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governance

February 1, 2002

In the first of a two part series, Kelin Gersick explores the implications of family development in the context of family business growth, development and success. Part two will explore specific applications of the model in governance design

The main challenge facing business families as they move to the second, third and later generations is maintaining a sense of connection across an increasingly disparate group of relatives. Can 50 (or 200) cousins spread across many countries and around the world retain an identity as a family? So far, most of the literature on family firms focuses on the first-generation nuclear family – one pair of parents and their children moving through their life cycle. In fact, the most difficult dilemmas for business families arise as they become more complex.

January 1, 2002

Finding the right model of governance at a time of complex change requires essential re-thinking. Focusing on the potential future scenarios and being educated in the key issues are good starting points for an effective transition

Successful adaptationto the challenges of generational transitions requires a fundamental re-thinking of the governance model that may have functioned effectively in the previous generation – particularly in family companies evolving to sibling or cousin partnerships. In these cases, the structure of ownership and control that worked in the past can become more complex as a result of the transition. When a family enterprise evolves in this direction, the transition calls for a significant redistribution of power and authority among an increasingly large and diverse network of stakeholders.

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