Growth strategies, professionalization, ownership structure and performance across generations of a family firm

This paper analyzes and compares first generation family firms with those of second and subsequent generations through certain characteristics relevant to a greater understanding of the influence over the business of a generational transition. The study examines a sample of successful family businesses in Aragon (Spain), over a period of fifteen years (1990 to 2004) that have provided information about their growth strategy, corporate governance, professionalization, ownership structure and financial results. Our results confirm the greater degree of complexity of the family firm as the ownership and the running of the business is passed to future generations. However, and contrary to all expectations, the greater degree of investment and complexity of the family firm over time does not give rise to the incorporation of external partners in the companyʹs share capital and neither a higher level of debt. The study also fines no differences in profitability between family firms, independent of which generation runs the business.