Family-owned business – Doubts and concerns

There has been increased interest among owners and those with tangential interest in issues relating to family-owned businesses, or FOBs, since the first article in the series in this space.

However, there are those with an attitude of ‘unless I can put my hand in his side, I will not believe’, who seem to hold the view that what has been written is far removed from the reality in Jamaica or anywhere in the Caribbean.

The tone of some of the conversations could be interpreted as questioning the validity of the body of research that has informed the series. They seem to be ‘demanding’ more details of the findings, and maybe references. No quarrel with the ‘Thomases’, since a researcher should seek to address the concerns of target groups, especially when the veracity of the research has been questioned.

This researcher has been doing work on family-owned businesses since 2004, and was part of a team from the Mona School of Business – now known as Mona School of Business & Management – that worked with external interests to conduct a survey of FOBs and women-owned businesses, or WOBs, in Jamaica. This research was extended in 2012 to have a closer look at FOBs in the English-speaking Caribbean, using Barbados, Jamaica and Trinidad & Tobago as the representative sample. The data-gathering process included administering a questionnaire and the convening of focus groups in each of the referenced countries.

Findings from the referenced research projects have helped to inform the MSME strategy of at least one commercial bank in Jamaica, as well as Jamaica’s MSME and entrepreneurial policy with respect to family-owned and women-owned businesses. Output from the research has also been published in peer-reviewed journal articles, a peer-reviewed book, and newspapers articles.

Although a quick Google search could help to validate these references, the researcher is willing to share these through direct correspondence. A sample of the findings and conclusions from the referenced research should prove useful to those with genuine interest in issues relating to FOBs.

Sample findings and conclusions

• Family businesses are very important to the economies of Jamaica and other Caribbean countries. As documented in a previous article in this space and elsewhere, the revenue generated from FOBs in 2004 was equal to approximately 32 per cent of the GDP of Jamaica. In 2013, the then Industry Minister of Barbados stated: “Big business is no longer being seen as the main driver of the Barbadian economy, as more family-owned enterprises are emerging as the main plank on which the modern economy hinges.” The conclusion is that paying scant regard to this category of businesses could lead to the demise of the economies in the Caribbean.

• Over 70 per cent of SMEs in Jamaica and the rest of the Caribbean are family-owned businesses. In Jamaica, there is no breakdown to capture this in the data-gathering process by either Statin or other government agencies. This gap might be indicative of the scant regard given to FOBs in Jamaica.

• Most persons of African ancestry have started businesses only for the purpose of educating their children, and not to create wealth. They therefore discourage their children from ‘coming back to continue’ the family business after completing their education. Many have concluded that “one does not need education to ‘run’ business”.

This seems to be perpetuated by the education system in the Caribbean – those who are deemed ‘bright’ are placed in groups to pursue disciplines to become lawyers, doctors, engineers and other professionals, while those deemed to be ‘not bright’ are placed in groups to do ‘business subjects’. This has led to several problems, two of which are: the student is confused, believing that one cannot pursue disciplines such as law or medicine and still own and operate a business; and that there is little value to one’s self-esteem to pursue business subjects.

Over the years, this researcher has had to counsel many students who were ushered into law, medicine and other natural science disciplines, but who wanted to pursue their own business, many of whom wanted to switch to do management studies or economics. Based on extended discussions with respondents in the two referenced studies, the researcher has concluded that treating being educated and operating a business as mutually exclusive pursuits has negatively affected the accumulation of generational wealth among people of African ancestry.

• There is the erroneous belief among many across the English-speaking Caribbean that operating large successful businesses is the purview of particular ethnic groups. This belief is not borne out by the data, and intervention is needed at an early age to help debunk this notion.

• In most cases, family-business success is treated as ‘a moment in time’ instead of a process that should begin from as early as is practicable. In many cases, this has led to family-business ‘replacement’, where those who are deemed successors are unprepared and called on to replace the incumbent who has either died, was forced out, or became incapacitated. This is compounded by the choice of replacement, who is usually the one available to take over, and not the one who is willing or capable.

The foregoing sample reflects the reality in the Caribbean and must be addressed to avoid the demise of successful FOBs in the region. Time and other resources used to address these will add more value than that used to question verifiable research.

More anon!

Lawrence Nicholson, PhD, is a senior lecturer at the Mona School of Business & Management, University of the West Indies, author of Understanding the Caribbean Enterprise: Insights from MSMEs and Family-Owned Businesses, and a director of the RJRGLEANER Communications Group. Email: lawrence.n.08@gmail.com