Family businesses are acutely aware of the danger they face. Most do not make it beyond two generations: power struggles between successors and dispersion of wealth and control are just two ways in which a budding dynasty can fall.
More such companies are drawing up family constitutions, also known as charters or protocols, to help them prosper and endure. These are statements that set out a family’s values, strategic goals and governance.
They are not new — the Mitsui merchant family of Japan created one in 1722 — but their use has expanded, especially in the past ten years. The financial crisis brought disputes over asset allocation and the direction of businesses, and helped boost their popularity. Other factors to have spurred the growth of constitutions include volatile oil prices, political turbulence and the spread of family wealth out of China and India.