Change the world

Family Business Unit

The Nelson Mandela University, through the Nelson Mandela University FBU, is the first university from Africa to be an affiliate of the global Successful Transgenerational Entrepreneurship Practices (STEP) project. The project involves rigorous qualitative and quantitative research, and an active dissemination of evidence based knowledge through summits with families and publications. Currently, the Nelson Mandela University FBU is the only unit of its kind in Africa. Becoming an affiliate of the STEP project is not only an enormous research opportunity for the Nelson Mandela University in general, but also provides the opportunity to put the Eastern Cape, South Africa and Africa on the map in terms of the field of family business.

The STEP Project (established in 2005) is a global applied research initiative that establishes learning partnerships between academics and business families in order to explore the entrepreneurial process among family businesses. These partnerships generate solutions that have immediate application for family leaders. To achieve continued growth and continuity (thus sustainable local economic development), family business leaders must pass on their entrepreneurial mindsets and capabilities so that future family members are able to create new streams of wealth for many generations to come. This is referred to as transgenerational entrepreneurship.

Academics and leading business families from around the world have joined as partners on the STEP Project to identify and explore successful transgenerational entrepreneurship practices and to create a stream of powerful practices and cases that empower families to build their entrepreneurial legacies.

"With 44 institutions and more than 200 scholars involved in a coordinated investigation of factors important for transgenerational entrepreneurship in family enterprises, the STEP project is extremely important in its uniqueness as a global applied research project. To co-create knowledge, STEP scholars and families have held 12 summits around the world, since STEPs inception in 2005." (Prof Sharma, Global STEP Director)

The Nelson Mandela University FBU conducted their first STEP case study with the family members of the well-known Tavcor Motor Group. The family manage the Volkswagen, Audi and Suzuki Dealerships in Port Elizabeth and George. The business started in 1950 as one of the first VW dealerships in South Africa and has focused its attention on a narrowly defined area - the Eastern Cape and South Western Cape.

Benefits to family businesses participating as case studies for the STEP project

  • The opportunity to be part of a network/club of African family companies who share the same key issues (transgenerational entrepreneurship), coming from different industries, countries and from different family contexts, allowing for interaction with and learning from "peers" on these important issues.
  • Family businesses will benefit from these interactions in that the exchanges and learning sessions will be supported by concepts, methods, insights and research conclusions coming from a consortium of professor-experts of family business globally who have pooled their knowledge in order to develop an applied research project on the topic of "transgenerational entrepreneurship".
  • Your company and brand(s) will gain greater visibility and legitimacy thanks to the commitment of your partner NMMU FBU and the STEP founders to cite, when it is useful and possible, their Family Partners within the public documents and media they will use to publish their findings.
  • An opportunity to be invited to attend the annual international STEP summit.
  • A one day meeting with your local STEP research team where feedback on the interviews undertaken within your family and family business will be provided. Main conclusions on your case based on the research model, analyses from the research team on your specific position, main strengths and weaknesses and main issues to deal with as far as "Transgenerational Entrepreneurship" will be presented. In addition recommendations will also be provided.

With regards to this study, the population can be defined as South African/African family businesses which meet the criteria specified below (Chrisman et al. 2005:560):

  • The family themselves must see their business as a family business.
  • The family ownership in the main operating business should be above 50 percent (voting share)
  • The family must have at least one active operating business, not only being a passive shareholder or investor.
  • There should be at least two generations involved in ownership and/or management of the business.
  • The business should employ at least 50 employees.
  • The family has a transgenerational intention, that is, an ambition to pass on the business to the next generation of family members.

Execution of the interviews

In line with the requirements of the STEP project (Nordqvist & Zellweger 2010), five interviews with key actors in the family business investigated were conducted. These actors had to include any combination of the following:

  • A controlling owner(s) working as CEO and/or chariman of the board in the main business.
  • The CEO/President of the firm's main business, whether family or non-family.
  • At least one more family member owner (if existing) who is active in the firm's main business (as a board member and/or employee).
  • At least one family member active in the main business (as a board member and/or employee) who represents a different generational perspective from the people mentioned above (the point is to get a multigenerational leadership perspective).
  • At least one non-family member active at top management level of the main business.
  • If there is a significant non-family owner that is considered strategically relevant, he/she should be interviewed.

The STEP interview schedule provided the interviewer with a set of semi-structured questions, divided up into four main sections, namely: the history and externalities, entrepreneurial orientation (EO), familiness resource pools, and entrepreneurial performance. Constituting these sections are subsections of questions regarding the topic of the particular section. Owing to the objective of this study, which is the influence of familiness resource pools on the transgeneration success of a family business, the responses pertaining the to the entrepreneurial orientation (EO) of the STEP interview schedule were not reported upon in this study. The use of semi-structured interviews gave the participants flexibility in the manner in which they could respond to the questions.

The interview schedule includes questions related to the following overall themes (Nordqvist & Zellweger 2010):

  • The history of the business and the business family.
  • The key strategic decisions and critical incidents.
  • The most influential family and non-family actors in the historical development.
  • The ownership evolution and governance structures.
  • The guiding values, vision and goals of the family.
  • The entrepreneurial character of the family.
  • The entrepreneurial character of the business.
  • The extent to which entrepreneurship is maintained and developed across generations.
  • The family's risk profile.
  • The eight dimensions of EO (innovativeness, proactiveness, risk-taking, autonomy and competitive aggressiveness).
  • The resource profile and the eight important resources for competitive advantage (leadership, networks, capital, decision-making, culture, relationship, governance and knowledge).
  • The nature of the family influence on these resources.
  • The contingencies (industry, environment, family involvement, family life stage and culture).
  • The entrepreneurial performance: financial, entrepreneurial and social.

Below are two examples of questions found in the interview schedule (Nordqvist & Zellweger 2010):

A: What role does the family's history, reputation and goodwill play in creating and using the networks and connections for development or generating entrepreneurial opportunity?

The answer should cover, if relevant, the following issues:

  • What examples do you have of people doing deals/business with you because of your family's legacy and/or reputation?
  • How is your strategy based upon or developed around your family's reputation and/or brand?
  • How does your family maintain/nurture the reputation and goodwill to ensure that these are an enduring part of your strategy?
  • Are these tied to a particular family member? Can they be passed on to the next generation?

 

B. Describe how your family relationships enhance or constrain your ability to act like entrepreneurs?


The answer should cover, if relevant, the following issues:

  • Relationships and decision-making around capturing opportunity?
  • Unity and relational agreement around growth and what new opportunities to pursue?
  • Next generation unity and entrepreneurship?

ABOVE: Proffs Venter and Farrington together with friends of the Unit

ABOVE: Mr Alan Taverner of Tavcor