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?
By anticipating and addressing key issues, family owners can reduce risk, manage conflict, and promote prosperity.
To ensure its success for generations to come, a family business should adopt only those characteristics of a modern corporation that will augment its distinctive attributes and fit with its culture.
Many of the largest and most ambitious companies in emerging markets are family businesses. They should be wary of modeling themselves on their counterparts in developed markets.
Planning for succession starts with recognizing that it will be one of the most complicated transitions experienced by a family business. BCG has identified ten principles to guide the process and enable the business to thrive into the future.
Managing Director & Senior Partner
Paris
Partner & Director, BCG Henderson Institute Fellow
Frankfurt
Managing Director & Senior Partner
Mumbai
Chairman, India
Mumbai