Stock market forces that have transformed Hong Kong family businesses

This article attempts to examine the impacts of the stock market on family businesses by using the example of the development of the property market in Hong Kong. Traditionally, family businesses were considered less significant economic force with the characteristics of being small in size, short-lived and ill-managed. This negative image reflects the reality that they lack sufficient capital for business development and a less developed stock market. The authors’ in-depth study of ten large family-controlled property developers which went to public when the stock market opened up during the boom in the 1970s shows that when these businesses obtained enough capital, they could take-off, fly high and grow into multinational conglomerates. Since capital is raised from the stock market, the organizational structure, corporate governance and accountability system have also changed accordingly. As a result, some of these successfully-managed Chinese family enterprises have not only cast off their former negative image, but emerged as a dominant force in the Hong Kong economy.