Brand, Identity and Reputation: Exploring, Creating New Realities ...

Rethinking the brand management of family businesses -
Does family add value and how do you manage it?
Joachim Kernstock, Centre of Competence for Brand Management, St. Gallen, Switzerland
Claudius König, CloserLondon, London, United Kingdom
Introduction
This paper reviews family heritage‘s position as a core element in brand identity (Balmer 2010, Balmer, Greyser &
Urde 2006, Balmer & Greyser 2002). It will aim to better understand the value of family in terms or brand management
and company leadership. It examines weather the adoption of a family feel adds value to a brand both internally and
externally and looks at its affect across four distinct family business archetypes.
Definition
When it comes to defining a family business we acknowledge three different established perspectives. In order to
understand the use of "family" in brand management, it is necessary to differentiate it from common definitions of
family businesses.
Firstly there are approaches combining start-up and entrepreneur activities (Abimbola & Vallaster 2007). In this study,
entrepreneurship approaches are excluded, because of the limited access to "heritage", which is developed over time.
There are definitions of family business derived from the entrepreneur and founders research community. Definitions of
family business in this context can be described as follows: "A business actively owned and/or managed by more than
one member of the same family."
Secondly, family businesses are often considered as being limited to small and medium sized companies, in which a
special leadership style is responsible for success. This is often discussed under the term of Mittelstand leadership. This
study does reflect on the often mentioned Mittelstand, which in the recent crisis has become an increased topic of
interest due to their resilience during this period.
Mittelstand, understood as a mindset and leadership principle has previously been discussed by Porter (1990) in his
study about the competitive advantage of nations and analysed as a key success factor of italian midsized companies
and by Simon in (2009) in his book Hidden Champions of the 21 st Century in relation to many German companies. In
other recent publications Mittelstand is reconsidered as a superior governance principle and also connected to family
businesses (Talaulicar 2010).
Thirdly, there is a politically driven "official" approach to family businesses that uses a broader definition of family
business. The European Community has provided an "official" definition, when a firm is considered as a familiy
business: " (1) The majority of decision-making rights is in the possession of the natural person(s) who established the
firm, or in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the
possession of their spouses, parents, child or children‘s direct heirs. (2) The majority of decision-making rights are
indirect or direct. (3) At least one representative of the family or kin is formally involved in the governance of the firm.
(4) Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share
capital) or their families or descendants possess 25 per cent of the decision-making rights mandated by their share
capital." (European Commission 2011).
This understanding of family business is part of the European commission‘s presidents program, who consider the role
of family businesses and their special in-depth orientation to corporate social responsibility and long term management
perspectives important in terms of sustainable economic growth. Therefore they believe that family businesses should
be supported by the European Community, a centiment which is backed up by Barroso (2007).
However, all these definitions and approaches to evaluating family business tend to base their definitions on ownership
and/or corporate governance. Cultural aspects, internal and external communications and customer and employee
relationships appear to be a significant area that has been under examined when evaluating family businesses. Further
more, the overarching aspect of brand management and identity, which touches all of these areas can prove to be a key
indicator in relation to identifying a family influence.
These aspects are important in order to understand brand management and its use of "family" in relation to addressing it
to stakeholders, or as a differentiator to market competition. "Family" as a differentiator can be emphasised either
internally creating a specific corporate culture or externally shaping the brand in the market place.
In order to identify family businesses this paper sets two principal distinctions towards any corporation: (1) Family
founding is present as opposed to public/state or investors founding of a company. (2) The focal corporation is not a
founders business or a start-up, set by an entrepreneur, but it is a established business (knowing well that establishing a
business is different depending on the industry exposure). An internet establishement counts in months, whereas private
banking, its business and its brand, needs decades (Abimbola & Vallaster 2007).
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