posted at 08:50
Author Name: The Economist
Companies Controlled By Founding Families Remain Surprisingly Important
Among them is the world's largest family firm, Walmart, in which the children of the late founder, Sam Walton are still big shareholders. The firm has applied its index of "Organisational health" to 114 family firms and around 1,200 other large companies. Ultimately, whether big family firms will continue to defy expectations of their demise will depend on their ability to negotiate the rocks on which family businesses have a unique propensity to founder. Edelman's survey found that the public's trust in family firms falls once the baton is passed from the founder to the next generation. Alarmingly, a study of 2,400 family firms in 40 countries published last month by PwC, a consulting firm, found that only 16% of them had a "Discussed and documented" succession plan in place. Some families are adept at training the next generation to work in the family firm. Outsiders often refuse to get involved in managing tensions within the family and assume their job is just to oversee the running of the business, when in reality they may be the last line of defence against a family breakdown destabilising the firm, he says. As big emerging-market firms pass from the founders to their heirs, the challenge will be, as it has been in the rich world, to reconcile the family's needs and desires with the demands of running a successful business.

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