Conflict within Colombian Family Owned SMEs

Handbook of Research on Social Entrepreneurship and Solidarity Economics José Manuel Saiz-Álvarez Tecnológico de Monterrey, Mexico A volume in the Advances in Finance, Accounting, and Economics (AFAE) Book Series Published in the United States of America by Business Science Reference (an imprint of IGI Global) 701 E. Chocolate Avenue Hershey PA, USA 17033 Tel: 717-533-8845 Fax: 717-533-8661 E-mail: [email protected] Web site: http://www.igi-global.com Copyright © 2016 by IGI Global. All rights reserved. No part of this publication may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this set are for identification purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI Global of the trademark or registered trademark. Library of Congress Cataloging-in-Publication Data Names: Saiz Alvarez, Jose Manuel, editor. Title: Handbook of research on social entrepreneurship and solidarity economics / Jose Manuel Saiz-Alvarez, editor. Description: Hershey, PA : Business Science Reference, [2016] | Includes bibliographical references and index. Identifiers: LCCN 2016002536| ISBN 9781522500971 (hardcover : alk. paper) | ISBN 9781522500988 (ebook : alk. paper) Subjects: LCSH: Social entrepreneurship. | Economic development. Classification: LCC HD60 .H3364 2016 | DDC 338.9--dc23 LC record available at http://lccn.loc.gov/2016002536 This book is published in the IGI Global book series Advances in Finance, Accounting, and Economics (AFAE) (ISSN: 2327-5677; eISSN: 2327-5685) British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. All work contributed to this book is new, previously-unpublished material. The views expressed in this book are those of the authors, but not necessarily of the publisher. For electronic access to this publication, please contact: [email protected]. 329 Chapter 17 Conflict within Colombian Family Owned SMEs: An Explosive Blend between Feelings and Business Rafael Perez-Uribe Universidad EAN, Colombia David Ocampo-Guzman Universidad EAN, Colombia ABSTRACT Micro and SMEs represent 96% of the companies legally constituted and registered at the Chambers of Commerce in Colombia, and between 70% and 90% are mainly family owned businesses. Many of Colombia’s largest companies and most successful business groups were born as family companies. However several researches and investigations developed by EAN University have revealed that these Family Businesses are a constant focus of conflicts. Why? What makes them so prone to conflict? The purpose of this work is to show the possible causes of this grim reality, and to offer some alternatives for proprietors to take these arousing conflicts to transform them into opportunities for improvement, giving their organizations an opportunity to be sustainable over time. INTRODUCTION Family affairs and issues generate both the greatest of satisfactions, and the deepest concerns. The strongest commitments, and the most fragile feelings. The greatest of generosities, as well as the most unfortunate sentiments of selfishness. A huge sense of belonging, and the deepest of estrangements. Tender acts of forgiveness, and the worst acts of vengeance. The greatest examples of self-accomplishments, and the most hideous acts of appropriation of others’ merits. The most stimulating and vibrating dreams, and the rudest awakenings (Koenig, 2000. Cited by Velez, Holguín, et al., 2008). DOI: 10.4018/978-1-5225-0097-1.ch017 Copyright © 2016, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. Conflict within Colombian Family Owned SMEs Colombian Family Businesses (FB) have been catalogued by Romero (2005) as the “backbone” of the economic development of any country, for in a free-market economy the entrepreneur becomes the key element in job creation and wealth generation. Furthermore, FB are the predominant type of company in the entire world, and many of Colombia’s mightiest and most recognized enterprises are family-owned companies, or were at their beginning. And, just as Koenig’s quote (2000b) states, family issues can cause the most remarkable satisfactions or the bitterest disappointments, and if you add business issues into the mix an explosive cocktail comes out of the blender. Family Businesses are not only the most common type of businesses, they represent the oldest manner to start a company in the history of mankind, and its importance is evident when one looks at some numbers. International statistics regarding the existence of FB show significant numbers on that regard: 100 million people are employed by these worldwide, they represent 60% of the Earth’s total companies and 25% of the 100 top companies in the world are family owned enterprises” (Betancourt, Arcos, Torres & Olivares, 2012). By the late 20th Century and early 21st, nearly 40% of the 500 companies registered in Fortune’s magazine Global 500, also known as Global 500, were either 100% family-owned companies or familycontrolled companies. (Lea. 1991. Cited by Avendaño-Alcaraz, et al., 2009). According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC, 2008, cited by Zuluaga-Arango, 2010), in Argentina and Brazil, 9 out of every 10 companies that operate within their economies is a FB; in Costa Rica 8 out of 10; in Peru 6 out of 10 and in Mexico the ratio is 4/10. This study also reveals that small Family-Partnerships are most commonly utilized in Austria, Norway, Sweden, Finland and Liechtenstein. By the same token, China, France, Italy, South Korea, Japan and Germany are recognized as strong family-societies. Table 1 illustrates some characteristics of family enterprises both in Colombia as well as in other nations. In Colombia, the vast majority of the business universe is composed of Micro, small and mediumsized enterprises (MSMEs), representing 96% of the Colombian business universe, and generating 63% of total job posts, 45% of the manufacturing production, 40% of total wages and 37% of the added value (Pérez & Crissien, 2007). At the same time the percentage of family businesses is estimated around 70%. (INALDE, 2013) The above mentioned data explains why within the Colombian collective imaginary regarding the business world MSMEs and FB are the same, and in many, numerous occasions, they are. Out of 1.343.521 companies from the industrial, commerce and services sectors, which in 2007 employed 2.818.430 workers, 58.67% were family businesses. (businesscol.com, 2007) Europe’s rich entrepreneurial and industrial history is filled with examples of family owned businesses that started as small family endeavors and eventually became true economic and industrial powerhouses. France’s acclaimed Peugeot started out as a small family business which produced a number of goods, then became a bicycle factory, and in time it became the worldwide renowned automobile manufacturer it is nowadays. What about the Renault Corporation? It couldn’t have become an automobile emporium if it wasn’t for the family support represented by the capital received by Louis Renault from his family; 330 Conflict within Colombian Family Owned SMEs Table 1. Some family businesses characteristics by country/region Country Family Business Characteristics United States “They have a tremendous positive impact on their communities, and are a powerful force for the American economy, producing 57% of the nation’s GDP, as well as employing 63% of the total workforce” (Family Enterprise USA, 2011. P1). European Union “They employ 45 million people. 