Zaibatsu Development in the Philippines: The Ayala Model

Abstract

This article discusses the ability of the family firm to grow for several generations by examining the case of the Ayala group in the Philippines. Such an ability, called here as generational growth, has been the subject of debate regarding the future of the family firm and the zaibatsu, which is a special type of family firm. Two features that distinguish Ayala as a model are 1) the ability of the family to maintain ownership and management control for generations and 2) the rejection of the use of political influence for rent seeking. An examination of Ayala's ownership-management system points to strategies employed for the preservation of the family's position within the firm. The quality and process of such preservation, which family members called stewardship, is also consistent in family and firm's political behavior. The paper proposes that the adoption of superior stewardship strategies accompanied by skillful entrepreneurship would ensure the family's continued ownership-management of the zaibatsu.