Highlights from the 1st BFFI - ECGI Family Business Conference 2023

The 1st Baltic region's premier family business conference took place on June 30 and July 1 in Tartu, Estonia. Over the course of two dynamic days, attendees were immersed in a wealth of enriching presentations, interactive workshops, and valuable networking opportunities. The event brought together a diverse group of 70 participants from 12 countries: Estonia (18), Latvia (19), Lithuania (15), Belgium (1), Denmark (1), Germany (2), Italy (2), Netherlands (1), Norway (3), Singapore (1), USA (5), and the UK (2).

The  conference brought together a remarkable mix of family businesses, academics, and advisors, with family business representatives comprising the largest group (26), followed by academics (22), advisors (12), family office representatives (5), and other participants from organizations and government sectors (5).

The BFFI - ECGI Conference "Resilience of Family Businesses During Turbulent Times" covered a wide range of topics that emphasized the significance of value creation, professional governance, and strategic planning for transitions. During the conference, several experts shared their insights on various aspects of family business management.

                           ***** Keynote Speeches *****

In his keynote speech, Morten Bennedsen highlighted the importance of utilizing family assets in business strategies, professionalizing governance systems, and planning for transitions. He also brought out the need for innovation, adaptation, and digitalization to drive value in family businesses.

Kimberly Eddleston discussed the art of pivoting and revitalizing family firms, emphasizing the advantages of these businesses in preparing for growth and embracing change. Assessing readiness to pivot and planning for future trends were also highlighted. Additionally, she provided strategies for preventing the negative impact of underperforming family members, known as the 'Fredo Effect'. Effective strategies to maintain competence and fairness within the family business were highlighted.

Alfredo De Massis explored the challenges faced by family businesses during times of 'polycrisis' and encouraged a broader perspective. Key areas of discussion included patrimony administration, generational transitions, socioemotional wealth and goals, and long-term orientation.

                         ***** NextGen Panel Discussion *****

The panel discussion featured next generation representatives - Mantas Makulavicius, Simone Møkster, Martin Schily, Mihkel Tammo, Maija Treija-Kovaca, Paulius Vaicekauskas - who engaged in a thought-provoking conversation about the challenges and opportunities they face in their roles. The discussion shed light on the unique dynamics that arise when transitioning from one generation to the next. The panelists highlighted key challenges, such as balancing tradition and innovation, managing family dynamics, and earning credibility in the business. 

                           ***** Practitioner Sessions *****

Kimberly Eddleston and Alfredo De Massis delved into family firm innovation, emphasizing the delicate balance between the old and the new. They discussed the unique nature of innovation in family firms and highlighted the importance of exploration, exploitation, and ambidexterity. Different creativity styles for fostering innovation were also addressed.

Christos Christou stressed the significance of corporate governance in ensuring business longevity. The benefits of good governance, the risks of its absence, and the role of family governance in promoting unity and sustainable development were highlighted. The process of designing corporate and family governance, as well as the role of trusted advisors, was discussed by Christos Christou and Rūta Gadeliauskaitė, LL.M.

Anete Marhele presented personnel options as a valuable tool for attracting and retaining specialists. The benefits of aligning specialists' interests with long-term goals and the advantages for both employees and the company were brought out.

Wendy Ulaszek, Ph.D. highlighted the importance of understanding and managing family dynamics in a business context for success. Neglecting the family can lead to conflict and value destruction. Ambidextrous leaders were discussed as those who sustain family unity, embrace contradictions, and effectively compartmentalize issues in governance forums. Developing ambidextrous leadership starts with individual leaders and oneself.

Santa Rubīna addressed the legal challenges faced by family businesses, including structures, tax planning, succession planning, and potential issues related to divorce, creditors, death, and illness. The importance of preparing for future transitions and protecting family members' well-being was emphasized.

                        ***** Academic Sessions *****

The academic track of the conference brought together academics and researchers from around the world shedding light on the unique characteristics and behaviors of family firms during challenging periods.

Yupana Wiwattanakantang presented her research that explored the appointment of professional managers (placeholder CEOs) in family firms during CEO transitions. This allows founding families to retain control when suitable family heirs for the CEO position are not readily available.

In the presentation on "Family Firms in the Covid Crisis," Bogdan Stacescu examined the economic effects of the Covid-19 pandemic on family businesses in Norway. The study revealed that family firms displayed better employment outcomes during the crisis compared to non-family firms. While family firms did not necessarily outperform financially, their emphasis on maintaining employment and providing stability for employees stood out as a key strength during the challenging period. 

Ruth Rooz (Stern)'s presentation on "I Am the Firm! Eponymous Firms And Rose-Coloured Forecasts" explored the disclosure of cash flow forecasts by firms bearing the names of their controlling owners. The study found that such firms tend to disclose more optimistic cash flow forecasts, suggesting a self-serving bias. The findings emphasized the need to understand the motivations behind these forecasts and their implications for decision-making.

Andrew Ellul’s paper focused on "Entrepreneurs’ Diversification and Labor Income Risk." The research highlighted that firm owners' portfolio diversification plays a crucial role in providing employment and wage insurance. The study revealed that owners with more diversified portfolios tend to provide more stability during periods of economic shocks, reducing the pass-through rate of layoffs and wage reductions.

The presentation on "CEO Succession" by Mario Daniele Amore explored the impact of CEO succession on innovation in family firms. The research findings revealed that the appointment of a family CEO led to higher innovation levels within the firm. This effect was not only immediate but also persisted for five years after the transition, challenging the notion that incoming CEOs solely protect trade secrets. The study highlighted the importance of patents in family firms and how they differ from trade secrets. 

Felix Meschke explored the role of sophisticated traders in trading family firms in their paper titled "Are Sophisticated Traders Better Informed When Trading Family Firms?" The study revealed contrasting results regarding the level of information held by traders when it comes to family firms. The researchers suggested that family firms might be more informative based on proxies such as earnings management and stock crashes.

Ivan Miroshnychenko's paper, "The Covid-19 pandemic and family business performance," investigated the financial performance of family and non-family firms worldwide during the pandemic. The study found that, on average, family firms demonstrated higher financial performance amidst the crisis. However, the positive effect varied across different family firms, industrial sectors, and countries.

Halit Gonenc's research on "Carbon Emission and firm financial performance: A comparison between European family and non-family firms" examined the relationship between carbon emissions and financial performance in family firms. The study revealed that firms investing more in carbon reduction strategies and achieving lower carbon emissions experienced a positive response from the stock market. This finding highlights the growing importance of sustainability initiatives in family firms.

  *****  Insights and Reflections from Conference Participants *****

“It was an extremely well invested two days into our growth as a family business.” -- Natalija Kurganovė ♡, Biržų duona (Lithuania)

“Baltic Family Firm Institute conference was exceptionally well-organized, featuring a thoughtfully designed agenda, influential speakers, and networking opportunities with high profile professionals.” – Maija Treija-Kovaca, GEMOSS (Latvia)

“Event in Tartu was diverse, professionally organized and brought light into deeper waters of what it means to be a family entrepreneur,” Mihkel Tammo, TIFC Family Office (Estonia)

“It was the best family business conference I have ever attended." -- Karolis Montvila, UAB Domeina (Lithuania)

"The conference surprised me - there were really high-level presentations and excellent speakers. It was interesting and I learned a lot of new things that made me think about the future and future of company management." -- Vytautas Jokuzis, PhD, ELINTA (Lithuania)