Thank you for joining us here today, Professor Özlem Yıldırım-Öktem and Professor Yılmaz Argüden.
Let me begin by considering my position with regard to family business; as you know, I represent the second generation in a family company, where I currently serve as chairperson of the board. I’m familiar with numerous beleaguered family companies and others struggling to cope with the issues of handover between generations. Some of them I know very well because their founders, founders’ children, or executives are among my close friends. I suggest that we start our conversation by touching on the issues of family businesses.
Family companies have attracted a great deal of interest of late, or am I mistaken? Was there always so much interest in them worldwide? There’s new research on them, new associations, new courses at business schools, and countless conferences and seminars focused on the issues of family businesses. I receive frequent invitations to deliver speeches.
There was a time when well-known multi-shareholder corporations seemed to be more prominent. Maybe fewer people were aware back then that family businesses formed the backbone of many countries’ economies. Awareness aside, the fact is that family businesses produce a large share of output in many economies. That’s why they’re considered to be important for economies and countries.
We know that family companies also have their own special problems. One concerns lack of longevity, in particular the losses that occur in the transfer of leadership between generations. For a variety of reasons, family companies fold in the transition from the founder to the second generation, and more crucially, the third generation. The reasons appear to stem from the unique structure of family companies. Increasingly, private equity funds are acquiring troubled second or third-generation family businesses and restructuring them in order to create value. On the other hand, family companies also have special strengths. Their longer-term management perspective enables them to pursue goals far beyond short-term gains. They are much more concerned about the sustainability of their business and the need for a healthy handover to future generations. They can forego short-term advantages in order to prioritize their contribution to society. Family companies can be very successful provided they embrace agility and adaptability. With this in mind, I’m actually quite optimistic about the future of family companies.
There are two points that I find particularly intriguing. The first concerns the capacity of family companies in Turkey to cope with the ailments specific to their kind; how successful are they in dealing with them, and how prepared are they for the problems that await them? What, in your view, could be done to improve governance in family companies?
And the second is, are there conditions specific to Turkey, stemming from the culture for example, that exacerbate the troubles of family companies and make them virtually insurmountable? Take the problem of mistrust that is prevalent in our society and which we frequently talk about; does it create an obstacle to handing over to professionals, for instance?