Understanding the MBA Path for Family Business Leaders

POSTED ON 06/28/2024 BY The Red Pen

Discover the transformative power of MBAs for family business heirs.

Family enterprises are major players in the business world, as highlighted by the  2023 EY and University of St.Gallen Family Business Index, which reports $8.02 trillion in revenue for these businesses. A McKinsey survey predicts that by 2025, family businesses will make up 40% of the world’s top economic entities.

Despite their prevalence, family businesses face unique challenges and responsibilities. To sustain and enhance their legacy, heirs can benefit from an MBA, which provides essential skills and knowledge for managing family businesses.

In this blog, we’ll discuss how an MBA can help family business members, offer tips for MBA applications, guide on securing recommendation letters, and identify business schools with specialized family business programs.

What are the advantages of an MBA for family business successors?

The stewardship of a family business presents a unique challenge for the next generation. Balancing legacy with innovation requires a deep understanding of core business principles and a strategic mindset. For family businesses with a rich history of success, a specialized MBA program equips future leaders with the tools to navigate complex challenges and propel their enterprises towards continued success. As Francesca Cornelli, dean of Kellogg School of Management, points out, family businesses are the backbone of the global economy, driving significant innovation and growth. Here is how an MBA can help you nurture your family business:

1) Networking

An MBA helps second-generation leaders build a support network of reliable peers, industry experts, and global connections. It empowers graduates to navigate family-specific challenges like succession planning and familial dynamics in the business and pursue international growth. For example, the Wharton School’s Family Global Alliance program supports family businesses by connecting them with global opportunities. 

2) Business schools offer unique insights for business success: 

While family businesses across sectors need innovative products and enduring passion to stay relevant, statistics indicate that 65 percent of new ventures fail within the first decade. To ensure their legacy thrives, these businesses need enduring structures, adaptive strategies, and professionalized management practices to navigate the ever-shifting business landscape. According to Pete Flint, CEO and co-founder of Trulia, an MBA can significantly enhance an entrepreneur’s career. It provides essential skills in finance, management, strategy, leadership, and decision-making skills, to thrive in a competitive marketplace.

3) Enhancing the reputation and building of your brand

Nearly 40 percent of Fortune 500 CEOs hold an MBA.  Elissa Sangster, Executive Director of the Forté Foundation, emphasizes that an MBA can provide individuals with a pathway to highly competitive business sectors like Silicon Valley tech companies and Wall Street finance. The MBA degree therefore provides family business scions with opportunities to elevate their reputation, solidify their family’s legacy in growing sectors and strengthen the brand legacy they inherit. They will be well set up to attract new opportunities and reinforce their visionary leadership within the family business.

4) Expand your worldview

Research from the UK Centre for Economics and Business shows that an international outlook improves business performance. Family businesses, in particular, can benefit from a global perspective. Business schools attract a diverse international student body, offering a variety of perspectives on business practices and problem-solving frameworks. This global exposure will equip future generations to understand global trends and market dynamics to identify new opportunities, navigate potential sector disruptions, develop strategies for international expansion, and forge valuable international partnerships. 

5) Business schools assist MBA students from family business backgrounds

Business schools provide specialized resources and assistance tailored to MBA students originating from family business backgrounds. For example, the Kellogg School of Management stands out in this regard, boasting the John L. Ward Center for Family Enterprise. This center is dedicated to pioneering solutions for the continuous and future challenges faced by family enterprises, reflecting Kellogg’s commitment to supporting and enhancing the success of students with family business ties.

How can family business heirs make their MBA application stand out? 

Craft a compelling narrative of the challenges, successes, and lessons you’ve learned while working with your family business to enhance the chances of acceptance into a desired program. Showcase your qualifications, work history, and concrete achievements and articulate a clear vision for your company’s future linked to the MBA program to demonstrate the logical connection between your aspirations and the business school.

Emphasize instances where you’ve contributed to growth and innovation in your family business. Quantify your achievements through revenue growth, cost savings, or successful strategic initiatives whenever possible. Measure your achievements by answering these three critical questions:

  • How far did you help the company grow during your tenure?
  • What company goals did you achieve?
  • How did your leadership move the company forward?

How should family business heirs choose recommenders for their MBA application? 

