Trust in the context of family businesses is a multifaceted concept that underpins both the business and the family relationships within it. It is not merely a subjective feeling but a measurable and essential element that influences coordination, risk-taking, communication, succession, and long-term success.
Definition and Core Elements
Trust in family businesses is often defined as the willingness of one party to be vulnerable to another, based on the expectation that the other will act in a reliable, fair, and benevolent manner. This willingness to be vulnerable is central, as it involves accepting the risk that others may not behave as expected, yet choosing to rely on them nonetheless.
Academic research and practitioners identify several key dimensions of trust in family businesses:
• Integrity: Honesty, adherence to values, and keeping promises.
• Ability/Competence: The skills and expertise required to fulfil roles effectively.
• Benevolence: Acting with goodwill and genuine concern for others’ interests.
• Consistency: Reliability and predictability in actions and decisions.
Some frameworks also include loyalty and openness.
All these terms are the building blocks of a family business. How can trust be built and sustained in family businesses?
Surely, communication in an open, transparent and honest form is essential. Family forums and meetings maintain trust and manage conflict. Fairness and justice also play a crucial role in establishing trust.