Family Business Audiocast | Episode 49 | Kimberly Eddleston
Available to Listen Now On: Amazon Music, Spotify, Apple Podcasts, Pandora, iHeart, YouTube
New Episodes Live: Subscribe to receive exclusive invitations to upcoming episodes of the Family Business Audiocast. Join us as we explore the pivotal strategies and stories behind successful family enterprises. Click to Follow on LinkedIn.
—————————————————
R. Adam Smith: Welcome to the Family Business Audiocast on LinkedIn. I'm R. Adam Smith, creator of this Audiocast series as an entrepreneur, investor, founder, investment banker, and board leader the last 25 years. I'm fortunate for my many experiences within the family firm industry. A warm thank you to our live audience on LinkedIn today, and for those listening in the future, a brief comment on why I created this broadcast.
Private companies are a passion of mine. Having grown up in a family of entrepreneurs and having engaged for two decades in deals, strategic transformations, investments, and boards, with an array of fascinating family enterprises, family firms, and family offices, I founded this series to offer a useful platform for listeners to hear from veterans, academics, and leaders in the vast family firm ecosystem.
Whether you're a family business owner, building, running, or advising a family office, or just expanding your family office activities, I hope these conversations are useful and enlightening. Now it's time to turn our attention to our accomplished guest on today's episode. Today, I'm very pleased to host Kim Eddleston on the show. Kim, it's great to have you here.
Kim Eddleston: It's wonderful to be here, Adam. Thanks for having me.
R. Adam Smith: You're welcome. I'm going to brag about you for a bit. Kim has a rare combination of academic rigor and lived experience, and is a leading authority on family business dynamics, governance, and entrepreneurship. She's the Schulte Distinguished Professor of Entrepreneurship and Montani Research Fellow at the D'Amore-McKim School of Business at Northeastern University, and a research fellow at Cornell University's Smith Family Business Initiative.
Eddleston has been recognized as one of the world's leading family business and entrepreneurship scholars in outlets like Small Business Economics, the European Journal of Family Business, and the Journal of Family Business Strategy. Her research focuses on family business and the careers of entrepreneurs, particularly how the family can be a resource or a constraint to the business, and how family firms remain innovative across generations. She's served as associate editor of the Journal of Business Venturing and the Journal of Family Business Strategy, senior editor for the Entrepreneurship Innovation Exchange, and founding editor of familybusiness.org, where we've worked together.
At Northeastern, she teaches a family business course for next-gen family members and an honors course called Examining Family Business Through Film. She's a fellow of the Family Firm Institute and the U.S. Association for Small Business and Entrepreneurship, and her research has accumulated over 20,000 citations, ranking her in the top 2% of scientists in the field according to Stanford University. Kim, wonderful to have you. What are you working on right now?
Kim Eddleston: There's always a lot being juggled, but broadly I'm trying to better understand the role of the family in family business survival and performance — increasingly from a family science perspective rather than the more strategy-focused approach of earlier research. That includes understanding when the family contributes to success versus when it's more of a hindrance, and looking at differences across emerging or transitioning economies.
R. Adam Smith: Let's start with the family as a strategic force versus a constraint. How can families better discern when their involvement accelerates growth versus getting in the way of the business?
Kim Eddleston: I wish more families would actually assess this themselves — are we contributing, or are we holding the business back? One thing to look at is how the family's values guide strategy — this matters even for passive shareholders or board members who aren't in management. Another is the family's commitment and dedication — are family members acting as role models, setting the tone, carrying the tacit knowledge that gives the next generation an edge because they grew up in the business and industry? A third is the social capital, goodwill, and trust the family has built with business associates and the community, enabling handshake deals and strong local relationships.
On the flip side — is the business becoming a "welfare institution"? Are there family members with jobs that don't need doing, or even on payroll without contributing at all? That drains money that could go toward innovation or marketing. Attitude matters too — a sense of entitlement, viewing the business as something that owes them wealth rather than as a source of identity and pride, is a red flag. So is a family member who'd have been fired, or hired elsewhere, if they weren't family. Left unaddressed, these issues can cause a business to stagnate, decline, or eventually fail.
R. Adam Smith: I'm glad you raised values — that ties directly to legacy, which is a favorite topic on this show. Before we get there, can you unpack the "Fredo effect"?
Kim Eddleston: The Fredo effect describes a family member who's an impediment to the business — someone who only has a job because of their last name, and who anyone else would have fired. It's a taboo topic; no one wants to talk about a struggling relative others have to clean up after. I actually named it after Fredo from The Godfather — the second-born son passed over for Michael, clearly never suited for the business, and whose actions cause problems and even sabotage the family. Using the name helps humanize a difficult subject and gives families a little levity when discussing it.
It's also deeply personal for me — I grew up in a family with multiple businesses, at one point nine of them, and one that I originally studied as a model of the family being a great steward of the business was later disrupted by a third-generation member. That's what pushed me to start researching it. In one study, 33% of families we surveyed admitted to having a family member present purely because of family ties, who was actively an impediment to the business.
