Written by Zong-Rong Lee.
Image credit: Taipei Taiwan skyline 2016 by Heeheemalu/ Wikimedia Commons, license: CC BY 2.0.
On the surface, Taiwan looks like one of the world’s most modern economies. It is the global hub for semiconductors, its exports are highly diverse and sophisticated, and its democratic institutions stand in sharp contrast to much of the region. Yet beneath this outward modernity lies an older power structure that refuses to fade: the dominance of family businesses. Whether it is buying an oolong tea from a 7-Eleven, taking out an insurance plan with Cathay Life, or shipping goods across oceans with Evergreen, consumers in Taiwan are constantly engaging with companies tied to family dynasties.
According to surveys, roughly two-thirds to three-fourths of Taiwan’s listed firms remain family-controlled. This persistence of what scholars call “family capitalism” unsettles the neat narrative of modernisation that Max Weber and Alfred Chandler popularised in the twentieth century. Weber’s model assumed that the rise of rational bureaucracies would lead to the decline of kin-based firms, while Chandler argued that the growth of modern technologies and large-scale corporations in the United States spelt the end of patriarchal ownership. Yet Taiwan’s trajectory diverged. Instead of fading, families consolidated. Why, then, does family capitalism persist in Taiwan when theory predicted its decline? As I argue in my paper, Continued Growth and Consolidation of Family Capitalism in Taiwan: a Historical–Institutional Account, understanding this question requires a look at the interplay between the institutional environment, culture, and markets on the island over the past several decades.
Politics as Patronage
The first factor to put into the equation is politics. The Kuomintang (KMT) regime that retreated to Taiwan in 1949 inherited not just a territory but a legitimacy problem. To consolidate its rule, the party leaned heavily on a strategy that political scientists call clientelism. Local families, many of them wealthy landowners under Japanese colonial rule, were incorporated into the new order as economic allies. In return for loyalty, these families received privileged access to industries, licenses, and markets, which generated the very first cadre of private businesses in Taiwan. The cement, finance, sugar, textile, and later petrochemical and oil refining industries were often monopolised by families with the right political connections. The Koo family, for example, was given control of Taiwan Cement, the Wu family-built Shin Kong into a textile, gas, and financial empire, and other lineages benefited from similar arrangements. Unlike in postwar Japan, where the American occupation dismantled the zaibatsu, or in mainland China, where the Communist Party eliminated private family capital, Taiwan’s ruling regime allowed family firms to thrive under authoritarian supervision. The patriarch of a family firm often remained in place for decades, cultivating and enhancing political relationships that could then be passed on to heirs.
Kinship as Social Capital
Yet political patronage is only part of the story; the cultural legitimacy of kinship and the social networks often associated with it are also important. In Confucian tradition, maintaining the ancestral line is a moral duty, and passing on a business to descendants affirms that duty. What makes Taiwan unusual is how families wove themselves together into broader constellations of powerful dynasties. The lineage multiplication and marriages among elite business families can be dated back as early as the colonial Japanese period and have continued throughout the market transition and into the present time. Through intermarriages, cross-shareholding, and interlocking directorships, Taiwan’s leading dynasties formed what scholars now term “kin-econ groups”: overlapping webs of families whose interests are aligned not just by business but by blood and marriage. The Wu, Tsai, and Koo families offer textbook examples. While their business groups — Shin Kong, Fubon, Cathay, Taiwan Cement, and China Trust Bank — often compete, they are also linked through in-law ties, and more often than not become important allies in their merger and acquisition games. Weddings frequently double as strategic alliances, reinforcing bonds that make hostile takeovers and external interventions by unrelated parties nearly impossible.
This dense kinship architecture echoes what sociologist Maurice Zeitlin once described as “classical capitalism”: a form of ownership where business dynasties consolidate wealth and reproduce class privilege through both economic and marital strategies, and pass it on to descendants. In Taiwan, the effect has been striking. As my data has shown, groups tied into kin-econ networks are far larger, more profitable, and more politically influential than those outside. They are more likely to control monopolistic positions in finance, cement, and real estate, while firms without such ties are left to compete in the open market. Kinship thus functions as a form of social capital. It provides a network of immediate resources and trust, reduces transaction costs, and allows for the rapid mobilisation of capital when new opportunities arise. Kinship also delivers tacit knowledge in the political world that may not be easily tapped by outsiders.
