Research

Most relevant published research

Portfolio Entrepreneurship as a Mixed Gamble: A wining bet for SME family owners. Cruz C., and Justo R. Journal of Small Business Management (forthcoming)

In this article, using a survey of more than 700 owners of Spanish SMEs through the GEM (Global Entrepreneurship Monitor) project, we demonstrate that the probability of being a "portfolio entrepreneur", that is, an entrepreneur who owns several businesses, is greater among those who belong to a business family. Our argument is that by diversifying its business portflio, families not only meet their financial targets but also their social-emotional goals (such as employing relatives or diversify household wealth). This duality of objectives makes the business families more willing to take the risk of creating a new business than other entrepreneurs for whom socio-emotional objectives do not exist.

 

Just about money? CEO satisfaction and firm performance in small family firms. Garcés-Galdeano, L., Larraza-Kintana, M., Cruz, C., & Contín-Pilart, I. (2017). Small Business Economics, 1-1

Using a sample of more than 2000 Spanish private companies, the study shows that in the case of CEOs who run a family business the importance of financial results in their overall satisfaction with the progress of the company is much lower than for CEOs they run a non-family business. Based on this result, the article supports the notion that for family business leaders the objectives to achieve go beyond purely economic ones.

 

Does family employment enhance MSEs performance?: Integrating socioemotional wealth and family embeddedness perspectives. Justo, R. and Cruz, C. (2017)

Cruz, C., Justo, R., & De Castro, J. O. (2012). Journal of Business Venturing, 27(1), 62-76.
Using a sample of microenterprises in the Dominican Republic, we demonstrate that the employment of family members is a profitable strategy for small businesses, which suffer from the limitations associated with their size and less legitimacy in the market. Our study also shows that women leaders are better able to transform family employment into a competitive advantage in these contexts.

 

Financial reporting and the protection of socioemotional wealth in family-controlled firms. Gomez-Mejia, L., Cruz, C., & Imperatore, C. (2014). European Accounting Review, 23(3), 387-402

In this article, we explain the differential behaviour of business families in relation to the communication of financial information (financial reporting). Our model maintains that in these companies, financial information decisions are driven by a diverse set of reasons of their family shareholders that can be synthesized in the preservation of the different aspects of the socio-emotional wealth (control and influence and reputation of the family).

 

Are family firms really more socially responsible?. Cruz, C., Larraza‐Kintana, M., Garcés‐Galdeano, L., & Berrone, P. (2014). Entrepreneurship Theory and Practice, 38(6), 1295-1316

In this article, we provide empirical evidence that family businesses can be socially responsible and irresponsible at the same time, depending on the dimensions of CSR measures Specifically, we show that family businesses are more socially responsible than non-family when it comes to practices aimed at favouring external stakeholders (that is, the community and the environment), but are less likely to implement social practices when it comes to employees and corporate governance.

 

Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches, and agenda for future research. Berrone, P., Cruz, C., & Gomez-Mejia, L. R. (2012). Family Business Review, 25(3), 258-279

In this article, we offer for the first time a scale to measure social-emotional wealth, offering various alternatives for its operationalization. The article published in Family Business Review has been included among the most cited FBR articles, also receiving an honourable mention as best article in 2013.

 

The bind that ties: Socioemotional wealth preservation in family firms. Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). Academy of Management Annals, 5(1), 653-707

Through this article, we position the Socio-Emocional Wealth approach as a valid theoretical framework to explain the strategic decision making of the business families. This approach suggests that at the time of making decisions, the business families are not averse to the risk but averse to the loss of Socio-Emocional Wealth, understanding this as the benefit obtained by the family shareholders from their position in the company that are not related to making money.

 

Socioemotional wealth and corporate responses to institutional pressures: Do family-controlled firms pollute less? Berrone, P., Cruz, C., Gomez-Mejia, L. R., & Larraza-Kintana, M. (2010). Administrative Science Quarterly, 55(1), 82-113

Based on a sample of 400 American companies, we use the theoretical framework based on Socio-Emotional Wealth to demonstrate that family businesses that operate in polluting industries pollute less than their non-family counterparts. This is due to the importance given by family companies to aspects related to reputation and protection of the family's image, aspects that weigh more when making decisions than purely financial ones.

