How family businesses can leverage the power of culture for long-term growth

Family businesses are often y rooted in the values and cultural traditions of their home countries. Successful companies often expand into new environments where they encounter families and businesses from different cultures and with different values. There are fundamental differences in the way they identify with values, build relationships, solve problems and negotiate. In order to quickly integrate into new environments and develop cross-cultural competence, family businesses must face these differences and similarities.

Family businesses also need to deal with the impact of foreign cultures on the family. The reason for this is that in recent years official travel has become more frequent, it has become easier to obtain residency in other countries, and in particular more and more people are choosing to send their children to study and work abroad. The younger generation has absorbed foreign cultural ways and inevitably wants to introduce them into their own families. The older generation is often skeptical because the new culture is too far removed from the traditional one. Cross-cultural pressures within family life force them to develop their own ways of negotiating and compromising.

Family businesses need to be aware of the predictable pressures as they expand beyond their home culture. We offer a new perspective on the changes caused by the younger generation, cross-cultural education, and explore how families can cope with this challenging process.

The Influence of Culture

Family businesses combine personal, parental and business relationships, and the influence of culture on family businesses varies from region to region: "Culture is the distinctive characteristic of a group. While individuals have personalities, groups have cultural traits. The form of a particular culture can be seen through people's beliefs, attitudes, morals, behaviors, and the social, economic, political, legal, and religious systems that form the group. Anthropologists believe that culture is in the repetitive process of people solving similar social problems." So says Jeanne Brett, an expert in cross-cultural consultation.

Cultural differences influence how people behave within families and businesses, what they expect from the next generation, and how they communicate with each other.

Three global cultures

Each country and ethnic group has unique characteristics, and cultural scholars have categorized global family cultures into three main types. Implicit in each cultural tradition are cultural factors that influence the expectations, practices and behaviors of family businesses in the region.

Individualistic cultures: rational thinking and human dignity

Northern Europe, North America, the United Kingdom, and Australia present a culture of individualism, rationalism, and promotion of human dignity. Individuals excel in groups because businesses and families support individual independence and human dignity. The family exists to help each member achieve a fulfilling life and maximize personal potential; children are free to choose their own distinctive path in life, and any personal achievement can be celebrated. The culture of individualism is characterized by elite management, responsibility, personal achievement, rationalism, and success through hard work.

Leadership is more about enhancing the beauty of the individual in a strong organization rather than focusing on the strength of the team. Leadership rationalization is created through trust or risk removal by followers. The authority of a leader is constrained by a variety of factors, such as the government's guiding policies, laws and regulations that guarantee fair dealings and limitations on power. In this environment, it is clear that men and women are equal. Business communication is rational and unemotional, but people are able to express feelings and ideas openly in a network of relationships. The casual nature of business in the U.S. demonstrates egalitarianism, and people tend to avoid job titles and call them by their first names.

The younger generation is encouraged to be transparent, to enjoy ideas***, and to be innovative in their assessments - the voice of youth can be heard and accepted by society. The new generation feels empowered to question the views of the previous generation, rather than honestly accepting their guidance. According to Professor T. M. Luhrman of Stanford University, Americans and Europeans stand out in the world because of a focus on the individual. We prefer to think of ourselves as unique, autonomous, self-driven, and self-reliant. As anthropologist Clifford Geertz puts it, this is a unique idea. People elsewhere are more inclined to think of themselves as intertwined with other people - interdependent rather than independent of each other. In this cultural environment, your goal is to fit in and adjust yourself to the pace of others, not to flaunt individuality. People recognize themselves as part of a larger collective - like a thread on a web - rather than fighting on the front lines alone. In the United States, it is said that the squeaky wheel gets the grease, just as in China, "The baby that cries gets the milk". In Japan, it is said that the nail that goes up gets smashed down, as in the Chinese saying "the gun strikes the bird that pokes its head out".

The main risk of promoting individualism and innovation is that individualist cultures often underestimate the power of tradition, loyalty and established wisdom. The authority of previous generations and families is likely to be ignored. Individuals are more reluctant to compromise for the good of the collective, so long-term family goals may not be realized. Each member can choose whether or not to work in the family business based on his or her own interests, and the call for maintaining family unity is becoming weaker. Individualism places too much emphasis on the "I" at the expense of the "we" compared to other cultures.

Collective Harmony: Focus on Family, Tradition, and "Face"

Collective Harmony, which has evolved over more than 3,000 years, is prevalent in East Asia, such as China, Hong Kong, Singapore, South Korea, and Japan. This culture is guided by Confucianism, which emphasizes loyalty, obligation to family, respect for parents and other authorities, and advocates that individuals recognize their place and support the collective rather than the individual. "The concept of "face" is central to the culture of collective harmony, encompassing elements of prestige, honor, respect, reputation, and influence, and is more socially driven and socially connected than the individualistic concepts of self-worth, shame, embarrassment, or social positioning. connected through society. People respect long-established traditions of social order and harmony and do not readily challenge them. The first question facing every new program is: "What does this mean for everyone (country, community, company, family)?" People are all interconnected and interact with each other and are components of a larger collective or cluster.

