Executive Summary

I was doing some research for work and I stumbled upon this article that we covered during one of my strategic management classes at McGill taught by Prof. Gregory Vit. Prof. Vit main research interests, and areas of expertise, is Contrarian and Conformist Strategy, so it is expected that he would try to make us see other perspectives.

This article is one of those that expand your horizons. Previous PNR Papers concerned mostly large, U.S. publicly traded companies because that is where the data is available for researchers. However, there are other kinds of interesting businesses like family-controlled businesses (FCBs) that are not covered much by researchers.

Family-controlled businesses represent 50% of GDP, 59% of the workforce and 92% of American businesses. Furthermore, it has been discovered that FCBs outperform their non-family counterparts on return on assets, market valuations, total shareholder returns, return on capital and tend to survive 2 to 3 times longer. FCBs outperforms because they are managed for the long run.

FCBs Secret Sauce: Continuity, Community, Connection, and Command

  1. Continuity: High-performing FCBs do not pay much attention to quarterly numbers, but they invest in their core competencies, build assets (people, brand, knowledge, etc.) and focus on doing something unique over a sustained period. Managers of these FCBs think that financial performance will come by itself if the firm deliver on a market-relevant mission.
  2. Community: Cooperation is more common than competition in high-performing FCBs. These FCBs have strong values, provide flexibility and ownership, which allow them to attract overlooked talent they can train and mentor.
  3. Connection: High-performing FCBs focus on win-win long-term relationships with external stakeholders (customers, suppliers and partners). It is not rare to see these FCBs give more value upfront without expecting a financial return.
  4. Command: The first three priorities can only be realized with appropriate governance. High-performing FCBs have little hierarchy, a decentralized structure and focus on the performance of the whole rather than micromanaging the parts. Furthermore, top executives at these companies receive decent compensation packages but nothing outrageous and they have the freedom, knowledge and incentive to invest for the long run.


Over the past decade, publicly traded companies have been under fire for their short termism: downsizing, outsourcing, value-destroying acquisitions and other capacity destroying measures. Considering these measures, it is surprising that these companies represent our role models.

FCBs represent an interesting alternative model for corporate governance. Executives at these highly successful FCBs act in the long term interests of the company and of all its stakeholders: shareholders, employees, clients, partners, and society at large.

Non-family companies can reproduce the long-run approach of FCBs. They have an edge by having an easier access to resources (capital, talent, infrastructure, etc.) Jeff Bezos at Amazon is one of the perfect example of a company that manage for the long-run: courageous leadership that resists short termism from shareholders and persistence in pursuing the vision of being earth’s most customer-centric company.

Read more: Miller, D. and Le Breton-Miller, I. (2007). ‘Kicking the habit: broadening our horizons by studying family business’. Journal of Management Inquiry, 16, 1–4.