By Dominique Turpin

What does it take for a family business to survive not just one generation, but ten or more? Across Europe, some family-owned enterprises have endured for centuries, navigating economic crises, technological disruption and changing family dynamics while maintaining their competitive edge.

Yet longevity is far from guaranteed. Many family businesses struggle to survive the transition from founder to successor, often facing challenges that have as much to do with family relationships as business performance.

Drawing on lessons from long-established European family enterprises, CEIBS President Emeritus and Professor of Marketing Dominique Turpin examines what enables family businesses to thrive across generations, the challenges of succession, growth and governance, and what family businesses in developing markets can learn from their European counterparts.

What makes family businesses stand the test of time?

Some European family businesses have survived for centuries, passing ownership and leadership from one generation to the next while navigating economic upheaval, technological change and shifting market conditions.

Take the example of my own family’s business, Domaine Pinon-Turpin, a French winemaking estate whose history dates back to 1550, spanning 13 generations. Its longevity raises an important question: What allows some family enterprises to endure for centuries while others struggle to survive beyond the founder's generation?

Europe is home to a wide variety of family businesses. Some remain entirely privately owned, while others have evolved into publicly listed companies in which founding families retain majority or minority stakes.

Despite their different ownership structures and business models, many successful European family enterprises share five characteristics: a narrow business focus, deep expertise, superior customer value, long-term reinvestment and a global mindset.

Rather than pursuing expansion for its own sake, these businesses often begin by developing a strong position in a particular market or area of expertise. They build lasting competitive advantages through their products, capabilities and customer relationships, while reinvesting profits to support future development.

Their long-term perspective is particularly important. Unlike businesses driven primarily by short-term financial performance, family enterprises may have the opportunity to make decisions with future generations in mind.

However, having a long-term vision does not automatically ensure continuity. Even the most successful businesses can become vulnerable when family relationships, ownership structures and leadership responsibilities begin to change.

The six risks that threaten family business continuity

Regardless of geography, family businesses face a distinctive set of challenges arising from the close relationship between family and enterprise.

These challenges can be understood through what family business expert Joachim Schwass describes as the "six Ds": death, disinterest, departure, divorce, deterioration and distrust. Each poses a different threat to business continuity.

The death of a founder or senior leader can create an unexpected leadership vacuum, particularly when no succession arrangements are in place. Disinterest among younger family members may leave the company without a willing successor, while the departure of key individuals can undermine organisational stability. Divorce may complicate ownership arrangements, especially when family wealth and business assets are closely intertwined. Deterioration in a leader's health or capabilities can affect decision-making and performance.

But perhaps the most destructive risk is distrust. When family members lose confidence in one another, disagreements over ownership, management and financial matters can quickly escalate into conflicts that threaten the entire enterprise.

These risks reveal a fundamental difference between family businesses and other organisations: business decisions cannot always be separated from personal relationships.

A disagreement over strategy may also reflect unresolved family tensions. A leadership appointment may raise questions of fairness, inheritance or parental expectations. Even routine decisions about dividends or investment can become emotionally charged.

For this reason, managing a family business often requires greater sensitivity and complexity than managing a company with no family ownership.

Across the world, these challenges ultimately converge around three fundamental questions:

• Who will lead next? The challenge of generational transition.
• How do we keep growing? The challenge of developing sustainable growth strategies.
• How do we stay together? The challenge of family governance and alignment.

How a family addresses these questions can determine whether its business survives for decades or generations.

Succession: A process, not a single event

Generational transition is arguably the most critical challenge facing family businesses.

According to figures cited by Egon Zehnder in March 2025, only one third of European family businesses remain family businesses into the second generation. The proportion falls to around 10–12% by the third generation and just 3–5% by the fourth.

However, the loss of family-business status does not necessarily indicate commercial failure. Some businesses may have been sold, merged or voluntarily closed, ceased to be family controlled, or financially bankrupted. 

One reason succession is so challenging is that most families have little direct experience of it. Unlike other corporate processes that occur regularly, generational transitions may happen only once every few decades.

