From the Kennedy family to Chile’s Matte family, powerful and wealthy families often seek political office. New research by Patricio Duran, Marcelo Ortiz, and Michael Carney seek to understand what those politically active families have in common and discuss potential motivations.
Across the globe, the direct participation of wealthy business families in politics is undeniable. The Kennedy family, France’s Dassaults and Chile’s Matte family, all these families not only shape economies but also steer political landscapes. Yet, despite their significance, we understand little about their common threads. To bring light to this issue, our research explores a simple question: What do these families have in common? To respond to this, let’s first discuss their potential motivations.
Why do some business families want to attain a political office?
The reasons behind the political ambitions of business dynasties are complex. These families often lead social progress in their countries. The Kennedys’ several charity foundations and the Mattes’ Primary Instruction Society are just a few examples of social initiatives funded and led by wealthy dynasties. Their high visibility also subjects them to public scrutiny, potentially curbing any overtly self-serving agendas.
These factors suggest obvious rent-seeking motives—like easier access to government contracts or blocking competition— but cannot alone explain their political activities. We argue that economic self-interested incentives only tell part of the story. The social backdrop against which these families operate also play a crucial role. We examine this through three social-embeddedness dimensions that have been shown to explain political participation: national identity, religiosity, and family generation.
National Identity: Immigrant entrepreneurs may be ambiguous about their national identity relative to locals. The lack of national identity weakens the interest in civil involvement and political participation. Furthermore, immigrant business families face potential challenges in rallying broader societal support compared to local families.
Religiosity: Faith can be a powerful unifier in fragmented societies, offering to religious business leaders a moral compass and societal legitimacy. Religiosity also frames political participation as a moral imperative to promote social ideologies aligned with the spiritual beliefs. Wealthy families can use their religion as a linking pin with other social groups to promote their shared values in society.
Generation: The longevity of a family’s influence enhances its social standing, paving the way for political engagement that is seen as both credible and beneficial for the broader political ecosystem.
Many of the world’s wealthy dynasties that have held political power share these three common characteristics. For instance, the Kennedys and the Mattes have been part of the business elite for over a century in their respective countries, and many of their members have publicly expressed their Catholic beliefs. In general, it is expectable that the significance of each characteristic varies depending on the cultural context of each country. In countries with low nationalistic culture or high religious diversity, these factors may be less relevant.
Note that this social-embeddedness argument does not suggest that political business families are altruistic. Indeed, class-wide rationality suggests that such families actively represent the broader interests of their closer community rather than the whole society. In that sense, social embeddedness suggests structural constraints on self-centered rent-seeking.
Chile’s Unique Lens: the Chicago Boys, Return to Democracy, and Family Capitalism
Chile provides a fascinating case to explore these ideas. With its mix of family capitalism, secular governance, diverse immigration history, stable democracy, and relative transparency, the country presents a unique case of business-political intertwining.
In Chile’s economic history, the political roles of business actors have been notably intertwined with broader economic policies, particularly during the regimes of former president Salvador Allende and the subsequent military dictatorship. Under Allende, business families faced nationalization and a shift towards a socialist economy. However, the rise of the military regime in 1973 saw a dramatic pivot, influenced significantly by the “Chicago Boys” — a group of economists trained at the University of Chicago. They championed free-market principles, leading to the privatization of state assets and the re-emergence of powerful business families in political spheres.
After Chile’s return to democracy in 1989, business families extended their involvement in public political discussions through trade associations, think tanks, and funding educational institutions. This change coincided with strong institutional development, low corruption, and a normalization of business actors’ political participation. For example, according to Forbes, the Piñera family, one of the wealthiest families in Chile, held several political roles, including Sebastian Pinera’s two presidential terms from 2010-2014 and 2018-2022.
Our Data and Findings
Our examination spans across 170 prominent Chilean business families, tracing their lineage from the inception of their business ventures going back to 1883 and up to the year 2020. We compiled a roster of individuals from these affluent family networks who have engaged in political endeavors, covering a period from 1989 to 2020. This thorough matching exercise unveiled 43 families—representing 25% of our sample—that have sought political office. Within these families, at least one member has either pursued a political candidacy or been named by the president to oversee a political office. Remarkably, following Chile’s transition back to democratic governance in 1989, a significant portion of these families have been actively involved in a myriad of electoral processes and have maintained a consistent presence within governmental spheres.
Our analysis did not uncover meaningful correlations between political activity and various family economic indicators, such as the scale of assets under family control, the breadth of their business diversification, their overall financial performance, or the nature of their investments in sectors deemed politically sensitive. This suggests that the economic metrics traditionally thought to influence political involvement may not hold as much sway in determining a business family’s political pursuits.
In stark contrast, when we consider social factors alongside economic ones, a clear and compelling pattern emerges. Our analysis indicates that families with a local root, a religious affiliation, and more generations are significantly more likely to be found within the political landscape. These social dimensions appear to be pivotal in shaping the likelihood of a business family stepping into the political sphere. According to the estimates, after controlling for economic characteristics, local business families are almost three times more likely to participate in politics directly than immigrant business families. The predicted probability of political activity for immigrant business families is 10.6%, whereas for local business families, it stands at 29.6%. Furthermore, religious families have a higher probability of being political business families than non-religious families. The expected probability for religious families is 41%, whereas for non-religious families, it is 20%. Lastly, there is a significant difference in the predicted probability of single-generation and three-generation families being political. The predicted probability for single-generation business families is 9.5%, whereas for three-generation families, it is 25.5%.
This shift in focus from economic attributes to social embeddedness provides a nuanced understanding of what propels certain business families toward political engagement, highlighting the importance of sociological factors correlating with direct political engagement.
Reflections
Our analysis suggests that the defining feature of politically active business families lies in their social integration and not as much in their wealth. In that sense, wealth can act as a necessary but no sufficient conditions to identify why some members of the business elite emerge as political leaders. This revelation prompts a series of relevant inquiries: To what extent do the ingrained social connections of these families mitigate self-serving tendencies once they ascend to political power? Do these politically active business families outperform other political figures in driving social progress? Furthermore, how do political institutions scrutinize and manage potential conflicts of interest that may arise when these economically powerful families engage in legislative reforms aimed at economic advancement? We invite for further examination into how these wealthy dynasties navigate the delicate balance between personal ambition and public service in the ever-evolving landscape of politics and business.
This piece is a summary of a forthcoming article in the academic journal Entrepreneurship Theory and Practice.
