Entrepreneurial Learning Between and Across the Generations in Family

Businesses

Kawartha Family Business GroupFebruary 25, 2013

Michael Konopaski – PhD Thesis

Lancaster University Management School – Institute of Entrepreneurship and Enterprise

Development

The Study

40 family business case studies from Peterborough (and within 40 km)

*Participants are from 40 different family businesses

** For most of the participants, it was the first time in their lives they had reflected on the

questions in the interview

Methodology

Interviews with Transcription

Grounded Theory followed by Quantitative Analysis

Sampling – passage from thesis

The Main Research Question – how do individuals in a family business learn to sustain growth and continuity

across many generations?

Definitions – key terms used in the study

Entrepreneurship – exploring opportunities and mobilizing resources

Learning – acquiring new, or modifying existing knowledge

Intergenerational Learning – between two generations

Transgenerational Learning – across many generations

“As long as I can remember, I was with my grandparents probably just as much as I was with my parents. I was always with

them as I was growing up.”

Family Business – no universally accepted definition

Familiness – the unique bundle of resources and capabilities resulting from family

involvement in a business which

may lead to competitive advantages

Tacit knowledge – difficult to transfer to another person by means of writing it down or talking about it. Requires extensive personal

contact, regular interaction and trust

Sharing Tacit Knowledge

“One day I realized that the person I was complaining to was the person I was

complaining about.”

Situated Learning Theory – Learning that takes place in the same context it was applied.

A student from Peterborough can learn accounting, banking or law at various universities in Ontario. This is cognitive

learning.

A student from Peterborough can learn accounting, banking or law by working at big firms on Bay Street in Toronto. This is

experiential learning.

A student from Peterborough can learn accounting, banking or law by working with small and medium sized businesses in Peterborough. This is situated (learning) and specific to the

local context.

“My dad worked six days a week and all the other kids’ dad’s were home at 5 o’clock,

supper at 5 o’clock every day and that just didn’t happen in our household. He was gone at 7:30 in the morning and came home at 6 or

7 at night and worked Saturdays. If you wanted to see him I rode in the truck with

him.”

Can you relate to the quote from the previous slide?

All family members from family businesses all over the world should be able to relate to a similar sort of experience

The next slide is the actual quote from the participant which shows the importance of context.

“My dad worked six days a week and all the other kids in our neighbourhood, most of their dad’s worked at

GE. So their dad’s were home at 5 o’clock, supper at 5 o’clock every day and that just didn’t happen in our household. He was gone at 7:30 in the morning and

came home at 6 or 7 at night and worked Saturdays. If you wanted to see him I rode in the truck with him.”

Legitimate Peripheral Participation – Describes how newcomers become experienced members and eventually

replace old timers in a business

Someone once told me that a PhD is essentially a flow chart of hundreds of box–to–box relationships that leads to the

development of original theory

The following concepts take into account existing theory, and put new boundaries on prior theory (supported by the data)

The point of a PhD study is to add new knowledge to an existing field of study

Themes – Recurring patterns in the data across most of the cases

Socialization at a young age

“When the family goes to the Farmer’s Market at four o’clock in the morning, you dragged the kids along. You didn’t leave them at home. Well, what am I doing while

I’m there? Well, I can learn to take money.”

Legitimate Peripheral Participation

“Some of these little kids grow up to become members. On the other hand, you’ve got your

older members that are dying off and that’s kind of sad. A lot of the older ones, especially when I was in my twenties, my dad’s friends, were almost like my parents. Then when they

started dying, oh God another parent.”

Reverse Mentoring

“What’s grown in the last five or six years, is a new way between what he’s done in the past

because technology’s played such a huge part in our business. We have two projects where we’re having renderings done in Shanghai right now.”

A Debt to the Past

“My grandfather was the second of seven kids. So he was the second oldest. Back in those days, the

hierarchy, the oldest son got the family business which was the farm, which was the producing, the farm north of

here. So my grandfather, being the second, got the sheep pasture to the south.”

“The gunshot treaty was 1809, which the British signed with the Ojibwa and gave them land north of Lake Ontario as far as you could

hear a gunshot.”

The Intergenerational Present

“In the past 30 years of doing this, we have developed ways, formulas, patterns. Say you are going to hire

someone to put new windows in a cottage, right? We’re doing a job together and we’re hiring together to put

windows in. So each guy has a different way of doing it and there are different ways of doing the same thing, right? But we’ve developed our way of doing it that we know works, based or our 30 years of doing it. So we

have a book of how to do everything and anything. That’s our family recipe.”

