Raphael Amit - Faculty Research in Knowledge@Wharton

SFOs in Action: How the Richest Families Manage Their Wealth

Wed, 14 May 2008 17:05:58 EST

For many of the world's richest families, SFOs -- Single Family Offices -- play an essential role in their investment strategy. SFOs manage the family financial portfolio and often provide other services, such as handling children's college applications or managing the family fleet of jets. Up until now, however, little has been known about these powerful entities. Yet new Wharton research shows that they play an important role in managing major investment portfolios, guiding significant philanthropic endeavors and maintaining a core set of values across generations of extremely wealthy families.

Playing Favorites -- Romantic or Otherwise -- Is a Messy Game in the Workplace

Wed, 08 Aug 2007 15:43:21 EST

This spring, World Bank president Paul Wolfowitz was forced out after being accused of arranging a big raise and promotion for a woman with whom he was having a relationship. As anyone who works in an office knows, though, favoritism isn't confined to love and sex: Family relationships and close friendships can upset co-workers' sense of fairness, too, and end up undermining an organization's performance. What's the solution? There's no one answer, according to Wharton faculty and other experts, but companies would be well-advised to keep their rewards systems transparent and to have clear policies regarding conflicts of interest.

Private Equity Is on a Roll, but Are Investors in for a Let-down?

Wed, 10 Jan 2007 15:27:02 EST

With private equity investors of all types flush with cash -- from venture capitalists and hedge funds to large leveraged buyout (LBO) firms such as The Blackstone Group and The Carlyle Group -- private financing hit record levels in 2006 and is likely to remain strong in the new year, according to Wharton faculty and industry analysts. Nearly a third of the dollar value of all U.S. acquisitions last year involved private equity firms, up from 3% five years ago. But just how long can this boom continue, and what changes may be in store for private equity models?

Indian Companies Are on an Acquisition Spree: Their Target? U.S. Firms

Wed, 13 Dec 2006 15:19:43 EST

Reliance Gateway Net, VSNL, Scandent and GHCL aren't exactly household names in the U.S., but they may be signs of bigger things to come. These are only a few of the growing number of Indian businesses that have acquired U.S. firms in the past few years. And the U.S. merger-and-acquisition activity is just part of a bigger picture. Indian companies -- usually quietly, but sometimes with media fanfare -- have been on a buying spree in continental Europe, Great Britain and Asia in attempts to become key players in global markets.

Why Is Microsoft Afraid of Google?

Wed, 19 Oct 2005 16:43:39 EST

In the few short years of its existence, Google has come a long way, simultaneously striking fear in the hearts of major players in the computer industry and also arousing their curiosity. While the company is keeping all competitors on their toes, it poses a special threat to one particular company -- Microsoft. Why? Because Google's existing and potential products -- as well as those of other firms -- raise the specter that Microsoft may witness an erosion of its control over the platform for the next generation of software application development, according to Wharton faculty members who follow the technology sector. Just how serious is this threat and what is Microsoft doing to combat it?

After Months of Acrimony, an Outbreak of Brotherly Love at Reliance

Wed, 13 Jul 2005 15:36:49 EST

Last week peace returned to Reliance, India's largest business group with $23 billion in annual revenues, after a settlement was hammered out between Mukesh and Anil Ambani, the two warring brothers at its helm. As part of a deal blessed by their mother, Kokilaben Ambani, Mukesh will control the group's oil, petrochemicals and natural gas businesses, while Anil takes over the telecommunications, power and financial services companies. The settlement enormously relieved millions of Reliance shareholders -- and stocks in India rose to record highs. As the reorganization process gets underway, the Ambani brothers have announced aggressive plans for growth. Experts point out, however, that the Ambani saga offers important lessons on the need for family-owned businesses to set up effective processes for communication, conflict management and resolution.

Family Business: Why Firms Do Well When Founders Are at the Helm

Wed, 03 Nov 2004 15:18:15 EST

Despite the lack of independent directors on their boards and voting power for minority shareholders, family-run companies are still the better bet for all stakeholders as long as the firm's founder is involved as chief executive officer or chairman. If the descendent of a founder runs the company, value is lost. Those are some of the conclusions of a paper by Wharton Professor Raphael (Raffi) Amit and Harvard Business School Professor Belen Villalonga. The paper, titled "How Do Family Ownership, Control and Management Affect Firm Value?" also looks at corporate governance. Among its findings: While family companies often lack independent directors and give insiders more voting power, they still manage to score higher on corporate governance than non-family companies.

Is the Latest Corporate Bankruptcy Strategy a Death Knell for Pensions?

Wed, 06 Oct 2004 15:59:56 EST

Chapter 11 filings by US Airways and United Airlines, and the possibility of other airlines following them into court, bring new attention to bankruptcy reorganization as a management strategy. For example, is bankruptcy a last-ditch effort to salvage a firm passing through a temporary rough patch, or is it a way to get rid of long-standing pension obligations to employees? Wharton professors and bankruptcy experts look at this issue and others, including the dangers that companies face during bankruptcy, and recent economic conditions that may push a growing number of firms into bankruptcy court.