75% of the companies are FB and 25 of the 100 largest European companies are FB as well. There are 200 family companies within the 1000 first European companies (with a turnover exceeding $1 trillion euros and creating than 5 million jobs). They represent 65% of both the GDP and European employment, and their profitability is above the European average. (Casado, 2007) Argentina “According to data obtained by the Argentinian Permanent Observatory of the SMIs (small and medium-sized industrial enterprises), 71% of the total companies in Argentina are family businesses, and that 90% of them directed their sales to the domestic market and the remaining 10% to the international market.” Regarding the academic education the FB’s senior management, the Observatory’s report found that 61% has no university/college education, and that 84% of these companies will be managed by direct relatives of their founder” (Betancourt, Arcos, Torres & Olivares, 2011) Mexico “90% of the companies in Mexico are family owned businesses, of which 10% are 100 years old, but lack proper corporate governance. Only 30% of that group reaches the second generation, while 15% reach the third generation. Succession plans fail not on account of reasons that are entrepreneurial in nature, but rather on account of family related issues” (Betancourt, Arcos, Torres & Olivares, 2011) Colombia “According to Colombia’s Business Superintendence, 70% of Colombian companies are family owned or family controlled businesses, making them responsible for 45% up to 70% of the GDP. These companies are a crucial part of the country’s economic and social development, and their sustainability plays a key role in Colombia’s industrial performance” (Colombia.com 2014) Source. Authors. or what about Siemens, that was born out of ten brothers who came from a working family in Hanover, Germany. America’s entrepreneurial history showcases the Rockefellers, the Fords, The Walt Disney Company, Anheuser-Busch, Marriott International, Mars, Wal-Mart, Motorola, Hasbro, Neiman-Marcus, among other large American emporiums that are family-owned businesses, or were in their early stages? Colombia’s industrial development is impossible to conceive without the examples mentioned by Gaitán and Castro (quoted by Velez Montes et al, 2008, p.8): …nobody can, nor should conceive Colombia’s economic development without relating it with family owned companies, (for it has derived) from the industrial efforts of Carvajal, El Tiempo, the sugarcane mills of the Valle del Cauca, Bavaria and Postobon, Coltejer, Fabricato, Grupo Luis Carlos Sarmiento Grupo Colpatria, Imusa, Coordinadora Mercantil, Ramo, Colombina; and also the companies that belong to the Sindicato Antioqueño: Espinoza Hermanos, Chaid Neme Hermanos, Pintuco, Crown, Haceb, just to mention some of the most relevant Colombian companies who began operations as FB, and some still are. There has been no consensus regarding the best way to define the concept and definition of Family Business. The presence of too many shades and nuances within the economic, legal and social aspects makes it very difficult to procure one homogenous, universal definition, which is generally accepted. Escalona (quoted by Velez Montes et al, 2008b, p.6) defines “family business” in a way that explains why it is so difficult to prevent the conflict within family enterprises: 331 Conflict within Colombian Family Owned SMEs The truest definition should be based on how a family’s most important values coincide with those of its business. In this regard, a company should be considered a family business when a strong bond between a company and the family that owns it, is evident. This nexus, this bond between a company and its proprietor family is a double-edged sword (Hunte, w/d) (LeCouvie, 2015): its strength is paramount to the company’s success, but the line dividing the owners’ vision and life project with the vision and the company’s life project can become very thin, a blurred line for the owners and founders. Very often these become convinced that their life project, and the one the company has are the same, or that it should be, for they and the company are one same being, and herein lies some of the most powerful reasons for conflicts to arise within FB. In that frame of mind, it is impossible for the company to have a life of its own, furthermore to live a life of its own, with the autonomy that every living being requires. According to Crissien and Perez (2007b), people decide to become entrepreneurs because they possess the desire to create wealth for themselves and their families. Almost all micro, small and mediumsized enterprises in Colombia were created by enterprising Colombian families, who faced a great deal of difficulty and adversity, and as their business helped them face these, the company winded up being perceived as another family member; another sibling for the offspring, and a “daughter” for the owners (Palacios & Pérez, 2007) When a marriage fails, and it is forced to face a tumultuous divorce or separation process the offspring are usually its most notorious victims. In a family feud derived by a conflict of interests in the inside of a FB, the first victim is the company itself. Why? There are various approaches by different authors that try to explain the root causes behind the conflicts within Colombian Family Businesses. Two of them are discussed below, followed by some suggestions on some actions to take to ensure a healthy interaction between the proprietor family and its company, therefore ensuring sustainability. THE FEUDAL APPROACH TO MANAGEMENT: AM I ONE WITH MY COMPANY? Velez Montes et al (2008c), in their study “The SME family business dynamics” (originally in Spanish, “Dinámica de la empresa familiar pyme”), conclude that non-family enterprises are managed through business models guided by objectivity and rationality, where employees’ performance is evaluated based exclusively on their performance, whereas FB are much more prone to be guided by bounded rationality, that is often fed by the dynamics of family relations. On the other hand, family businesses are composed of human beings united by blood ties, kinship, affinity, and that have associated themselves in pursuit of a profit with a long-term vision. This vision winds up merging with the family’s vision (Lamp. 2015). These types of scenarios transform the founder into the cornerstone, and the central pivot of the company’s management. He/she constitutes the corporate image to the outside world, and the natural leader within the company, hence becoming the epicenter of the organization’s dynamics. Their voice and their views are considered “Vox Dei”, and very seldom do they possess enough mental or emotional flexibility to accept and/or embrace other point of views, making them very obtuse leaders, who cherish their long-established traditions, their power and status inside their organization, and this makes 332 Conflict within Colombian Family Owned SMEs them terribly resistant to change. They suffer from what has been coined as the “Caudillo Syndrome”1 (Oxandabarat & Neira, 2010) (Ocampo, 2011) When the founder becomes the axis upon which the company rotates all the strategic decisions depend on him/her, and the management approach utilized will be a decisive factor on the organizational climate the company has, as well as the company’s relationship with its external environment (Cosier & Harvey. 1998:77). What Type of Management Approach Is Most Often Used in Colombian FB? Pérez-Uribe (2000 and 2013) sustains that Colombian FB are very often run under what he has coined as a “feudal management approach”. By Feudal, Pérez-Uribe is clearly referring textually to “belonging to the feud or feudalism, which was a kind of contract between the Lord and his vassals whereby the lord ceded a land to his vassals, forcing themselves and their descendants by oath, to loyalty and personal gift to their Lord”2, using this anachronism to illustrate how archaic and obsolete are the management tactics used to administrate many Colombian family businesses. This comes as a great surprise and disappointment, for the owners/founders/managers have attended numerous courses, conferences and seminars on management issues both in Colombia and abroad. But why do they attend these? Is it to improve and broaden their scope? To learn new concepts to emulate in their companies? One would hope that the answer to the last couple of questions was a definitive YES, but unfortunately it is not. Some Colombian company owners do attend these events to learn, to broaden their horizons, to break their management paradigms. Others just do it for the sake of it; for the recognition it brings, and to increase their relations capital. In their minds, narrow and obtuse, changing their management ways is not necessary; they are already wealthy, their companies are profitable and some are growing like clockwork, why change something that is working Pérez-Uribe (2000b). “If it ain’t broke, don’t fix it” says the famous American slogan, and therefore change is overlooked, especially if the owners coffers continue growing, but success doesn’t last forever, and as Robert Kiyosaki (1997) has said “Success is a poor teacher”. When an entrepreneur manages his/her business under a feudal approach inevitably he/she will confuse his life project with the company’s, depriving his/her company of the independence and autonomy it needs. (Pérez-Uribe, 2009) Under a feudal management approach it is impossible to find a clear and explicit separation between the owner’s life project and vision and the organization’s life plan, project and vision. The reason being is that the proprietor ends up thinking that he or she and her company are one, and as it is deprived of the autonomy and a life of its own that as a legal, independent entity it needs to have, the company’s destiny and the one of its owners are now co-dependent, and these are truly very tumultuous and dangerous waters to navigate in (Sharma. 