Introduction

Chinese family companies are a major influence in Southeast Asian economies. While family-owned companies dominate small business, as they do in other countries, what is unusual about Southeast Asia is that family companies also dominate big business. Big enterprises in Asia are not the large-scale firms run along Western lines, but rather a conglomeration of small and medium-scale enterprises in a variety of markets that are often not even remotely related (see, for example, Gomez and Jomo 1999). In a (now dated) survey of corporate ownership by the World Bank following the Asian Financial Crisis in 1997, Claessens et al. (2000) examined the ownership of almost 3,000 Asian companies and found that a high proportion were family controlled; these firms, in turn, controlled a large part of many Asian economies. For example, the top ten families in Thailand controlled about 46 per cent of assets, whilst their counterparts in Indonesia control an even larger proportion — about 58 per cent (see Table 10.1).

What is perhaps surprising is the high concentration of top family assets irrespective of the level of a country's development or its legal or political system. One likely explanation is the importance of elite patronage networks that not only connect businesses but also link businesses and governments, which are then used to obtain monopoly and other competition-restricting concessions. Business goals and firm characteristics are also important. Family-owned businesses, big or small, may put the interests of the family ahead of profitability, which can have implications for competitive conduct — a family business may be more concerned with preserving the business (to employ family members and to ensure proper succession) and so sustain losses for extended periods of time which may drive even more efficient competitors out of business. Or networks can be used to prevent new entry.