Family legacy: keeping the entrepreneurial spirit alive

Cultivating entrepreneurship in a family environment

Entrepreneurs often talk about the influence of parents or other significant figures in developing their ‘can do’ mindset. Cultural transmission – like many other learned behaviours – within families comes out through observing the behaviour of close family members, hearing relatives’ life stories and picking up the habitual sayings and mannerisms of the family unit.

Positive influences can empower young people to develop strong entrepreneurial skills, knowledge, and attitudes¹. These role models might not always be a parent, or even a relative. But the opportunity to watch the activities, approaches and mindset of a trusted adult is the next best thing to first-hand experience – and offers an invaluable insight into the emotional journey that comes with entrepreneurship. Understanding how work is integrated into their lives, how they deal with challenges, where they find energy to pursue their passion can positively, or negatively, influence the entrepreneurial intentions of younger family members.

Storytelling is another powerful tool for cultivating entrepreneurship. Research suggests that the more children know about their family’s history, the stronger their sense of control over their lives and the higher their self-esteem². This is linked to the idea that a strong sense of “intergenerational self ” builds a feeling of belonging to something bigger than themselves³. The most helpful narratives are the ones with ups and downs normalising setbacks and showcasing resilience.

Communication and parenting styles also influence important aspects of the entrepreneurial mindset – for instance, the level of creativity and, the orientation towards action. Research suggests that pluralistic communication patterns in families, characterised by high conversation and low conformity⁴, can help raise successful family business leaders⁵. Studies have shown that combining high demandingness with high responsiveness to children’s needs in parenting style is related to children’s autonomy and school success⁶. Every interaction that takes place within the home significantly influences one’s perspectives and mindset. As the saying goes “values are caught, not taught”.

Leveraging the family ecosystem for experimentation

To further foster entrepreneurship within the family, many see value in leveraging the family ecosystem for experimentation. Families are increasingly recognising that entrepreneurship requires not only a mindset but also the acquisition of specific skills, frameworks, and tools. Practical experiences in business, investment, or impact fields can provide valuable learning opportunities for family members.

For instance, a family in France created a club of entrepreneurs to support budding entrepreneurs in their projects. Each family member can present their idea and receive advice from around 90 employees of the family business, including legal, tax, and financial experts, as well as executives from various brands.

Thus, several companies of various sizes and fields have been launched. We also encountered simpler examples, such as a family who established a tradition where each member on their 16th birthday can propose a new product or concept for the family business ensuring that innovation is not only welcomed but encouraged.

Some families include a sort of (opportunity bucket) in their family investment strategy, which may be referred to as a ‘family bank’, a ‘family venture fund’, or a ‘rising generation development fund’. This can serve as a tool for intra-family financing, providing seed capital for new business ventures or investment capital for testing new strategies.

The aim is to support the entrepreneurial development of the rising generation of family members while safeguarding the core family business and investments.

To achieve this, it is crucial to establish clear operating rules and processes, including an application process, assessment criteria, and funding conditions. Mentoring and support from family members and ideally professionals should also be provided.

Families can also utilise philanthropy and impact investing to cultivate entrepreneurship within their rising generation. At its core, philanthropy is an experiment in building a better world, and, as such, an entrepreneurial mindset is crucial to this field. Not only can involving the family members in philanthropy and impact help younger generations to develop skills in research, management, finances, and teamwork, but by giving them space to explore their own areas of interest, and the multitude of ways in tackling them, it can help to inspire this entrepreneurial spirit in a relatively safe environment.

An example of where this worked well was in a family foundation focusing on tackling biodiversity loss across Europe. The foundation trialled a junior board, to engage younger family members in the foundation’s work. Each member was put in charge of a sum of capital to put towards the issue as they saw fit, with a requirement to report back at the end of the year. The process generated innovative ideas and approaches. More importantly, it ignited a confidence in the younger generation to take calculated risks, explore and test new ideas, and it gave them courage to learn from failure – all crucial attributes of successful entrepreneurs.

In the family ecosystem, failure should be understood as part of the learning process, and successes, regardless of their scale, should be celebrated. Creating a safe space for experimentation within the family nurtures that entrepreneurial mindset, where individuals are encouraged to take risks, learn from their experiences, and continuously innovate.

Pulling it all together

By embracing intergenerational cultural transmission, effective communication styles, and providing opportunities for experimentation, families can create an environment that fosters, cultivates and encourages entrepreneurship. This approach empowers the rising generation to develop the mindset, skills, and resilience needed to succeed as entrepreneurs, while also preserving the core values and legacy of the family.