Companies and business organizations have considerable influence within the countries and communities that they are established. Each company and organization is unique in how it is run and managed based on the nature of the organization, the goal it intends to achieve and the people that have control over how it should be run. Corporate governance according to Aguilera and Judge (2014) is the functional management structures that an organization has, that makes it meets its objects, through the people involved by distributing roles and responsibilities. This paper will look at Family Led Market Economies as a model of capitalism.
The primary owners of organizations that fit the profile of Family Led Market Economies are basically members of a family. There are instances where it is a nuclear family having control, or an extended family, in the case of fourth generation family businesses. Other owners of these FLME are interested business groups. In many cases the managers of these companies come from within the family or are hired to act as agents that represent the interests of the family that the business is associated with. The employers pledge their loyalty to the leading family. In case there is ever a board of directors in the company, these men and women in these positions are selected by the family to push for the family’s interest. The boards of directors for FLME usually meet in informal settings, such as over dinner tables, over road trips or any family meeting. The family does not relinquish its control over the affairs of the company.
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Conclusively, the nature of family business restricts external interference from meddling with the affairs of the organization. However, the more a family company grows, the more the family is made aware that they are required to shed off some of their ownership rights. The legal counsel team also plays a big role in ensuring that there are measures put in place to ensure that the family’s interests co-exist with the company’s interests and macro environment forces.
References
Aguilera, R., & Judge, W., (2014) Who will guard the guardians?: International Corprate Governance. Ivey Publishing, D’ Amore-McKim Northeastern University.
