Family Firms

Family firms represent a cornerstone of the global economy, playing a significant role in both private and public sectors, driving innovation and entrepreneurship, and contributing to economic diversification and resilience across industries. This chapter delves into the defining elements of family firms, exploring their strengths and weaknesses, as well as their nuances and implications through a multifaceted lens. The chapter also focuses on one of the most crucial moments in a family business’ life: generational succession, a critical issue that significantly impacts long-term sustainability and governance. Drawing on examples and addressing methodological issues, the chapter finally examines family firms’ corporate governance and agency problems, shedding light on conflicts between shareholders and managers, as well as between controlling and noncontrolling shareholders.