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Although there are many different definitions of a family business, most researchers agree that a definition must include a combination of equity ownership and control. Thus, a family business is defined as a business in which the founding family owns more than 50 percent of equity and family members—those who are related to the founding family through blood, adoption, or marriage—sit on the board of directors or hold management positions in the company. If certain conditions exist, family businesses have the potential to yield superior strategic advantages over nonfamily firms. These advantages stem from their unique characteristics, or their “familiness.”

Family businesses represent a large portion of the U.S. economy. They generate about 50 percent of gross domestic product (GDP), 60 percent of total employment, and ...

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