Turn Silver-spoon Kids’ Daddy Competition into A Positive Energy

“Pindie” (meaning to compete through daddy’s power) has become a social tag of the second-generation rich. It destroys social equity and encroaches on the development opportunities of grassroots. To alter this negative public image, some second-generation rich have publicly manifested their determination to become the second generation entrepreneurs without falling back on their family background. This, however, can also lead to intergenerational conflicts and present potential risks to family business succession. Should the silver-spoon kids compete through their daddies’ power? According to a joint research conducted by the University of South Australia and the Rensselaer Polytechnic Institute, “Pindie” can be changed into a positive energy.

The researchers conducted a survey among 119 manufacturing family firms in 7 northeastern states in the United States. All these firms have survived more than 25 years and underwent at least one intergenerational succession. Family members accounted for 75% of the management and held 93% of the business ownership on average.

Through telephone interviews with senior executives (CEOs/General Managers) from these family firms, researchers discovered that the second generation successors’ entrepreneurial self-efficacy (ESE) was positively linked to the special human capital they could obtain from their families; and the development and acquisition of ESE, in turn, could directly help sharpen successors’ abilities to identify opportunities.

The research results help us rediscover the positive side of “Pindie”. According to the researchers, silver-spoon kids are essentially differentiated from grassroots not by their richness or social capital gained from their fathers, but by ESE. ESE indicates the confidence an individual has in his/her entrepreneurial abilities. It is a kind of psychological quality. Under the same entrepreneurial environment, people with low ESE are more concerned about costs and risks, while those with high ESE exude confidence in capitalizing on every opportunity. Hence, “Pindie” can be a competition of ESE which should be a real advantage the second-generation rich have over the grassroots.

Researchers also noted that the psychological superiority of the second-generation rich largely grew out of the special human capital they gained from families and family firms, including their working experience in family firms, the elder generation’s exemplary role, their perception of founders’ entrepreneurial efforts as well as their communication with the elder generation. To this end, harmonious relationships and effective communication between generations are prerequisites to the development of ESE.

Note:ESE即entrepreneurial self-efficacy

Resource: Shruti R. Sardeshmukh & Andrew C. Corbett. The Duality of Internal and External Development of Successors: Opportunity Recognition in Family Firms. Family Business Review,2011.