2004:7-8). Both the aforementioned Pérez-Uribe and Velez coincide in explaining how in these types of organizations everything evolves and turns around the owners and their will. A detailed production schedule, or a detailed programming for the sales force, all can be changed in a heartbeat, in the owner’s heartbeat to be precise, regardless of the consequences that these abrupt changes may have. Care to complain? You will listen to the proverbial “it is my business, it is my way or the highway”. 333 Conflict within Colombian Family Owned SMEs Despite the unhealthy working environment derived from this managerial approach, despite sudden changes in programming, despite treating personnel as if they were serves, these enterprises make good money. Their income allows the owners to build small fortunes, making them feel all too well about their management skills confident, even arrogant and smug at times. In the long run, this is counterproductive for their companies and for them. They’ll hold on to their management approach blinded as they are by their success, which provides them with a sense of security that forbids them to understand just how harmful this management approach really is (Danes, Rueter, Kwon & Doherty. 2002:33). It is imperative to clarify that not because the / the owner of an SME is wealthy it necessarily means that their companies are wealthy as well. Many a times the fortunes of the owners have been built by bleeding their company completely dry. They are rich owners of poor companies, and a poor company doesn’t contribute to a country’s economy. (Pérez-Uribe & Ocampo-Guzmán. 2015) All the eggs have been put in a same basket. All the bets have been placed on a single horse. The owner’s/manager’s/founder’s economic, mental, emotional, familiar stability, his/her health and overall well-being as humans depend on the business’ success, on its the health and well-being. And success is not a given, sometimes it just never comes, and if that’s the case what then? What Is the Concept behind “Owners Bleed Their Companies Dry”? How Can Someone Do Something that So Clearly and Negatively Affects Them? It has been aforementioned how under a feudal management approach it is impossible to find a clear and explicit separation between the owner’s life project and vision and the organization’s life plan, project and vision, thus making the owner think, feel and act as though he/she and the company are one unit, one being, one organism. Several authors have explained that one of the symptoms that evidence a modern in a small business’ managerial approach lies precisely in the much needed pristine, clear, loud and explicit detachment between the company’s vision and life project and those of its owner’s. (Perez, Nieto, Velasquez et al, 2009:28) (Kilmann & Thomas. 1975) (Rodríguez. 2007) However, and very sadly, Colombian SMEs proprietors/managers insist on using the feudal management approach, and the consequences are very dire, both for the organization and the family that owns it, especially for the founder. (Pérez – Uribe. 2000 and 2013c) An analogy using John Boorman’s 1981 exquisite masterpiece Excalibur can explain how noxious thinking “the company and me are one” can be: After years of prosperity, peace and darkness threaten Camelot. Morgana bears a son, Mordred, and a curse, caused by Mordred’s unnatural, incestuous origin (he was conceived by Morgana and Arthur when Morgana took the form of Guenevere and seduced Arthur) strikes the land with famine and sickness. At the same time, Arthur finds Guenevere and Lancelot asleep together. Heartbroken and distraught at their betrayal, he thrusts Excalibur into the ground between the sleeping couple, renouncing the power of Excalibur, the one that ensured that if the King was prosperous, the Land was prosperous as well. Following these events Arthur plunges into a depressing stupor that doesn’t allow him to live, but it doesn’t kill him either. Grieved and broken, Arthur sends his knights on a quest for the Holy Grail in hopes of restoring the land. Many of them die, or are bewitched by Morgana. Everything seems futile. All hope is gone, but then Perceval has a vision of the Grail. He has it near his grasp. A deep voice (King Arthur’s voice) asks him: “Have you found the secret that I have lost? Perceval answers: “Yes, you and the land are one”. 334 Conflict within Colombian Family Owned SMEs Upon answering the riddle he gains the Grail and takes it to Arthur, who drinks from it and is revitalized—as is the land, which springs into blossom. Many Colombian entrepreneurs have wrongly and harmfully allowed themselves to feel the same connection with their company, and during their company’s zenith, when finances and profits are buoyant, when business is thriving and burgeoning, owners enjoy splendid emotional and physical health. But if a deep crisis arrives, so does an abnormal tachycardia or arrhythmias, heart attacks, and in some cases, deep depressions a la King Arthur, but there is no Holy Grail, so suicide is a more viable option. The feudal approach of management makes managers/owners power and control addicts, and it not by coincidence that this type of management has been pursued and programmed by Senior Management, determined not to lose the power and/or control they’ve amassed, and to keep on running the company’s fate as they are accustomed to, even after they have retired! (Pérez, 2000 and 2013d). Can a person addicted to power, control and success easily break paradigms? Change his/her mental models? And far more important and paramount; what type of company is the second generation inheriting? What challenges, some insurmountable, will the second generation face consequence of the feudal approach that its predecessors used? Perez & Palacios (cited by Crissien & Perez, 2007b:113) highlight that everything boils down to a question of attitude; the owners/managers must really have the desire to improve their businesses, even if it is a thriving business. They must comprehend that there is always room to improve, that despite what their personal wealth shows, there are always issues that need attention and revision. Perez and Palacios urge the Colombian FB proprietors to read and interiorize the following reflection: Because their firms have given them the opportunity to live comfortably, in return they should perceive them as their daughters, and accept that as such they need to grow and mature by themselves. THE EFFECTS OF THE FAMILY-BUSINESS INTERACTION Romero (2006) explains how the Colombian family owned SMEs experienced an accelerated process of modernization during the last years of the 1990s, and during the first decade of the third millennium. The process sought the purpose of longtime purpose; to enhance and increase the productivity and competitiveness of SMEs, but with a new twist. Now the SMEs’ need to become more competitive and productive came from three (3) facts: 1. 2. 3. The consolidation of the mass use of the internet as a working tool, which further enhanced the already ongoing process of globalization and internationalization of economies, and at the same time forced the SMEs, as it did to all the business fabric, to update in every front, in every aspect possible, for neglecting to do so might cause their extinction. Towards the end of the 20th century, the successive Colombian governments increased their interest on the SMEs’ welfare and development. Public and private institutions also augmented their awareness in Colombian SMEs, hence they increased their efforts to support, by offering resources, training and legal conditions to facilitate the SMEs’ development. Aligned with the two first events, entrepreneurs began to show a greater willingness in leaning more and more on external advice, and in tempering their technical and managerial skills. 