Should you join the growing number of family businesses that proudly promote the fact that they are (and have been) family owned – for decades, some even for centuries? Or do you prioritize your family’s privacy over leveraging your family’s involvement in the business for the benefit of a distinct family business brand?
Drawing on evidence from research and practice, this article provides some insights as to the circumstances under which it makes sense to brand a company as family-owned.
Nearly everybody in Germany immediately recognizes Claus Hipp, a 3rd generation owner and a manufacturer of organic baby foods in Germany. Since the early 2000s he’s been the face of the company’s advertising. He’s since appeared in thousands of TV spots on national TV, talking about HIPP being a pioneer in organic production. Each spot closes with his signature line: “For this, I vouch with my name” [Dafür stehe ich mit meinem Namen]. And HIPP is in good company: A growing number of family business owners are promoting the fact that they are (and have been) family-owned, for decades and some even for centuries.
These family firms are banking on the possibility that their stakeholders appreciate the fact they are family-owned, and that the notion of family gives them a competitive edge over their competitors without any family involvement.
They do so for good reason: Prior research substantiates the intuitively appealing assumption that family firms have a superior reputation (e.g., Craig, Dibrell, and Davis, 2008; edelman.com). Several studies indicate that key stakeholders hold distinct associations with family-owned companies, viewing them as relatively more trustworthy, reliable, authentic, quality and customer-oriented than their non-family counterparts (e.g., Binz, Hair, Pieper, & Baldauf, 2012).
However: Family business branding is hardly a magic bullet for family-owned companies. Evidence shows that context matters – a distinct family business brand may work well for some family firms, but not for others. If the notion of family adds no value to your stakeholders, or if your family shies away from the heightened scrutiny that comes with a family-based brand identity, branding yourself as family-owned can come at a cost.
Signalling Family Involvement: Sender's And Receiver's Perspective What is a family business brand, or a family-based brand identity? Through a family business brand a company actively communicates the family’s involvement in the business. Prior research has largely focused on the receiver side of the family business brand, investigating the distinct associations and expectations it creates in the minds of relevant stakeholders, such as customers or employees.
These perceptions are shaped by the individual’s general attitude towards the notion of “family” and the associations they hold with the idea of “family business.” One customer might view family-owned companies as trustworthy and responsible, while another views them as outdated and resistant to change; one job-seeker might perceive them as loyal and long-term oriented, while another might be skeptical about a possible lack of transparency, or nepotistic tendencies.
Just like with any other messaging, however, we must consider not only the receiver, but also the sender's perspective on the family business brand. Here, we must think about whether (and how) the notion of family fits with our offering and existing messaging – in other words, how does the family add value to our brand? What is more, we have to be sure that the family is willing to tolerate the heightened scrutiny that comes with becoming a representative of the business, and part of the brand identity (Binz Astrachan & Astrachan, 2015).
In sum, we must understand how our key stakeholders perceive family involvement, in both positive and negative ways. Various stakeholders might value the family business’s strong customer or quality orientation, or they might see family involvement as a sign of nepotism and resistance to change. Only then can the family design a brand identity that leverages the positive, while mitigating some of the potentially negative perceptions. At the same time, family members must be ready to become ambassadors for that brand, and to embrace messaging that conveys how the family adds value to the company and to the stakeholders.
How To Design A Compelling Family-Based Brand Identity
Companies such as US conglomerate SC Johnson (“A family company”), Italian wine-maker dynasty Marchesi Antinori(“26 Generations”), or Warburtons (“Family Bakers”), a family-owned bakery in the UK, all put family at the heart of their corporate brand. While they all highlight the owning family’s involvement as a key element of their business success, they do so very differently.
Antinori’s narrative focuses on the expertise that the family has built, and passed down over 26 generations, while the Johnson family states that because they are family-owned, they can “do what’s right for people and the planet” (scjohnson.com, May 2021). Warburtons state their dedication to quality and highlight that “they care because their name’s on it."
Family firms differ “in the extent to which the focal element of the branding strategy was the family, the [offering], or the organization” (Micelotta & Raynard, 2011). While smaller and older family firms with less geographical reach have been found to be more likely to brand themselves as family-owned than larger, younger, and globally operating companies, the examples provided above show that a family-based brand identity can work for companies of any size. What matters is that the value the ownership group adds to the business is ultimately meaningful to the stakeholders -- that is, to the individuals who purchase their products and services, who apply for their job openings, or who agree to do business with them.