When I was traveling in China a few years back, many people expounded on the sorry state of Chinese corporate governance. Analysts lamented, "You have to understand, most businesses in China are family businesses." This was not considered a good thing. Advancement in Chinese businesses was limited by family connections and family politics. Professional managers need not apply.

Now I realize family businesses are the norm in the United States. Consider Sumner Redstone, the billionaire who controls Viacom. Redstone is engaged in a very public and very messy fight with his daughter Shari, once considered his heir apparent. The Bancroft family, which has controlled Dow Jones and the Wall Street Journal for almost a century, has sold out to Rupert Murdoch's News Corporation, another family-controlled business.

Harvard Business Professor John Davis, who specializes in studying family businesses, tells me that 35% of Fortune 500 companies are family-controlled. Well over half of the 1000 largest business companies are also family-controlled. Lots of people turn out to work for Mom and Dad.

It's easy to see the complications that arise when business and family mix. How can you treat all the kids equally when there’s only one slot for the CEO? Also, as Davis points out, families are complicated, sentimental systems, that tend to play down controversy. So families tend to overreact to conflict, adds Davis. That's not a good thing when it’s time to debate corporate strategy.

That said, there are good reasons families tend to own and operate so many large businesses in the U.S. Families can take the long view, investing for a payoff that may keep a company healthy until the grandchildren are old enough to play a role. How many CEOs think that far ahead?

And what's the most effective institution in the country when it comes to preparing future generations to succeed in our complicated economy? It's the family. Study after study shows children from strong families do better in life. Why shouldn't companies run by strong families do well too?

Supporting family businesses is even a political issue. Republicans have made protecting family farms and companies a top priority. The pledge to repeal the death tax (estate tax to progressives) is a popular plank of many a GOP candidate’s stump speech.

That's not to say families are perfect. Davis warns living off the family trust can infantilize people, sapping each succeeding generation’s initiative and interest in the family business. Warren Buffett said the Bancrofts blew it at Dow Jones. Instead of acting like owners, they were passive observers.

Families have also been known to fight on occasion. Sumner Redstone's son sued him to gain control of his share of the family trust. The Murdoch family reportedly resolved a tense dispute over how to include Rupert's children from a third marriage in the family trust. Though the father is said to be close to his children, Murdoch's son Lachlan and daughter Elisabeth left News Corp. after reportedly clashing with other executives.

It’s also tricky to tie a family's identity to a business. The Bancrofts bolstered the Wall Street Journal's independence for a century, but at what price? In a letter that found its way onto the Journal's website (situational irony?), Crawford Hill writes to other members of the Bancroft clan: "We are an amazing group of people who have lives that extend way beyond our ownership of Dow Jones." The letter is fascinating reading, equal parts business analysis and family therapy. "You are all fine humans", writes Hill. Yes, but you can feel the unstated question: But who will we be if we sell Grandpa's business?

In the end, the Bancrofts did not end up being very good at business. Warren Buffett figures Dow Jones could have been worth $50 billion. What about the new family owners? Murdoch told the New York Times: "We've got journalism in the blood. I've tried very hard to imbue my children with the same thing." It carries special responsibilities. No doubt Murdoch's critics are waiting to see what the Journal's new family owners have in mind.