A study mentioned on the website of the INSEAD business school examined the degree of institutionalisation of family firms in Latin America. The researchers focused on six key attributes.
The first group of "younger family firms" were those led by:
- first generation
- second generation
- third generation
The second group were older family firms than the above-mentioned.
What did the survey reveal?
Growth capabilities
Older family firms were more successful in terms of identifying and executing growth strategies. They carried out more mergers and acquisitions and achieved slightly better organic growth. Regulations, corruption of public officials and changes in macroeconomic policies seem to have a less severe impact on older family firms than on the younger ones.
Relationships with external actors
Family values and heritage have greater importance in older firms but the gap is again not so large. The difference in sharing core values and family values was only modest. Younger families did slightly better in terms of ties with public officials and other entrepreneurial families. Older firms, on the other hand, did better as regards relationships with customers and suppliers.
Funding opportunities
The gap here was not so large but older firms still enjoyed greater access to debt finance. They were also more likely to be publicly listed and had access to more additional funding from the family. In terms of equity capital from external investors, there was no big difference.
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