I believe that age could be your advantage, if you are leveraging the experiences of the team to do more for less.

Meaning, if you are capturing the knowledge from the senior-most knowledgeable experts, and making those captured knowledge available (to be reused) for by the rest of your work-force. This way, you can be very efficient and improve the productivity and quality to it sutmost, and at the same could reduce your operational costs.

How to accomplish that—is a good question? You may find the following article useful in that regard.

Article A Systematic Approach of Virtual Enterprising Through Knowle...

Thanks Brian. I agree with you that one of the advantages could be to make the most the experiences of senior knowledgeable experts. But, family conflicts appear stronger with new generations in charge and new structures of corporate governance may prevent keeping the values, tradition and good practices of the founder family...

Dear Julio

we are researching the advantages and disadvantages of family firms in the GCC - it might be good to communicate or collaborate?  

Some works have studied this topic and it is proved that those family firms that have arrived to the third generation are stronger for facing many types of problems. We carried out a work here in Valencia for the Commerce Agency, around 2008, with some family firms and we found more advantages than disadvantages. If you want we can send you the book by post.

That would be most kind and I'll be sure to send you the results of our current project.  I'd be happy to pay any postage of course - ir is it available on-line anywhere?

Professor William Scott-Jackson, 34 St John St, Oxford, OX1 2LH

I would say "it depends". Whether older family firms are better or less positioned to meet the current challgenges depends on

- the capabilities within the firm: If the family firm has only been active in a stable industry in the past and this industry gets disrupted, then the family firm is probably in trouble. In Germany we saw that several of those family firms got really in trouble when the financial and economic crisis hit several years ago. 

- it also depends on the financial situation of the firm, how much slack and short-/long term debt the family firm has. Many family firms have a very reasonable financial structure that helps them to survive tough times but this is not the case for all family firms.

- it also crucially depends on whether the family has a "family governance". Research shows that family firms do not only need a "corporate governance" to manage the firm but also a "family governance" to manage the family members. A good family governance can avoid conflicts and thus prevent the family from destroying the firm. 

Look at my profile there are few articles about that topic...

Thanks William, María, Nadine and Imran for joining us to this debate. I would be pleased to communicate and collaborate regarding this topic. Please Maria sent us the book. Imran,  could you indicate us which are the specific papers?

Very interesting the comments from Nadine. 

I agree more with Nadine.  It really "depends" on how the family values are actually passed on to next generations and how different generations communicate between each other to cope with the continuing complexity in the environment of the family business.  While experience of the early generation could be a strong guiding force in a changing environment, their rigid  mindset may affect accepting new ideas and need for flexible strategic decision in a changing environment.  In two of my case studies in a developing country context I found generational conflict on issues relating to business expansion.  However, there were instances where healthy and effective communication helped remove generational gaps in business expansion and growth. Therefore, age of the firm could be an advantage when the family governance mechanism works well to shape the corporate governance mechanism through accommodating experience and new ideas of the generations in a changing business environment.   My case studies were done in 1980s and I don't have copy to help.

You may be inetrested to the enclosed article, also dealing with the link between age/size and performance. Regards, MV

Excellent contributions and I admire the mutual openness to help. In Lebanon, older organizations have the advantage over the new ones based on the drastic events which matured the older organizations and pushed these to practice strategic decision making relying on the people on board. Beside this fact, the owners of the older family firms made sure to educate their kids abroad before bringing them back and obliged their kids to start from the lower ranks, a fact that contributed to minimize conflicts between generations.

The oldest companies have gone through several crises, and learned from them. A first step of "accommodation" of big business in the mid-1980s, was solved by exchanging their Presidents, and the focus on activities that held greater expertise. All this became current business 's literature and education in schools of business administration. Thus, it can be said that older firms are better prepared to resist the theme. However, with regard to innovation, technology start-ups has shown remarkable skill, and they are many, many, many of them survive and launch highly successful products.

Dear colleagues,

We have the first results of our research. More than 70% of the oldest Spanish family firms continue creating value today. Size, age and industry matter! Largest and oldest firms and from manufacturing industry continue creating value. 

Hi,

This paper may be of interest for you:

S Hwang, W Kim, "When heirs become major shareholders: Evidence on pyramiding financed by related-party sales", Journal of Corporate Finance, 2016, 41, p 23 -42.

Best regards.

One other dimension that older family firms are very concerned about now-a-days is succession planning which showed as a critical success factor for continuity of the business.

My study is in that manner if they are prepared well and instutialized they are more succesful.

https://www.researchgate.net/publication/241681830_Creating_strategies_from_tows_matrix_for_strategic_sustainable_development_of_Kipas_Group?ev=prf_pub

https://www.researchgate.net/publication/241681830_Creating_strategies_from_tows_matrix_for_strategic_sustainable_development_of_Kipas_Group?ev=prf_pub

Article Creating strategies from tows matrix for strategic sustainab...

Dear  Julio,

Intuitively, I assume that older family firms have already lived through "teething problems" of young family companies like a commander-style CEO-founder, financially destructive tunneling, or the directorship of a "rotten kid". In a mature family firm I would expect more readiness to employ professional Management.

Paul   

Thanks everybody for your interesting comments. A last study using the same sample (the oldest family firms in Spain and their non-family firms counterparts) said to us that firms with a professional CEO obtain better performance than family firms with a family CEO. Then, it seems that professionalism is a key factor when time passes.

However, Julio, old firms need to change the internal culture of keeping the source of power within the family members, which necessitates a very courageous decision.

Hussin, I agree with you. But what difficult is to find the balance between keeping own socioemotional wealth and pursue also economic benefits. 

The key, I guess, is to clearly articulate and agree the strategic objectives of the firm, which in the GCC, for example, might well be 'preserve the family name', pass on something to descendants', 'maximise influence'; whereas in the UK/US it might be 'build it and sell it' or 'maximise dividends' etc.

I agree with William because Legacy is something highly appreciated in the southern part of the globe.

I agree with you. We are usually working with Spanish firms, so non-economic aims are crucial to explain decision-making. For instance, we have used them to explain why family-managed firms are more efficient turning technological innovation into long-term performance, but they can be used for more research issues. 

HI,

Being a very old family company could be an advantage because you have faced so many different situations that you are ready to face another one (founder , heirs, CEO coming from outside the family,...). But tradition must also prevent to adapt  the portfolio of assets to the incumbent market...Innovation is very important.? Tou have to finde a special mix of tradition and novelty.

You may have a look on this paper:

Family Matters?: A Cross-National Analysis of the Performance Implications of Family Ownership

Corporate Governance, : An international review, November 2016, vol 24, issue 6 (pages 584–598)Sandra Dow and Jean McGuire

Best regards

I think it is an advantage. The oldest companies have an important wealth of knowledge, expertise, relational capital, a good helm, and above all a good reputation.

I agree with Prof. Patrick Navatte. Family firms have old traditions which make them survive well.

Regards

SM Najim

We are now working in a project relating family firms and growth. It is likely that old familly firms have been able to reach this age because of their resilience, because they have opted for a conservative growth throughout their life...Is is true?