Why individual goals and motivation matter in family businesses: A historical perspective

Family businesses are the most common form of organization worldwide, accounting for up to 90% of all firms. While most are small, many are medium and large firms, for example, a third of S&P 500 firms are family controlled.

Family businesses typically pursue both economic goals, such as growth and performance, and noneconomic goals, such as preserving the family legacy and maintaining connections with the local community.

Balancing these goals is a constant challenge, as decisions often require trade-offs between business success and family or community-centered objectives.

A recent study by Alexandra Dawson, professor in management at the John Molson School of Business, examines how family business goals develop by shifting the focus from businesses to individuals, as they are the ones who set and pursue company goals.

The analysis focuses on the Florio family in Italy. From the mid-19th century to the early 20th century, this family became one of the wealthiest and most influential in Europe, building businesses across several industries, including shipping, tuna fishing and canning, wine and banking. Their success was not sustained, however, and the family business failed.

Using a historical approach to examine patterns over time, the study identifies mechanisms that explain which goals individuals pursue and when economic and noneconomic goals are balanced. The Florio case shows that family business goals are primarily shaped by individual decision-makers, depending on their motivation.

Motivation, goals and influence

When motivation is autonomous motivation, individuals act based on their own interests, values and sense of purpose. When motivation is extrinsic, it is driven mainly by external rewards or pressures. These differences help explain why some generations maintain a balance between economic and noneconomic goals, while others do not.

The historical analysis identifies high-level patterns across generations. Successors’ motivation helps explain the Florio family’s trajectory, from rags to riches and back to rags again.

Autonomous motivation, combined with a growing business and favorable (but also an unfavorable) context, tends to support a balance between economic and noneconomic goals. Conversely, extrinsic motivation is more likely to lead to imbalances, especially when combined with a large, diversified business operating in an unfavorable context.

Individual goals do not exist in isolation. They evolve over time in response to interacting forces at multiple levels: individual, family, business and context.

Family influence plays a particularly important role in shaping motivation. Drawing on insights from self-determination theory, the study shows that, when families foster confidence and competence in successors, support their sense of autonomy, and encourage feelings of connection and belonging, individuals are more likely to develop autonomous motivation.

This, in turn, supports a better balance between economic and noneconomic goals. Business stage and complexity, as well as external context, also shape which goals are pursued and how effectively they are balanced.

The proposed process model highlights how these influences interact over time. Some generations actively embed the family legacy within the community, while others move away from family values, favoring external opportunities. Changes in family structure, business life cycle and external conditions trigger shifts in individual motivation and, ultimately, family business goals.

The key to continued success in family business

Overall, these findings suggest that families seeking to maintain a balance between economic and noneconomic goals should foster autonomous motivation in next-generation successors.

Confidence and competence can be nurtured through mentoring and role models; autonomy through meaningful involvement in decision-making; and relatedness through storytelling, shared values and governance mechanisms.

Recognizing how individual motivation interacts with family support, business complexity and external conditions is essential for sustaining balanced goals over generations.

A complex interplay of factors

The Florio case illustrates that family business goal formation is a dynamic, multilevel process. Economic and noneconomic goals change over time, shaped by the interaction of individual motivation, family influence, business stage and context. A historical perspective helps explain why some family businesses thrive across generations, achieving a balance between growth and legacy, while others face decline.

Read the cited research, “Family business goal formation: Exploring individual motivation and the interaction with family, business, and context”