Seriously, Bill, thanks for the great comment. Your points are well taken. I was thinking of figures I’ve seen from Joseph Astrachan’s group showing that only a small percentage of new family-owned businesses survive beyond the second generation. But you are right that it is hard to make a meaningful comparison (especially outside the US) between family- and non-family-owned businesses. Moreover, I don’t have data handy on corporate survival (e.g., average years of survival after IPO) to compare average or median survival rates across firm type. When we refer to corporations being long-lived we typically think of P&G or Sears or others that have been around for a century or more — hardly a random sample of all new corporations!

On the point about the problems of the corporate form more generally, I heartily agree that this structure, like all organizational forms, has drawbacks as well as benefits. (Indeed, last week I taught Jensen’s “Eclipse of the Public Corpotation” in my strategy class!)

Anyway, regardless of the sloppy way I framed the post, I’m sure you agree that 27 generations is longer than most. :-)

I looked into question at one point in time and found a variety of studies — none definitive — that provide some hints about the distribution of firms (going-concerns, that is) by age.

The data do seem to support the idea that there are sharp declines in firm population by age at various times between birth and age 20 to 24 (e.g., liabilities of newness and adolescence). In the data I had at hand, about 2/3rds seemed to disappear over the period.

However, suvival rates by age improved thereafter. If you use the generally accepted period for a generation of firm ownership (24 years), you end up with about a 50% survival rate from 2nd to 3rd gen, and about the same, or even slightly better, in successive ages. So the odds of survival for family firms seem to start out poor, but then seem to level out.

On the other hand, Peter, what data do you have to support your initial premise? All the data I have seen suggests that that family ownership of enterprise is so prevalent that its really not meaningful to contrast “family firm survival” with “non-family firm survival”. Statistically speaking (at least in terms of the number of organizations counted), the number of non-family firms as a percentage of the population of firms is trivial. And while the percentages change a bit if one takes sales or employment into account, the data indicate that it is the public corporation, not the family firm, that is by far the most rare (See La Porta et al). Doesn’t this state of affairs suggest that it is the family-owned enterprise, not the public corporation, that has the “survival” advantage?

:-}

I thought the opposite was true, or? Throughout Europe you have longstanding family firms that appear to have persisted for quite some time, while at least the turnover in F500 companies suggests (I seem to remember that the Tushman/O’Reilly piece in CMR talks about this) that large public companies aren’t around (comparatively) for too long.