Family Business, Corporate Longevity and Governance
JORDI CANALS
IESE Foundation Chair in Corporate Governance
In a world awash in capital and the rising power of private equity-owned firms, it is quite remarkable that family firms continue to be the dominant form of business ownership around the world. The economic and social progress of economies and communities depend on the prosperity generated by family businesses. Any discussion of corporate governance needs to consider family firms as a relevant category in itself, different from listed companies or private capital supported firms.
Some studies have argued that the persistence of family firms around the world can be explained by the low level of protection that national legal systems offer non-controlling shareholders. Countries with higher levels of protection would strengthen the development of more efficient and sophisticated capital markets, and the growth of listed companies. The fact is that the level of investors’ protection around the world has increased over the past 20 years, but this has not resulted in an increase in family firms going public and becoming listed companies. On the contrary, the high regulatory burden of listed companies has significantly diminished the appetite for private companies going public.
The sustained persistence of families as majority owners of companies around the world suggests that other governance factors may be in play. At the recent IESE ECGI Corporate Governance Conference (held at IESE Madrid on March 16, 2026), more than 20 speakers presented insightful explanations of why family businesses often succeed. The first is that family firms tend to have a deep notion of purpose, which defines the reason for their existence. As Colin Mayer, Dorothy Lund, David Reeb, Belén Villalonga and Anne Sanders, among others, highlighted in their presentations, corporate purpose helps better align the interests of shareholders with the board of directors and the senior management team. It can also enable the firm to engage positively with stakeholders that are important for the company, such as employees, customers or local communities. Moreover, many family businesses have intergenerational commitment, and this quality often fosters longer-term horizons for strategic decisions and investment.
Intergenerational ownership and decision-making framed in terms of generations are features that encourage family businesses to focus on the relevance of corporate governance to nurture the firm’s purpose, wealth creation and legacy. Family businesses tend to define effective corporate governance models that can protect their purpose and drive performance. This leads family firms to consider governance arrangements that provide stability for the firm, particularly when facing a generational transition. Among these solutions are foundation enterprises, which legally safeguard the company’s original purpose, avoid ownership fragmentation over generations and allow for governance arrangements to support it, including permitting the foundation’s board to exert influence on the firm’s board of directors.
This structure is widely used in countries such as Austria, Germany and Denmark, as highlighted by Anne Sanders in her presentation. Similarly, the recent emergence of family offices allows families to stay active in business while changing the weight and roles of businesses in the family portfolio, as Josh Baron suggested. A long-term perspective allows for investment in patient capital and innovative projects that might not be considered by private equity firms or other investors, as Bruno Cassiman and his colleagues suggested in their presentation.
Research presented at the conference, as well as panels with family business CEOs, pointed to some potential threats to family firms’ longevity, such as favoring family-related managers and employees over meritocracy, as Margarita Tsoutsouras, Randall Morck and Marco Pagano discussed. This is a real challenge. Nevertheless, as noted by several family business CEOs and panel chairpersons, the overall available evidence seems to be favorable to family firms, especially those that implement effective governance and are led by a professional management team.
As chairs and CEOs Maurice Brenninkmeijer, Tor and Fabian Bonnier, Sabina Fluxà, Gildo Zegna, Francisco Riberas, Søren Staugaard Nielsen and Martin Schily expressed in their presentations, in a world defined by pervasive uncertainty and disruptive forces (technology, societal polarization, wars and geopolitical conflicts), many family firms invest in good corporate governance with a long-term horizon. By doing this, they confirm their commitment to the company’s development and nurture stability in the business world and society at large.
NEWS&TRENDS.
CEO turnover among leading consumer companies has accelerated, reflecting boards’ willingness to prioritize rapid transformation over leadership continuity. A recent Spencer Stuart analysis shows that companies are increasingly appointing experienced external CEOs to reverse poor performance; however, first-time CEOs may in some cases be better suited to navigate disruption and drive long-term change. Read more here.
Boards are entering 2026 facing heightened disruption. A recent Harvard Law School Forum post by The Conference Board identifies key priorities, including strengthening CEO succession, accelerating board refreshment, and building resilience to address emerging risks such as geopolitical uncertainty. Read the article here.
CEO “mega grants” pay packages are under renewed scrutiny. The recent extension of this type of remuneration to Meta's top executive team has intensified the debate around their effectiveness and alignment with shareholder value. Evidence discussed in a recent Columbia Law School blog suggests that such packages are often not associated with significant positive stock price performance and result in limited realized compensation for CEOs. Read the article here.
C-suite mentoring is gaining importance as CEO and senior management roles become more demanding amid geopolitical tensions and rapid technological change. A Russell Reynolds Associates article highlights how mentoring can support decision-making and resilience in uncertain environments. Read here.
IESE's recent research.
DAI, J., ORMAZABAL, G., PEÑALVA, F., RANEY, R. (2026). Mandatory investor disclosure, sustainability commitments, and portfolio decarbonization. Journal of Accounting and Economics, 81 (1), Article 101817.
BOULONGNE, R., YOUNG-HYMAN, T., BERRONE, P. (2026). Short-term demands and long-term commitments. A Temporal model of stakeholder governance. Academy of Management Journal.
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