The vision and perspective of young people working in family businesses is a resource that could represent a competitive advantage and development opportunity for Italian footwear producers. This is, in a nutshell, the meaning of the research “Family businesses? A real endeavour! The generational transition in family-run industry" that was presented today during Assocalzaturifici's AGM, and produced by Assocalzaturifici and LIUC Business School.
“In what is still a critical moment for our sector, Assocalzaturifici chose to investigate an important issue like the future of family businesses in order to try to find answers and new opportunities – explained Annarita Pilotti, chair of Assocalzaturifici – The results of the research offer food for thought: for these companies, which represent a key component of our sector, real continuity comes in the form of change that young people who grew up in entrepreneurial families can instil in their businesses, if they are allowed to express themselves and make innovations within the organisations".
The quantitative research involved a specific questionnaire for a sample of young people aged between 18 and 40 from Italian footwear businesses, and their older family members who are directly involved in the production process. The under and over 40- year-olds were asked a series of questions to understand how they see their companies and what approaches they would use to develop them, whom they would ask for help and what level of priority they would give to variables like innovation and internationalisation.
ADDRESSING THE CURRENT PITFALLS OF FAMILY BUSINESSES
According to the preamble underlying the research, approximately seventy per cent of family businesses don't survive beyond the first generation and less than 10% survives for half a century.
Against this backdrop it is important to focus on the development of new entrepreneurs within families. But how can this be done?
The research identifies certain traps people should be wary of and some objectives they can set themselves. One of the traps is 'familism', immobility and excessive blocking out of the outside world, while objectives include promoting a responsible and shared ownership amongst members of the family, education, the involvement of third parties from outside the family and an analysis of potential leadership models for the future. The research concentrates the objectives for families raising young entrepreneurs within a series of essential key issues. To create a favourable environment for young people within the business, it is important not to blur the distinction between family and business, have a willingness to change the capital structure, while also being able to innovate and improve processes continuously including through the involvement of nonfamily members. Other important points are a willingness to work with other partners and create lasting connections with stakeholders and a propensity to internationalise the business.
COMPARISON BETWEEN UNDER AND OVER 40-YEAR-OLDS
When it comes to admitting that emotions, feelings and possible conflicts with other family members could influence their decision-making processes, almost 40% of the over 40 group claim to be involved, compared to just over 30% for the younger group.
With regard to the management of companies, the over 40-year-olds state that they are significantly geared towards exclusive control of company capital – a choice that is shared by almost 60% of interviewees - while this aspect is only important for 30% of under 40s. Indeed, the percentage of youngsters who do not at all agree with their family's exclusive retention of control over the company is double that of the older group.
A strong difference between the younger and older group can also be identified when it comes to the possibility of employing external managerial staff to grow the business: 50% of the younger interviewees say they would, while the percentage is just over 30% for the older group. It is interesting to note that none of the under 40s said they completely disagreed while approximately 4% of the over 40s said they would never bring in external managers for their companies.
Even the openness of the company towards external partnerships with potential stakeholders for socially useful ventures is less pronounced for the older group, with about 40% of interviewees agreeing, while the percentage goes up to 45% for the under 40s. The youngsters are also more enthusiastic when it comes to creating strong relationships with all stakeholders, based on trust and mutual respect: while approximately 70% of under 40s strongly agree, the percentage from the older group with the same opinion is just over 50%.
YOUNGSTERS: PAVING THE WAY FOR INNOVATION AND INTERNATIONALISATION
Against a backdrop where the mentality of entrepreneurs over 40 who were interviewed appears to be aligned with fairly standard models of entrepreneurship and control over company management, it is interesting to see that youngsters working in these companies have been given precise roles relating to innovation. Therefore, in response to the question as to whether they have been involved with roles of responsibility in activities for the promotion of innovation in the last 5 years, about 78% of under 40s responds "quite a lot" and "a lot", while only 4% of the total interviewees actually sees this as their responsibility.
When looking at this same time period, it is always youngsters who managed external partnerships to ensure the innovation of their companies (73% of interviewees). Similarly, and with comparable results, the research reveals that in the last five years about 81% of under 40s was involved in roles of responsibility in internationalisation activities for their family businesses.
FOOTWEAR BUSINESSES AND UNDER 40s: WORK IN PROGRESS
The research certainly offers a snapshot of companies that are committed to renewal - 50% of them successfully sold new products in the last 3 years - but they are still heavily linked to generations of over 40-year-olds. It is rare to find situations where under 40-year-olds have high level of responsibility in companies, while cases of youngsters at the helm of companies, in the role of CEO, are extremely rare (6%), with this role virtually always (98% of cases) in the hands of senior family members. Even external managers are still a rarity, and account for only 25% of the organisations of companies in the sample.
The involvement of youngsters in internationalisation and innovation activities is comforting. These are fundamental variables for young people as they look towards the future where they will have increasingly important roles in the development of their companies.
Survey methodology Questionnaire with closed answers that was sent online to 105 members, approximately 80 companies. The respondents are members of Assocalzaturifici's Young Entrepreneurs Group, aged between 18 and 40. 48 members took the questionnaire (46%). The young respondents were also asked to choose a member of the previous generation, who is still involved in the management of the company, to discuss issues with.
Press release
Assocalzaturifici
19 June 2018