There is also the risk of confusion over responsibilities. When a younger family member assumes a leadership role, the outgoing generation may find it difficult to relinquish control. Differences in management styles, expectations and communication can further complicate the transition.

Successful succession therefore requires preparation from both generations.

For incoming leaders, gaining professional experience outside the family business can be especially valuable. Working elsewhere allows them to develop independent capabilities, understand professional management practices and establish credibility beyond their family name.

They should also be prepared to learn the business from the ground up, understand its operations and recognise the contributions of experienced employees.

Equally important is the ability to put personal ego aside. Being a member of the owning family does not automatically make someone the best person to lead the company.

For outgoing leaders, the challenge is different but no less significant.

They must begin planning early, communicate their intentions clearly, resolve outstanding issues and accept that their successors may approach the business differently.

This can be particularly difficult for founders who have spent much of their lives building their enterprises. Stepping away from day-to-day management may feel like relinquishing not only authority, but also a central part of their identity.

Yet a successful transition requires the previous generation to make room for new leadership.

Families may benefit from agreeing on clear retirement arrangements, establishing governance structures and seeking assistance from independent advisors when necessary.

The key lesson is that succession should be treated as a continuous process of preparation and development, rather than an event triggered by retirement, illness or crisis.

Growth across generations: Lessons from Henkel, Zegna and Bonnier

While leadership transition is essential, family businesses must also continually adapt their strategies to remain competitive.

European family enterprises offer several examples of how businesses can evolve across generations without losing their foundations.

Consider the German company Henkel, founded in 1876. Its early generations concentrated on detergents before expanding into adhesives and other product categories. As the business developed, ownership became more fragmented and professional, and non-family management assumed leadership responsibilities.

Henkel illustrates how a family enterprise can evolve from a narrowly focused business into a diversified organisation, accompanied by changes in its leadership and ownership structure.

The Italian fashion and textile group Zegna provides another example.

Beginning with textile spinning, successive generations expanded the company's activities into weaving, clothing production, retailing and leather goods. Rather than remaining confined to its original operations, the business progressively integrated additional stages of the value chain and diversified its activities.

Sweden's Bonnier, meanwhile, a family-owned global publisher established in 1804, demonstrates how family businesses can evolve over an even longer period.

Beginning as a retailer of books, the company expanded into publishing, magazines and other media-related businesses over successive generations. Its evolution involved both related and unrelated diversification, alongside increasingly fragmented family ownership.

Although these companies followed different paths, their experiences highlight an important principle: preserving a family business does not mean preserving its original business model unchanged.

Each new generation must assess where the company's competitive advantages lie, which opportunities are worth pursuing and how its existing capabilities can support future growth.

For family businesses in developing markets like Africa, the lesson is not simply to imitate European diversification strategies. Rather, it is to develop growth strategies that reflect their own capabilities, markets and long-term ambitions.

Expansion should be driven by a clear business rationale, not merely by the desire to build a larger family empire.

Family governance: How can families stay together?

As family businesses expand across generations, ownership often becomes more complex.

A company initially controlled by one founder may eventually have dozens of shareholders, including family members who work in the business and others who have no operational involvement.

Their interests may differ significantly. Some shareholders may prioritise dividends and financial returns, while others favour reinvesting profits to fund growth. Some family members may want executive positions, while others prefer to remain passive owners.

Without clearly defined rules, these differences can create friction and undermine trust. Effective family governance is therefore essential to long-term continuity.

One particularly useful mechanism is a family constitution, a framework that establishes shared expectations, responsibilities and decision-making procedures before conflicts arise.

A family constitution can address several important areas.

• First, it can establish governance arrangements, including how board members are selected, how family meetings are organised and how future leaders are chosen.
• Second, it can define employment policies for family members, covering qualifications, reporting relationships, compensation, performance evaluations and retirement.
• Third, it can clarify ownership and financial matters, including voting rights, dividend policies, business valuation, share transfers and dispute resolution.

It can also establish principles for interpersonal relationships, conflicts of interest, information disclosure and the company's broader responsibilities.

The purpose is not to eliminate disagreement, which is inevitable in any organisation or family. Rather, it is to create a transparent and predictable process for resolving differences.

