Government commissioned reports say family owned firms have weaker management than non-family run companies.

The London School of Economics surveyed 10,000 companies for the Business Department and says that for the UK to shake off its 'middling' management ranking the Government must 'reduce the role' of poorly performing family-run firms.

Management quality is 'highly linked' to productivity and profits, says Prof John Van Reenen, director of the LSE's Centre for Economic Performance. Second and third generation firms typically had weaker management than peers run by non-family management, he says.

'People think it's a wonderful thing to pass on to the next generation but if you look at the management qualities of those firms they seem to be less well managed and less productive,' he says.

Prof Van Reenen says inheritance tax breaks for families that allow business assets to be passed on tax free could be scrapped to tackle the issue.

However his views were attacked by Roger Pedder, former chairman of Clarks and director of the Unquoted Companies Group. 'Do these academics not realise it is a competitive market out there. It is rubbish to suggest we are sitting in our comfortable niches,' he says.

• < Prev
• Next >