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Family firms

Business in the blood

Companies controlled by founding families remain surprisingly important and look set to stay so

Nov 1st 2014 | NEW YORK| From the print edition

 

 

THE “Lucky Sperm Club”, as Warren Buffett likes to call it, is still
going strong in the commanding heights of business. On opposite sides of
the Atlantic, Ana Botín and Abigail Johnson have recently succeeded
their fathers in filling two of the most powerful jobs in finance, as
chairman of Banco Santander and chief executive of Fidelity Investments,
respectively.

Founding dynasties run, or wield significant clout at, some of the
world’s largest multinationals, from Walmart to Mars, Samsung to BMW.
Half a century ago management experts expected the hereditary principle
to fade fast, because of the greater ability of professionally-run
public firms to raise capital and attract top talent. In fact, family
firms have held their ground and, in recent years have increased their
presence among global businesses.


Family-controlled firms now make up 19% of the companies in the Fortune
Global 500, which tracks the world’s largest firms by sales. That is up
from 15% in 2005, according to new research by McKinsey, a consulting
firm (which defines such firms as ones whose founders or their families
have the biggest stake, of at least 18%, plus the power to appoint the
chief executive). Since 2008 sales by these firms have grown by 7% a
year, slightly ahead of the 6.2% a year by non-family firms in the list.
McKinsey sees these trends continuing for the foreseeable future.



Read the whole article online on The Economist website:  Family firms: Business in the blood | The Economist