{"id":4884,"date":"2019-05-15T05:53:15","date_gmt":"2019-05-15T10:53:15","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=4884"},"modified":"2020-12-20T22:11:32","modified_gmt":"2020-12-21T03:11:32","slug":"the-key-to-strengthening-family-business-the-4-components-of-family-capital","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/the-key-to-strengthening-family-business-the-4-components-of-family-capital\/","title":{"rendered":"The Key to Strengthening Family Business: The 4 Components of Family Capital"},"content":{"rendered":"

Family Capital<\/a> is a true differentiator between family-owned businesses and companies with a fragmented shareholder base. Family\"\" Capital expresses itself as the organization\u2019s culture, ethos, and network.\u00a0 While hard measures liking it to performance are elusive, Family Capital clearly conveys powerful advantages.<\/p>\n

McKinsey Organizational Health Index<\/a> database indicates that family-owned businesses enjoy a significant advantage in providing career opportunities to employees.\u00a0 This is a gap that grows even wider among family businesses<\/a> in the top quartile of healthy companies. However, even the benefits of a positive family-oriented network can go awry in the mix of personal and professional tensions that may affect family businesses.<\/p>\n

Family Capital is the strongest intangible asset of family businesses. Having a good understanding of the 4 Components of Family Capital<\/a> allows family businesses to build a strong culture.<\/p>\n

The 4 Components of Family Capital<\/strong><\/h2>\n

\"\"<\/a><\/p>\n

    \n
  1. Tribe<\/strong>. The Tribe is the sense of connectedness, shared culture, and support in the social fabric of a family business.\u00a0 It is expressed through a sense of closeness that nonfamily employees feel toward the owners. In fact, it goes beyond the immediate clan or owning family.<\/li>\n<\/ol>\n
      \n
    1. Family Identity<\/strong>. The Family Identity is the degree to which members of families that own businesses identify with them can vary widely.\u00a0 It extends to how consciously families decide to express their image through the company brand and how much a sense of family promotes the family legacy and visibility in the market.<\/li>\n<\/ol>\n
        \n
      1. Trust<\/strong>. Family Capital\u2019s trust element refers basically to the owners\u2019 reliability.\u00a0 It is the degree of trust the organization\u2019s members have in the ability of family leaders to improve the company\u2019s performance. It is the ability of family leaders to keep their promises to stakeholders and do what they say they will do generally.<\/li>\n<\/ol>\n
          \n
        1. Stewardship<\/strong>. Stewardship denotes the strength of family values.\u00a0 It is the idea that family leaders put the organization\u2019s interest above their own.\u00a0 It is the degree to which family leader take a long-term perspective.<\/li>\n<\/ol>\n

          Taking the Yin and Yang of Family Capital<\/strong><\/h2>\n

          Family Capital is the strongest tangible asset of Family Business. Focusing on Family Capital will allow owners to thrive in an era of heightened constraints. Family Business just needs to take a good view of its advantages and disadvantages to maximize its competitive advantage. Let us take a quick look at the first component: The Tribe.<\/p>\n

          Tribe promotes a closeness to family and togetherness in organizations.\u00a0 On the other hand, because of its closeness, there can be less diversity in the organization.\u00a0 It promotes a culture of \u201cfit in or fly off\u201d and Performance Management<\/a> may be difficult.<\/p>\n

          Truly, the Tribe has its advantages but too much of it can stifle even the next generation of owners. Having a good view of the other components and how it affects organizations and members of its organization can be a helpful guide in directing Family Business to better manage its Family Capital.<\/p>\n

          Interested in gaining more understanding of 4 Components of Family Capital<\/a>? You can learn more and download an editable PowerPoint about 4 Components of Family Capital<\/strong> here<\/a> on the Flevy documents marketplace<\/a>.<\/p>\n

          Do You Find Value in This Framework?<\/h2>\n

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          \u2013 Omar Hern\u00e1n Montes Parra, CEO at Quantum SFE<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

          Family Capital is a true differentiator between family-owned businesses and companies with a fragmented shareholder base. Family Capital expresses itself as the organization\u2019s culture, ethos, and network.\u00a0 While hard measures liking it to performance are elusive, Family Capital clearly conveys powerful advantages. McKinsey Organizational Health Index database indicates that family-owned businesses enjoy a significant advantage… The Key to Strengthening Family Business: The 4 Components of Family Capital<\/span><\/a><\/p>\n","protected":false},"author":111,"featured_media":4886,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[408,85],"tags":[1591,1590],"class_list":["post-4884","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-management-leadership","category-organization","tag-4-components-of-family-capital","tag-family-capital"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/4884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/111"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=4884"}],"version-history":[{"count":7,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/4884\/revisions"}],"predecessor-version":[{"id":8141,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/4884\/revisions\/8141"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media\/4886"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=4884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=4884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=4884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}