The Family Business Field

1
The Family Business Field
Dr. Jon Martínez Echezárraga
ESE ESCUELA DE NEGOCIOS UNIVERSIDAD DE LOS ANDES
2
Agenda

• Introduction to the field
• Research opportunities
• Main topics
• Institutions and Conferences
• Main sources of information

3
Agenda

• Introduction to the field
• Research opportunities
• Main topics
• Institutions and Conferences
• Main sources of information

4
What are Family Firms?
They are difficult to define, but in general they
are companies with three characteristics

• Their ownership is controlled by a family
• Some family members run the business, as
  executives or Board members
• They want to perpetuate the founders legacy

The more these characteristics are present in a
firm, the more familiar is the company .
5
Importance of Family Firms
All over the world, the family firm is the
predominant form of business organization
Country Family
Firms United States 96
Switzerland 88
Italy 99
Great Britain 76
Spain
71 Portugal
70 Chile
65 ________________ Firms from a certain
size up.

6
Importance of Family Firms
Family firms are the backbone of many
economies In most countries they represent

• 45 a 70 of GDP
• 45 a 70 of Employment

7
Life Expectancy of Family Firms
Statistics indicate a low expectancy of life for
family companies
In the U.S. 40 dissapear during the first 5
years 66 of the rest go through the second
generation but only 12 survive the 3rd.
generation In the U.K. 24 survive the second
generation 14 last longer than the third
generation In Canadá 90 are born as family
owned 30 go through the second generation
10 go further

8
The Three Circles Model
Family Firms are composed of three sub-systems
OWNERSHIP
Partners or Shareholders
Family Members
Executives and employees
FAMILY
COMPANY
Source R. Tagiuri and J. Davis
9
Stages in Family Business Development
Cousin Consortium
Sibling Partnership
Owner-Manager
Source J. Ward
10
Agenda

• Introduction to the field
• Research opportunities
• Main topics
• Institutions and Conferences
• Main sources of information

11
Research Opportunities

• 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

12
Main 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

13
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

14
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)

15
Main Sources of Information

• 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)