Corporate Governance in Family Controlled Businesses
The objective of achieving greater accountability for performance
by managers of corporations extends beyond the universe of public
companies to the world of family controlled businesses and other
family controlled enterprises such as family foundations, family
offices and family limited partnerships.The universe of private
companies (the vast preponderance of which are controlled by family
groups) exceeds the universe of public companies until the threshold
of revenues greater than $500,000,000 is reached. In addition,
many of the Fortune 500 such as Ford are controlled by their founding
families through control of the voting power to elect the boards
of directors. By virtue of being family controlled these enterprises
as well as the foundations, offices and investment vehicles controlled
by families have long maintained what the creator of the Corporate
Governance site calls "permanent shareholders."While it is unlikely
that family controlled enterprises will move beyond looking like
"political oligarchies" there are numerous instances where these
enterprises establish effective corporate governance, although
not always in the form of a truly supervisory board of directors.
Given the clout that family controlled enterprises wield in both
the for profit and the not for profit worlds, I believe some attention
ought to be paid to enhancing effective governance of this sector
of the economy. Some of the developments in the public company
world have direct applicability. Many do not. Some developments
in the world of family business might enlighten many advocates
of corporate governance in public companies. The implications
of this topic for economies on Pacific Rim, in Latin America and
in Europe where the preponderance of capital is still controlled
by family groups are profound. I believe it is unlikely the issues
will be discussed outside of the U.S., however, unless the topic
is broached here. Across the globe privately controlled and family
controlled enterprises share many problems that are susceptible
to cross border solutions. If there is any interest in this subject
on this site, I would be pleased to facilitate a discussion. Richard
Narva
Principal Consultant
Genus Resources, Inc.
genusr@aol.com