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Family Business

Family businesses have unique challenges and opportunities for growth.

Family businesses represent an important and growing part of the economy. Globally, more than 30% of large companies are family-owned. The number of family businesses in emerging markets with revenues exceeding $1 billion is growing rapidly, and family businesses will remain a vibrant force in mature markets.

In comparison with nonfamily businesses, family businesses exhibit different behaviors and performance. There are also clear distinctions between family businesses from developed and developing markets. Because of their tendency to take a longer-term and less risk-seeking perspective, family businesses from developed markets show greater resilience. Those hailing from developing markets exhibit greater growth ambitions and pursue global leadership.

Family businesses share many strategic and operational concerns with nonfamily businesses. At the same time, they face unique challenges—largely at the intersection of the family and the business. What is the appropriate governance structure and what role should the family play in the future of the business? How should the company manage succession planning, generational transitions, and capability development? How does it attract the best nonfamily talent? How should the value created by the business be shared among the family? How can growth be funded without diluting family control?

Governance for Family Business: Sustaining the Magic for Generations to Come

At some point all successful family businesses reach a moment of truth. The thriving business—built on a magical combination of ambitious vision, entrepreneurship, decisiveness, and a bit of luck—outgrows its less-than-formal approach to governance. It becomes clear that a more rigorous approach is needed to sustain the organization's success into the future. But how?

The most successful efforts to formalize family business governance respect the magic that drove the initial phase of success and seek to formalize it. Many elements contribute to the magic, but these five are among the most important:

Clear Vision

Long-Term Perspective

Rapid Decision Making

Entrepreneurial Spirit


A Dialogue on Family Business in Mature and Emerging Markets

Family businesses from mature and emerging markets have many similarities and differences. BCG’s Nicolas Kachaner and Vikram Bhalla discuss their recent research and what family business executives can learn from their peers in different market environments.

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