Isabelle Le Breton-Miller: “The family business is a model to be inspired by”

Isabelle Le Breton-Miller, a professor at the Montreal School of Higher Business Studies, has investigated family businesses like few others. In fact, in the academic world his works are cited quite frequently. For example, an analysis carried out by her and other experts in Italy concluded that among family companies, those founded and run by couples are the most effective. “There are factors that explain it. Getting married or living under the same roof is already a decision. Opening a business together is another. Have children. The social capital comes from two different families ”, he comments.

Various studies indicate that around 85% of the world’s companies are family-owned (89% in Spain), contributing considerably to the economy (57% of the US GDP; 100 million jobs in the European Union). However, for a long time and despite their importance, argues the Canadian researcher, family businesses have generated interest mainly due to problems related to succession. “Juicy stories have taken up too much space in the media,” he says. “Although I must say that attention to other aspects of these companies is gaining ground in journalism, banks, managers. Curiously, there is still a certain disdain in the academic world outside the circle of experts in which we know each other well ”, he adds,

Isabelle Le Breton-Miller’s most recognized work (written in tandem with her husband, academic Danny Miller) is Managing For The Long Run: Lessons In Competitive Advantage From Great Family Businesses, considered a canonical book in the discipline. Published by Harvard Business School Press in 2005 and translated into six languages ​​(including Spanish), it is the result of several years of research on the experiences of several internationally recognized companies managed by families (Ikea, Michelin or Walmart, among others. ). The book shows that they share four priorities that have had an effect on their longevity: making connections, ensuring continuity, being in charge, and creating community.

According to an Edelman survey carried out in 2017, 16% of those consulted say they feel more trust in family businesses than the rest. In addition, around 50% indicate that they prefer to work in this type of company compared to other options. However, most associate job creation, long-term thinking, and financial success with groups disengaged from any clan. Le Breton-Miller, faced with this paradox, highlights the degree of durability of family businesses: “They survive longer. The data are clear: a period two or three times longer than the others. We speak of a vision, of a set of values ​​”.

This corporate culture is being recognized during the pandemic. A report by Credit Suisse highlights that family businesses have shown greater resilience capacity after the onslaught of the coronavirus, as they tend to present superior defensive characteristics, in all sectors and latitudes. Researchers from Bocconi University found that Italian firms whose majority shareholding belongs to the family had better financial results than the others during the first months of the spread of COVID-19.

Opinions of other experts (such as Torsten Pieper, from the University of North Carolina, and Rania Labaki, from the EDHEC Business School) have pointed in the same direction. And all these explanations refer, to a large extent, to that kind of DNA of family businesses described in the book of the Canadian couple. “From the title we wanted to highlight it. I mean the long term; to the advantage of a look that goes beyond the quarterly reports, ”explains Le Breton-Miller.

Crisis proof

The researcher highlights that many companies have had to face complicated scenarios in their history. “There are studies on how they showed solidity in periods of crisis. For example, the research by Allouche and Amman in Japan after the 2008 crisis. These are experiences related to very serious situations: financial blows, natural catastrophes, wars, changes in the political regime. There has been prior learning. It’s about surviving and continuing; not just to survive and sell, “he says.

It also emphasizes social ties: “There is a level of involvement and relationship with the community: customers, suppliers and, above all, employees. These ties tend to seek higher levels of protection. Many family businesses have divided working hours among their workers to avoid layoffs, of course, to the best of their ability. In the United States it is very important not to lose health insurance ”. According to the Family Business Institute, as a result of the covid-19, 82% of these Spanish companies have cut jobs and 30% acknowledged having got into debt.

Regarding decision-making, Le Breton-Miller points out: “We have observed how several family businesses modified their production to adapt to the pandemic, as a way to protect jobs and provide service to the community. I am thinking of the German Melitta, who manufactured masks in her coffee filter facilities. They are decisions that are faster in this type of organization ”.

Various organizations indicate that the impact of the pandemic is being very serious for micro and small businesses. The Economic Commission for Latin America and the Caribbean (ECLAC) estimates the closure of 19% of all companies in the region in 2020 (2.7 million). “If we consider that the family business is the majority form of organization, the data on all those that closed include many of this type. Covid-19 has been a hecatomb. It is a catastrophe for the global economic fabric ”, comments Le Breton-Miller. “There are many types of family business, by size, sector, on the stock market or not… As in everything, there are some that do not act in the best way. Let’s remember what happened to Parmalat. But we are talking about a model, with its strengths and weaknesses, that should inspire us ”, he adds.

Regarding the ways to support these companies to cross the storm, the academic responds: “In several countries the possibility of extending the payment of certain taxes is being offered. But first you have to think about supporting them so that they don’t close. The best way to help is not by adding more weight. Recovery will not be quick ”. Le Breton-Miller also comments on the need for greater access to bank and government credit, and points out the differences in the laws of each country. “Consumers also have an important role. We must support these companies that have ties to our communities, ”he says.

Bertrand Laurioz, president of ADL Performance, wrote in Forbes: “Being a family business is not a guarantee of success, but by bringing shareholders and employees closer together and aiming for the long term you can help overcome crises, with more respectful social relationships. It is in this sense that the family business can be the future of capitalism ”. It is not the only voice defending this idea. Isabelle Le Breton-Miller agrees: “We are talking about a model where human relationships and community matter. A thought that is not obsessed with the short term ”.