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Preface and Acknowledgements
"This is a book about family and business, success and disappointment, love and discord." (p. ix) Family histories are more than a rich source of instructive anecdote. The contribution of family business to economic growth and development is too often overlooked by economic historians and policymakers. The majority of firms in Europe and the United States are family-owned, contributing one-half to two-thirds of GNP and jobs. In contrast to the "managerial model," family firms are the best hope for successful development in "Africa, the Arab Middle East, much of South Asia, much of South America." (p. xii) Not all industries are suitable for family management. The chemical industry for example, is characterized by technological change, requires highly specialized knowledge. Thus, early on the industry was organized in conglomerates. Growth, diversification, and technology all work against the continuity of the family firm. So does success, as later generations lose interest in the family work. Still, family businesses are more successful on average, and the managerial model has serious downsides, as illustrated by the collapse of Muhammad Ali's campaign to industrialize Egypt.
The success of family dynasties over generations is determined by choice of sector (banking vs. high-tech) and the value a particular society puts on business activity and amassing wealth through enterprise. This book focuses on examples from the West because the countries of the West have led economic development and modernized and the operations and techniques developed in the West are examples for the rest of the world. Landes acknowledges the help of a long list of people, including Niall Ferguson, Henry and Nancy Kissinger, and Larry Summers. Finally, he thanks his own family and wife.
Banking is fertile ground for family firms because it relies on connections and trades in a single commodity -- money -- that is not subject to constant technological improvement. Especially in banking, enrichment is the biggest threat to trans-generational success. Some families deal with it better than others, who are tempted by the social status large amounts of money can buy. In some countries, like England, folks with high social status look down on strivers and entrepreneurs. Banking is a business that thrives on connections and contacts, so it's a contradiction that the more successful bankers get the more stuck-up and pretentious they become: "It seems clear that banking is bad for bankers' character" ( p. 9).