How many CEOs are just children, relatives or friends of the founder

[Wesley_Clark]

If you take companies like Ford or Busch they were taken over by the children of the founders. As a percentage how many companies are run by the children, other relatives and friends of founders?

[Shalmanese]

There was an excellent survey done by The Economist last year on family businesses which you can find here. Let me know if you can’t see the article.

Some relevant snippets:

Indeed, the majority of businesses are family-controlled, from unsung millions of modest firms to commercial giants such as Wal-Mart, Ford, Samsung or Hyundai. One study in the mid-1990s reckoned that more than 90% of all enterprises in America were family-owned.

…

In fact, depending on how you define “influence”, families have some sway in between 35% and 45% of America’s 500 largest companies. In other parts of the world, the proportion is higher still. Even in Britain, which lacks an overtly strong family-business culture, about two-thirds of all companies, public and private, describe themselves as family-owned.

I distinctly rememeber the article talking about the makeup of successors to a family business but I can’t seem to find in on a quick skim. The closest I could find is:

The vast majority of family businesses consist of a single founder-owner or founder-couple, sometimes employing relatives who come into the business to help or to find a job. A study by four family-business gurus, published seven years ago (“Generation to Generation”), reckoned that about three-quarters of family firms in America took this form. A further 20% are sibling partnerships; and 5% are “cousin consortia”. “Succession is the ultimate test of a family business,” say the authors. “Once the business has been transformed from an individual venture into a family enterprise, its continuity becomes a unifying concern.” The very task of keeping the family firm in existence may thus sometimes provide the glue that holds quarrelsome relatives together.

[Sage_Rat]

Extraneous information:

I would suspect a fairly good number, particularly if we’re talking privately owned companies and small-businesses (I would imagine.) Unfortunately, most CEOs that I met were in the young presidents’ organization so still under the “handing over the reigns” age-group–thus I can’t give much in the way of hard numbers or even observed. But in general parents want to see their children fill their own shoes and otherwise have the best chance at success as they can, ergo.

How long it lasts from there will depend of course on how volatile the industry is, and how skilled the progeny. Of course many may also be mostly CEO in title only, with the actual running of the company passed over to others.

[Freddy_the_Pig]

Management consultant Peter Drucker says that:

Of the 13.2 million businesses in the United States, 90 percent are family owned and managed. These companies employ more than 77 million people, or about six out of every 10 workers in the United States, pay 65 percent of all wages, and generate 55 percent of the nation’s gross domestic product. Between 1977 and 1990, family businesses created eight out of every 10 new jobs in the United States . . .
Contrary to popular belief, not all family businesses are small like the husband-and-wife team running the local restaurant. About 200 of the Fortune 500 companies are family owned.

Of course, “family owned” covers a spectrum from small proprietorships where the founder still owns 100% of the business to large corporations where an extended family of cousins owns 51%. And it doesn’t answer your question as to how often a family member is the CEO. I know of no source for that information.