Prof. Jean Lee Shares Insights on Family Business Heritage & Governance with CEIBS Alumni in Hefei

Prof. Jean Lee Shares Insights on Family Business Heritage & Governance with CEIBS Alumni in Hefei

September 1, 2013. Hefei – Academic Director of the CEIBS Kaifeng Family Heritage Centre, Michelin Chair Professor in Leadership & HR and Professor of Management Dr. Jean Lee today gave a keynote speech entitled “Heritage and Governance of Family Businesses: Emotional Bonds, Management, Governance,” at a forum on family business sponsored by Noble Club, a subsidiary of China Resources Land (Hefei) Co., CR Land Centre. It was the sixth such academic forum Noble Club has sponsored. More than 200 entrepreneurs and senior business executives turned out for the forum, which was co-organized by the CEIBS Alumni Association Anhui Chapter, the University of Science and Technology of China’s EDP President Federation, and Xinhua Net, and titled, “The Development of Family Business in China: A Three Dimensional Analysis”. 

Mr. Cao Jie, Vice Chairman of the CEIBS Alumni Association Anhui Chapter, gave the welcome address, in which he noted the significance of this forum and introduced Prof. Lee. In her speech Professor Lee examined the current opportunities and challenges facing Chinese family businesses, as well as their unique characteristics. She began by describing how family businesses are perceived by the general public. She then remarked on the irony that many of the perceived disadvantages of family businesses – such as their centralized equity ownership and conservative financial strategies – have turned out to be strengths for many of them, particularly during the recent global financial crisis.

Prof. Jean Lee Shares Insights on Family Business Heritage & Governance with CEIBS Alumni in Hefei

She also spoke about the major differences between family businesses and other types of enterprises. A typical characteristic is the coexistence of a family system and a business system; how both these systems overlap directly influences the development of a family business. A good balance between emotional bonds, management and governance, together with open-mined leadership, communication, decision-making and well-defined roles, is vital to the sound development of a family business.

When facing critical choices concerning business development, many family business owners would choose to give up their short-term financial wealth to ensure their family’s long-term development. Prof. Lee explained this is part of the concept behind “socio-emotional wealth (SEW)”, which has an influence on the decision making in all family businesses. SEW has five dimensions: the degree to which family members identify with the family business; close social bonds, emotional attachment, family control and influence, and willingness to prepare for succession. Family spirit and emotional attachment are double-edged swords that must be properly developed and employed to fully realize the unique advantages that a family business has. 

Prof. Lee also shared case studies about two 100 year-old family businesses: the Yeo family (Yeo Hiap Seng, Singapore) and the Mulliez family (France). She explained how their rise and fall was affected by family business governance, and shows why family businesses must develop succession plans based on an effective governance structure. When nurturing successors, Prof. Lee said that the most important things are building trust, achieving good business performance and being a team player.

Prof. Jean Lee Shares Insights on Family Business Heritage & Governance with CEIBS Alumni in Hefei

After finishing her presentation, Prof. Lee enjoyed a lively discussion with local entrepreneurs on topics such as how to prepare the second generation family members for business succession and build long-lasting family businesses. Entrepreneurs from state-owned enterprises also expressed their views on the heritage of entrepreneurial spirit. Anhui Hengxin Group Board Chairman Ms. Zhao Yuxiu said that she hoped her daughter would be a shareholder of the company rather than its general manager. Prof. Lee closed by encouraging family business owners to continue to build their brands, and wished them well in passing on their entrepreneurial spirit to the younger generation and nurturing more energetic and competent successors.