International Journal of
Innovation, Management and Technology

Abstract

Family Controlled businesses carry the weight of economic wealth creation in most economies. In the U.S. alone, family businesses account for 80 to 90 percent of the 18-million business enterprises in the United States, and 50 percent of the employment and GNP. In India family controlled business are 85 to 90 per cent of total corporate entities which contributes 75 per cent of employment, 65 per cent of GDP and 71 per cent of market capitalization. The situation of other countries is not diverse from US anyway. Rapid growth and globalization has increased risk level for family businesses to run and survive for long life. Founders who had dreamt to build family empires started many of today's large corporations. By adopting sound corporate governance mechanism, many of these challenges can be tackled or fetch in bottom. In this paper, we describe the importance of corporate governance in family owned business and challenges facing these businesses in new era. Organizations are especially susceptible to loss of vision and purpose during periods of CEO transition, as the leaders who facilitated shape the vision are replaced by others who may not share the same values and capabilities. This paper also addresses the importance of understanding business succession planning and challenges involved by traditional ways of succession planning and firm effectiveness in the family business.