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Comment: Why family feuds aren't always bad for business

On the surface family feuds don't look so good for business. They mean decisions are often put off as family energies get diverted to emotional disputes between members, not the running of the company, writes David Bain. 

The current family feud between Liliane Bettencourt, France's wealthiest woman and L'Oreal heiress, and her only child, Francoise Bettencourt-Meyers, seems to bear this out.
 
Bettencourt has recently indicated that L'Oreal, one of the biggest companies in Europe and 31% controlled by the 87-year old, could become the target of an overseas bid because of the increasingly bitter legal feud with her daughter.
 
She said in a statement last week: "I hope my daughter will not destabilise the group which I and my father have wanted to be French."
 
But family feuds within business empires like L'Oreal might not always be as dire as Bettencourt says.
 
From the Austrian economist Joseph Schumpeter "creative destruction" perspective, the point might be obvious. Schumpeter used the term to describe the process of transformation that accompanies radical innovation.
 
A degree of chaos and disruption creates new ideas and individuals to emerge – even new family members – that leads to innovation and renewed entrepreneurship.
 
Perhaps one of the best examples of this working in practice is the feud between the German brothers Dassler 60 years ago in the north Bavarian town of Herzogenaurach, which spawned two of the most success sporting goods companies of all time – Adidas and Puma.
 
Adi and Rudolf Dassler fell out over the control of Adidas, which Adi had set up in the 1920s. Rudolf left Adidas after the World War II to set up Puma on the other side of town.

It might be wishful thinking that Bettencourt-Meyers is about to set up a rival to L'Oreal. And there are no other immediate family members around to take up the mantle of providing new leadership at the cosmetic giant.
 
But the argument still makes sense from a broader perspective.
 
Moreover, family feuds might not always be so bad even if this process of renewal doesn't happen.
 
L'Oreal's share price has outperformed the CAC-40, France's main stock market index, by 16% since the beginning of the year, performing particularly strongly since the feud intensified in the last few weeks.

Just as arguments between friends and families can often lead to a more fruitful relationship in the future, the same logic can be applied to family businesses.

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