335 Conflict within Colombian Family Owned SMEs Undoubtedly seeking support from government agents, chambers of Commerce, business associations, and/or relying on consultants and external advisors to help SMEs to improve, to get formalized, to document their productive and administrative processes, was (and is!) absolutely the way to go in pursuing the ultimate transformation; from a surviving, struggling to make ends meet SME into a thriving, profitable, sustainable SME of international stature. (Perez, Nieto, Velasquez et al, 2009b). But the underlying question remains, how can those agents and institutions help mitigate the evident obstacles and problems that the dynamics of family owned SMEs pose? How Do the Members of the Family Interact in the Workplace? How Does the Family as a Whole Interact with the Company? Is There Any Kind of Jealousy amongst Family Members? Ward (quoted by Romero, 2006b, p.136) sustains that the quality of the interaction between family or family owners and their company affects both the productivity and the competitiveness of family owned SMEs. By interaction Ward refers to the manner in which the family members relate with each other, participate in the company’s affairs, and how does the dynamic of being at the same time family member/ company owner evolves. Increasing a business’s competitiveness implies the incorporation of processes and practices that demand something that it is a tremendous challenge for any human being: CHANGE. (Foss, 1997 & Barton, 1995, cited by Sacristan, Forcadell and Montero 20013: 8). Change within an organization will always encounter barriers and obstacles ranging from disdain for the whole change process to the absence in the company of the competencies and qualities required to successfully undergo a change process. (Ginebra, 1999. Mentioned by Avendaño-Alcaraz J., Kelly L., & Trevinyo-Rodríguez R. N. 2009:191). Reactive organizations, the lack of a clearly defined and disseminated strategic direction plan, nonexistent performance indicators, staff and personnel who does not really perceive the need to incorporate processes and practices conducive to improving the competitiveness of the company, and therefore have no desire to change. (Pérez-Uribe and Ramirez Salazar, 2015). All these barriers and obstacles are quite a handful of a challenge to overcome, and what if an additional and tremendously heavy burden is added, the one represented by the conflict inherent to the family businesses, where emotions and relationships get mixed with operational and administrative problems? Where absolutely everything is mixed? Family and Business: How to Deal with the Burden of It All Family businesses are often plagued with substantial conflict. Kellermans & Eddleston (2004), cited by Praet (2011) emphasize, that although the conflict is often perceived with negative effects, also may be beneficial in certain circumstances. Distinguishing between task - conflict, process – conflict, and the role of facilitator in conflict resolution and confidence-building. They mention that altruism also plays an important role in conflict reduction, and in enabling relationships to properly flow within family enterprises. Depending on the expectation of what is appropriate or not, the members of the families behave differently in similar situations, and have different expectations in regards of how much are they willing to sacrifice to reach their goals. According to the authors named above, the founders might consider the 336 Conflict within Colombian Family Owned SMEs company and its success as a key element of their existence, and devoted their lives to the company, even at the expense of their own personal lives. Whereas the following generations might regard this kind of behavior completely obsolete. For these generations, the firm and its continuity could be still important, but at the same time, they are not willing to sacrifice their personal lives pursuing goal. As a result, sometimes the transition from the company’s first generation to the next could in fact reflect a change of identity in which subsequent generations have different preferences. (Molly, Laveren & Deloof, 2010, cited by Praet, 2011b) But the goals and objectives of a FB are not exclusively monetary; there are non-economic and nonfinancial goals that often are deemed even more important than obtaining a hearty profit. In fact Cabrera Suarez. M.K. (2012), mentioning Klein and Kellermanns (2008), says that for family businesses value creation means to pursue both economic and non-economic results. These non-economic results are related to more profound desires and expectations. To make sure that the family maintains control of the company, at least to keep the majority of the stock in the family’s property. To keep the company’s goodwill intact, its good reputation, its stature as an important player in the country’s business fabric. Such qualities are all intimately related to the family’s own reputation and social prestige, and they should be kept generations hence; these are the kind of objectives that constitute what in recent managerial literature is known as socio-emotional wealth (Berrone, Cruz and Gomez-Mejia, 2012; Dyer, 2003; Gomez-Mejia, Berrone and Castro, 2011; Zellweger, Nason, Nordqvist and Brush, 2011. Cited by the aforementioned Cabrera Suarez, 2012b). Now, what can family owned SMEs do to ensure that their objectives and goals survive the company’s management first generation? How can these companies and businesses become sustainable over time? All SMEs should have a professional and properly structured corporate governance that is in charge of the firm’s Strategic Direction. The corporate governance can be defined explicitly or implicitly; Colombia’s history of businesses development reveals many examples of organizations that have endured the test of time without having an explicitly defined strategic process planning and/or a structured corporate governance. They did (and do) possess the conditions that Romero (2005b) holds as paramount. These critically important three (3) conditions are: 1. 2. 3. Quality Family Relationships: Cooperation, unity, solidarity, warmth, these are all qualities present in a family with healthy relationships, but in a family that also owns a business it is very important to have a crystal clear comprehension regarding the reasons that led to the company’s foundation and the existing common interests A Clearly Defined and Assimilated Organisational Structure: Functions, roles, responsibilities, duties and power limitations must be clearly defined for every family member involved in the organisation. Furthermore, the “rules of the game” must be pristine from the get go. A Corporate Governance Structure: Ensuring a professional management approach of the family business completely independent of family interests. Family matters and business matters must be completely separated. Romero (2005c) describes an aspect that entails a great similarity to the aforementioned “Caudillo Syndrome,” and that becomes an enormous hurdle in the establishment of a proper corporate governance, as set in c) above. 337 Conflict within Colombian Family Owned SMEs It is highly advisable to include non-family members in the corporate governance structure. Someone that is not a family member, and that doesn’t have any kind of sentimental ties with any member of the company or the family. Someone who will help keep any type of bias out of the equation. And in comes the infallible Dictator. The dynamics of family SMEs are dominated by the concentration of power in the manager/owner. He/she makes the key decisions and manages the business-critical information, and is terribly reluctant to share both their decision power of and/or key information, not even with their own flesh and blood. No one has ever evaluated their performance throughout the entire existence of the company, and they’re not about to let someone outside the family core to do so. They are used to make their decisions without anyone’s opinion, without any advice, and even so more important, they are accustomed to make indisputable decisions. This resistance makes an implementation of a Board of Directors with non-family members incredibly difficult, despite the fact that one of the central recommendations that experts make is precisely to use this body to professionalize family SMEs, and Colombian FB very often have installed a Board of Directors that are a mere formality. They are composed of the owner’s spouse, one of their offspring, a brother, an uncle, all family members who work for the owner, who will gently vow their heads, or do not have enough power to oppose his/her decisions. SOME STRATEGIES TO ACHIEVE SUSTAINABILITY FOR A POSITIVE INTERACTION BETWEEN FAMILY AND ENTERPRISE For Romero (2005d) three main conditions are needed: 1. 