopting a more forward-looking and analytical strategy than second-generation and subsequent generations. Founders have greater formal and informal power to direct resources to the exploration of new projects (Zahra, 2005), while second and following generations may be more focused on preserving the family and business heritage (Eddleston, 2008; Ellington et al., 1996). Moreover, differences between different interest groups, represented by property, family and company (Tagiuri and Davis, 1996) can act as political barriers when making decisions. At times, when a new generation takes the lead in the family business and maintains the management team formed by the previous generation, there might be significant differences of opinion. Veteran managers may express firm resistance to changes due to misguided fidelity to the founder, as well as a lack of agreement with the new generation.

In conclusion, there is ample evidence that family businesses do not always overcome the processes of change, with the generational changeover being particularly delicate (Casillas, Díaz, Rus, and Vázquez, 2014). Consequently, it would be useful for family businesses to be able to identify the specific factors that could hinder change processes. This article tried to provide you with some literature on the barriers to change within family businesses. I hope this can help you identify the correct answer to this important question: What is hindering your family business to change, adapt and grow?