Corporate Governance and Family Business - Essay Example

Whether it is on the land of superpower U.S., or on the land of one of the most industrialized nations of the world, the U.K, or on the land of less developed countries, like Brazil, family businesses account for a great share in a wide range of industries. According to some surveys, at present in many countries, family businesses account for as high as 90 percent of all the enterprises situated in those nations. On average more than 75 percent of all the companies in the world are family-owned. In Europe, the share of family business at the aggregate industry level is more than 70 percent. This kind of dominant presence of family businesses all over the world has forced a number of people to argue that in any society across the world the most substantial economic force is nothing but family-owned or controlled businesses.  

The dominant presence of family businesses in a large number of industries, however, does not come as a surprise. In fact, it would have come as a surprise, had it been found that in certain industry family businesses were encountering significant difficulties while making their entry into the industry. The abundance of family-controlled or family-owned businesses in any industry in any part of the world is actually a common phenomenon because of the reason in any industry a new business is generally started by some common friends or a group of people within a family to give shape to their common ambition. Whether a firm started as a family business will continue as a family-controlled firm in long run, is, however, a quite different issue. Whether a firm will choose to be a family-owned firm only even in long run or will restructure its ownership pattern to become a non-family owned firm depends on a number of factors including the pattern of internal development of the firm, the capacity the family ownership in handling various management issues, and numerous external factors like the pattern of market developments.

Very often ‘family factor’ of any family-owned or controlled business is a vital key to succeed in its business endeavors.