What is Different About Family Businesses?

Ralph Chami

No 2001/070, IMF Working Papers from International Monetary Fund

Abstract: Family businesses make up forty percent of the Fortune 500 companies in the US, generate about two-thirds of the German GDP, employ about one-half of the labor force in Britain, and account for the majority of the private economies in developing countries. This paper develops a theory of family business that brings market forces and the family, as a nonmarket institution, under one rubric. The paper highlights and analyzes important factors, including product market competition, trust, and succession, which allow family businesses to thrive and to successfully compete with other businesses.

Keywords: WP; altruism; asymmetric information; family business; trust; nonmarket transactions; moral hazard; corporate governance; family firm; wage contract; wage insurance; agency problems arise; firm profits; Wages; Insurance; Competition; Income; Europe; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 37
Date: 2001-05-01
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Citations: View citations in EconPapers (42)

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