Four nordic countries
Hans Sjögren is professor of economic history and institutional economics at Linköping University, and has written Familjedynastier – så blev Sverige rikt. The book, translated into English with the title Family Dynasties in the Nordic Business World, examines Swedish financial families such as Wallenberg, Lundberg and Bonnier, and equivalent families in Norway, Denmark and Finland.
Sjögren uses the term “family dynasty” to describe families that have managed a company for at least three generations, and whose ownership makes them into global players and gives them the ability to influence the business policy of a country. The book also describes families with “dynastic ambitions”, which have not yet occupied their position for sufficiently many generations, but otherwise satisfy the criteria.
Most importantly: there are surprisingly many family-owned companies. Even though many people talk about institutional, “faceless” owners, 35% of all employed people in Sweden are employed by family-owned companies. And among the world’s 500 largest companies, all categories, we find 15 Danish and Swedish family-owned companies.
Another important fact: most were started outside of the metropolitan areas. It turns out that as many as nine of ten such companies have their roots in the countryside.
From the countryside
“One important reason for this is that the costs of salaries, land and buildings are lower. And if the company is the only large employer in the area, the personnel are more loyal”, says Hans Sjögren.
“The founders often strive for independence, and are characterised by frugality, efficiency and shrewdness. This is an interesting combination of personality traits that has often led to major success.”
The large family companies nearly always started with something completely new – a revolutionary product or a new idea for manufacture or distribution. Sjögren uses the term “pioneering industrial logic”. Three clear examples are Hans Rausing’s new packaging for liquids, Ingvar Kamprad’s new processes to manufacture, package and distribute furniture, and Ole Kirk Kristiansen’s toys, initially of wood and later of plastic.
These were the innovations on which the companies Tetra Pak, IKEA and Lego were founded.
“The formation of the large family dynasties comes and goes in waves: sometimes down, sometimes up. But it is remarkable how labour movements, both in Sweden and the other Nordic countries, accepted these companies and the way in which the families amassed fortunes. Sometimes the labour organisations even collaborated with them. This shows how important they have been for employment and the overall economy of the country.”
Family and company
One major challenge for the family-owned companies is generational change in the management, and weighing the relative importance of family ties and expertise. What’s best for the company and what’s best for the family? Are they always the same? How does a generation cope if those who inherit do not want to, or are unable to, take over the family business? What happens when someone is considered to be of the “wrong” sex, as when Sofie Helene Olsen was not permitted to take over the Norwegian family-owned shipping company. She founded her own instead, in 1955.
Hans Sjögren believes that this question is the most important question for whether a family dynasty will be successful or not. For each successful dynasty, it must be remembered, there is at least one failure, which is often the result of management problems and/or structural changes in an industry. In the 1970s and 1980s, a crisis in shipbuilding and the maritime industry destroyed two large and successful family companies: the Broström and the Salén shipping companies. In these cases, however, poor management contributed to the problems.
It´s fun to write books.
“For the members of such families, having the right surname is the most important qualification. But it’s also important to know when the family should take a step back”, says Hans Sjögren.
Just as many other businesses, these family-owned companies eventually have to face the question of whether to remain true to the original idea, and refine and renew it, or diversify. Lego is a clear example of how expansion into new areas – the gaming and entertainment industry in the 1990s – failed, and where the core activities proved to be sufficiently strong to build a new global group.
When Hans Sjögren started to write the book, he believed that a general conclusion would be the value of the old motto: “Cobbler, stick to your last”. And this is often the case, but not always.
“Jan Stenbeck may be the exception that proves the rule. He left the original activities behind, went into completely new areas, and was hugely successful”, says Hans Sjögren.
The book also discusses the general idea that the first generation creates, the second maintains, and the third destroys. This is quite simply a myth, originally launched in Thomas Mann’s famous novel Buddenbrooks. There is no evidence at all that this is what happens.
You describe 25 families in the book. Which is your favourite?
“The Lego family, Kristiansen, is rather special. The founder Ole Kirk Kristiansen was a carpenter who lost both wife and employment in a depression in Denmark in the 1930s. In order to support his four children, he started to make wooden toys. He subsequently turned to making plastic building bricks and eventually became leader for a global company. And his children subsequently gave a great deal of help in the work.”
Hans Sjögren brings up another family: “Consider Ingvar Kamprad, sitting at home at the kitchen table and selling kitchen chairs by mail order. When his mother became concerned about the future, he told her not to worry, because ‘soon the whole world will be sitting on kitchen chairs from Älmhult’.”
Translated by George Farrants