Family-Owned Businesses: A Thing of the Past or a Model for the Future?

Asindividuals widely identified with family businesses, we often are asked questions by those unfamiliar with family businesses' role in our society and economy Executives in large corporations, dealers in corporate finance and securities, our colleagues on business school faculties, journalists, and elected or appointed government officials often seem bemused by our passionate commitment to family businesses. To them, family businesses are quaint relics. Others regard the family business as an ideological icon, a mostly rhetorical symbol that combines motherhood and apple pie with entrepreneurial drive. Recently, Dr. Francis W Rushing, a highly respected economist and economics educator who holds the Ramsey Chair of Private Enterprise at Georgia State University, challenged us to deal with the question of whether familyowned businesses are a thing of the past or a model for the future. We felt that the question was eminently worthy of our thoughtful attention and have attempted a modest answer here. Our belief, of course, is that family business is both of the past and for the future-and that it is just this capacity to transcend time that is its greatest strength. What was the fulfillment of "The American Dream" for a past or current generation can be conceptualized as the fulfillment of "The Next Chapter of the American Dream" as successive generations build on the entrepreneurial accomplishments of their parents. We have learned by knowing family businesses throughout the world, that the American dream is not uniquely American. Indeed, the family almost universally appears to be societys fundamental economic unit. Its connection with business is therefore obvious and unsurprising if we think of business as the ownership and management of productive assets residing in the family In post-World War II America, the large, publicly owned corporation, with separation of ownership and management, became perceived as the norm. Only in that context does family business seem quaint or unusual. Indeed, much of the latest thinking in such areas as agency theory, executive compensation, corporate governance, and organizational design stresses the desirability of shrinking the management/ownership chasm. Relationship management,