Business & Management Studies

Abstract

Family business is a pervasive global form of business organization. In the United States alone, one-third of the S&P 500 are family businesses. It is particularly striking, given the importance of family business, that the intergenerational transfer rate is so abysmally low. This paper considers the analytical issues of measuring family business performance and organizational structure for both public and non-publically owned business performance and suggests areas for further empirics. A bevy of issues have not been fully addressed by researchers, issues such as the likelihood of family business owners being poorly diversified, especially compared to well diversified shareholders. These problems can be magnified if the firm is not publically traded, which also eliminates the market discipline regarding debt and equity. Also introduced is the forensics of business failures as a method to view performance, where family businesses are renowned for the difficulty in achieving intergenerational firm transition. Important empirical issues and opportunities are explored.