2. 3. Positive family relations in which cooperation and union are present, furthermore, common interests regarding the existence of the family business is of outmost importance, The presence of an organizational structure clearly defined and assimilated in which functions, roles and decision environments are established for the family members who are linked to the family business, this along with clear ground rules for the family, An administrative scheme and a corporative government that allows professional management of the family business independently from the family interests. In other aspect, Romero (2005e) mentions again the “chieftain syndrome” which he regards as the biggest obstacle for the conformation of an adequate corporative government. Said government should be made up of a Board of Directors that includes external members who support the businessman and his steering committee. However, as we have seen before, the power concentration in the manager/owner dominates the dynamics of the Family SMES. They are the ones who make all the important decisions and manage the critical information for the business, and are terribly reluctant to share their decision making power and the key information. During the whole life span of the enterprise they have grown accustomed to lead without external consulting, to have their decisions unchallenged, to not having their management evaluated and to not have any intervention on the way they run the business. This resistance they put up makes the implementation of a Board of Directors with non-family members very difficult, even though the usage of such organism is one of the principal suggestions experts make for the professionalization of the Family SMES (Romero, 2005f). 338 Conflict within Colombian Family Owned SMEs The “chieftain syndrome” ends up making the corporative government a mere formality, in which the possibilities of a positive collaboration between the family members beneath a participatory management are minimal, therefore generating family conflicts and allowing the possibility of external experiences that would be nurturing for the competitive capacity of the company to be lost. The absence of clear and fair ground rules, where the prevailing management approach is an autocracy masquerading as a democracy that leads to an on-the-go improvised way of dealing with situations, under an atmosphere permeated by distrust, rancor, and the toxic mix of emotions and money, when the owning family is forced to make complex and conflicting decisions or when facing family disputes (Dodero, 2006). Under these circumstances, objectivity is hardly seen and it is very possible that decisions are made which hinder the interests of the company with, in some cases, catastrophic results. If to the before mentioned we add a lack of a manifest assignation of duties and responsibilities, which is when the distribution of executive tasks of each family member is not clearly defined, some could take hold of other people’s work through an entitling feeling of ownership. Usually this is how a structure in which every executive family member has come up with their own responsibilities, position and its relation with the other members of the company. In some cases, each family member creates their own information system that allows them to control what information reaches the other executives. This meddling causes bad blood between relatives that ultimately affects the family. Failed communication and coordination, the lack of a manifest task and responsibilities division have been the main causes of conflict between family members (Van Wyk, 2012). The situations mentioned above revolve around the same concept: the difficulty of working together when working alongside relatives. These problems are more commonly found on enterprises in which the second generation, meaning the sons and daughters, are the ones running it. The decisions that were unanimously made by the founder of the company previously are required now to be consented by all siblings. Their role model was that of their father’s absolute power, but now they have to learn mutual respect and understanding of their sibling partners’ interests, to complement each other and, above all, to discuss about topics that aren’t usually talked about for fear of misunderstandings (Collins M, 2007). From this type of predicaments it is very likely that rich businessmen end up owning poor enterprises. Moreover, as a result of a disorganized management where all family members blend their personal finances with those of the business, the company is torn apart and is forced to present to government entities poor financial results which make the enterprise unable to have the independence that, as a legal person, should have. All of this deters the enterprise from developing to its full potential and therefore contributing to the economy of a society (Pérez-Uribe and Ocampo-Guzmán, 2015b). For better or worse, conflicts are ever present within family life. However they should be looked upon as opportunities for the improvement and growth of the relationships. Working properly and with harmony alongside relatives demands a good communication which entails learning to interact without judging. Another issue that stands out is that of the significant differences between family members regarding their entrepreneur training. Frequently, the academic background of the sons and daughters is better than that of the parents […] this allows them to see the reality of the enterprise and business management differently, and therefore if they do not have mutual understandings, surely conflicts will arise (Dodero, 2006b). 339 Conflict within Colombian Family Owned SMEs Added to the difficulty family members find when working together, there are some issues that make people be wary in their relationships with others such as gossip, personal rivalries, and difference in opinions, mistrust and conflicting interests, among others. In most cases, these problems transcend the business atmosphere and impair family relations, consequently weakening the main pillars upon which family businesses are held, like work commitment and dedication (Dodero, 2006c). According to Dodero (2006d), success factors such as “effort and dedication” and “vision and strategy”, are featured prominently above all others. These components reflect the passion and commitment that family members put on their work to help their business thrive and frequently this means that a great entrepreneur with a good business vision is behind the wheel of the company. On the other side, the mentioned author states that “organizational problems”, “family disputes caused by lack of good communication between relatives” and “poor management” stand out as some of the mistakes that family members have admitted committing and that have impaired the growth of their enterprise. Gomez (2011) explains some key factors and activities to pursue sustainability of the Family SMES: 1. 2. 3. 4. 