What Five Features of Family Firms Offer Unique Advantages?

Family-owned firms value authenticity, trustworthiness, and personal connection with customers. These firms are owned by a family that motivates productivity for better productivity. They are also slower to adopt new technologies and practices and less scalable than corporate competitors. These businesses have unique value propositions. Here are five features of family-owned firms that provide a competitive advantage.

1. Reputation for authenticity and trustworthiness

One of the most valuable benefits of a family-owned business is its reputation for authenticity and trustworthiness. Family-owned businesses have a reputation for being authentic; that is why they can charge a premium or gain access to markets where they might not otherwise be welcome. Customers who appreciate authenticity can choose to spend their money at family-owned businesses.

2. Cultural focus on employees

Family-owned firms tend to have a higher proportion of employee-owners and a more egalitarian culture than corporate firms. This can be a significant advantage for family-owned businesses. For example, employees feel less insecure about their jobs when family-owned companies go through times of change, such as when the next generation takes over. They are more likely to stay with the firm and be committed to their work.

3. Co-ownership of customers and employees

Family-owned firms are likely to have a broader view of ownership and partnership than corporate firms. Family-owned firms are often co-owners of their customers and employees. This can be a significant competitive advantage if the customer and employee populations overlap. For example, suppose a family-owned financial services firm offers investment advice to its customers. In that case, the owners are likely to feel responsible for making those recommendations in the customers' best interest, not just the firm's best interest. This broader sense of ownership also extends to employees. One study found that family-owned firms are likelier to offer generous benefits and ongoing employee training.

4. Commitment to continuous improvement

Many family firms are committed to their communities and the world. This broad commitment to doing good can be a competitive advantage and source of personal satisfaction. It also gives family firms a reason to adopt new technologies and practices.

5. Operational efficiency

Family-owned firms often have a greater sense of operational efficiency than their competitors. They are more likely to run like a family business. This can be a competitive advantage because they're more likely to have the right processes and practices. They're less likely to let operational inefficiencies drag down their business.


Family-owned firms have unique value propositions that set them apart from other companies. They are likely to have a reputation for authenticity and trustworthiness, a cultural focus on employees, co-ownership of customers and employees, commitment to continuous improvement, and operational efficiency.

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