RELEVANCE AND IMPORTANCE OF CORPORATE GOVERNANCE IN FAMILY OWNED BUSINESSES
Topics: Corporate governance, Corporation, Governance, Management / Pages: 7 (2062 words) / Published: Feb 18th, 2015

BUSINESS ETHICS AND CORPORATE GOVERNANCE

Assignment on
RELEVANCE AND IMPORTANCE OF CORPORATE GOVERNANCE IN FAMILY OWNED BUSINESSES

BY

Abhijith Sudesh Gujaran
FSB 2013003061

Family-Owned Businesses
Family-owned businesses are the spine of many economies around the globe and their sustainability is crucial to global economic growth.
Many of the world’s greatest corporations were started and are still run by family lines. In fact, some of the largest publicly listed companies are family-owned, including one-third of Fortune 500 companies.
Family Businesses play a vital role in economic development – not only through their business contributions but also by creating an investment environment that is open, safe, secure and transparent. A number of family businesses began as entrepreneurial projects 50 to 60 years ago and have over the years diversified their interests and created a number of successful conglomerates. These businesses are considered relatively young and will undergo a generational change over the next five to ten years, having reached a stage where a more structured governance process is necessary.
Specific studies over the last couple of years have shown that family firms are more dominant in the Middle East and North Africa region compared to other regions. Two key factors contribute to their growth and subsequent power of family owned businesses.
1. Cultural preferences- To first pursue business within the family and only then consider outsiders
2. Solid political connections
Family-owned firms face a distinctive set of challenges that are entrenched in an organizational structure that thwarts these enterprises from attracting and retaining high quality human capital, obtaining lower cost debt and equity capital, and ensuring long term competitiveness and sustainability. The recent growth in family-owned enterprises has created a demand for tools which will help these companies be more competitive. Corporate governance practices provide a means

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