The Ownership Trust and Succession Paralysis in the Family Business

Abstract

This article shows the key role of the ownership system in the healthy development of the family business. Specifically, the analysis focuses on a case in which the ownership of a family business is held in trust. The paralyzing impact of this ownership arrangement on the business and family systems is described, revealing dysfunction in authority relations in general and succession processes in particular. An interpretation is offered to suggest that the trust has allowed the founder, long dead, to effectively retain control. The resulting diagnosis yields several implications for the development of family business theory and practice.