FAMILY businesses are often built on the hard work, vision, and determination of their founders. However, as these enterprises transition to the next generation, a critical question arises: What is more important — ownership or stewardship? In this first article of a series, we explore the distinction between these two concepts and highlight why embracing a stewardship mindset is essential for ensuring the long-term success of family businesses. This exploration also draws on insights from the Japanese approach to stewardship, which offers valuable lessons for business sustainability across generations.
The Case for Stewardship in Family Businesses
In the context of a family business, ownership is typically associated with control, decision-making power, and the rights tied to holding shares. While these elements are undeniably important, focusing solely on ownership can limit the business’s long-term potential. Ownership grants authority, but stewardship requires a deeper commitment to the future well-being of the enterprise, its people, and the values that define it. Stewardship is not simply about holding the reins — it is about nurturing the business for future generations, ensuring sustainable growth and continued success. This approach fosters a legacy that extends beyond the current leadership, securing the business’s future for both present and future family members.
Ownership vs Stewardship: The Key Differences
At its core, ownership is about rights — the right to make decisions, distribute profits, and direct the course of the business. Stewardship, however, is about responsibility. It calls for a long-term vision that prioritizes sustainability over short-term gains and emphasizes growing the business for future generations and broader stakeholders. Here are the key distinctions between ownership and stewardship:
Entitlement vs Merit
Ownership can lead to a sense of entitlement, where family members believe their position in the business is a birthright. In contrast, stewardship is rooted in merit and responsibility. As second-generation leader Kevin Tan, son of Dr. Andrew Tan (founder of the diversified Alliance Global Group operating in Asia), once remarked, “Our last name is not a birthright.” Kevin’s rise to leadership was not automatic but earned through merit and contribution. This principle underscores the idea that stewardship is not inherited — it is earned through dedication and service to the business.
Short-Term Control vs Long-Term Value
Ownership often emphasizes immediate control — focusing on boosting profits, holding decision-making power, and protecting personal interests. Stewardship, by contrast, focuses on the long-term health and growth of the business. It is about creating enduring value that benefits not only the current generation but also future ones.
Personal Gain vs Family Legacy
Ownership can result in decisions driven by personal gain or the pursuit of short-term profitability. Stewardship, on the other hand, requires a focus on the long-term family legacy, ensuring that today’s decisions positively impact future generations while preserving the family’s core values.
Control vs Empowerment
Owners may struggle to relinquish control, often believing that their involvement is essential to the business’s success. Stewards, however, recognize the importance of empowering the next generation. Stewardship is about equipping future leaders with the tools, experience, and values they need to continue the business’s legacy and ensure its ongoing prosperity.
The Japanese Concept of Stewardship
Japan offers a unique perspective on stewardship, one that is deeply embedded in its cultural values and long-standing tradition of iemoto or the “house system.” In Japanese family businesses, stewardship is viewed as a sacred duty that transcends the individual owner and focuses on long-term sustainability and community responsibility.
The Japanese concept of stewardship emphasizes the idea of beyond self, where the steward’s role is to maintain and enhance the business not only for personal or family gain but for the benefit of future generations and society as a whole. This mindset is founded on the belief that a business is not merely a financial asset but a cultural legacy that must be preserved and passed on. (To be continued)/PN
