What is Different About Family Businesses?

ByRalph Chami

May 1, 2001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Competition, Financial institutions, Financial markets, Financial sector policy and analysis, Income, Insurance, Labor, Moral hazard, National accounts, Wages

Keywords: agency problems arise, altruism, Asia and Pacific, asymmetric information, Competition, corporate governance, Europe, family business, family firm, firm profits, Global, Income, Insurance, moral hazard, nonmarket transactions, trust, wage contract, wage insurance, Wages, WP

Pages:
37
Volume:
2001
DOI:
https://doi.org/10.5089/9781451849158.001
Issue:
070
Series:
Working Paper No. 2001/070
Stock No:
WPIEA0702001
ISBN:
9781451849158
ISSN:
1018-5941

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