Family Firms and Corporate Purpose

That we are living in turbulent times is self-evident. That we are experiencing radical uncertainty is more insightful. The distinction is between what is risky but probabilistically predictable and what is unknowable and unpredictable - between Donald Rumsfeld’s “known unknowns” and “unknown unknowns”. The financial crisis and Covid are examples of the latter: that financial crises and pandemics occur is known, but the advent of what, when and where were not predictable and not predicted. 

What is the relevance of this for corporate purpose? To answer this, it is necessary to understand what a corporate purpose is.  It is not a vision of where a business will be. It is not a mission statement of what it will do. It is not a strategy for how it will do it. It is why the business exists, why it is created, its reason for being. 

That question is always important, but it gains particular significance after a major unpredictable and unpredicted dislocation like the financial crisis or the pandemic. The existence of the business is then called into question and therefore knowing why a business exists takes on special importance.

The previous vision of where the business is going, its mission of what it will be doing and its strategy of how it will do it may no longer be relevant after a profound shock. In contrast, the question of how a business can find new ways of generating financial value for itself and its investors from enhancing values for its customers, employees, suppliers, communities and governments is precisely the right one. How can it remain viable, relevant and solvent in the new world order?

The pandemic illustrates this well. During the pandemic many businesses found themselves without customers, students or audiences. The successful ones were those that knew why they existed and pivoted to find novel ways of sustaining their existence through delivering, teaching and entertaining online.

This is particularly relevant to family businesses as against individually, institutionally, or publicly owned firms. The reason is not just that family businesses have concentrated, long-term, intergenerational ownership. While that is often the case, it is not always so, and family businesses are not entirely distinctive in that regard. 

There may be a more insightful reason. Families cannot walk away and disappear into the ether when the world changes, as individuals, institutions, or public owners may be able to do. They are inherently intertwined with at least some of their stakeholders, especially their employees and local communities. 

That will not be necessarily true of all family firms or all their stakeholders, but it is of some family businesses in relation to some of their stakeholders. For those firms, knowing how to pivot in the face of radical uncertainty will be critically important.
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Colin Mayer is Emeritus Professor of Management Studies at the Blavatnik School of Government and the Saïd Business School at the University of Oxford, and an ECGI  Fellow and Research Member.

This blog is based on a discussion held at the 2026 IESE-ECGI Corporate Governance Conference Family Firms: Purpose, Economic Performance and Social Impact. Visit the event page to explore more conference-related blogs.

The ECGI does not, consistent with its constitutional purpose, have a view or opinion. If you wish to respond to this article, you can submit a blog article or 'letter to the editor' by clicking here.