By Abosede Ajala

Family-owned businesses are the backbone of the economy as they create wealth, provide jobs, are locally rooted and connected to communities. They seem to be around for long period of time, from historical view point, keeping in mind the evolutionary reasons, most countries have family businesses constituting the largest category in terms of ownership, estimates do vary, but is above 75% in all cases. About one third of the companies listed in fortune 500 are family businesses.

History is chock-full with examples of remarkable rises of family businesses, yet there are also numerous accounts of family businesses brought down by bitter feuds among family members, disappointed expectations between generations and tragic chronicles of later generations unable to manage their wealth. It will amuse you that despite all this a large number of businesses throughout the world are organized around families. Hence the questions:
– Why are family firms so prevalent?
– What are the implications of family control for the governance, financing and overall performance of these businesses?
These questions are beginning to receive attention in the economic exploration community.

At the core of the debate is the question of whether family firms evolve as an efficient response to the institutional and market environments, or whether they are an outcome of cultural norms that might be costly for corporate decisions and economic aftermaths. The idea that a culture based on strong family ties may sometimes impede economic development which is not new, this view were dated back at least to Max Weber’s essay, which argues that strong culturally predetermined family values may place restraints on the development of capitalist economic activities which requires a more individualistic form of entrepreneurship and the absence of nepotism.

Therefore, family owned businesses which is control by the family is a source of comparative advantage for firms, allowing them to achieve superior economic outcomes over their non-family counterparts. In the overall view, family firms embraces a long-term approach to management, while the widely-held corporations in contrast, are often associated with short-term and narrow-mindedness of corporate. Family company is an inheritance to be protected and handed on and on. It’s outcome of the next and each generation’s commitment to the last. You will realize that the link that binds current generations and future ones provides the family firms with “Persistent Investment”.
You will agree with me that one important characteristic that shapes entrepreneurial behavior is family structure; with the entrepreneur being a creation of the basic unit of socialization which is the family, it is an essential influence on his general attitude towards everything including business and lifestyle, family structure plays a role in providing access to funds and information that might be beneficial to the entrepreneur within the family.

It also plays the role of orientation as the entrepreneur can hardly ignore family values in managing their business. Aldrich and Cliff (2003), stated that entrepreneurs are inseparably linked to their families and rely on family values in pursuing their entrepreneurial endeavors.

A substantial body of research confirmed that the family into which a person was born and nurtured has some advantages and disadvantages that subsequently influence their socio-economic, emotional, and entrepreneurial capabilities.
Furthermore, it is great to note that in Africa – Nigeria – Ondo State in particular someone from polygamous family tends to do better in business due to the quest for self-sustenance and independence.