How the family business successful? Part III: the family project

In family businesses (EF) only 30% of them passed to the second generation and no more than half of this percentage makes the subsequent (Larsen and Goodstein, 1993). One of the reasons for this low survival is due to family conflicts. In order to provide clues to the solution of such pressing problem we wonder: all conflicts are negative ?, there is only one type of family business ?, If the answer is no, what are those that promote agreements?
1. Positive and negative conflicts
Not all conflict is negative (Kellermanns and Eddleston, 2004). Disagreements can be of three types: first, the conflict tasks, refers to discussions on what should be the objectives of the company and what tasks should run.
The second, the conflict processes, is how they should be executed tasks and what and how much responsibility should be given to individuals. The third refers to personal conflicts, the perception of animosity and incompatibility among those involving emotional aspects, such as anger, frustration and irritation to other relationships.
The first two conflicts, tasks and processes, are positive if they involve an exchange of ideas moderately.
The relationship is the worrisome conflict, first, because it interferes with work by encouraging the formation of groups that fight each other, the second one, exacerbated disagreements over the succession, and third, lessen the positive effects of a moderated discussion on conflict by tasks and processes.
The higher the conflict relations, the lower the performance of the company (Kellermanns and Eddleston, 2004).
2. The type of family business that promotes agreements
A doctoral thesis (Garcia Alvarez, 2001) concludes that there is no single type of EF and that they can be differentiated according to the values ​​that convey the founders to their successors.
EF are classified into four types: family tradition -the heirs are conditioned by tradition (in some eastern families is expected that the firstborn take care of the family business) – -one strategic descendants he becomes leader who guide by the sense of autorrealización-, architect -the successor is forced to create a company because of a negative fact (dismissal or divorce) – or parents-the inventor have led to future manager a skill that is not valued by the market (sell classical music in popular neighborhoods of Lima).
The above research finds that the founders transmit values. In family tradition: family spirit, simplicity and reliability; in strategic: to create business, determination or guidance to the person; in the architects: family counseling, satisfaction or evidence; and the inventors: innovation, dependency and autonomy.
These companies differ on why the business is created and who influences the decisions of the manager. The first two types of EF company created by personal choice: the family tradition by customs and beliefs that prevail in the family and strategic for self-realization; as I expected the family group company takes an end. The two remaining conceive by obligation, forced to the dismissal inventors and creators because they have no other recourse, the company is only a means to the end which is the family. Evidence indicates that the first two types offer performance (performance, turnover, cost of debt, etc.) than the last two. In the case of companies of family tradition and architects, managers make their decisions influenced by the family group; instead on strategic and inventors, affected by the leader.
In the expansion process of an EF are three important moments that cause conflicts. The first is when the founder is still the leader, the second, when he is to retire and the third when members of the second or higher generation take over the business.
Consider the conflicts that occur in the first place. While the founder concentrates power, conflicts and process tasks are minor, but if the founder uses the threat with his subordinates may occur conflicts relationships. But this concern can worsen conflict if reciprocal altruism is low. This concept refers to the expectation that a family has other, that a benefit today is rewarded in some way in the future. Usually this benefit is not due to economic rationality (Kellermanns and Eddleston, 2004). An example may clarify this point. family learning opportunities are offered no education or experience in exchange for hard times in the future, even if they are professionally trained, do not leave the company.
ConflictoAhora observe the conflict in the second stage when the founder is about to retire due to a rift succession occurs. This problem has been called dependence of the founder (Garcia Alvarez, 2001). It is reasonable that the founder exercise power while he is young and his ideas are useful to the enterprise; but these qualities will not last forever. It is therefore desirable that, over the years, leave the company and retire.
However, in many cases the founder do not want to retire, enjoy what it has always done. Here the struggle of a successor who want to take over the business and a father who refuses to withdraw occurs.
Finally let’s focus on the conflicts that occur when the second or higher generation takes the reins of the EF. At this stage the greatest discrepancies occur and are mainly due to dysfunctional behavior, two or more people interact in a way that is detrimental to all. This point will be explained in more detail in a future article.
To summarize the types of EF show that avoid conflict. Conflicts tasks and processes are desirable if it involves an exchange of ideas moderately. In our view, due to group cohesion, conflict by the absence of reciprocal altruism is minimized in the EF family tradition. While according to Garcia Alvarez (2001: 295), founder dependence occurs in EF architects but not in the family tradition or strategic.
3. Case Moreno [1]
This group was born in Lima, by 1955, it is dedicated to apparel industry and is currently in the third generation. The first generation is removed, the second own brand garments sold in Peru and exports with brand outside the US and the third sells t-shirts and jeans with own brand in fashion stores in the US In 2004 the whole group has sold more than $ 11,000,000.
The EF is family tradition; observe the company as an end, the group is one of the main Peruvian exporters of jeans. Successive managers are convinced by the implicit demands of the family. Some expressions of members of the second generation: “I know that I will not reach life to do what I really want to keep the promise I made to my father,” and the third: “In the family part, if they (parents and grandparents) had not done what they have done, I was not there (in New York) with this business. ”
This case shows that in the family tradition EF few struggles or absence of reciprocal altruism nor dependence founder occur.