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The legacy of a family business is as unique as the family itself. It’s a way of honoring the company’s heritage, preserving its traditions and protecting the reputation of the company that in many instances bears the family’s name. Legacy also shapes the long-term vision of the family’s business and guides their strategic choices. Should they expand into new markets? Invest in cutting-edge technology? Diversify or stay true to their traditional business operations?

To begin the exploration of the essence of family business legacies — the opportunities and the challenges in today’s world — the STEP Project Global Consortium (SPGC) and KPMG Private Enterprise conducted a survey of 2,683 family business CEOs from 80 countries, territories and regions, including 54 respondents from Malaysia. After a detailed academic analysis of the survey data, we also moderated a series of roundtable discussions in January 2024 with family business leaders along with family business academics and professional advisers.

Unlocking legacy – The path to superior growth in family businesses takes a deep look at how you and your family business can sustain competitive growth well into the future with the introduction of a “legacy matrix”.

Legacy cannot be viewed through the lens of the past, but as essential ingredients for future-oriented, sustainable growth. Successful family businesses understand this. They embrace innovation to remain relevant in a fast-changing environment while leveraging their historical knowledge and experiences to inform forward-thinking strategies, helping to ensure the business remains competitive and resilient in the face of new challenges.

Tai Lai Kok
Family Business Tax Leader
KPMG Private Enterprise in Malaysia

Key takeaways for Malaysia’s family businesses

The survey data from the Malaysia-specific survey highlights the key components of legacy, transgenerational entrepreneurship, sustainability and performance:

A unique combination of tangible and intangible assets (biological, material, social and identity legacy) in family businesses, recognized for its role in sustaining the family’s regenerative power and transgenerational entrepreneurship. Family businesses with rich legacies tend to have strong family connections, a high level of financial performance and exhibit strong performance, employee, supplier and social sustainability practices.

Legacies also reinforce the emotional bond that fuels a family’s identity, inspiration, and innovation. But legacy can also be a liability if it is too entrenched in tradition, and it can stand in the way of innovation, change and agility in future generations.

There is a strong attachment to the family’s shared values, attitudes, and beliefs, which tends to contribute to a focus on community relationships and strong social ties. In contrast, there is less attachment to shared family stories and rituals, that shape the family’s identity. This view is shared by both Malaysian and global family business leaders, as indicated in the survey results.

Represents families’ ability to sustain the entrepreneurial orientation of their businesses through a continuous stream of family members’ entrepreneurial activities across multiple generations. There are three dimensions that are seen as the primary contributors to the strength of families’ transgenerational capabilities: family relationships, family entrepreneurship and future generations.

Consistent with global family business leaders, family businesses in Malaysia put relatively equal weight on incorporating family relationships, family entrepreneurship and future generations in their commitment to maintaining their entrepreneurial legacy across generations.

The strength of a family business legacy contributes to its sustainability performance across four dimensions: community, environmental, employee and supplier.

High entrepreneurial legacies contribute to the sustained transgenerational entrepreneurship of the family business, which in turn contributes to sustained, long-term business and sustainability performance. Those with high social legacies tend to have high community and environmental sustainability performance, while high social and material legacies contribute to high employee and supplier sustainability.

There is a compelling link between legacy and transgenerational entrepreneurship in guiding the strategic decisions of family businesses and the impact they have on long-term business performance and sustainability.

Family businesses in Malaysia with pronounced biological legacies and a commitment to the well-being of employees, suppliers and other people connected with their business tend to have strong business and sustainability performance. In addition, another significant factor contributing to their strong performance is a high level of transgenerational entrepreneurship, which fosters long-term stability and growth across generations.

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