The History of Family Business, 1850-2000

Published by EH.NET (December 2003)

Andrea Colli, The History of Family Business, 1850-2000. Cambridge, UK: Cambridge University Press, 2003. x + 114 pp. $40 (hardback), ISBN: 0-521-80028-5; $15 (paperback), ISBN: 0-521-80472-8.

Reviewed for EH.NET by Alison C Kay.

In The History of Family Business, Andrea Colli offers a historical and comparative perspective on family business. This book begins with a consideration of the definition of a family business and promotes the need to move beyond the traditional analytical dichotomy between family and managerial firms (pp. 6-22). The second part of the book considers family business in different institutional and political contexts. It also examines the different relationships within family firms over time (pp. 27-45). Finally, in the third part of the book, Colli compares the performance of family business with that of other economic organizations. He considers the impact of changes in technology and market structures characterizing the second and third industrial revolutions on family firms and the role of family business in the evolution of contemporary industrial capitalism. In this section of the book, the problem of the introduction of managerial hierarchies into family-controlled enterprises is examined, highlighting the different experiences in various national contexts (pp. 49-65). The book ends with a bibliographical essay, providing a synthesis of current debates and highlighting seminal works (pp. 77-84).

Central to Colli’s agenda are the reasons for both the decline and persistence of family business, the different forms it has taken over time, and how it has contributed to the growth of single economies. It is not merely, he writes, a device to handle uncertainty during the initial phases of industrialization (p. 27). However, he points out, it is clear that the degree of world-wide diffusion of the family firm depends largely on the stage of economic growth of each country, on the sectors involved, and on the structure of the enterprise itself inside these sectors. Therefore, even if the contribution of family business to GNP converges across modern economic nations, there are international differences in its pervasiveness and structure. A family firm is the product of a specific national culture. Despite these differences, Colli argues that it is the ability to fine-tune — to continually seek new survival strategies to bridge the aspirations of family members with the constraints imposed by market competition, institutional and legal systems — that accounts for the longevity of the family firm.

Much more could have been said on the role of smaller family business in the economy. Perhaps motivated by a desire to take the identification of the family business beyond the traditional perception of the small and elementary production unit, Colli’s picture often focuses on medium to large-scale business. Due to this, an opportunity is missed to examine the pivotal role of women in smaller family businesses across the globe. The book’s focus (and by default their exclusion) does permit a useful general picture to be developed and also reduces the family-managerial business analytical dichotomy. However, it also restricts from our view the rich variety of form that family business has historically taken. Although this book stresses “the extreme diversity of family businesses,” (p. 73) studies such as this — which in essence focuses on the medium to larger-scale operation — provide an essential, interesting but also partial picture. They overlook the role and dynamic of the smaller, equally as important, family business and the complex web of strategies, motivations, communities, networks and identities therein. Beyond this issue, in all fairness, Colli seeks to guide us through the “shifting controversy” surrounding the impact of family firms in modern advanced industrial economies, and reaffirm the importance of placing business history in its social, historical, institutional, and economic context (p. 76).

The History of Family Business has many strengths. Although the family firm as a specific organizational form has received attention from scholars, particularly of the industrial revolution, this book offers a new focus. A central theme is the resilient persistence of such an organizational form through the second and third industrial revolutions. Colli neatly outlines the resilience and efficiency often found within family business, contrary to its anecdotal image of family emotion over economic reason when compared with managerial capitalism. Furthermore, he champions the purposefulness of this form of business organization, arguing that it does not result from a supposed incapability of entrepreneurs to understand and adopt the managerial models of the American corporation. Instead, Colli presents a view of its enduring presence as a demonstration of its “efficiency” against a defined institutional framework, rather than as a failure. This book is succinct, provides a useful summary of research into family business, presents new and vital ideas and is well argued. It will be particularly useful for the student of economic and business history.

Alison C. Kay has recently completed her D.Phil. thesis at Nuffield College, Oxford University on the topic of London’s women in business, 1750-1880. She is currently researching women’s role in the metropolitan accommodation business.