Nearly three years ago, Barton Hamilton was preparing to moderate a panel discussion at Olin’s first family business symposium, among the earliest manifestations of the school’s fledgling family business initiative.
Three symposia and $9 million later, Olin has launched a full-fledged research center dedicated to the issues surrounding family-owned business—with Hamilton taking the lead as its first director.
Dean Mark Taylor appointed Hamilton to the post effective February 2 and with that appointment, the Koch Center for Family Business is officially launched. Sure, Hamilton said, there’s a lot of work to do moving forward.
But he’s thrilled to be part of realizing the vision of the Koch family—which includes two WashU alums and St. Louis real estate developers—who underwrote Olin’s sixth research center.
“The Kochs told me this is part of their legacy,” Hamilton said. “I feel great responsibly to be a steward for their legacy and do what I can do to make the vision a reality.”
A focus on research
Elke and Paul Koch, BSBA ’61, JD ’64, MBA ’68, and Fran and Roger Koch, BSBA ’64, MBA ’66, launched the focus on family business in 2016 with a $1.09 million donation to Olin Business School. The donation paved the way for a family business initiative featuring regular symposia on the subject, a course on family businesses, student practicum projects with family business owners and a student club.
The effort was, in part, also driven by interest from students, who approached former Dean Mahendra Gupta about the subject and later presented him, at his request, with a full-fledged outline and justification for the program.
Hamilton—who is also the Robert Brookings Smith Distinguished Professor of Economics, Management and Entrepreneurship—said the foundation laid by the family business initiative will remain in place and expand.
The secret sauce of the new center, however, will be research into the unique dynamics that drive family businesses and their power, representing 64 percent of the US economy.
“We want to know the secrets to success that Cargill and Enterprise have, but there’s a lot of companies in the $50 million to $200 million range that are the backbone of a lot of communities,” Hamilton said. “Those are also businesses that face a lot of challenges and we want to understand what those challenges are and figure out how we can help them achieve more success.”
For example, are family businesses more successful in the long run than non-family businesses? They’re not thinking about the next quarter, they’re thinking about the next generation. Yet, there is a tradeoff: How do family businesses introduce new ideas and innovation when the tendency may be to do things the way they’ve always been done?
Another area ripe for research: What is the interaction between family dynamics and business dynamics? As families grow, how do they provide dividends and wealth to an expanding slate of brothers, sisters and cousins, while continuing to invest in the growth of the business?
He is excited by the prospects for what research can tell us about family business, how it can help family business owners improve and how it will guide students who will be owners of, customers of, clients of and partners to family businesses.
“This is something we can be distinctive in,” Hamilton said. “We’re putting our flag on the map and telling the world that this is something that’s important to Olin and to Washington University.”
One advantage of a funded research center, Hamilton said, is the ability to purchase data and fund research on a scale unavailable before. Data into family-owned and closely held businesses is hard to come by, often requiring a lot of manual effort to compile.
In fact, two of his own research projects are still a long way from publication because of the mammoth effort involved in collecting and analyzing the data. One project is looking at the differential performance of CEOs in family businesses, depending on whether the CEO came up from within the family, came up in the business (but were not family members) or came from outside the business altogether.
Hamilton said the family business symposia will continue, as will a class in family business led by adjunct professor Spencer Burke, principal at the St. Louis Trust Company, who has served as the initiative’s de facto leader since its launch.
Other steps ahead for the Koch Center for Family Business include searching for and identifying promising research projects, identifying staff administrative support and recruiting a board of advisers for the center.
“The Kochs want us to be a research leader in this area,” Hamilton said. “There’s not much that’s been done given the importance of this to the economy.”