340 The main values mentioned by centennial family businesses are the same values mentioned by non-family firms: integrity, respect and customer service. a. However, the values that characterize family businesses are employee and workforce proper and adequate training, common good is prioritized over individual welfare and a long-term perspective and a thorough commitment to their companies. It is to be noted that these values are somewhat different to the values that characterize non-family firms. A newly founded FB finds that the variable that affects its growth the most is the founder’s previous experience. Alongside the founder’s previous experiences, three personality traits are powerful allies to achieve success: achievement motivation, extraversion and resilience. a. Personality traits and professional background of the founding fathers may be tremendously important variables when it comes to explaining the growth of new family businesses, but they are not the only ones. For this reason, studying the success of newly formed family businesses should take into account not only the personality traits of the business manager but the characteristics of the enterprise itself, this without excluding the analysis of the environment in which the company was created and developed. Women decide to participate in FB for several reasons, but the most relevant are: take care of their family’s patrimony and heritage, for their own professional and personal development and to maintain family unity and harmony. In this day and age women partake on their family’s company not only for sentimental reasons, their involvement also affects the spheres of patrimony and business managing. a. External factors play an important role when it comes to boost or discourage the participation of women in FB. Case analysis have shown that women are most discouraged to get involved in their family’s business exclusively due to external factors such as the conflicts that might arise between relatives that work in the company. b. As for the motivation to contribute to the growth of the enterprise and the creation of channels for family communication, it is worth noting that these are aimed to benefit of third parties, be it other family members or non-family company collaborators. The five (5) main strategies that allow family companies to successfully pass from generation to generation are: Conflict within Colombian Family Owned SMEs a. b. c. d. e. having a clear strategic business plan based on good moral values, a cultural legacy, solid achievements and a distinct vision for the enterprise. Establishing businesses that have the ability to evolve and organize themselves through a structural government. Establishing schemes for family government and property affairs. Embark on a planned strategic succession with processes that involve members of different generations of the family. Mapping a constitutional family protocol that contains guidelines for the company’s future entrepreneurship development. Pérez-Uribe et al., (2009c, 2013 and 2015), have designed a business diagnosis model called the Model of Modernization for Organizational Management (MMOM) (all copyrights EAN University), which consists of sixteen organizational components to properly diagnose a SME, as well as it highlights the best management practices to be followed by family SMES in order to be more competitive and sustainable through time. The MMOM of EAN University is a thorough situational analysis approach (Figure 1) that situates a business on a management level while, at the same time, identifying the key points for developing a clear pathway that leads to change, improvement, innovation and management modernization Figure 1. Model of Modernization for Organizational Management (MMOM) organizational components Source: López, Ocampo & Pérez –Uribe (2012:8). 341 Conflict within Colombian Family Owned SMEs It systematically establishes the priorities for the modernization and innovation projects and offers descriptions of the actions and elements that the company should take into account whilst defining the pathways that allow the optimization of said key elements. Given its broad spectrum, this Model is applicable to both service and manufacturing companies (Pérez-Uribe and Ocampo-Guzmán, 2015c, mentioned by Pérez-Uribe and Ramirez, 2015b). The model is made up from the following elements: 1. 2. 3. A conceptual background that explains each of the sixteen components with their respective variables along with a description of what is considered as a survival, informal, in development or a world class SMES. The instrument with 16 matrixes developed in Microsoft Excel whose purpose is to compile the essential information of the company, thus allowing the creation of a structure for a systematical analysis, along with providing the necessary information for the situational analysis. It also provides the tools for designing the conversion, innovation and modernization routes (Figure 2) that a survival SMES should undertake in order to transform itself into an innovative and modern SMES. Lastly, the model supplies a document with sixteen cases that show how to implement the MMOM (Pérez-Uribe and Ocampo-Guzmán, 2015d, mentioned by Pérez-Uribe and Ramirez, 2015c). The stages or levels of evolution and management situation of a SMES are qualified in quartiles. The first quartile is from 0 to 25, the second from 25 to 50, the third from 50 to 75 and the fourth and last one from 75 to 100. In the model, starting from the first stage (Figure 3), a pathway to be followed is defined in order to guide the business to a higher level, always going through the various components and under a meticulous analysis of the different variables and the theoretical descriptions. All of this allows finding a management curve, as shown in Figure 3. (Perez, Nieto, Velázquez, et al, 2009d). Figure 2. MMOM stages Source: López, Ocampo & Pérez –Uribe (2012:34). 342 Conflict within Colombian Family Owned SMEs Figure 3. General performance curve: Company X Source: López, Ocampo & Pérez –Uribe (2012:35). A summarized description of the best management practices that family owned SMES should adopt, taking the MMOM and its sixteen components and descriptions as a basis, is described below (PérezUribe, et al., 2009e, 2013b and 2015b): 1. Economic Environment Analysis: a. Checking with either advisors or universities specialized information and having an operative group with clear methodology to analyze: i. The global tendencies and the long term government plans in order to identify opportunities and threats to the company in medium to long terms. ii. Economical, environmental, and other government policies to help identify opportunities and threats that might affect the strategic management if the company. iii. The behavior of the economic variables (GDP, exchange rates, inflation, job availability, etc.) so that they might be included in a periodic revision of the company’s strategy. iv. The economic, environmental and other government policies to be able to identify their impact on businesses. b. Periodically consulting with precise tools (polls, workshops, focus groups) the needs, interests, demands and prospects of the interest and target groups of the company so as to develop the necessary actions and activities to satisfy said groups. c. Having formal knowledge (data bases, researches, bibliography) of the characteristics (tendencies, size, structure, growth patterns) of: 343 Conflict within Colombian Family Owned SMEs i. 2. 3. 344 The production chain and the cluster on which the company works or competes to incorporate them in their strategic management. ii. The magnitude and behavior of the chain market in which the company works or competes and include them in their strategic management. iii. Other similar businesses or those businesses that directly compete with the company. iv. The attributes (design, quality, packaging, label, brand, warranty and service, among others) and levels (generic, improved, unique) of a wide range of the products that directly compete with the company’s own products or with similar businesses, in order to include this information on the company’s strategic management. d. Establish the price or rates’ strategies with precise knowledge of the legal framework, the costs, the expenses, the margins and the prices of rival enterprises or similar organizations, along with their behavior (elasticity and intermediaries) for each product and service. Strategic Management: a. Conceive future situations and evaluate their occurrence probability, alongside a long term vision, supported by a validation system, a simulation or a mathematical model as a planning tool. b. Achieve a total alignment of the enterprise’s planning requirements and those of its labor force. c. Deploy a system for the company’s objectives. This should be a working tool for all employees. d. Develop a programme so that the fulfillment of the business values becomes not only a motivation factor, but a source of stability and commitment from and for its members. e. Permanently evaluate and implement the strategies, adjusting them according to the market’s and the business’ stakeholders requirements. f. Devise an indicator system that evaluates the effectiveness and reach of the strategies (Balanced Scorecard is highly recommended). Marketing Management: a. Create a culture that considers above all else the needs and expectations of the stakeholders, clients, users or consumers. It is fundamental to be able to surpass their expectations and needs. b. Develop a process in which the company’s positioning and its brand(s) comes as the result of a direction process supported by research and planning guided by management and its