Research in progress

IS THERE REALLY A FAMILY PREMIUM?

RISK-PROFIT ANALYSIS IN LISTED FAMILY FIRMS (Jointly with Manuel Becerra, University of Queensland Business School)
sing a database of 2,000 European listed companies, this study aims to determine to what extent higher profit levels among family businesses is due to their different levels of exposure to risk by examining systematic risk, non-systematic risk, and liquidity risk.

 

GOVERNANCE VERSUS FAMILY GOALS: WHAT MATTERS MORE FOR THE ADOPTION OF RISKY STRATEGIES INSIDE FAMILY FIRMS?

WHAT REALLY CAUSES AN AVERSION TO RISK IN FAMILY FIRMS (if it is true that they are risk averse)? (Jointly with Chris Graves, University of Adelaide, Manuel Becerra, University of Queensland Business School).
This research project examines the propensity to risk of a group of private family firms using a sample of 500 Australian firms, all of which are owned 100% by families. The study is aimed at determining which factors lead family firms to take more or fewer risks.

 

WHO ITS AT THE TOP IN FAMILY FIRMS?

Jointly with Rocio Bonet, Professor of Human Resources, IE Business School.
This study examines the career paths of over 400 CEOS of family firms who are not a member of the owning family and compares them with those of CEOs in non-family owned firms. The main objective of the study is to analyze if there is a difference in patterns (in terms of educational background, previous experience, etc.) among CEOs who end up leading a family business, and the patterns among those who end up in a non-family business.

 

DOES GLOBALIZATION MEAN THE END OF FAMILY FIRMS? (Jointly with Juan Santalo, Professor of Strategy, IE Business School)

Jointly with Juan Santalo, Professor of Strategy, IE Business School.
Using databases of listed U.S. firms, this project examines how the level of profitability of a firm is affected by a reduction in trade tariffs, and the strategies companies use to defend themselves from such reductions. The study compares family firms and non-family firms.

 

WHEN DO WOMEN REALLY MAKE A BETTER TABLE? EXAMINING THE INFLUENCE OF WOMEN DIRECTORS ON FAMILY FIRM’S CORPORATE SOCIAL RESPONSIBILITY.

Jointly with Rachida Justo, Professor of Entrepreneurship, IE Business School.
This project examines the extent to which the presence of women on the board of management improves levels of corporate responsibility in family firms. The study uses the databases of U.S. listed companies. americanas cotizadas.

Recent cases

Case 1: THE STRENGTHS AND WEAKNESSES IN THE GROWTH OF LEGO, with Caterina Moscherini, Strategy Professor.

The case analyzes LEGO’s performance in the 2000-2013 period, emphasizing the role of the family element within the business and its influence on strategic decision-making processes in the company. In particular, the case study addresses three central ideas: the corporate strategy and the management of the corporate strategy; the family property and its implications for the growth of the business; and the role of a non-familial CEO in family businesses. After analyzing LEGO’s competitive positioning at the start of 2000 and why LEGO found itself on the verge of bankruptcy in 2004, the case describes the change brought about by Joergen Knudstorp, the first non-familial CEO in the history of LEGO.

CASE 2: THE STORY OF A HEALTHCARE GIANT: THE END OF A FAMILY’S LEGACY? “QUIRÓN GROUP”, Cristina Cruz

The case looks at the story behind the growth of Quirón Group, from the creation of its first hospital by founder Publio Cordon up until the sale of the group in 2015 by the second generation. The case focuses mainly on assessing the pros and cons of the decisions made at the different stages of growth, both from the familial and business perspectives. From the family’s point of view, the case looks at the challenges posed by shared ownership as the family continued to grow, as well as by the individual ambitions of the different family members, and how they began to break off from the family’s shared vision for the business. From the business point of view, the case considers the difficulties faced by family businesses in growing while maintaining control in highly competitive environments, while also analyzing the advantages and disadvantages of external investment, differentiating between strategic and financial investors.

RECENT PUBLICATIONS IN PARTNERSHIP

 

WHITE PAPER: HOW TO CREATE VALUE ACROSS GENERATIONS: BEST LATINOAMERICAN PRACTICES (IN THE NEXT PUBLICATION)

This White Paper looks to help entrepreneurial families create value across generations. To achieve this, it first identifies what qualities define families with a high degree of cross-generational potential.

