Abstract
The current literature on governance presents the US-type widely-held public corporation as the universal model of the modern business organization. Conversely, family firms, which are dominant elsewhere are presented as an inferior form, laden with dysfunctional corporate governance structures. They are allegedly prevalent in countries with weak corporate law, and they cause poor macroeconomic performance. Influenced by this wave of Anglo-American thought, some reformers in developing countries have taken steps either to abolish family firms, or to reform investor-protection laws hopeful that these measures will result in the eclipse of family firms. This paper attempts to show attempts to force the eclipse of family firm are misguided. It highlights factors that may cause family firms to persist in spite of improvements in the quality of corporate law. The paper concludes with a reflection on what reformers, concerned about promoting economic development, should pay attention to in developing countries.
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