Management of Family Businesses in View of the Challenges of Modern Economy

Summary

Abstract

This paper is poised to present the issue of family businesses and the specific role they play in the modern economy as well as to describe the ways in which those businesses deal with the challenges of modern civilisation. Among numerous issues related to the functioning and development of the researched sector, the author focused on the following: the definition, functioning and tasks dealt with by family businesses, the number, the structure as well as the social and economic significance of such firms in comparison to other countries, succession within family businesses, exemplary oldest and largest family businesses in the world, life cycle stages of family businesses as well as the determinants of their development and the directions thereof. Finally, the main challenges faced by those businesses in Poland and the European Union. The argument has been supported by statistical data and the results of questionnaires.

Keywords: family business, functions of family businesses, succession in family businesses, external and internal factors of family business development, life cycle of a family business, a new business model

Introduction

A family business is the oldest and the most popular form of economic activity. Within the framework of centrally managed economy, with the predominant presence of state-owned enterprises, the role of family businesses was marginal. Fortunately, this is becoming a thing of the past, both in Poland as well as in other Eastern European former socialist states. In the broad perspective, family businesses constitute 80% of all enterprises in the USA and Canada, approximately 75% in the EU, and 36–40% in Poland. The latter figure is still on the rise. According to other statistics, family businesses account for approximately 66% of enterprises in the world, employing 80% of total workforce.

This paper is poised to present the specific attributes and functions of family businesses as well as some issues that emerged in the directions of their development over the past few years. It appears those businesses have to face the growing consequences of the 3^rd and 4^th industrial revolutions (information and digital) as well as other new challenges of civilisation.

The substance and the functions of family businesses in the economy

The substance of a family business consists in the conjunction of two factors, a family and a firm, that is a union of two separate environments represented by business and family life.