The Philippines would seem to be an unlikely place to find perspectives on management and governance. Hit hard by the 1997 Asian crisis, the country endured two years of fiscal mismanagement and economic decline under the administration of President Joseph Estrada, who was removed from office in January 2001; a heavy depreciation of the currency; and a global slowdown. Most companies in the Philippines have suffered accordingly.

Survivors of such economic volatility can offer valuable lessons. Ayala Corporation has come through the past five years with its businesses and reputation untarnished,¹ which is more than many other conglomerates in Asia can say. Founded as a distillery in 1834, the company soon expanded into trading and agriculture, and it now operates businesses ranging from land to water, light-rail to auto retail, and telephones to banking. Ayala companies currently represent some 25 percent of the market capitalization of the Philippine Stock Exchange.

For seven generations, the family of the company’s current president and CEO, Jaime Augusto Zobel de Ayala II, has guided it with a rare mix of adaptability, financial conservatism, and increasingly transparent governance. Although the merits of the conglomerate model are disputed in Western management circles,² Mr....