As my analysis shows, firms embedded in kinship networks are consistently larger in terms of assets, employment, and market capitalisation. They are disproportionately concentrated in finance and regulated industries, while displaying lower export ratios than firms outside kinship networks. Leaders of kin-based groups are also significantly more likely to hold prestigious association posts. For example, in 2006, more than two-thirds of the leading members in the Chinese National Association of Industry and Commerce (CNAIC), the most influential business association in Taiwan, were owners of major family enterprises, frequently representing the second or third generation of family control. Significantly, nearly half of the board members were linked by either patrilineal descent or marriage ties, demonstrating how kinship networks extend beyond ownership structures into the organisation of elite associations. These findings suggest that family businesses not only constitute the backbone of Taiwan’s economy but also dominate the representation of business interests at the national level.
Liberalisation Without Dispersion
The 1990s—the period when Taiwan went through the process of democratisation and economic liberalisation—were supposed to mark a turning point to break apart family dominance. Indeed, institutional economists suggested that deregulation and the growth of financial markets would encourage more dispersed ownership and professional management. Instead, the opposite occurred. As my data has shown, when deregulation in the 1990s opened banking and securities, telecoms, and high-speed rail to private players, the business families most deeply embedded in kin networks and political capital were the ones who captured the licenses. Their existing ties provided both the financing and the political clout to move faster than potential outsiders. It was the old dynasties, reinvigorated by new opportunities. Rather than dislodging family capitalism, market reforms reinforced it. This paradox highlights that market institutions are never neutral; they are structured in ways that reflect prior distributions of power.
The Costs of Dynastic Control
Taken together, the aforementioned analyses suggest that the simultaneous interaction of kinship networks, political privilege, and strategic adaptation to market transitions has consolidated family capitalism in Taiwan. As my data and analysis have demonstrated, the role that kinship plays in the reproduction of Taiwan’s corporate elite is still central. Dynastic family firms have maintained dominance across generations, and kinship ties influence who represents the business community at the highest level of business associations, who gains access to lucrative markets during liberalisation, who grows to dominate strategic industries, and who collaborates through interlocks and co-investments. Rather than being displaced by modern corporate forms, kinship has adapted to changing institutional contexts, serving as the backbone of Taiwan’s family capitalism. These findings suggest that kinship-based family businesses, by virtue of their size and sectoral concentration, have retained privileged access to the domestic market and to political institutions, thereby reinforcing their capacity to dominate within Taiwan.
And yet, the continuing dominance of family business in a market raises concerns for economic vitality because it entrenches oligarchic structures and constrains the dynamism of competition. Studies find that firms led by non-family professional managers often outperform those run by heirs, echoing global findings. Corporate governance scholars also warn of pyramidal control structures, where families maintain effective control over vast conglomerates with only minimal direct ownership. This allows them to entrench themselves while shifting risks onto minority shareholders. At the societal level, the dominance of family capitalism entrenches what Mancur Olson called “distributional coalitions.” By clustering power within a closed set of families, it restricts upward mobility, slows adaptation to technological change, and fosters social rigidity. Thus, while family capitalism has provided stability, its persistence raises structural concerns about openness, inclusiveness, and the long-term adaptability of the Taiwanese economy. Whether this model can continue to deliver innovation and fairness in the decades ahead remains uncertain. But for now, Taiwan’s corporate boardrooms still echo with familiar surnames, and the circulation of elites that Vilfredo Pareto once described has evolved into something more enduring: dynasties that continue to rule the market, generation after generation.
Zong-Rong Lee is a research fellow at the Institute of Sociology, Academia Sinica, Taiwan. His primary research interests lie in economic sociology and social networks, especially in the East Asian context. He is currently a visiting scholar at Harvard-Yenching Institute (2025-2026).
This article was published as part of a special issue on ‘Transitions and Challenges in Taiwan’s Economy and Society‘.
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