Although family-owned medium and large enterprises are important actors of the Hungarian economy and society, relatively little is known about them. We interviewed Attila Wieszt, research fellow of our university’s Center for Family Business (CFB) about their current research and further plans.

György Drótos, Head of CFB talked about the circumstances of setting up the Center as well as about its objectives in previous interviews. What is the scientific mission of CFB?
The most important expectation of the founder is that we should be of direct benefit to Hungarian family businesses. In addition to our teaching and event organizing activities, we are trying to achieve this goal in research from two directions: through the adaptation of foreign research findings and their publication in Hungary on the one hand, and by getting involved in and launching new research in Hungary on the other. Around 12-15 main themes can be identified in family business research , out of which our Advisory Board has selected three: succession, governance and change-innovation-adaptation. Content-wise these three themes will define the framework of our research activities. Whereas previously, one of the biggest dilemmas of international research was how family enterprises could be distinguished from non-family enterprises, internal heterogeneity of their group has become one of the main concerns in the last decade . At the same time it is not sufficient to explore their difference. It would equally be crucial to understand how and in what internal management processes they differ from each other. In connection with that, we are working on a comprehensive survey on enterprises in these months, with data collection still being underway. The findings will be published in February.

What is the aim of the research? What have been your initial objectives?
We would like to get a comprehensive and representative picture of Hungarian family businesses. Our sample will include enterprises with a yearly turnover in a range of 80 million to 150 billion forints. The survey has a double purpose: to get a picture of the state of affairs in Hungary and to define further avenues of research accordingly. In the first part of the research we wish to map the basic data on the population of family businesses, and in the second part we will examine how their heterogeneity prevails in the overall themes of succession and governance.

What kind of difficulties, obstacles have you faced so far during the research?
One of the key initial problems was the fact that the family character of enterprises is hard to define. Researchers have been attempting to provide a general definition since the 1990s, but have not come up with anything that is broadly accepted. Based on the operational definition at first we had thought that we would consider as family businesses enterprises in which family ownership is at least 50%, the intentions of succession within the family are high and at least two family members work for the enterprise. As we know little about conditions in Hungary, we had to give up this subtlety of definition and limit ourselves to 50% ownership.

How is the research done in concrete terms?
Data recording is carried out by an external partner, TÁRKI. They purchased a database from which they filtered the enterprises that are relevant for our purposes on the basis of the 2016 data. First, they take a random sample from this population and conduct phone interviews with the selected businesses. When they are ready, we will have access to a database that is representative in terms of industry, size and location. We will then take random subsamples from this population to collect data on their internal functioning. When the research is completed, one of our main ambitions is to look after and regularly update the database, the other being to continue the research – partially based on the previous findings – with in-depth interviews, with special regard to the connection between change management and governance. In this topic we are joining forces with our partner FBN-H, the co-operation forum of Hungarian family enterprises, which is the Hungarian member organization of the International Family Business Network.
It is true for Hungary, but generally also globally that relatively few management researcher are engaged in this field as a core subject. Besides, there’s a great abundance of research topics as family enterprises are one of the most widely spread business forms. Hence we are trying to address as many partners as possible in order to set up a co-operation. We are in touch with the most significant institution of the field on a global scale, the German Wittener Institut für Familienunternehmennel (WIFU). The survey referred to above was devised together with one of their leading researchers.

How far do you expect the Hungarian sample to be different from those of the Western countries? Do you expect any similarities with the other post-Socialist countries of the region?
We are expecting two things. On one hand, there is a key independent variable in the research of family businesses, which is how long they have been in family ownership, whether there is continuity. Many other things are also connected to this variable, according to some scholars even the degree of family influence. As a matter of fact in our region due to historical reasons the majority of enterprises are only first or second generation businesses. Thus, the measure that is widely applied in the Western European and in North-American surveys for the purposes of defining family influence can only be used to a lesser degree or it does not provide an accurate picture. Therefore in the survey we also inquire about the prehistory of family enterprise. Our hypothesis is that in certain business groups, business antecedents that are either real or have been present in family narratives across generations can be associated with commitment to the enterprise and in turn indirectly with the business results of the enterprise. I think that this could be true not only for Hungary, but for the entire region. In the spring we will present our findings at a conference in England. There in a section on family businesses in which besides the German researchers, there will also be Bulgarian, Polish and Czech researchers and we are curious whether they will confirm our ideas. On the other hand, also due to the historical-economic background, we expect the average family enterprise to be smaller than in Western Europe or in North America. The notion of the German „Mittelstand” does not only refer to SMEs operating in Germany, but to some extent also to the thriving large enterprises of German ownership that have a secure market position. Most of them are in family ownership and they constitute the backbone of German economy. The group of medium and large family enterprises, however, is much smaller in Hungary than in Germany and also less significant when compared to other types of enterprises, one of the reasons being that they were launched in the 1990s and have not had enough time to develop.

The ruptures, political changes of the 20th century prevented the accumulation of capital: not just financial, but also social and intellectual capital. How are these interrelated?
I presume that they are strongly interrelated and in fact complement each other. It is equally important to have family unity, a sense of ownership, the cohesive force of property as well as the entrepreneurial spirit. Although as mentioned before, we assume that there is some „invisible” continuity since even though these companies were established in the 1990s, in many families there used to be something that they carried on or kept alive. There have been, however, some large gaps like the issue of succession. This element is hardly present in our business culture or if it is, only as a choice between black and white: does the business remain in the family or does it cease to be in family ownership. Actually, a number of intermediate solutions are known that families could make use of: succession of ownership and succession of management should be separated and for both the options of transfer within the family, outside the family or mixed transfer are available. If the family enterprise has taken roots and has brought beautiful sprouts, the available financial, social and intellectual capital will all help the family in its decision: what are the needs and intentions of the manager-owner family members? What form of succession should they opt for?

Does historical experience contribute to grasping the situation?
Yes, absolutely. As a matter of fact, there is a stereotype according to which family ownership tends to be identified with small size. Less attention is devoted to medium and large enterprises. The latter ones, however, are essential: owing to family ties they are attached to the Hungarian economy, they do not move abroad, they pay their taxes here and very often they maintain intense connections with the local communities, municipalities. Also, they can serve as a good example to smaller, developing Hungarian enterprises as far as family involvement or succession is concerned. Here as well we might come up against the generation barrier: most of them are first or second generation businesses. Zwack Unicum Zrt., one of the flagship family-owned enterprises of Hungary, which is currently in its fifth generation, can unfortunately rather be considered as an exception considering the longevity of its existence.
Nevertheless, we strongly believe that we can learn much from our predecessors. A research project has been initiated with colleagues from the Institute of Management and with other colleagues from the Faculty to explore these strings. Before 1947 several large enterprises used to operate in Hungary that were recognized all over the world and had already passed their second or third generation. We think that even today we can learn much from their problems (rivalry between siblings, distribution of competences, identification with the company in the higher generations, maintenance of the entrepreneurial spirit in the successive generations, culture of estate management etc.) and from the way they addressed them.

Who are the current members, researchers of the CFB?
At present, officially there are four colleagues: György Drótos Acting Head, Barbara Meretei and Éva Vajda (both joined as doctoral students) and myself participating in the Center’s work as a research fellow. We would also like to turn to one of the important resources of the university, namely students and alumni who have a family business or are somehow attached to one. At a later stage we would like to have all of our research questions and findings validated by this group.

Máté Baksa