Who own the family firms? : Berle & Means (1932) and Jensen & Meckling (1976) revisited

Abstract

In response to the calls for the diversity and the longitudinal study of the family business, this empirical paper sheds light on Japanese family businesses managed but not owned by the family for 40 years or longer. Based upon the thorough analysis of all listed firms in Japan, the paper identifies 1,877 family businesses, accounting for 52.9% of all listed firms, with 113 firms managed but not owned by the family, of which 11 have been managed but not owned by the family for 40 years. Analysis of the 11 firms reveals the fact that the families have kept conscious and continuous efforts to maintain the family capital, especially the human and social capital, and that, through such efforts, they’ve prioritized non-financial values, such as employee satisfaction/satisfaction and social responsibility, while keeping a long-lasting relationship with stakeholders. The paper identifies family’s such a stakeholder-oriented approach as the major factor to be entrusted by the shareholders’ meeting and the board of the directors to manage the firms without ownership influence. The paper finds the theoretical background of such families’ legitimacy in Berle & Means (1932), who pioneered stakeholder approach, while proposing to critically reexamine Jensen & Meckling (1976).