Family firms as kinship enterprises

Abstract

Evidence from around the globe shows that family firms are enduring, resilient forms of profit-seeking and not an archaic, transient form that will inevitably disappear. Social science research has tended to characterize the family values of these firms as producing "efficiency distortions" that adversely affect their financial performance. The author suggests an alternative heuristic approach of treating family firms as kinship enterprises that endure beyond the life of the firm. This approach enables us to understand how the timing of decisions about capital accumulation, expansion and diversification, as well as managerial organization, are shaped by kinship sentiments and intergenerational commitments without setting up an opposition between economic and kinship goals.

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