The essential role of trust in family business entrepreneurship

Abstract

Trust is one of the most essential elements that bind family members and business together in a family business. Entrepreneurial activity within a family business is virtually impossible without trust. Families lacking trust will not take the risks associated with venturing and that negatively affects entrepreneurial innovation and value creation within the company. It has been said that trust takes time to build, seconds to lose and forever to restore. This chapter discusses how to build, maintain and repair trust between family members. It describes how perceptions of ability, benevolence and integrity are essential to trust and how those perceptions affect the degree of risk one is willing to take in a new venture in a family business. After examining how to build trust the chapter explains that repairing broken trust depends upon whether the perception of ability, benevolence or integrity has been affected.