Family business's - Hinduja group - Essay Example

ntrepreneurial endeavors as they all seek to exploit wealth opportunities in order to create wealth for the financial welfare of the founding families. People who went on to build their own family empires founded various large international companies like Ford, BMW as well as Wal-Mart among others. This implies that family businesses play an important role in economic development through their contributions to the business world while at same time creating investment environments that are secure, safe and open (Fernández Pérez and Colli, 2014, p. 63). A variety of approaches exist through which academics can assess the relative successes of family businesses including through considering family governance, the performance of the business, its philanthropy, social responsibility as well as corporate governance.

Family governance is comprised of agreements that inform the connection between the business and the families while at the same time emphasizing on the aspects that will ensure the family business grow from generation to generation (Poutziouris, Smyrnios and Goel, 2013, p. 133). Family governance also entails distribution of power in the company among the different members of the family. In general, family governance is a management technique which that covers more than one generation and is intended to make sure that the history of the family, its wealth as well as values extend past the archetypal two generations.

According to the Harvard Business School, family governance is comprised of three aspects including periodic meetings of the members and a representative group of members that is tasked with planning, the creation of policies and consolidation of business-family bonds and communication (Miller and Le Breton-Miller, 2005, p. 292). The third aspect is family constitution that provides policies and guidelines to regulate the relationship between the members with the business. These aspects make sure that there is clarity in regards to the