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Family Control and the Rent–Seeking Society

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  • Randall Morck
  • Bernard Yeung

Abstract

A high level of trust within a small elite, like a low level of trust in society at large, may be a serious impediment to economic development. This is because such concentrated high trust among the elite promotes political rent seeking, known to retard growth. We propose that entrusting the governance of a country's great corporations to a few wealthy families promotes this undesirable distribution of trust. Preliminary empirical evidence and arguments grounded in game theory support this view.

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  • Randall Morck & Bernard Yeung, 2004. "Family Control and the Rent–Seeking Society," Entrepreneurship Theory and Practice, , vol. 28(4), pages 391-409, July.
    • Handle: RePEc:sae:entthe:v:28:y:2004:i:4:p:391-409
    DOI: 10.1111/j.1540-6520.2004.00053.x
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    8. Isabelle Le Breton-Miller & Danny Miller, 2018. "Beyond the Firm: Business Families as Entrepreneurs," Entrepreneurship Theory and Practice, , vol. 42(4), pages 527-536, July.
    9. Min, Byung-seong, 2021. "Heterogeneity of R&D in family firms," Journal of Business Research, Elsevier, vol. 129(C), pages 88-95.
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    11. Marcin Borsuk & Nicolas Eugster & Paul-Olivier Klein & Oskar Kowalewski, 2023. "Family Ownership and Carbon Emissions," Working Papers 2023-ACF-01, IESEG School of Management.
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    17. Fan, Joseph P.H. & Yu, Xin, 2022. "Do founding families downgrade corporate governance? The roles of intra-family enforcement," Journal of Corporate Finance, Elsevier, vol. 73(C).

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