I believe it does not take much to realise that I am passionate about the subject of Family Business and that helping family businesses is more of a life mission than just a job for me. This leads me to constantly reading the latest research on family businesses from across the globe. One of these latest research projects was recently held in the US and was about whether it is better to appoint a family or non-family CEO.

The end result was that the answer as to whether family CEOs really are the best choice for family businesses is a maybe or yes, sometimes and in certain circumstances. This latest research has built on nearly 40 years of research and confirmed that family CEOs tend to prioritise a noneconomic goal: keeping the business in the family. This suggests that nonfamily CEOs – leaders brought in from the wider business community, selected based on characteristics such as past performance – may be more interested in prioritising purely economic goals, such as boosting turnover, cutting costs and improving the bottom line.

Research also found that companies led by family CEOs tend to have more concern with corporate social responsibility but invest less in innovation and international growth. All of these things could have important business implications. For example, investing less in research and development could lead to worse economic outcomes.

Does that mean that family CEOs are bad for business? Not at all. When looking directly at economic outcomes, research found mixed results – some cases indicated that family CEOs had positive effects, and others showed negative ones.

However, what is a very common baseline across research of 40 years and over, is that ultimately beyond whether the family business is led buy a family or non-family CEO, it all very much depends on the goals that family businesses decide to pursue. I could not agree more. I strongly believe that one of the most important things a family business can do is to understand its own goals and priorities. While that’s easier said than done, if a business has ill-defined goals, that can set a new CEO up for failure – whether they’re in the family or not. That’s because they’re likely to pursue strategies that the family, the company or the market does not want.

The end result is that the evidence on whether family CEOs are good for family companies’ bottom line is mixed, which suggests they’re sometimes effective and sometimes not. I am sure that in the coming years and months more research will happen to understand the combination of the characteristics such as age, education and personality that influence family CEO performance in their family businesses, to conclude when a family CEO could be good for the family business and when a family business should opt for someone from outside.

In the meantime, may I invite you to read our latest article on Family Business by clicking on the below link:-

https://timesofmalta.com/article/understanding-family-businesses-a2.1091463