The emotional component of management

NewIn: Melanie Richards, Professor of Family Business Culture and Ownership.
NewIn: Melanie Richards, Professor of Family Business Culture and Ownership.

NewIn: Melanie Richards

Our "NewIn" series introduces our newly appointed professors. In this second episode, we meet Melanie Richards. She researches how family-owned companies make decisions and where the owners assume responsibility.

11 years ago Melanie Richards made a clear change of direction in her career. As a successful management consultant in London, she had a job that many business graduates dream of. She found the atmosphere in the finance metropolis "incredibly dynamic, incredibly professional." But she gradually realized what she was missing - both in her own work and in the companies that she was analyzing. "The results of our consultations were important, but always limited by a narrowly defined purpose. And I never had contact with companies that were using cutting-edge knowledge to create sophisticated products."

Her personal image of a company was shaped by the enterprises in the Black Forest, where she grew up. Few regions its size can boast comparable numbers of family businesses. "Specialized skills as a source of pride, loyal staff with low turnover and integration into society, for example through sponsorship of clubs," says Richards, summing up what she sees as the defining characteristics of mid-sized as well as large family enterprises. When making her move into the world of research, Melanie Richards was motivated by a desire to gain deeper insights into such companies that would have long-term relevance.

"What do the owners see as their responsibility"

Richards is not primarily interested in economic aspects. "In family companies there is more at play than financial targets. The owners are interested in the company’s long-term survival. They do not like to lose ties to customers and suppliers. The desire to exert a certain influence in their business and social environment often plays a role along with power dynamics within the families. So there is a socio-emotional component of management that we would like to understand better."

Melanie Richards is especially interested in how owners combine their sense of personal responsibility with developments in society. "For example, we want to investigate how the families deal with the issue of sustainability. Some companies are transparent in their sustainability efforts. But we also see families who dismiss corporate social responsibility as an American construct. They take the attitude: We have always been respectable business people. So we don’t need to get involved in these initiatives. What do these owners see as their responsibility when making concrete decisions? And what are the consequences for society?

Open company doors for students

Psychology and sociology play a major role in these studies. "That is one thing that I love about my field of research," says Richards. "It is not strictly limited to one topic. I can afford to be creative when developing new topics and designing studies."

Creativity is sometimes needed, too, when it comes to gaining access to companies. "Part of the logic of a family enterprise says that a family is private, so that the family company should be private, too." But the long-standing contact between TUM and companies and the resulting trust can help to open doors. "Our master’s students recently interviewed family companies on the topic of sustainability. I was surprised myself how open they were to being asked a lot of questions by these incredibly smart and critical young people."

How can startups turn into family companies?

Another thing that attracted Melanie Richards to TUM was the possibility of cooperating with social and engineering sciences and with the startups incubated here. "Startups are managed by individuals, too. But the company culture is not necessarily geared to long-term personal responsibility. It is definitely open to the possibility of an exit. So one of the most exciting questions is how startups can turn into family companies."