The research concludes that to be a family with a high degree of cross-generational potential, two kinds of balance are needed: 1) finding the right balance between exploitation of existing resources and exploration of new business opportunities, and 2) balancing the different objectives of the family (social-emotional wealth) so that members act as a source of competitive advantage for the business. The White Paper analyzes the “best practices” from the family, business and legacy points of view that have allowed families to strike this dual balance.

Secondly, the White Paper sets a typology for all business families, depending on what is holding them back from finding the dual balance. Using the best practices of families with a high degree of cross-generational potential as a point of reference, the White Paper proposes a combination of recommendations at the level of the family, business and legacy so that each type of family business can achieve a dual balance and become a family with a high degree of cross-generational potential.

 

WHITE PAPER: SOLUTIONS FOR BUSINESS FAMILIES: TRANSFER THE LEGACY WITHOUT KILLING AMBITION

Through surveys and interviews conducted with over 200 members of business families, this White Paper takes a first look at the challenges faced by entrepreneurial families when it comes to conducting the generational transition process. The research allows us to conclude that the main challenge consists in “transferring the legacy without killing ambition” or how to successfully communicate not only the richness, but also the family legacy and the capacity to continue creating value in each generation. The second part of the White Paper presents solutions to help business families achieve this goal. Transferring legacy without killing ambition involves:

 

  1. Establishing rules of the game for managing the shared legacy, for which purpose it is recommended to develop a family government, protocol and shareholder agreements
  2. The consolidation of family assets for more effective management through trusts and holding companies
  3. The transmission of family values via a philanthropic foundation
  4. he creation of a trans-generational vision by establishing a roadmap of the family legacy and finally e) comprehensive management of the legacy through the creation of a family office
  5. Throughout the White Paper, the operation of each of these mechanisms will be explained in detail. It will also be explained how each one of them helps business families to solve the challenges of generational transition

Copyright © 2016 Credit Suisse Group AG

 

1ST REPORT BANCA MARCH-IE: THE CREATION OF VALUE IN EUROPEAN LISTED FAMILY COMPANIES (2001-2010)

The study analyzes the creation of value of 2,423 companies listed on various European stock exchanges during the period 2001-2010. The results of the study leave no doubt: European listed family companies have created more value for their shareholders during the period analyzed. By controlling for other factors that could be affecting the creation of value in any of its aspects, such as size, debt level and sectoral risk or distribution, this results clearly show the existence of a “family effect” that has a positive influence on the long-term creation of value for shareholders in the case of European listed companies.

 

2ND REPORT BANCA MARCH-IE: THE FAMILY PREMIUM IN EUROPEAN LISTED COMPANIES

Based on the higher profitability of family companies as compared to non-family companies (i.e. the “family premium”), the study identifies the factors that contribute to maximizing the family premium. The study demonstrates that institutional context matters, as the family premium is higher in Germany and the United Kingdom than in other European countries. There are also significant differences across sectors, with the family premium being most significant in sectors such as textile and automobile. In addition, it was demonstrated that the advantages of family control are more obvious in smaller listed companies (those with a market capitalization under €350 million). Finally, the study shows that despite their greater profitability, listed family companies are lower rated, which suggests that the market “penalizes” some risks associated with family ownership.

 

3RD REPORT BANCA MARCH-IE: CORPORATE GOVERNANCE IN LISTED FAMILY COMPANIES

This study analyzes the corporate governance practices of 1,200 companies listed on European and American stock markets with the aim of determining the situation of family companies in relation to non-family companies in terms of corporate governance. The results show that family companies comply to a lesser extent with the good governance recommendations contained in the governance codes for listed companies, though the situation differs depending on the geographical area. Family companies in the United States and the United Kingdom remain a step behind non-family companies in terms of governance, but their situation is much better than their counterparts in the other European countries included in the sample.

The results of the report also prove that making an effort to improve corporate governance is a profitable investment for family companies, since companies with above-average corporate governance have higher returns than others. If the previous reports demonstrate that the combination of “family company” and “listed company” brings together the best of both worlds, this 3rd report demonstrates that adding “company with good governance” to the equation substantially improves the family premium.