Corporate governance and ethics: Corporate governance in the family business.

Introductory thoughts

• Family businesses constitute the world’s oldest and most dominant form of business organization.
  – In many countries, family businesses represent more than 70% of the overall businesses and play a key role in economic growth and workforce employment.
  – In Spain, for example, about 75% of the businesses are family-owned and contribute to 65% of the country’s GNP on average.
  – Similarly, family businesses contribute to about 60% of the aggregate GNP in Latin America.
• Family businesses range from small and medium-sized companies to large conglomerates that operate in multiple industries and countries.
  – Italy: Salvatore Ferragamo, Benetton, and Fiat group.
  – France: L’Oreal, Carrefour group, LVMH, and Michelin.
  – South Korea: Samsung, Hyundai motor, and LG group.
  – Germany: BMW, and Siemens.
  – Japan: Kikkoman, and Ito-Yokado.
  – US: Ford motors co, and Wal-Mart store.
• It is also a fact that most family businesses have a very short life span beyond their founder’s stage.
  – Some 95% of family businesses do not survive the third generation of ownership.