The Family Business Field

© Jon Martínez -ESE

ESE – ESCUELA DE NEGOCIOSESE – ESCUELA DE NEGOCIOSUNIVERSIDAD DE LOS ANDESUNIVERSIDAD DE LOS ANDES

Dr. Jon Martínez EchezárragaDr. Jon Martínez Echezárraga

The The Family Business Family Business

FieldField


AgendaAgendaAgendaAgenda

• Introduction to the fieldIntroduction to the field

• Research opportunitiesResearch opportunities

• Main topicsMain topics

• Institutions and ConferencesInstitutions and Conferences

• Main sources of informationMain sources of information


What areWhat areFamily Firms?Family Firms?

What areWhat areFamily Firms?Family Firms?

• Their ownership is controlled by a familyTheir ownership is controlled by a family

• Some family members run the business, Some family members run the business, as executives or Board membersas executives or Board members

• They want to perpetuate the founder´s They want to perpetuate the founder´s legacylegacy

They are difficult to define, but in general they They are difficult to define, but in general they are companies with three characteristicsare companies with three characteristics:

The more these characteristics are present in a The more these characteristics are present in a firm, the more “familiar” is the company firm, the more “familiar” is the company .


Importance of Family Importance of Family Firms Firms

Importance of Family Importance of Family Firms Firms

Country Family FirmsCountry Family Firms

• • United StatesUnited States 96 % 96 %• • Switzerland 88 %Switzerland 88 %• • Italy 99 %Italy 99 %

• • Great Britain 76 %*Great Britain 76 %*• • Spain 71 %*Spain 71 %*• • Portugal 70 %*Portugal 70 %*• • Chile 65 %*Chile 65 %*________________________________* Firms from a certain size up.* Firms from a certain size up.

All over the world, the family firm is the All over the world, the family firm is the predominant form of business organization:predominant form of business organization:


Family firms are the backbone of many Family firms are the backbone of many economies:economies:

In most countries they represent:In most countries they represent:

• 45 a 70% of GDP45 a 70% of GDP

• 45 a 70% of Employment45 a 70% of Employment

Importance of Family Importance of Family FirmsFirms

Importance of Family Importance of Family FirmsFirms


In the U.S.:In the U.S.:• • 40% dissapear during the first 5 years40% dissapear during the first 5 years• • 66% of the rest go through the second 66% of the rest go through the second generationgeneration• • but only 12% survive the 3rd. generationbut only 12% survive the 3rd. generation

In the U.K.:In the U.K.:• • 24% survive the second generation24% survive the second generation• • 14% last longer than the third generation14% last longer than the third generation

In Canadá:In Canadá:• • 90% are born as family owned90% are born as family owned• • 30% go through the second generation30% go through the second generation• • 10% go further10% go further

“Life Expectancy” Life Expectancy” of Family Firms of Family Firms

“Life Expectancy” Life Expectancy” of Family Firms of Family Firms

Statistics indicate a low expectancy of life Statistics indicate a low expectancy of life for family companies:for family companies:


FAMILYFAMILY COMPANYCOMPANY

OWNERSHIPOWNERSHIP

The Three Circles The Three Circles ModelModel

The Three Circles The Three Circles ModelModel

Family Firms are composed of three sub-Family Firms are composed of three sub-systems:systems:

Partners or Shareholder

s

Family Members

Executives and

employees

Source: R. Tagiuri and J. Davis


Sibling PartnershipSibling Partnership

Cousin ConsortiumCousin Consortium

Owner-ManagerOwner-Manager

Stages in Family Business Stages in Family Business DevelopmentDevelopment

Source: J. Ward


AgendaAgendaAgendaAgenda

• Introduction to the fieldIntroduction to the field

• Research opportunitiesResearch opportunities

• Main topicsMain topics

• Institutions and ConferencesInstitutions and Conferences

• Main sources of informationMain sources of information


Research OpportunitiesOpportunities

Research OpportunitiesOpportunities

•The field is relatively new (less than 20 years)

•There is more “folklore” than rigor•However, recent work is becoming

increasingly rigorous•There are many interesting topics


Main TopicsMain Topics Main TopicsMain Topics

1. Family businesses vs. business families

2. Succession and retirement

3. Developing successors and the next generation

4. Strategic management and planning

5. Financial dilemmas: balancing growth, control and liquidity

6. Ownership and wealth issues

7. “Professionalizing”, change and non-family managers

8. Corporate Governance: Board of Directors and Shareholders Assembly


Main Topics (Cont.)Main Topics (Cont.) Main Topics (Cont.)Main Topics (Cont.)

9. Family Governance: Family Council, Protocol, and Family Meetings

10. Family dynamics, relations and conflict management

11. Women in family firms

12. Legal and tax issues

13. Complex and multigenerational family firms

14. Culture, values and ethnicity


Institutions and Conferences

Institutions and Conferences

• The Family Firm Institute (USA)– Based in the U.S. – For academics, consultants and professionals– One big annual conference in the U.S. (Sept.-Oct.)

• The Family Business Network– Based in Europe (Lausanne)– For business families– One big world conference in a European city (Sept.-

Oct.)– It has a previous academic conference

• IFERA– For European academics and researchers– One conference in Europe (March-April)


Main Sources of Main Sources of InformationInformation

Main Sources of Main Sources of InformationInformation

• Books– “Family Business Sourcebook” (3 editions),

by Craig Aronoff, Joseph Astrachan and John Ward

• Journals– Family Business Review

(Journal of the Family Firm Institute, FFI)See specially: Handbook of Family Business Research, volume VII, number 2, summer 1994

• Magazines– Family Business Magazine (U.S)– Families in Business (Europe, in association with the

Family Business Network)

The Family Business Field

Documents

Transcript of The Family Business Field