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Mixing Family with Business: A Study of Thai Business Groups and the Families behind Them

49 Pages Posted: 21 Mar 2005  

Marianne Bertrand

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Simon Johnson

Massachusetts Institute of Technology (MIT) - Entrepreneurship Center; National Bureau of Economic Research (NBER)

Krislert Samphantharak

University of California, San Diego - School of Global Policy and Strategy

Antoinette Schoar

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

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Abstract

A large fraction of business groups around the world are run by families. In this paper, we analyze how the structure of the families behind these business groups affects the groups' organization, governance and performance. To address this question, we constructed a unique data set of the family trees and the business groups they run for 70 of the largest business families in Thailand. We show that the group head and his brothers hold the majority of family positions within each group. However, we also find a positive relationship between family size and involvement of family members in the business group, especially when the ultimate control has passed from the founder to one of his descendants. Interestingly, groups that are run by larger families (more male siblings of the group head) tend to have lower performance. This negative performance effect coincides with a larger number of small firms in these group, more fragmented internal capital markets and possibly more tunneling along the pyramidal structure of the groups. These performance and within-group resource allocation effects are again especially pronounced in groups where the founder is no longer active and ultimate control has been passed to one of his descendant. One hypothesis that emerges from our analysis is that part of the decay of family-run groups over time may be due to in-fighting for group resources as control becomes more diluted among different family members.

JEL Classification: G3

Suggested Citation

Bertrand, Marianne and Johnson, Simon and Samphantharak, Krislert and Schoar, Antoinette, Mixing Family with Business: A Study of Thai Business Groups and the Families behind Them. Available at SSRN: https://ssrn.com/abstract=687299 or http://dx.doi.org/10.2139/ssrn.687299

Marianne Bertrand (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-5943 (Phone)

HOME PAGE: http://gsbwww.uchicago.edu/fac/marianne.bertrand/vita/cv_0604.pdf

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-588-0341 (Phone)
617-876-2742 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Simon Johnson

Massachusetts Institute of Technology (MIT) - Entrepreneurship Center ( email )

United States
617-253-8412 (Phone)
617-258-6855 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Krislert Samphantharak

University of California, San Diego - School of Global Policy and Strategy ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States
858-534-3939 (Fax)

Antoinette Schoar

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

50 Memorial Drive, E52-447
Cambridge, MA 02142
United States
617-253-3763 (Phone)
617-258-6855 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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