It is notoriously difficult to change people’s minds about a deeply ingrained prejudice. Yet nepotism’s bad reputation is just that: an irrational prejudice, based not on facts but on ignorance, ill will and ideology. What is more, the evidence for it is largely anecdotal. There have been studies of family succession in business, however, and since most nepotism happens in that sphere, the health of family businesses is a good indicator of whether nepotism is as bad as people say it is.

Does nepotism promote bad management? Not really. In fact, according to a recent study in the Journal of Finance, family firms exhibit significantly better accounting and market performance than their nonfamily-run counterparts. Family managers plan better for the future, exhibit greater concern for product quality, and view their firms as a legacy to pass on rather than a source of wealth to consume in their own lifetime. The authors found that family firms are about 7 percent more profitable and 10 percent more valuable than nonfamily firms. Among today’s larger family-run companies are Nordstrom, Wrigley, Comcast, NewsCorp, McGraw-Hill and Ford Motor.

A survey by the Raymond Institute for Family Business found that the number of family businesses is actually increasing in America. Currently there are over 24 million family-owned businesses, a figure that represents a staggering 90 percent of all American business. Family firms employ about 80 million people and account for 65 percent of gross domestic product. Moreover, revenues for family firms are up 50 percent since 1997, which indicates that they may fare better in recessions than their rivals do. They are also less prone to lay off workers in a downturn. In addition, contrary to conventional wisdom, over one-third of family businesses surveyed said that their next CEO is likely to be a woman.

American business has always been family-based. Think of the Boston Brahmins, a tightly knit group of intermarried families who built New England’s textile industry, created its transportation, banking and communications infrastructure, and built the great educational and cultural institutions of Boston. Moreover, the vast majority of instances in which family members work together are productive and, to judge from countless profiles in the business press, intensely rewarding. The proof is the vitality of American business today. If nepotism were really a bad thing, the American economy would be a basket case instead of a thriving engine of prosperity.

Is nepotism a mechanism for hardening class barriers and frustrating upward mobility? It is true that members of the American upper class traditionally seek to employ their relatives. Yet that is only half the story. Immigrants, the working classes and the poor have used nepotism to pull together and escape from poverty. Think of the great institutions built by Irish immigrant families in the 19th century—the American Catholic Church, the urban political machines and the early labor movements.

Is nepotism motivated by selfishness? Sometimes, yes. But nepotism is best understood as the means by which people pass on knowledge, skills and values from one generation to the next. The sum of these transactions is the way in which society at large perpetuates its material and cultural legacy.

The bottom line is this: Nepotism is not going away anytime soon. It is a natural impulse, deeply ingrained in both biology and culture. Nor, given its importance in the creation of social bonds, is it something we want to get rid of. The solution is not to keep banging it with a hammer, like a glob of mercury, but to bring it out into the open and treat it as an art that may be practiced well or badly. 

Adam Bellow is executive editor at large for Doubleday and author of In Praise of Nepotism: A History of Family Enterprise from King David to George W. Bush.