“We had a 50 year reunion here at the farm, and we gave out awards for businesses. We gave out certificates for 50

years that this business had done business and we had 40 year ones and down to 25. We told stories about

dealing with the businesses. We fed 472 people in a sit down meal with, with china. No paper plates. Right up

here in our shop with a tent and we had a party. People still talk about it.”

Transgenerational Future

“Starting with my grandfather, it was like, you could take a piece of property and split it up amongst the cousins and

all the brothers and sisters, but I think that it was my grandfather’s and my dad’s determination not to piece it up, not to sever this off and not to piece that off. Keep it whole and keep it for the family members that contribute

and want to make this their vehicle to exist.”

Learning From Ancestors You Have Never Met

“There’s so much history involved. My great grandparents made plans that they wanted to stick through the years.

Specifically one maple tree has to stay in the middle of the field. It was one of my great grandfather’s wishes so it has to

stay.”

Findings

The majority of the participants in this study have family members actively

involved in the business that will never retire

The most successful businesses are always thinking about how the business

was influenced by family members 50 years back, and also always thinking about

how the business might look 50 years forward

Family and Business is the Same Thing

“I don’t think my daughter realizes that if this business loses, that we’re losing the house

and cottage. My boys think they can walk in, pick something off the shelf and take it.”

Family and Business is the Same Thing –passage from thesis

Transgenerational learning

Participants in this study are surrounded by their past. In some cases, relations to those family members they have

never met often have a significant impact on how they learn. Also, they often make decisions based on those

family members that have not been born yet.

A Critical Approach –

Successful family businesses that contradict prior theory

Succession Planning

“In their early twenties, I started the process of moving them in. And that wasn’t done arbitrarily. That was done in discussion

with them saying, if you’re showing an interest, here, I can make a couple million dollars a year so I’ll gladly give you $400,000

each of that and we can all have some fun.”

Competition

“We have lunch together every Friday. I’m big on getting advice from those who have been through it, people who’ve

been in the business much longer than I have.

Implications For Public Policy

While large, public companies have been reducing local labour costs and capital spending (General Electric and PepsiCo) or have left the community entirely (Johnson &

Johnson) in recent years, it is the family businesses, which have family reasons to stay in the community, and

a commitment to the long–term well being of their businesses in the community that should have a larger

voice in influencing public policy.

How Can We Apply Some of These Things in Our Family Business?

Learn From Different Generations

“I maintain various circles of friends. I keep an older circle of friends that used to be 20 years older than me.

Then we became friends with our eldest son’s friends and my youngest son’s friends. We have four circles of

friends. Through that experience, you can slot yourself into where you are, where they are, and where we’re all

going to be, and you can pick up things that are important to them, which may mean absolutely nothing to our older

friends or things that are important to us which means nothing to the younger ones.”

Focus on transfer of entrepreneurial mindset, not ownership and control

“He’s always sort of had his ear to the ground trying to figure out other opportunities might be out there. My first experience here was just following him up the road just to

have a look at it just to see if we could both see the potential in it. It was a cold winter’s day and it seemed

kind of odd to talk about ________.”

Write down your family recipe for doing business

“ My dad is going to write a book on the history of our farms so that we can understand it because once he passes away

there’s a lot of knowledge of past generations that goes away with him. Most importantly how each generation

passed on their influences to the next generation and how they dealt with transitioning the farm to the next.”

Develop accelerating streams of wealth across many generations

“There are so many different sources of income inside our business with the Service Department, the Propeller

Repair Shop, Boat Top and Upholstery, the Machine Shop, the Gas Bar, the Service Department …”

Rearrange the physical layout of the family business to increase he intensity of interaction between key family

members

Wife –“It would have been a more mixed operation and it was basically for sustainability of the family. I think they would have produced some crops for selling, I guess, but ..”

Husband – “basically, they were trying to feed themselves.”

As a result of this sharing of tacit knowledge, entrepreneurial learning is more fluid between two family members in a family business due to the many years of

common experiences

Succession Planning is a Much Longer Cycle

Achieving continuity between and across generations for the family business is a much longer cycle which

needs to consider not only recent history but the distant past, and how the distant past affects the far

away future

That is my original contribution. Thank you giving me this opportunity.

Questions?