Trust: The Social Capital That Drives Family Enterprises

“Trust makes the world go round.” — Michiko Aoyama

I had a moment of clarity while reading What You Are Looking for Is in the Library by Michiko Aoyama. The quote, “Trust makes the world go round,” immediately reframed my thinking on family businesses. It made me realise that in family enterprises, trust is not just an abstract ideal - it’s the force that drives growth, sustains integrity, and ensures longevity.

We’ve all heard W. S. Gilbert’s saying, “It’s love that makes the world go round.” But in the environment of family enterprises, love is the glue - it’s trust that powers the engine of success.

Love brings families together, but trust creates opportunity. In family businesses, trust doesn’t just help family members work together, it allows them to make decisions with confidence, take bold steps and think generationally. Without trust, ambition can stall, but with it, families can innovate and set the foundation for generational success.

I found this concept really striking after reading Aoyama’s book. When trust is at the core of family relationships, businesses don’t just survive, they thrive. In 2024, family firms with high levels of trust were 2.3 times more likely to invest in new opportunities compared to those with lower trust. Trust, not just love, is what makes the difference.

Accountability and Trust

Accountability is essential in any business, but it thrives in cultures where trust is the foundation. When family members trust each other, they’re able to provide constructive feedback and make adjustments without the fear of damaging relationships. I’ve worked with family businesses where trust enabled board members to engage in tough conversations with transparency, giving everyone the opportunity to learn and grow.

In these environments, accountability doesn’t feel like a burden or a threat, it’s simply part of the process. When trust is present, feedback isn’t a form of judgement, but a tool for ongoing improvement.

Succession and Trust

Succession can often be the most challenging period in a family business, but when trust is present, it softens the process. Trust allows the older generation to step back, knowing their legacy will be respected and it gives the next generation the confidence to take on new roles.

Reflecting on Aoyama’s message, I see how trust helps transform what could be a time of fear and resistance into an opportunity for growth and renewal. High-trust family businesses typically experience quicker leadership transitions. This means businesses stay agile and future-focused.

Reputation and Trust

Family firms are known for their reputation, but that reputation is often built on the trust that exists within the family. When there’s trust internally, that energy translates into relationships with clients, investors, and partners. The business becomes known for its reliability, transparency and resilience.

In fact, family businesses that invest in building internal trust are 30% more likely to form stronger external partnerships. They also face fewer governance challenges because their actions reflect their values. Trust becomes the foundation for all of their external relationships, proving that it’s not just about what you say - it’s about how you act.

Practical Strategies for Building Trust

Building trust isn’t something that happens overnight, but there are a few strategies that can help family enterprises strengthen this crucial element:

1. Make Transparency a Priority Share financials, performance metrics and strategic plans openly across the family. When there’s full transparency, trust can grow naturally. Every family member should be able to see how their role contributes to the business’s success.

2. Clarify Family Norms Early On Establish clear expectations and values that everyone agrees on. A Family Charter can help define decision-making processes and role boundaries. This clarity ensures that everyone is on the same page, reducing confusion and preventing conflict in the future.

3. Hold Regular Conversations Have regular family meetings that focus on governance, not just social gatherings. Use structured discussions to tackle difficult issues head-on. Neutral facilitation can help guide these conversations, ensuring that everyone feels heard and respected.

4. Let the Younger Generation Take the Lead Give younger family members the opportunity to lead small projects or initiatives. This helps them build credibility and trust within the family enterprise, showing their ability to take responsibility and make decisions that impact the future.

Trust Is Essential for Long-Term Success

Family enterprises need to think of trust as a strategic asset. It’s not a “soft skill” that you can take for granted. Trust can drive practical outcomes, like:

• Better decision-making and faster innovation

• More efficient leadership transitions

• Stronger stakeholder relationships

• Fewer governance challenges and internal conflicts

In a world where family businesses face increasing pressures trust is, one of, the keys to long term generational success.

So, next time someone says, “Love makes the world go round,” maybe you could suggest that perhaps it is trust that keeps the wheels turning.