HSG surveys family businesses

21 May 2012. Family businesses in Switzerland are having trouble with succession: 79 percent of students whose parents own a family business do not want to follow in their parents’ footsteps. Only three percent of Swiss students interviewed have specific plans to take over their parents’ company after their studies. Good occupational alternatives in Switzerland and the relatively low commitment to entrepreneurial family traditions are the most important reasons cited by the students.

Waste of opportunities
In many Swiss family businesses, a generational change is coming in the next few years. “It’s mainly those companies in which several generations feel responsible for the development that will be successful in the long run”, says Heinrich Christen, a partner at Ernst & Young. Almost half of the student children of entrepreneurs (49 %) have gained professional experience and specific knowledge of the industry that their parents’ business is in. As a successor for the business they would ideally combine the ability for professional management and a familial sense of responsibility. This opportunity is lost when potential successors seek their professional fortune outside the family-owned business.

Employee rather than entrepreneur
Most children of entrepreneurs seek a career as an employee directly after their studies. That was the preference of 73 percent of Swiss students and 65 percent of all respondents. “The differences are big in an international comparison, because the opportunities in the different countries vary to a great degree”, HSG professor Thomas Zellweger explains. A keen interest in the succession in the family business is not only found in countries with a comparatively poor population but also in very affluent countries like Singapore and Luxembourg.

A strong majority of students state that their parents’ opinion on occupational decisions is important to them – 84 percent in Switzerland, 85 percent globally. Still, parents should not urge their children too strongly into family-business succession. If the parents’ lives as entrepreneurs seem unattractive and marked by high pressure, children will less often decide for a succession.

Career opportunities enhance interest
Next to the commitment to the parents, career reasons play an important role in the students’ decisions. “Large and thriving family businesses have a higher chance for family succession”, Zellweger says. “It’s not so much about the money for the children of entrepreneurs – they rather see better opportunities for self-fulfillment and to find an inspiring environment for their entrepreneurship.”

Picture: Photocase / Ulrike A