History: a strategic resource for family businesses

As a result, a number of company initiatives began to flourish, focusing on showcasing the company's history in order to strengthen its corporate culture. This often coincided with anniversaries, as the last nineteenth century saw the emergence of numerous companies during the second industrial revolution, in the electrical and chemical industries for example. At the same time, following on from Chandler's work at Harvard Business School, 'business history' also gained a foothold in the academic field, particularly in France with the journal Entreprises et Histoire.

There have been a number of initiatives by companies to dramatise their history in order to strengthen their corporate culture.

Some of the companies that have invested seriously in research into their history have endured, such as Saint-Gobain, which recently celebrated its 350th anniversary. Others, having invested in research into the history of their sector, have sometimes disappeared as independent companies, such as Pechiney, one of the jewels of twentieth-century French industry. Finally, while some companies have disappeared as trade marks, such as Crédit Lyonnais, disguised under the initials LCL and then swallowed up by Crédit Agricole, their heritage continues to be promoted through archives that are open to researchers.

6 good reasons for family businesses to use their history

There are many uses for history, and many people are tempted to mobilise it for different purposes, as shown by the current debates around the national novel or the excellent book edited by Patrick Boucheron, Histoire mondiale de la France (Seuil, 2017). For the family business, there are two possible uses: within the family, within the business or outside it.

Integrating and strengthening links

Within the family community, history can be used to integrate newcomers, such as spouses or the youngest members (the NextGen). It can be used to strengthen links between generations or to more or less distant branches of the family. This can be extended to non-family managers and executives or to family office employees to ensure that they have a good understanding of the expectations of their key stakeholders.

Generating commitment

There is also a strong potential for creating value by using history to create commitment among employees in general, and to facilitate the transfer of knowledge by formalising company-specific practices during training. The family business is a special environment in which individuals often value the idea of "working for someone" rather than for anonymous shareholders or "mercenary" managers with little attachment to the organisation. Finally, family businesses, more than others, are very often linked to a territory, to a physical space: the region, the village, the factory. The history of a family business leaves its mark on a concrete space, through its buildings and infrastructures. Architecture is a powerful lever for the transmission of heritage and symbolism, and even for direct exploitation in the context of industrial tourism.

Adapting to the environment

For the family and for the company, history also enables us to respond to the expectations and demands placed on the organisation by its environment, in order to engage with external stakeholders. Customers, of course, but also service partners, suppliers and local communities.

Building the present and the future

History is not just the past. In order to devise an effective strategy, family members and managers need to understand the constraints and opportunities associated with the development paths previously followed by the family and the business. What theorists call "path dependency"[1] is a central element of strategic thinking.

Persuading, Communicating

The value of history as a strategic resource rests largely on its ability to evoke and persuade. More often than not, history creates this effective persuasion through the 'pedigree' effect, that produced by the feeling of a lineage obtained from a long-standing presence in business. That famous "bank founded in..." sign underlines resilience and seriousness, and gives savers confidence.

Producing

Sustainable family businesses can make effective use of history to promote their services and products, on the one hand through historical narratives, and on the other through the redesign or relaunch of iconic models.

How do family businesses make such a big deal of it?

Before being a resource, history is the fruit of a construction. However, it is difficult to generalise about the way in which family businesses develop their history. Some families have a very informal attitude to transmission, and they do so from one individual to another. This process encourages the transmission of quasi-mythological stories between generations, emphasising heroic moments or turning points. It depends heavily on personal memory and is not immune to selective forgetting.
When businesses and families expand, or become multi-generational, with many cousins for example, they tend to be more professional in the process. They call on an archivist to sort through the archive documents and possibly a professional historian to write a problematised history. Indeed, it is important to rigorously study the history of the family and the company. A professional historian will not be involved in the emotional dimension and will be more reflexive about historical events and the archive. Because of their scientific training, historians are able to contextualise events and put them into a broader perspective (industry, territory, technological developments or changes in customs and consumer habits). They can also make the link between developments within the family and the company's strategy.

However, companies and families may be tempted to emphasise, reinvent and even create a historical narrative in order to exploit it. It is important to understand that there is a big difference between the past (all the events that took place before today), memory (what remains in people's minds) and history.

History is a "social and rhetorical construct that can be shaped and manipulated to motivate, persuade and frame actions inside and outside an organisation" (R. Suddaby). From this point of view, the writing of history is highly political and strategic within the family and the company. This writing changes over time and depends on the current concerns of the people who control this history and their vision for the future.

History is a very plastic material

Family businesses have been studied in their use of the past as a strategic resource and to develop their brand or corporate heritage. In this respect, history can be seen as a source of competitive advantage. More specifically, a corporate history written in a succession context will emphasise change. It also needs to reflect current attitudes and priorities. For example, families in the mid-twentieth century were much less interested in the environment, sustainability or professional opportunities for women within the organisation. Failures are also rarely mentioned. It's a shame, because companies can learn a lot from a rigorous autopsy of an aborted project or costly venture!

Naturally, families change a great deal over time and the definition of what belongs in the family history is the subject of debate. In a recent exhibition devoted to the history of a family business, some cousins were removed from the family tree because they had sold their shares in the company after a family quarrel... History is a very plastic material.

Find out more

We feel it is important to know more about the interaction between history and strategy in family businesses. Historians are not used to joint research with management or family business researchers. This is why the Family Business Center at Edhec Business School has included history as one of its research objectives.There are few studies on the mutual influence between emotions and history and their impact on the viability of family businesses. On 11 and 12 May, the Family Business Centre is organising an international conference bringing together historians, family businesses, practitioners and researchers to share and learn about this subject.

For more information on the EDHEC Family Business Conference 2017, visit the event page