A Growing Corporate Club: The Founding Felon

Wed, 25 Aug 2004 14:35:51 EST

Along with Martha Stewart, some of the biggest names in the current wave of corporate criminal cases are company founders – Kenneth Lay of Enron, Bernie Ebbers of WorldCom, John Rigas of Adelphia Communications, Steve Madden, founder of the shoe company that bears his name, and Sam Waksal of Imclone Systems. While most founders are never even summoned to court, they have a deep connection to their companies, making those firms especially vulnerable if their founders turn out to be felons, according to Wharton faculty and other experts.

What's Behind the Overseas Forays of U.S. Online Giants?

Wed, 28 Jul 2004 12:53:59 EST

EBay has taken over Baazee.com in India. Yahoo has launched Yisou, a search engine, in China. Google has acquired a stake in Baidu, a Chinese search engine. What's driving the international expansion plans of these Internet companies? More importantly, will the business models of these U.S. companies lend themselves to being exported and transplanted overseas? Experts at Wharton and elsewhere note that localizing a global business can be a daunting challenge - but if handled right, the payoff can be huge.

SAP, Microsoft and the Coming Consolidation in Software

Wed, 14 Jul 2004 17:19:54 EST

Even the most jaded journalists ‑ who scorn press releases ‑ knew there was a hot story in the separate handouts issued June 7 by Microsoft and SAP. Microsoft, the world’s largest maker of software for personal computers, last year had approached Germany’s SAP, a leading enterprise software company, about a potential merger, but the preliminary talks were discontinued this spring, said the dry-as-dust announcements. The news sparked a buzz throughout the technology world, and for good reason. Wharton faculty members and other academics say that it was as good an indication as any that the software industry is ripe for consolidation. They differ, however, on whether SAP needs to link up with a major partner in order to thrive. And some suggest that a SAP-Microsoft merger may not be a dead issue.

The Buzz on Google's IPO

Wed, 19 May 2004 14:34:20 EST

By any measure, there is much to admire about Google - its business model, its laser-like customer-focus, its ability to generate revenues and profit. And yet, with the company’s recently announced plans to go public, Google-watchers also see some formidable obstacles ahead, such as increased competitive challenges from Microsoft, Yahoo! and others. Even the act of going public, observers say, is not without possible drawbacks: a relinquishment of some managerial control, for example, and the need to devise ways to generate more revenue without alienating legions of loyal users. In short, the hottest show in Silicon Valley is ready to roll, and its long-term future is anybody’s guess.

Does Sun, Burned by Competition, Need a New Business Model?

Wed, 22 Oct 2003 13:48:09 EST

The clouds over Sun Microsystems are thickening as the company continues to struggle against competition from cheap, open systems offered by Dell, and from IBM and Hewlett-Packard in high-end business systems. While many tech companies have felt the pain of the drought in information technology spending, Sun � a manufacturer of servers and proprietary networking software based in Santa Clara, Cal. � seems to be suffering more than most. What should Sun do, and is CEO Scott McNealy the one to do it?

The Post-War Future of Iraq and Its Abundant Oil Reserves

Wed, 09 Apr 2003 00:00:00 EST

Now that the U.S. and its allies have fought their way to Baghdad, what are the prospects for Iraq�s economy? About the surest prediction one can make is that the journey from economic basket case to a free-market-style system will be long, tough and uncertain, according to interviews with Wharton faculty and others. Oil revenues in recent years have fallen far short of their potential, the country has no capital markets or impartial judicial system, and its debt burden is staggering, thanks to the war with Iran and the invasion of Kuwait. Yet a healthy Iraq is crucial. As one observer notes, �the more stable the region, the less terrorism we will see,� not just in the U.S., but also in the Middle East.

Middle East: When Peace Comes, Revival and Reconstruction Will Follow

Wed, 26 Mar 2003 00:00:00 EST

The assault on Iraq by the U.S. and its allies is curtailing economic activity throughout the Middle East as tourism and business travel plummet, consumer spending is put on hold and investment uncertainty deepens. But when the war ends, the reconstruction in Iraq will lead to billions of dollars of spending on infrastructure as well as opportunities for entrepreneurs in the region. Indeed, the Middle East could become more attractive to foreign capital -- but only if the Israeli-Palestinian conflict is resolved and the region grows more stable and democratic.

Unemployed Dot-commers: Desirable Execs or Damaged Goods?

Wed, 09 May 2001 00:00:00 EST

In today�s tough economy, people who once worked for dot-coms now find themselves pounding real pavements in search of work. How difficult will it be for these people, especially those in top management positions, to find new jobs? Will their dot-com experience count for them or against them? If they previously worked for traditional companies, will old-economy employers be willing to hire them back? Wharton management professors and executives in the recruitment and outplacement industries offer their opinions.

Wharton Faculty Wish-list for George W. Bush

Wed, 17 Jan 2001 15:21:20 EST

There is little doubt that President-elect George W. Bush will have to hit the ground running once he is sworn into office on Jan. 20. A convergence of factors � ranging from leftover election rancor to a divided Congress to a newly sluggish economy - means Bush will have an unusually short honeymoon. Knowledge@Wharton asked Wharton faculty members to identify the most important issues � related to their own fields of expertise � that the new administration should address.