Selecting the right recommenders is critical, especially for MBA applicants from family business backgrounds. Choose individuals who can vouch for both your professional abilities and personal qualities. A recommendation from a non-family member in a leadership role within the family business can provide an external perspective and demonstrate your ability to collaborate with diverse individuals.

Alternatively, a recommendation from a client or business partner can validate your professional skills and highlight your impact on business relationships. It will showcase your ability to establish and nurture external connections—an asset in a business school environment. A mix of recommenders can offer a well-rounded view of your skills and character. Your recommenders should focus on recent activities from the past one-and-a-half or two years.

Which are the top 10 business schools for family business education?

We have carefully selected a list of MBA programs worldwide that excel in equipping applicants with the skills and knowledge necessary to assume leadership positions within family-owned businesses.

1) The Kellogg School of Management, Illinois, US

The John L. Ward Center for Family Enterprises at Kellogg offers courses, conferences, and research on various aspects of family businesses, fostering a supportive community for operators to learn and share experiences. 

2) Columbia Business School, New York, US

Columbia’s Global Family Enterprise Program provides students and alumni with courses, events, and educational programs, delving into the distinct dynamics of enterprises that often transcend traditional business roles.

3) Harvard Business School, Massachusetts, US

Harvard Business School offers executive education programs for family businesses to understand dynamics, leverage strengths, and build a foundation for success. Programs include Building a Legacy: Family Office Wealth Management, Rising Generation in the Family Enterprise and Families in Business.

4) Cornell Johnson Graduate School of Management, New York, US

Cornell Johnson’s Smith Family Business Initiative at Cornell University is committed to bolstering and reinforcing the community of family business owners, leaders, and alumni involved in or affiliated with family businesses. The initiative includes the Family Business Club, specialized courses, guest speaker series, and various study trips focusing on family businesses.

5) The Wharton School, Pennsylvania, US

Wharton has adopted a distinctive approach to family businesses through the Wharton Global Family Alliance. This initiative unites family businesses worldwide, facilitating the exchange of their distinct challenges and experiences. This effort results in a vibrant community, research projects, and conferences, which enrich the MBA curriculum with specialized courses tailored to address the unique complexities faced by family businesses.

6) Kenan-Flagler Business School, North Carolina, US

UNC’s Family Enterprise Center at the Kenan Institute of Private Enterprise supports students who have chosen to focus their learning on running a family enterprise. Resources include specific courses, the Family Business Club, roundtables, workshops, mentoring, and advising.

7) Babson College, Massachusetts, US

The Bertarelli Institute for Family Entrepreneurship (BIFE) is a learning hub that offers family business owners a wealth of resources for research, mentorship and networking to amplify their capacity to create lasting positive economic and social impact.

8) INSEAD, France

The Wendel International Centre for Family Enterprise at INSEAD aims to enhance family enterprises’ long-term performance and sustainability through research and knowledge dissemination, emphasizing their significance as a business model. INSEAD has an MBA Family Business Club, fostering interaction among students interested in family businesses. They also offer Family Business Next Generation Mentoring Sessions to help you explore your role in the family business during your time at INSEAD.

9) IE Business School, Spain

IEBusiness School houses the Center for Families in Business, a vibrant community of scholars and specialists dedicated to producing innovative and pragmatic insights for families in business. They research business families’ unique aspects, challenges, and success factors. Through training and outreach, they empower you to become a responsible stakeholder and be prepared to face future challenges.

10) London Business School, UK

London Business School provides a range of lifelong learning options, including well-rounded MBA programs, focused executive courses, and open programs tailored to family enterprise needs. The Institute of Entrepreneurship and Private Capital at London Business School also provides a range of family enterprise programs to educate executives and the next generation of family business leaders, ensuring they become valuable assets to their family businesses.

For family business candidates, it’s crucial to demonstrate how the MBA program will benefit you and your business. The Red Pen provides various services to assist you in the highly competitive MBA application process. Learn more about the Red Pen’s end-to-end MBA Admissions Consulting packages. Connect with us for guidance with your MBA application. In the meantime, you can read our blogs What are ‘MBA Goals’ and Why Do They Matter? and MBA Essay Prompts for the M7