R. Adam Smith: That's especially tricky when preparing a business for sale or a major transition — you need real clarity in organizational structure and putting people in roles suited to their strengths. Let's talk about organizational imprinting — the values and decisions of founders that shape a firm's direction and legacy over time, and how that legacy needs to evolve as industries and competition change.
Kim Eddleston: The imprinting effect is remarkably strong in both family and non-family firms — research shows a founder's imprint can influence decision-making as much in the third or fourth generation as in the first. Founders need to think carefully about articulating their values — not just naming them, but teaching through storytelling: what does integrity actually look like in practice, with concrete examples?
Founders also shape things like a firm's openness to innovation. Next-gen leaders sometimes resist changing strategy or products because it feels disrespectful to the founder's legacy — but if you don't innovate, competitors will make you obsolete. Founders should think about what role their values and mission should play decades down the line, and the next generation needs room to reinterpret that legacy in their own way.
I love the story of Zildjian — the oldest family business in America, though originally founded in Constantinople. They make cymbals, and the company began with an alchemist commissioned to create gold for royalty; in experimenting with metal alloys, he discovered the mix created interesting sounds instead. To this day, the family invokes that "search for gold" as a metaphor for their ongoing pursuit of innovation — recently launching an electronic drum kit called "Alchemy." Reassessing what founding values mean today, and making the legacy your own, is actually a way of honoring the founder while keeping it alive — and it helps earn the next generation's genuine commitment.
R. Adam Smith: Legacy isn't just something shaped internally — it can live on even after a company is sold and becomes an independent force, or continues under new ownership. Given your global work, what cultural differences strike you most in succession and legacy across family enterprises?
Kim Eddleston: I teach a next-gen class at Northeastern with heirs from around the world — this past semester, students ranging from small family businesses to some of the world's largest public companies — and hearing it in their own words brings a lot of context to my research.
Firstborn-male primogeniture is still very much alive in many parts of the world, with real questions around whether women can hold roles or even own shares. It gets more complicated with divorce or multiple wives — determining who counts as the "firstborn male" can itself be contested. Definitions of family also vary widely — some cultures live communally with aunts, uncles, and cousins under one roof.
Filial piety, especially in many Asian cultures, creates deep deference toward elders — admirable, but it can make it hard for the next generation to feel comfortable offering ideas, questioning decisions, or speaking up as they join the business, which becomes a real challenge in succession. It's on the older generation to actively invite that input.
Finally, China's one-child policy means we're about to see a wave of young women taking over enormous, successful businesses — something the world has never really seen before, likely emerging over the next eight to ten years. Many of these women are being carefully prepared through education and experience, and it will be fascinating to watch and potentially learn from.
R. Adam Smith: In earlier work together, we discussed sharing values with the next generation — not just wealth — so they appreciate the effort and sacrifice behind it, not just the wealth itself. As we close, what makes you optimistic about the next generation of family business leaders, particularly Gen Z?
Kim Eddleston: There's much more emphasis now on educating the next generation — through workshops, conferences, organizations, and podcasts like yours — so families realize their experiences aren't unique and there's a lot of support available. One major advantage of being a family business is the ability to prepare the next generation with tacit knowledge gained from growing up around the business and industry — something competitors simply can't replicate. Combined with genuine dedication and identification with the business, that sets families up for real success.
One thing worth noting: the age of maturity has shifted later than it was for my generation — where we might have felt "grown up" at 19, today's next gen tends to reach that point closer to 25 or 26. Parents shouldn't compare their own milestones at a given age to their children's. It's fine for people in their twenties to explore other paths first — that's when they're building independence and their own identity — and if you've instilled appreciation for the business and its values, they often do come back, wanting to contribute rather than out of obligation. I recently heard from a former student — who used to insist he'd never join his family's business — who's now in a leadership role helping take it public.
Families should also make sure members who choose not to join the business still feel valued and connected — through things like family councils, which is a whole separate conversation.
R. Adam Smith: Great note to end on. Before we go — what's your own definition of legacy?
Kim Eddleston: Tough question to leave me with. For me, legacy is fundamentally about something living on beyond you — values and mission that are a bit intangible, emotional even — the idea of building something that future generations want to be part of, want to uphold, and that makes the world a better place.
R. Adam Smith: Perfect answer. Kim Eddleston — global expert, academic, thought leader — wonderful to have you on the show today. Thank you so much for coming.
Kim Eddleston: Thank you, Adam. Looking forward to that next article with you.
R. Adam Smith: This is R. Adam Smith, signing off. Stay tuned for the next episode of the Family Business Audiocast, available live on LinkedIn, YouTube, and X.
—————————————————
Explore the strategic intricacies of family business success with the RAS Family Business Audiocast. Join R. Adam Smith as he delves into exclusive discussions with global leaders shaping the future of private wealth and enterprise. Each episode offers a rare glimpse into the core decisions driving prosperity in high-stakes markets. Tune in to gain expert insights and innovative strategies that empower family businesses to thrive across generations.
Available On : Amazon Music, Spotify, Apple Podcasts, Pandora, iHeart, YouTube
Disclaimer:
Opinions presented are personal and do not represent the positions of speakers’, sponsors’, or guests’ organizations.
Family Business Audiocast™
