Corporate Governance In Family Owned Businesses: A New Paradigm Shift In Management

Abstract

Globally, family-owned businesses are the cornerstones of economic growth and improved standards of living. Empirically it has been proven that more than two thirds of all businesses in the world are estimated to be family businesses. Worldwide family owned businesses have proven beyond any reasonable doubt to contribute significantly towards employment creation, poverty reduction and wealth creation. However, majority of family owned businesses in the retail sector in Zimbabwe have remained miniature compared to other listed counterparts. A crucial question to pose is whether their stunted growth, high death rates and bankruptcy be attributed to their failure of implementing corporate governance principles or to other factors? Traditionally corporate governance has been associated with listed companies. This research sought to investigate the extent to which family- owned businesses practice succession planning, determine the extent to which they businesses implement separation of management from control and establish the extent of transparency in family businesses. Both exploratory and descriptive research designs were employed. Desk research, questionnaires and interviews were used as data collection instruments. Research findings confirm that most family owned businesses hardly implement corporate governance principles despite its widely acclaimed benefits.