Family consciousness and role consciousness **** together define who people are. The task of the born is to play their roles and honor the family. The duty of children is to protect and grow the family, respect the wisdom of time-honored traditions, and add to the family honor. The older generation deserves to be honored. The patriarch/matriarch represents authority and maintains the family order as a benevolent and wise man. Women settle down and gain respect. Younger men wait patiently for the transition of power and responsibility. When hearing the call of the family business, the next generation clearly prioritizes their own obligations to pay for the family over issues such as subsidies and positions. They tend to bury many of their opinions in the back of their minds, whereas the second generation in the West will mention the above issues with ease. In a culture of collective harmony, most communications and behaviors tend to maintain long-term relationships and earn mutual respect. People will avoid any behavior that disrupts family relationships.

Their language is more indirect and ambiguous compared to western countries. This creates a comfortable atmosphere where everyone communicates without having to pick up the conversation or have concerns. If not properly controlled, assertive and clear communication can break down pre-existing social networks, especially when communicating within the family. The strengths of collective harmony are its connectivity, stability, predictability, and social support, but the weaknesses are also very clear: innovation and change are slow. Previous generations may have been too set in their ways to handle crises and seize fleeting opportunities. They also don't encourage the kind of communication and collaboration that adapts to a changing environment. In turn, younger generations are reluctant to share their feelings and ideas with their elders.

Honor culture: focus on tradition, family and hierarchy

Honor culture originated in tribal societies and is widespread in Southeastern Europe, North Asia, Central and South America, the Middle East and India. Families are the center of social and economic life, and societies are organized in established hierarchies of obligations and roles. Glorious cultures emphasize harmony and respect for authority. Strong leaders in society are themselves symbols of global eh and are extremely loved and revered. A person's status is predetermined at birth. Women are respected and admired in society, but traditionally women have played a limited role in the Glorious Culture, a situation that has only recently changed. Many societies that believe in a culture of honor face an unstable institutional environment. Frequent changes in external governance structures lead to a high degree of instability in the rule of law, while family leaders imply stability, trust, authority, and responsibility to manage and lead their extended families in a methodical manner in a perilous environment. Educational, occupational, and marital choices (especially in highly traditional families) are collectively determined. Excessive independence, on the other hand, implies disrespect for the family and is not to be esteemed.

Families and corporations that promote a culture of honor usually have a political culture based on the relationship of the individual to the power hierarchy. In most cases, trust is based on personal connections and social circles, and in only rare cases is trust generated by actions done by the individual. Honorable families place a high value on their existing network of relationships, and small circles of trust are formed between those who are prestigious and leaders.

Similar to the Harmony culture, the drawbacks of the Honor culture include an overemphasis on stability, a lack of open communication mechanisms, and the triggering of behind-the-scenes power struggles. If recognized by the family, innovation is a dead letter, and new ideas and new leaders must first build trust in the family hierarchy before change can be successful. The lack of open communication mechanisms then means that those at the lower levels of the hierarchy need to bide their time. The rigid hierarchy of the honor culture is often the trigger for bitter conflict. Leaders are challenged and removed, alliances and conspiracies grow and spread, and true partnership is lost.

An inclusive culture in the modern world

The globalization of the economy and the convergence of the world's cultures have been both a blessing and a curse for family businesses. We have found that culture clashes tend to be more evident in intergenerational or inter-family differences than in personality differences. Young people work as a team, explore new things, and treat their siblings as equal partners. They tend to adopt a "fetishistic" approach, importing elements of an individualistic culture into the traditional values of a culture of honor or harmony.

Successful families are usually able to selectively assimilate the best of other cultures as the generations evolve. They draw on fresh culture and are rooted in good traditional culture, and in order to achieve this harmony:

1. The older generation must recognize that its values are strongly influenced by traditional culture. But flexible thinking in entrepreneurship also helps them to open their minds and try to embrace new ideas.

2. The younger generation needs more patience and less personal desire. While advocating open communication, they should also respect their elders and traditional culture. It is important to realize that most innovations that leave traditional values are not sustainable.

3. In the process of trade-offs and integration of traditional and emerging cultures, family businesses should be adept at learning from the experiences of other outstanding families and utilizing the power of third-party consultants. Sometimes, external advice that understands and has solved similar cases is rather more reliable.

4. See the process as a rational negotiation, not a test of loyalty or power

. Each family member gains, loses, and contributes to the process. When people focus on the family's *** enjoyment of the benefits, a harmonious *** win is often achieved.

5. If desired, the family may also choose to hire a trusted advisor to harmonize the delicate relationships among family members. Drawing on the best parts of different cultural traditions and integrating them to form an inclusive culture can help bring together the strengths of all family members to lead the organization in creating a new cultural heritage.