The Importance and Consolidation of Family Businesses in the Contemporary Economy

Abstract

Objective : The aim of the research is: to present the ways of defining family businesses and their evaluation in terms of practical utility, to assess the importance of family businesses and indicate local differences related to economic, cultural and moral factors, to analyse the tendency to group family businesses into economic and legal entities, and to present selected institutions established for scientific and legal support for family businesses, to analyse selected issues related to the functioning of family businesses, such as succession mechanism, its longevity and sustainability, tracking the current trends in changing the role of family businesses in the global economy. Research Design & Methods : An extensive range of scientific literature on the issues of family businesses was analysed. Particular attention was paid to the ways of defining family businesses, assessing their role in the economy, mechanisms of their transformation over time, and their tendency to associate into larger economic and legal entities. Over 90 publications were analysed, about half of which are foreign-language texts, including western ones as well as texts representing the assessments of research from such countries as the UAE and India. Findings : Some of the most comprehensive and useful definitions of family businesses are listed, while the need to formally include large enterprises and corporations in the category of family enterprises is indicated. The important role of family businesses in the creation of Gross Domestic Product is underlined. The tendency of family businesses to organise themselves into larger legal and economic entities is indicated. The most important Polish institutions which deal with the issues of family businesses are listed. The impact of succession mechanisms and intergenerational transformation of a family businesses are shown. The average period of its existence in Poland and in the world is estimated. The main factors influencing the longevity of family enterprises are identified. The reasons for the gradual disappearance of “family features” in family businesses (e.g. transformation into a joint-stock company or creation of a conglomerate holding) are indicated. The validity of further research is justified. Implications / Recommendations : Little is known about the Polish, European and world rankings of the oldest family enterprises described in the article. Such research is worth continuing. Contribution : Including large family companies in the research, the paper searches for the reasons behind the declining family character of family businesses. These include the transformation of a family business into a listed joint-stock company or the establishment of a holding – in particular a conglomerate, as well as family problems.