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Family businesses are inefficient - discuss

Are family businesses inefficient? Professor John Van Reenen of the Centre for Economic Performance at the London School of Economics seems to think so for family businesses in the UK. 

Commenting in an article about how to get the UK economy to grow in the Financial Times, Van Reenen was asked to give his ideas about improving management skills in the UK. He said Britain is a nation of “David Brents”, referring to the useless manager from the UK television series The Office.

Among his suggestions for making management more efficient was limiting inheritance tax relief on family-owned companies, because, according to the article, he had found these types of business to be some of the worst run.

Interestingly, on the same day Van Reenen’s remarks were reported in the FT, research from the Institute of Family Business said family businesses are leading the way in the appointment of women to senior positions, compared with non-family businesses.

The survey of unlisted firms, conducted on behalf of the IFB jointly by Leeds University and Nottingham University, revealed that family firms have a greater total percentage of women directors (44%) than non-family firms (32%).

There may be little to connect the two stories, but the IFB research suggests family businesses are doing at least more than non-family firms to improve the gender bias in company boards, if not to improve overall management quality.

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