Family-owned businesses which install a family charter with binding rules are economically more successful. Moreover, a family constitution strengthens the “family peace” (emotional cohesion) and increases the relationship of the family to the company (emotional ownership). This is not due to higher returns but also due to the fact that the shareholders feel better involved in the company and are there for each other.
The study, (Regulated) Emotions in Family Firms by KPMG in Germany and the Friedrichshafen Institute for Family Entrepreneurship (FIF) of the Zeppelin University, provides analysis following interviews conducted with 85 family-owned businesses. It examines for the first time the emotional structure that ownership of German entrepreneurial families have to their businesses and to what extent the individual family members stand together. These new discoveries are a continuation of the research into the "emotional factor" in family businesses.
Great link between family and company
According to Dr. Alexander Koeberle-Schmid, a specialist for family strategy at KPMG in Germany, the great advantage of a family constitution is that it ensures clarity and transparency and families know what to do when disagreements arise. In addition, it strengthens the family’s emotional cohesion because the shareholders work together at formulating the family charter.
For more information on the study and it’s results, please see the full report: Family Governance: Familie und Firma in Einklang bringen (Please note that the study has been created in the German language).