Importantly, governance should extend beyond family members involved in daily management. Family shareholders who do not work in the company still need to understand their rights and responsibilities as owners.

For larger families, professional advisors, independent directors or a family office may also help manage the increasingly complex relationship between family wealth, ownership and business leadership.

The most important principle is to establish these arrangements before problems emerge, when family members are better positioned to reach agreements without the pressure of an immediate dispute.

What makes an effective leader of a family business?

Strong governance provides the foundation for family business continuity, but effective leadership is equally important. Unlike executives in other organisations, family business leaders must balance commercial objectives with family relationships, generational expectations and the responsibility of preserving a legacy. 

Therefore, successful family business leadership requires a combination of professional competence, personal integrity and interpersonal skills.

Vision and adaptability are essential. Leaders must establish clear long-term goals for both the business and the family, while remaining responsive to changes in markets, technology and family circumstances. Preserving the company's values should not come at the expense of its ability to evolve.

Equally important are integrity, communication and emotional intelligence. Family business leaders must build trust, communicate openly and understand the different perspectives of family members and employees. These qualities become particularly valuable when disagreements arise over ownership, succession or strategic direction.

Decisiveness and accountability also matter. Leaders need to make informed decisions, resolve conflicts fairly and take responsibility for business outcomes, even when those decisions may be unpopular within the family.

Finally, professionalism and the ability to delegate are crucial to long-term success. Rather than concentrating authority within the family, effective leaders recognise the value of capable employees and professional managers, empowering them to contribute to the company's development.

Beyond managing current operations, family business leaders must also prepare the next generation. This means identifying and developing potential successors, communicating family values and ensuring that future leaders possess the capabilities needed to take the business forward.

Ultimately, successful leadership is not simply about maintaining control. It is about creating conditions for both the business and the family to thrive beyond the tenure of any individual leader.

What can family businesses in developing markets do differently?

The experiences of European family enterprises offer valuable lessons for enterprises in Africa and developing markets around the world, where many entrepreneurial businesses must also navigate the relationship between family ownership, leadership and long-term growth.

However, there is no universal formula for success. Every family business is shaped by its own history, values, ownership arrangements, market conditions and relationships. Strategies that work for a centuries-old European manufacturer may not be appropriate for a younger African business operating in a rapidly evolving market, for example.

Nevertheless, five principles are broadly applicable.

First, recognise the complexity of family business leadership. Running a successful enterprise requires commercial expertise, but managing family relationships, expectations and ownership interests demands additional capabilities.

Second, understand that every family business is unique. Avoid a one-size-fits-all approach. Governance arrangements and growth strategies should reflect the family’s circumstances, values, ownership structure, and business context.

Third, plan succession well in advance. Developing the next generation takes time, and families should not wait until a founder is ready to retire before addressing leadership continuity.

Fourth, prepare early for the “six Ds”. Unexpected personal or family developments can disrupt even the strongest enterprises. Contingency planning is therefore essential.

Finally, build strong and professional governance. Clear responsibilities and roles, decision-making processes and accountability for both family members and non-family executives can help prevent family disagreements from becoming business crises.

Above all, these lessons point to one overriding recommendation: plan early.

Family business owners should begin discussing succession, growth and governance while the company is performing well and relationships remain strong.

If necessary, they should not hesitate to seek outside expertise.

The ultimate objective is not simply to hand over a successful company to the next generation, but to build an organisation capable of continuing to create value long after its current leaders have stepped aside.

After all, the true measure of a family business's success is not only what one generation achieves, but what future generations are empowered to build.

Dominique V. Turpin is President Emeritus and Professor of Marketing at CEIBS. He’s a marketing expert and Japan specialist. He was IMD's Dentsu Chaired Professor of Marketing and the Dean of External Relations until 2022 and served as IMD President, Dean and Nestlé Professor from 2010 to 2016. 

Prof. Turpin has extensive teaching, consulting, and research experience in the fields of marketing and international strategy in Europe, Latin America, and Asia, particularly in the areas of brand management, customer orientation, and communications strategy.