David Landes on Family Firms
2 November 2006
| Peter Klein |
Economic historian David Landes’s new book, Dynasties: Fortunes and Misfortunes of the World’s Great Family Businesses, focuses on the family firm (discussed here, here, and here). As described by the New York Times, Landes wants to suggest that “the business-school mythos of the ‘professional manager’ has led to a persistent underestimation of the importance of family firms. Fully a third of Fortune 500 companies can properly be characterized as family businesses, and on average they outperform the ‘professionally managed’ firm by a surprisingly large margin.”
Entry Filed under: - Klein -, Theory of the Firm. .
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1. what’s so special about family firms? « orgtheory.net | 2 November 2006 at 10:36 am
[...] Peter Klein points to a new book by the economic historian David Landes that tracks some of the world’s most famous family businesses. This NY Times review of the book is intriguing, but it also raises what I think is an important question: what is unique about family firms? The reviewer writes that the book makes a good argument for the prominence of family firms. A third of Fortune 500 firms are still family businesses (depending, I suppose, on what you consider to be a family firm). Wal-Mart is still overseen by Sam Walton’s son. The family controls about 40 percent of the company’s stock, and a third generation is moving up through the Walton business empire. It’s a good question whether professional outsiders would have maintained, for good or for ill, the almost religious commitment to cost-cutting that the heirs seem to have inherited from the old man. [...]