[The Baking Typewriter] Rediscovering Family Business Competitiveness... The Story of a 100-Year-Old German Company

[Asia Economy Reporter Hyunwoo Lee] The term ‘Family Business’ literally refers to a system in which a small family holds ownership and management rights of a company and wields strong authority. In South Korea, it has commonly been translated as ‘Chaebol (財閥)’ or clan-based enterprises and has mostly been used with a negative connotation.

However, around the 2008 financial crisis, the positive aspects of family businesses began to be highlighted again in Western societies, including the United States. This was because moral hazard issues in the American-style management system, which strictly separates ownership and management through professional managers, surfaced in many places, increasing the need for the stability and sense of responsibility that family businesses possess.

The author of this book, Masaru Yoshimori, Professor Emeritus at Yokohama National University, is well-known for emphasizing the positive meaning of ‘ownership.’ Professor Yoshimori, who argues that the positive elements of family businesses?translated in Japan as ‘D?zoku (同族) enterprises’?and the corporate management techniques they have preserved for centuries should be introduced to Japan, has especially focused his research on the many family businesses in Germany.

At the beginning of the book, he cites the Fuggerei, the world’s first social housing complex for commoners established 500 years ago by the wealthy Fuggers family in Germany, as an example, emphasizing that the ownership of family businesses maintained over centuries can greatly contribute to corporate and social development.

The Fugger family was not only a major financial family in 16th-century Germany but also one of the largest financial dynasties in Europe, exerting significant influence over historical turning points such as the election of the German emperor and the Reformation. Particularly, the sale of indulgences led by them alongside the Roman Catholic Church remains a subject of criticism. However, the author stresses that the social contributions of the Fugger family, who first introduced the concept of social welfare in late medieval Germany, are equally significant.

The major German family businesses introduced in this book, along with the Fugger family, all have histories exceeding 100 years. Names of globally renowned companies such as Krupp, a leading steel company founded in 1811; Zeiss, an optics company established in 1816; and Bosch, founded in 1886, are mentioned.

The author emphasizes that these companies’ success lies not only in maintaining a family business system and demonstrating healthy ownership to lead technological development and innovation but also in their significant social contributions. In fact, these companies have established themselves as national enterprises connected to local communities and the country at large, promoting labor-management coexistence and contributing to the continuity and stability of the companies, the author analyzes.

Of course, the author does not forget that various historical twists and social consensus processes were involved before such positive ownership could be established. He devotes considerable space to explaining Germany’s dual structure of general management boards and supervisory boards, as well as legal systems designed to prevent excessive management rights exercised by owners. Ultimately, the author argues that the strengths of family business ownership can shine when companies, the state, and society properly manage them through checks and balances.

However, the book’s uncomfortable aspect is the deliberate highlighting of the fact that most of the companies introduced collaborated with Nazi Germany as war crime companies and that the dual corporate board structure was created by Nazi Germany. Considering these points will help deepen understanding of corporate structure issues.

Story of Germany’s 100-Year Companies | Masaru Yoshimori | Translated by Wonki Bae | Korea Economic Daily | 580 pages | 30,000 KRW

This content was produced with the assistance of AI translation services.