Chapter 8: The Family Firm: An Analysis of the Dynastic Motive
8. The family ﬁrm: an analysis of the dynastic motive 8.1 INTRODUCTION The advantages of an integrated social scientiﬁc approach to the analysis of institutions are particularly evident in the case of the family ﬁrm. Although the family ﬁrm has long been an important feature of business enterprise, the concept is rarely deﬁned in a rigorous manner, and until very recently it has never been modelled in a formal way. Indeed, considering the long-standing historical importance of the family ﬁrm in economies at every stage of development, there is surprisingly little economic literature on the subject. Most of the literature is written from a purely managerial or organizational perspective (see, for example, Berkhard and Dyer, 1983; Gersik et al., 1997; and Levinson, 1971). Economists tend to identify family ﬁrms with small and medium-size enterprises. This confounds the implications of size with the implications of family ownership and control, and wrongly suggests that all family ﬁrms are small. Despite the ‘managerial revolution’ of the twentieth century, many large ﬁrms remain family owned (Jones and Rose, 1993). This chapter attempts to remedy some of these deﬁciencies in the economics literature. The chapter is structured in three parts. The ﬁrst part (Sections 8.2–8.5) scrutinizes the concept of the family ﬁrm, and shows how popular preconceptions about it are often the product of ambiguous deﬁnitions. The second part (Sections 8.6–8.8) compares and contrasts the perspectives of institutional economics and neoclassical economics upon the family ﬁrm. It is shown...
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