1. © Jon Martínez -ESE ESE – ESCUELA DE NEGOCIOS UNIVERSIDAD DE LOS ANDES Dr. Jon Martínez Echezárraga The Family Business Field

2. © Jon Martínez -ESE AgendaAgenda 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

3. © Jon Martínez -ESE AgendaAgenda 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

4. © Jon Martínez -ESE What are Family Firms? What are Family Firms? Their ownership is controlled by a familyTheir ownership is controlled by a family Some family members run the business, as executives or Board membersSome family members run the business, as executives or Board members They want to perpetuate the founder´s legacyThey want to perpetuate the founder´s legacy They are difficult to define, but in general they are companies with three characteristics They are difficult to define, but in general they are companies with three characteristics : The more these characteristics are present in a firm, the more familiar is the company The more these characteristics are present in a firm, the more familiar is the company.

5. © Jon Martínez -ESE Importance of Family Firms Country Family Firms United States 96 % United States 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. All over the world, the family firm is the predominant form of business organization:

6. © Jon Martínez -ESE Family firms are the backbone of many economies: 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 Firms

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

8. © Jon Martínez -ESE FAMILYCOMPANY OWNERSHIP The Three Circles Model Family Firms are composed of three sub-systems: Partners or Shareholders Family Members Executives and employees Source: R. Tagiuri and J. Davis

9. © Jon Martínez -ESE Sibling Partnership Cousin Consortium Owner-Manager Stages in Family Business Development Source: J. Ward

10. © Jon Martínez -ESE AgendaAgenda 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

11. © Jon Martínez -ESE Opportunities 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. © Jon Martínez -ESE 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. © Jon Martínez -ESE 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. © Jon Martínez -ESE 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. © Jon Martínez -ESE 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)