FAMILY BUSINESS IN SOUTH AMERICA: A GENERATIONAL COMPARISON
MATTHEW SONFIELD, HOFSTRA UNIVERSITY
ROBERT LUSSIER, SPRINGFIELD COLLEGE
PRESENTED BY
ENG. ISLAM ELZAYAT ,MBA,MCT
AGENDA• Introduction
•Research Questions
•Hypothesis
•Methods
•Statistical Analysis
•Result and Decision
INTRODUCTION • This investigation compared first-, second- and third-
generation family businesses in a sample of 210 family
businesses in Argentina and Peru
• Family firms constitute a highly important component of most
countries’ economies
• In the USA, an estimated 80 % of the total 15 million businesses
are family businesses
• Drawing on data from 210 family firms in Argentina and Peru,
this paper reports on an analysis of generational issues
RESEARCH QUESTIONS
Family firms move
beyond the generations ,
Does any changes occur ?
RESEARCH QUESTIONS
Is there are a significant
differences between the
Three generations ?
ARGENTINA • Family business plays a big role on Argentina business
outcome
• Argentina´s family businesses are of great socio-
economic importance because almost 75 % of total
businesses (1,200,000) are family firms
• Approximately 50 % of GNP and 70 % of employment is
contributed to family business, and they control 95 % of
total trade
• Also, 85 % of family businesses are founded by 26 to 28
year old
• 76 % belong to two or more owners
PERU• Peru is a nation with a population size of nearly 29.1
million people
•GDP nearing $ 159 billion in 2010
• the Peruvian economy remained strong throughout the
2008-2009 global economic crisis due to proactive
macroeconomic measures
• 1990’s, the Peruvian government began to actively
encourage SME development through government
sponsored small enterprise development programs and
economic reforms
HYPOTHESIS 1Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to include non-family members
within top management
HYPOTHESIS 2Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to have women family members
working in the firm
HYPOTHESIS 3Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to use a “team-management” style
of management
HYPOTHESIS 4Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to have conflict and disagreement
between family members
HYPOTHESIS 5Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to have formulated specific
succession plans
HYPOTHESIS 6Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to use outside consultants,
advisors and professional services
HYPOTHESIS 7Subsequent-Generation Family Firms
spend more time engaging in strategic
management activities than First-
Generation Family Firms
HYPOTHESIS 8Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to use sophisticated methods of
financial management
HYPOTHESIS 9Top management styles and decisions in
Subsequent-Generation Family Firms are
neither more nor less likely than in First-
Generation Family Firms to be influenced
by the original business objectives and
methods of the founder
HYPOTHESIS 10Subsequent-Generation Family Firms are
more likely than First-Generation Family
Firms to have considered “going public.”
HYPOTHESIS 11Subsequent-Generation Family Firms are
neither more nor less likely than First-
Generation Family Firms to use equity
financing rather than debt financing.
METHODS•The objective of this study was to combine
the data to provide a comprehensive and
large sample of family firms
•The research design was survey research
using both mail and personal interviews
STATISTICAL ANALYSIS•Hypotheses 1-11 compared the dependent
variable among the three generation groups
using a one-way ANOVA test.
RESULTS AND DISCUSSION
RESULTS AND DISCUSSION
The use of outside consultants, advisors
and professional services increased
through the three generational levels, but
only statistically significantly from the
second-generation to the third-generation
level.
RESULTS AND DISCUSSION
The influence of the original business
objectives and methods of the founder
decreased through the three generational
levels, but only statistically significantly
from the second-generation to the third-
generation level.
RESULTS AND DISCUSSION
The likelihood of top management
considering going public increased from
the second-generation level to the third-
generation level (but not form first-
generation level to second-generation-
level).
CONCLUSION
•In summary, this investigation compared
first-, second- and third-generation
family businesses in a sample of 210
South American companies
•Both supporting the authors’ various prior
country studies and yet challenging the
earlier more conceptual literature
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