RSM researchers invite family businesses to dinner discussion.

What happens in a family business during the risky period when the manager steps down? Family businesses are warmly invited to attend a round-table dinner meeting on Tuesday, 28 May to discuss the question. The dinner is hosted by the Erasmus Centre for Family Business (ECFB).

The <link research centres family-business>ECFB, based at Rotterdam School of Management, Erasmus University (RSM) specialises in research, ideas and information about subjects that really matter to family-run businesses in the Netherlands and elsewhere. Each round-table meeting presents recent research which is discussed by researchers and their guests. Guests are those who currently leading family businesses, and those expecting to lead them in the future. May’s meeting will focus on the change of course in family businesses after the company manager has stepped down.

“Within family businesses, the period surrounding management successorship can be a turbulent one,” says ECFB director <link people vanessa-strike>Dr Vanessa Strike. “After this ‘changing of the guard’, existing family businesses often lose their independence, run a greater risk of bankruptcy, and often experience reduced profitability. Earlier research attributed these worrying outcomes to intergenerational and interpersonal conflicts.

“But recent research by the <link research centres family-business>ECFB shows that these types of problems often result from more fundamental reasons, namely changes of course in strategy and governance.”

Strategy-wise, many family firms become conservative in their approach, for example, cutting down on research and development, or showing less inclination to fund higher-risk projects using borrowed money. This risk-averse attitude can also be found in corporate governance as a protective wall is built up around the company to keep out external influences. The ‘tools’ used are preference shares and the appointment of co-opted associates to the Supervisory Board.

“This gives us lots to talk about over dinner,” says Dr Strike. “For example, how should family firms pick the new company manager? Is it a good time to create a more challenging and less protective environment? How can a family firm retain the entrepreneurial spirit shown by earlier generations and further encourage that ‘can do’ mindset?”

A limited number of places are available for family business members wishing to join the dinner and debate, to be held at RSM from 17:00 on Thursday, 28 May. The introduction will be given by Professor Pursey Heugens (Professor of Organization Theory, Development & Change), and the discussion during dinner will be led by Professor Hans van Oosterhout (Professor of Corporate Governance & Responsibility), both from RSM.

If you would like to attend, please contact Ms. Janneke Suijker, ECFB Secretariat at +31 (0)10 ­‐4081405 or email jsuijker@rsm.nl.