In an October 2013 article, the Financial Times explored the way that American culture venerates the entrepreneur. Whether Steve Jobs, Jeff Bezos, Mark Zuckerberg, or other cultural-business icons, successful entrepreneurs are lauded as living the American dream and driving innovation in the economy.
This elevation of entrepreneurs, however, may unfairly minimize another type of enterprise: the family business. According to a source quoted in the Times article, a staggering 77 percent of new ventures start as family businesses, and another three percent of new ventures become family businesses within two years. These figures were based on a broad definition of “family business” and include enterprises in which the founder’s relatives contributed assets such as services, financial capital, or networking contacts. Seen in this light, many business owners who the American public perceives as entrepreneurs were not acting on their own, but rather as heads of family businesses.
Family enterprise differs from a single-owners startup in various ways. Potential disputes over control of the company, estate planning, and structuring of businesses entities are all affected when family members run a business jointly. Research indicates that family businesses are more likely than sole-owner businesses to retain employees for longer and to interact more with their communities and neighborhoods. Nevertheless, some experts believe that a lingering bias against family businesses remains. Such bias might be attributable to the nepotism that people often ascribe to family businesses. This bias may explain why the study of family businesses has been neglected in educational circles; as one business school professor quoted in the Times said, the teaching of family enterprise lags the teaching of entrepreneurship in the U.S. by 20 years.