Definition of Terms and Concepts

Change is the essence of life – in both business and society – and the heart of change is creative destruction. In this sense, family business leadership and management processes, including business creation, transfer, succession and termination and events are at the heart of evolutionary and sometimes revolutionary change. How that occurs, that is, in more or less intelligent, effective, and efficient ways, is determined by both chance and necessity as stated by Jacques Monod in Chance and Necessity in 1971, and in this context lie the concepts of strategic knowledge arbitrage and strategic knowledge serendipity coined by Elias G. Carayannis in 2008. Heterogeneity may indeed be one of the central reasons why and how the human species survived, evolved and prospered both biologically as well as socioeconomically. In this chapter, we view the family enterprise as an adaptation triggering and moderating mechanism and we thus focus on the socioeconomic aspects of heterogeneity and, in particular, whereas “adaptation” has been the biological manifestation of the forces of variety and selection acting on the natural gene pool, we postulate that “innovation” has been the socioeconomic manifestation of the forces of co-opetition, co-specialization, and co-evolution (C3) acting on the knowledge economy and society. In short, better family business leadership and management methodologies enable the undertaking of bigger risks in a manner that is more calculated and can be better managed along the way resulting in systemically superior results from both a strategic as well as a financial perspective and this in the end may be the key determinant of the long-term survival and prosperity prospects of a family business as it inexorably becomes part of the socioeconomic process of creative destruction.