From Business School to the Family Business
Family-owned companies account for 80 percent of all businesses worldwide, according to Bloomberg Businessweek, and, therefore, are fundamental for economic growth. Aware of the importance of family-owned companies, global business schools are introducing MBA programs to educate students to run these businesses. Governments in countries such as the U.S and the United Kingdom support these initiatives as ways to achieve economic growth.
"In the U.S., family businesses make up about 50 percent of U.S. gross domestic product and also employment," said Patrick Saparito, Ph.D., director of Saint Joseph's University family-business program. "These businesses are unique in many respects, most notably, that they are private, and comprised of families that have strong inter-personal relationships. That creates both advantages and problems as one can imagine. Thus, they are very different than managing a public company."
Strathclyde Business School in Glasgow and ESADE Business School in Barcelona are two schools offering MBA programs focused on the governance and management of family-owned companies. Saint Joseph's is also in the process of doing so. These MBA programs combine discussions on family and traditional business topics that enable executives to run family-owned companies more efficiently once they graduate.
MBA programs: yes, in family business
In the fall of 2011, Saint Joseph's introduced a major and minor in Family Business and Entrepreneurship to benefit the large number of students coming in with such a background. Once the first group of undergraduates specializing in this area graduates in 2013, Saint Joseph's plans to expand its Family Business and Entrepreneurship offerings into its MBA programs.
"The courses are structured to offer students a study of the unique interpersonal and business issues associated with a family-owned and managed firm," Saparito said. "Special emphasis will be placed on finance, business plans, entrepreneurship, family business, entrepreneurial law, negotiations and new product development."
Strathclyde developed its family business MBA to specifically help educate the managers of the British family business of William Grant & Sons, a Scotch whisky distiller producing brands such as Glenfiddich and The Balvenie. The MBA combines discussions on family businesses, entrepreneurship and luxury branding, as well as on marketing, operations and strategy. Strathclyde is slated to expand its program to the benefit of other companies, and employees, as well.
"So far, it seems that other organizations are very keen to join this program and we are selecting who we think is most appropriate for the second cohort, which is scheduled to start at the beginning of 2013," George Burt of Strathclyde told CampdenFB magazine.
ESADE Business School offers family business MBA programs as well. In these MBA programs, ESADE professors help educate students to understand the competitive advantages and weaknesses of family businesses and the interactions between individual, family, and organization. They also provide students insights, frameworks and competencies to transform the family business in order to remain competitive over time.
Students learn how to develop strategies according to their roles -- board member, CEO, manager, family member, in law, next generation member -- within the family business. They also discuss strategy, finance, marketing, leadership and human resources.
"Family businesses are important because they are, by far, the dominant form of organization around the world," ESADE professor Alberto Gimeno, an expert in family businesses, said. "Developed economies are based on family businesses and emerging economies are building themselves around these business models."
It's all in the family: putting these MBA degrees to work
Wharton MBA Shreyans Parekh puts his business school education into practice at Koyal Wholesale, a family-run enterprise located in Southern California. A wedding and events supply company, the 35-employee Koyal Wholesale sells products online and ships worldwide. Parekh runs the company with siblings Sheetal, a Pepperdine MBA, and Shayna, a Yale-educated attorney.
Parekh is responsible for online operations and new business development. In that capacity, he uses market analysis, product management and global retail operations knowledge acquired in MBA programs to grow the business. Staff has doubled and sales have quadrupled in the past year, he said. Parekh also uses family business knowledge acquired in MBA programs to make equity ownership and financing decisions at Koyal, as well as to find common ground with his siblings on company matters.
"[The MBA] has boosted my confidence tremendously," he said.
Parekh's experience illustrates how business school could be a great way to acquire the tools necessary to grow a family enterprise. It can provide not only the management skills, but also the needed confidence to stand out from the crowd while also helping boost the contributions that family-built businesses make to the global economy.