The culture and the country of origin of the family business have significant influences on family business governance. Western cultures are more business-oriented, and Eastern cultures more family oriented. In Western countries, few family members may work in the company. In Eastern countries more family members do so – sometimes they all do.
Word pairs can illustrate whether a culture is more “business first” of “family first.”
|Business First||Family First|
|Most competent leadership||Personal Growth|
|Ownership rights||Family membership equality|
|Individual responsibility||Collective responsibility|
|Legal contracts||Moral commitment|
|High trust in outsiders||Low trust in outsiders|
Families have to decide whether governance – both of the family and of the business – is oriented more towards the family’s or the business' interests. In a “family first” business, the CEO is usually a family member; family members can work in the business, sometimes without limit as to their number; remuneration and dividends depend on family needs.
If the approach is “business first,” the position of the CEO is held by the most competent person, and often only one family member can work in the company and only as CEO; remuneration is market-based, and dividends are only paid out if the company is profitable.