Family Business

Family business is significant. In respect of family business in the ME, in 2002, 80% corporations are controlled by one family. Meanwhile, In 2008 family business contribute wealth takes account 31% among GDP in the UK and It offers 9.5 million jobs for people. In addition, in the top 500 firms, family business takes account for 35% and provides 50% jobs. Thus family business influences our society deeply, and we should pay more attention to family business. According to Reginald (1995), the manager who is a member of family will pay more attention to their company than professional managers and they focus on long-term development of company. However, family business faces many problems. One of major problems is how to financing about family business. In unlisted family business, they are closed external environments and keep mystical. Thus it leads that investors cannot get information and do not invest them. Therefore family business often obtains money from relatives and bank. it leads that family business cannot obtain a large number of money to expanse business. In listed family business, the managers who are the member of family pay more attention to their own needs rather than investors. This leads to investors not trusting the family business with their wealth. Thus family firms grow slowly.

Another major problem of family business is inheritance. When the person who create firm become old, which one will inherit the firm? He has more than one child. He chooses the inheritors depending on age? Intelligence? In addition, he may choose one to inherit and manage the firm, but his other children may not obey and fight with their brother or sister. It is a disaster for a firm. However in the real world it often appears. For example, in Samsung Group, the chairman is Lee Kun-hee who is the youngest one among his brothers and sisters. In 2012 he is charged by his brothers and sisters. They assert that Lee Kun-hee hides their father’s wealth and required Lee Kun-hee return the wealth. Finally Lee Kun-hee obtains successful for the charge and keeps his position in Samsung Group. However, this news will influence Samsung Group negatively. Lee Kun-hee had to pay more attention to charge. It leads that he cannot devote himself to manage group. This leads other shareholders’ wealth is damaged. In addition, It is harmful for the group’s image.