The Secret to Family Business Success: How They Dominate Without Competing

When you hear "family business," you might think of dramatic TV shows like Succession or Yellowstone, but the reality is even more compelling. Research reveals that family businesses are uniquely skilled at keeping competitors out of their market space—often without actually fighting them.

Source Illustration: Getty Images

Around the world, family businesses produce about two-thirds of all economic output and employ more than half of all workers. They can be incredibly profitable: the world's 500 largest family businesses generated a collective US$8.8 trillion in 2024, which is nearly twice the gross domestic product of Germany.

If you're not steeped in family business research, their ubiquity might seem strange. After all, families can bring drama and conflict, which doesn't sound like a formula for efficiency. But researchers studying this phenomenon wanted to understand why there are so many family businesses and why they thrive globally.

The Usual Answers Don't Really Explain It

The standard explanation for why family companies exist is straightforward: they allow owners to generate income and create a legacy for future generations. A related question is why entrepreneurs involve relatives in new ventures. Research suggests it's because family members care and can help when resources are limited.

However, this might not be unique to family businesses. All companies, whether family-run or corporate, balance short-term profit and long-term goals and seek reliable workers. The key insight is that family businesses excel by leveraging their unique dynamics to avoid direct competition, securing their market position through strategic advantages rather than head-to-head battles.