Japan is famous for the longevity of its family-run businesses, some of which trace their history back more than a thousand years. Handing down a firm through generations is seen as so important that it has given rise to the unusual tradition of mukoyōshi.
When there is no son to take over the family firm, a male employee is married to a daughter of the family and then formally adopted, taking on the company’s name. Toyota, Canon and Suzuki, the latter of which is on its fourth generation of adopted sons, have all been handed down to mukoyōshi.
The practice is a world away from corporate succession in the West. Or is it? After all, Mike Ashley’s son-in-law, Michael Murray, succeeded him as CEO of Frasers Group last May. Then there’s Delphine Arnault, who was appointed head of Christian Dior last week by her father Bernard, CEO of luxury behemoth LVMH.
In Hollywood, so-called nepo babies – actors and musicians with famous parents – have recently come under scrutiny. Now it might be time for the spotlight to shine on those who have inherited the leadership of some of the UK’s biggest firms.
Four of the currently serving FTSE 100 CEOs have a direct family link to their predecessor or the company founder. Family ownership is more common among unlisted companies and often cited as a reason why firms avoid floating on the stock market. Around 86% of British private businesses are thought to be family owned, although the majority are small-scale.
George G Weston, CEO, Associated British Foods
Associated British Foods owns dozens of businesses including Kingsmill and Primark. Despite being listed, it has been controlled by the Weston family for almost a century. W Garfield Weston founded the company in 1935, building upon his father’s Canadian baking empire. His son, Garry Weston, served as chairman of the group for more than 30 years, stepping down just before his son, George G Weston, was appointed as CEO in 2005. Other members of the Weston family can be found heading up various ABF subsidiaries and shareholders around the world.
Michael Murray, CEO, Frasers Group
Ashley promoted his daughter’s husband, a former nightclub promoter and property investor, as CEO of Frasers Group in 2022. Murray was just 32 when he took on the role and his supporters have described him as pivotal in helping the group appeal more to younger shoppers. Others revolted when asked to approve a bonus scheme that could see him in line for £100m on top of the nearly £21m he was previously paid for consulting work with the group.
Simon Wolfson, CEO, Next
Simon Wolfson is the FTSE 100’s longest-serving CEO. His appointment at the age of just 33 was controversial in 1997, given he had only joined the company in 1991 as a sales assistant. His rapid rise through the ranks was widely attributed to the influence of his father, Lord Wolfson of Sunningdale, who was chairman of Next from 1990 to 1998. Questions about his suitability soon faded, however, with the retail group successfully weathering storms that sank many of its rivals and now seen as a bellwether of high street performance.
Tony Smurfit, CEO, Smurfit Kappa
Tony Smurfit is the third generation of the eponymous clan to lead the packaging giant. His grandfather, Jefferson Smurfit, established the company in 1938, later passing on its leadership to his son, Sir Michael Smurfit. Following a brief six-year interregnum, Tony stepped up from chief operating officer into the CEO role. Nepotism has been a winning formula for both shareholders and the family coffers. Sir Michael, who once said “equity is blood”, is one of Ireland’s richest men and a prominent art collector.
Richard Walker, executive chairman, Iceland
One of the largest private companies in the UK, supermarket chain Iceland, was passed down to current managing director and executive chairman Richard Walker by his father Malcolm, who insisted his son spent a year stacking shelves when he first expressed interest in joining the family firm. Richard says this “gained him a lot of respect” when he later took on management roles across the business.
Holly Branson, chief purpose officer, Virgin Group
A rare female beneficiary of nepotism, Holly Branson abandoned a medical career to work at her father’s Virgin empire. She is now its chief purpose and vision officer and is thought to be being groomed to eventually take over as CEO at the group, a role currently held by outside hire Josh Bayliss. Holly’s LinkedIn profile makes no effort to hide her pedigree, listing one of her jobs as “Virgin family member… since birth!”
John Perkins, joint CEO, Specsavers
Specsavers is managed by the son of its founders, Doug and Mary Perkins. John Perkins worked his way up through management at the retailer after a short stint at Deloitte. Two of his siblings also hold senior roles, while the Perkins have even met with their grandchildren to discuss the future of the business.
Jake Dyson, R&D director, Dyson
Dyson is one of the UK’s most prominent companies and reported global revenues of £6bn in 2022. We can assume founder James Dyson must have thought of the purchase of his son Jake’s lighting company as small change when he brought it under the Dyson Group umbrella in 2015. He told the Financial Times: “I want the business to remain a family business. Jake is highly competent, loves technology, and has good business sense and marketing sense. He’s got all the things I had and more, because he’s more inventive. So he will take it to places I couldn’t.”
Lord Anthony Bamford, chairman, JCB
JCB has been handed down through generations of the Bamford family. Current chairman Lord Anthony Bamford inherited the construction equipment company from his father and steered it to become a household name. Along the way he amassed a reported £4.32bn fortune and a deep influence in the British political scene.
Is nepotism bad for business?
Many of these leaders reject the nepotism label, arguing that they earned their titles through merit, not blood.
In some ways, that might be true. “There is value in working in the same occupation as your family, and that needn’t be unfair or harmful in an economy where success is not zero sum,” Allison Schrager argued in a column for Bloomberg. In-depth knowledge of a business fostered from a young age can be crucial to a leader. Meanwhile, someone with a personal as well as a professional stake in the business might be inclined to work harder. One study found that family CEOs had a positive emotional effect on their employees.
But it’s hard to warm to the practice – which after all runs explicitly counter to diversity and inclusion efforts. From a shareholder’s point of view, leaders are less likely to have a clearheaded view of their offspring’s abilities.
Then there’s the personal toll. Delphine Arnault may have won out over her siblings in the rumoured battle for control of LVMH but, as watchers of the TV show Succession will know, that may come at the cost of normal family life.
Nepotism may have worked out well for the above-mentioned firms. But for all their success, survivorship bias is at play. We might never know how many promising businesses failed or faded into mediocrity after being gifted from founder to undeserving child.