Summary of Dynasties

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8


Recommendation

You know the names: Rothschild, Rockefeller, Ford, Toyota, Guggenheim. Yet, economists rarely analyze the impact of family enterprises. Bestselling author and scholar David S. Landes corrects this imbalance with his study of 11 enduring, influential dynasties. He defines a dynasty as a successful business held within one family’s control for at least three generations. Family companies, even immense ones, often follow a predictable pattern: First, an ambitious, clever, hard-working patriarch, and, perhaps, his children, found a big, profitable business. Then, the following generations spend the accumulated wealth instead of adding to it. Yet, there are fascinating anomalies within this model – from amazing philanthropy to bad apples. The dramas behind family ties that unravel (or knit more strongly) in the face of big money make each chapter read like an absorbing novel. Sometimes Landes’ attempt to track every branch of a family tree can leave the reader out on a limb, yet getAbstract warmly recommends this entertaining work to anyone with an interest in history, economics or family dynamics.

About the Author

David S. Landes taught history at George Washington University and Harvard. He also wrote The Wealth and Poverty of Nations, Bankers and Pashas and Revolution in Time.

 

Summary

Why Study Dynasties?

Today’s economists generally ignore family businesses as a subject worthy of study and analysis. Popular economic thinking takes the stance that family-run businesses are not strong enough to be major economic influencers. Although significant, multigeneration dynasties merit closer examination, economists have largely ignored them. Why? The reasoning is that they are transitional entities. As businesses grow, they need specialized skills that often can be found only outside the confines of a family, particularly when technology develops beyond family members’ expertise. Also, as businesses boom, successive wealthy generations generally prefer to pursue interests outside of commerce and leave the workings of family companies to paid managers.

In the European Union, “60% to 90% of businesses” are family-run, accounting for roughly two-thirds of jobs. In the 1990s, 90% of the companies in the U.S. were family-based firms. At that time, one third of Fortune 500 businesses were either family-controlled or could trace their roots back to family enterprise. Further study reveals that family businesses generally outperform nonfamily businesses...


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