3 Types of Family Business Culture

In early 2016, two psychologists, Dennis Jaffe and James Grubman, published a book entitled Cross Cultures: How Global Families Negotiate Change Across Generations. In this book, the authors identify three business cultures that prevail in family businesses worldwide.  Each family business tends to fall into one of them.  And understanding which culture defines a particular family business is key to understanding how its family members will function and how that business will interact with other businesses.

The three cultures identified by the authors are termed “individualist,” “harmony” and “honor.”  The individualist culture focuses on supporting each family member’s creativity and individual success.  The harmony culture focuses on duty to and respect for family.  And the honor culture focuses on loyalty and obedience to a single leader.  To quote from a New York Times interview of Dr. Jaffe, “The individual culture says, ‘Go off on your own.’  The harmony culture says, ‘You have an obligation, if called by the family.’  The honor culture would say, ‘You better join the business, because you can’t trust other people.’”

Each family business tends to be hard-wired into one of these cultures.  They can and do change, but only over time and with difficulty.  And a business with one of the cultures is unlikely to work well with a business with a different culture.  As Dr. Jaffe observed in his Times interview, a business with an individualist culture, where people do what they want, will struggle to work with a business with an honor culture, where people follow the leader and keep their mouths shut.

Drs. Jaffe and Grubman are clear that none of the cultures is inherently better than the others; all of them work.  What is important for families in business is to recognize the culture bucket into which their family business falls and how it either aligns with or differs from the cultures of other family businesses with which they would like to have dealings.  This recognition, and then taking (or not taking) action based on it, may well tip the scale on whether a business relationship between family businesses will end up succeeding.

“Family business can be very rewarding; and it can be challenging. One thing is certain, it will be more complex than what other businesses face”

Bruce Pym, Managing Director
Meridian Capital