The Family Business

Is family management contrary to the fundamental American creed advocating free competition, equality of opportunity, and the best man for the job? Is the value of a tradition of family management largely illusory—a product of self-interested rationalization by the families involved? Does family influence contradict all precepts of professional management? Do the complexities and demands of today's business environment make it foolish to attempt to perpetuate family influence in any firm? Doubts like these about effectiveness—if not the morality—of family management of businesses are typical of prevailing attitudes among businessmen, consultants, and educators. In some enterprises, the family interest is a source of serious weakness. But, whether the very presence of family members in an organization is per se an indication of misman-agement is definitely open to question. In fact, if one takes an objective look at the success of some family enterprises, he may wonder whether the effectiveness of the typical reward-punishment system underlying nonfamily businesses has not been greatly overrated. In this article, I will attempt to take just such a dispassionate look at family business and to identify some of its advantages and disadvantages, hoping that these will serve as guideposts for members of the business and financial community who wish to understand such enterprises more fully. I hope that this article will be of particular interest to those who are currently employed by, or are considering being employed by, or who now manage family firms. In view of the fact that what are strengths in one company may be weaknesses in another, the most that any outsider can contribute to people within a particular firm is to provide insights that will help them understand their situations so they can then work out their own courses of action