team. c. Keep marketing plans documented, and make sure these that take into account at least the next four years, so that the company is able to be prepared to swiftly respond to the changes in prices or rates of rival or similar business that occur in the market. d. Hire or perform marketing studies that are applicable to the marketing variables of the company. e. Have a detailed knowledge of the purchase and consumption behavior of the company’s: i. Clients, stakeholders and other market buyers. ii. Target buyers. Plan accordingly. f. Have knowledge of the stakeholders and consumers’ life cycle, and plan marketing movements to retain and keep them satisfied. Control the results. g. Develop strategies to attract and maintain satisfied customers during their life cycle. Offer the market very distinct products. h. Have an estimated cost system made by an expert that can be updated constantly. Conflict within Colombian Family Owned SMEs i. 4. Develop actions that make the rate and price strategy an answer to the company’s and market’s needs. j. Distribute your product either directly or through intermediaries, always having full information, control and evaluation of the products market reach, rotation, availability and sells volume for each of the mediums used. k. Sell’s budget should obey a marketing and sells research and planning process. With a sells team plan different situations and countermeasures to control this processes. l. Tactics and sells strategies should be in harmony with the type of product, the needs of the market, the clients, the buyers and the users. Include tactics that rely on new technologies. m. Plan and create a publicity budget that can be controlled and revised so that its results can be known at any given time. n. Come up with a discount plan based on marketing studies. Control and evaluate it. o. Plan the involvement of the company in events such as fairs, showcases, missions and showrooms. Get to know their affectivity and control its results. p. Carry out activities to promote your products through different mediums to sell your product to different channels and consumers using careful planning and controlling the results. q. Adequately plan: i. Public relations and the education of all the collaborators so they participate actively on the company. ii. Control the results. Promotional merchandising and the permanent staff. Get to know and control the effects on the enterprise. r. Formulate a clear philosophy towards costumer service. Plan and control their fidelity. Train and empower your collaborators to offer the best possible costumer service. Always try to be remarked by your clients as a company with excellent customer service. Management Culture: a. Define, document and make explicit the responsibilities of the company’s directives (Board of Directors, Family counsel) to all interested. b. With indicators show the role and involvement of the business’ management as a leader in the creation, promotion and maintenance of a harmonious work culture. c. Make explicit throughout the whole company the activities that promote the development of leadership in all levels. d. With indicators make explicit the results of the diagnosis and improvements of a management culture. e. With indicators reveal the results of the activities that promote the improvement of each person’s handling of authority and autonomy in their job. f. Develop strategies to consolidate work teams that help making the achievement of the company’s objectives easier. g. Put into practice a process to develop formal and manifest commitments of the management to quickly respond and satisfy the employee’s initiatives. h. Create and carry out development plans for the workers that show their results in their everyday work in the business. i. Set up programs to prepare employees that are soon to be retired. j. Employ referencing and comparison methods to recognize and contrast your company’s management policies and practices with the best national and international development practices. Use this information when engaging in decision-making processes. 345 Conflict within Colombian Family Owned SMEs k. 5. 6. 346 Create, implement and give feedback to a process of acknowledgment for the tasks that each of the individuals and groups perform and that contribute to the achievement of the company’s objectives. l. Come up with methods to analyze and properly tackle the feelings of rootlessness, angst and stress that some workers might have because of their work environment. m. Use activities to promote respect and human dignity among employees and collaborators of the company. Organizational Structure: a. Adjust the structure to guarantee the success of the Strategies before mentioned and make them known to everyone involved in the company. b. Utilize, evaluate and make periodically known each workers role or position descriptions to further improve processes. c. Evaluate, update and get feedback on the process maps, manual and the organization chart to improve the process and strategies of the company. d. Adopt in your decision making process a space for dialogue with all the parties involved. Decisions should always be in line with the Strategic Management. This should be shown with the indicators and the results over time. e. Standardization and normalization should be part of the collaborators usual rhythm and, whenever possible, it should count with an international certification. f. Strategic management should be the guideline for any structural, manual or system upgrades. g. Developing activities that allow collaborators to create and work in teams as a common characteristic of their job. This should be shown through indicators and results. h. The way the company is run should enable project work permanently and all records are to be complete, updated and used to improve the learning curve and facilitate decision making processes. i. Carry out transformation in the structure of the company that follow the guidelines established by the Strategic Management. j. Create systematic and integrated databases that contribute to the value added in the measuring of efficiency indicators of the structure in relation with the strategic management. This should facilitate decision making for the construction of change. Production and/or Service Supply Management: a. Carrying out of short, medium and long-term planning, in line with the organization’s strategy, with an optimum projection and projected towards future expansions. b. Periodic implementation, updating and feedback of the handbook in which processes, procedures and time are standardized. c. Sales and operations alignment with the corporate strategy, through a high-technology management information system. d. Implementation of a quality management system and its processes, with both national and international certificates. e. Implementation of a skills requirement plan and a systematized operations control (such as MRP) f. Have the latest know-how (e.g. MRP, CRM, ECR or ERP) supported by an information system and highly qualified personnel, focused on anticipating production capacity and adding value to customers’ requirements. Conflict within Colombian Family Owned SMEs 7. Financial Management: a. Develop investment for working capital, looking for the estimated floor value in the supply chain. b. Develop investment in accounts receivable, consulting with a Benchmark on the company’s financing capacity and profitability. c. Prepare and analyze a cash flow that allows to periodically determine the factors that have an impact on how the company generates value. d. Search for the financing of the working capital that shows the company’s efficiency in managing the supply chain. e. Obtain financing from suppliers as a result of the supply strategy. f. Increase in sales resulting from an adequate price/value ratio (cost for users, quality and opportunity) in a competitive scenario. g. Take financing decisions regarding the expansion for acceptance of products and services and awareness of the competitive advantages. h. Adjust working capital management to a thorough calculation of sales and expected changes in the market. i. Make purchases to be the result of an observed profitability and the demand for products and services. j. Manage profitability as the minimum return on investment expected in order to satisfy the different groups of interest around the company. k. The information processed in the company must transcend to the outer environment: markets, consumer trends, developments on regulations, technology, etc. l. Work with data bases that are regularly updated and that allow to compare risk scenarios for the company. m. Define and release the credit policy in accordance with the company’s strategy and within a value-generating framework. n. Develop an impact-based indebtedness policy in terms of profitability and risk for the shareholder. o. Compare the forecasts on corporate strategies and competitive advantages in particular, in order to facilitate the company’s growth. p. Ease control and follow-up of the expected goals in the company, based on the financial statements and their projections. q. Benchmark the company’s critical variables. r. Prepare zero-based (0) forecasts, specially emphasizing the environment variables (PEST) and the qualitative aspects of demand. s. Design the costs system so preparation of zero-based (0) forecasts and decision-making are more flexible. t. Schedule the temporary surplus resources in a way that they match the company’s defined expectations. u. If necessary, contract consulting and advisory services in a planned manner, taking into account the relevance, the existing resources and the different development stages of the projects. v. Organize an area in charge of processing the company’s information, giving emphasis to a continuous assessment of the strategy and the generation of value, so the collection and distribution system flows openly between the company’s areas and levels. 347 Conflict within Colombian Family Owned SMEs w. 8. 348 Handle accounting as information basis within the company, and identify a sound information system from it towards the ERP supply chain and the CRM customer service. x. Handle a treasury management system with a financial or similar entity. Human Management: a. Structure and release human management mission, policies, goals and strategies and develop them in a uniform manner throughout the company. b. Align, execute and evaluate the human management strategic plan in accordance with the company’s strategic direction and periodically check that it is perfectly working. c. Implement and evaluate from time to time the documents, procedures and assessment and improvement mechanisms related to human management. d. Permanently use and evaluate the selection process (interviews, tests, background check, references, etc.), including outsourcing, the company’s priorities regarding the skills, capabilities and values of the candidates, the physical and health criteria in order to determine if the candidate fits the position. Develop tests for their entrance. e. Develop and periodically evaluate: the hiring policies, inside and outside consultation sources for the preparation of the employment and draft contracts. f. Permanently use: i. Mechanisms to inform the new employee basic aspects such as: History, evolution and objectives, organization chart, Work Regulations, duties and coordination relations with other areas of the company, and ii. Mechanisms to promote and measure adaptation of a new worker. g. Develop and frequently assess: i. Training programs that are useful for the company’s workers, ii. Training with clear criteria, known and used by all the areas of the organization, iii. Improvement and innovation of the training programs in all the company’s areas and/or processes, iv. Proof of achievement by the workers trained and implementation of the concepts learned in their daily, operational or technical work throughout the areas or processes. h. Implement criteria that evaluate the employees’ development in their daily work and their achievements in applying the training process with the collaborators, both in the administrative and operational or technical levels, and proving them with indicators in all areas or processes. i. Implement criteria to promote workers (by merit, years of service, etc.) and prove them with statistical data throughout all areas or processes showing the promotion criteria, the positions promoted and their effectiveness in the company’s productivity j. Implement an Assessment and Merit process that reveal improvement needs in the workers and a performance evaluation with objectives and factors relevant to each position, process or work area. k. Implement: i. Fair criteria to determine the salary for a work position, readjustment regularity and salary policies, ii. Management indicators to determine the salary scale with respect to the industry, and iii. Payroll system with the latest technology in the sector. l. Develop and follow-up on programs demonstrated by indicators in all areas or processes: m. Of Social Welfare, Conflict within Colombian Family Owned SMEs n. o. p. Creating an environment favoring the worker’s collaboration and willingness, Of communication to disclose to the workers the existing welfare programs. Clearly demonstrate throughout the company statistics showing increase in productivity, decrease of absenteeism and workplace accidents as a result of the implementation and execution of welfare programs. q. Implement and evaluate safeguard measures against labor-related risks that may affect the individual or collective health in the workplace. 9. Foreign Trade: a. Imports: i. Accurately plan acquisition of imported raw materials, supplies, finished goods and/or services and implement contingency plans to solve any problems arising from the delay in the importation process. ii. Appoint a permanent committee to develop quality rules and quality control for imports. It is essential that experts from the company be part or be aware of government committees in charge of quality. iii. Develop specific technical rules for imports, in compliance with the regulations of national and international institutions. iv. Organize a work team with specialists in charge of studying in depth the technical aspects of alternate suppliers. v. The company’s managers must actively participate in all government spaces related to decision-making of import policies and procedures. vi. Clearly show that the logistics results of imports effectively and efficiently exceed the company’s projections and policies. b. Exports: i. Product design must exceed with added value the identified needs of the customers and must make a distinction between foreign and domestic customers. ii. Frequently export and have a sound marketing chain. iii. Develop a flexible culture of continuous learning to anticipate to international markets. iv. Have: 1) behavior analysts of the foreign consumer, 2) an experts team (internal and external) constantly evaluating the risks of exporting, 3) permanent information channels that allow for a rapid introduction in the production process of changing patterns in foreign demand and 4) joint ventures with foreign companies. v. Develop the ability to incorporate technical improvements on packaging and presentation of the product or service much better than competitors abroad. vi. Constantly work so the trademark is well known abroad and foreign customers are faithful due to the product’s distinction 10. Logistics: a. Have a logistics plan in which: i. Production, logistics and sales are in line with the strategy, the suppliers and the customers, ii. The Materials Requirement Planning (MRP) is in agreement with suppliers, and iii. The technology support fully satisfies the customer’s requirements. b. Have an indicator integral system adequately supporting production and sales. c. Work with a fully implemented Supply Chain Management model. 349 Conflict within Colombian Family Owned SMEs 11. Associativity: a. Work with horizontal and/or vertical cooperation networks in log-terms projects. b. Reach agreements with other entrepreneurs through contracts, in the form of associations, temporary alliances, franchises or other legal forms for group contracts. c. Develop, along with other allies, innovation, knowledge transfer and synergy processes that strengthen the group. d. Be a social integrator by fulfilling commitments with other internal and external groups of interest, generating trust and favorable capital stock for the associativity and making the necessary link between entrepreneurs, the academy and local, national and international governments. e. Rigorously comply with the law and all national and international rules with social and ethical responsibility and keep practices and habits of respect to commitment and disagree with all illegal practices. f. Summon other companies to develop joint long-term projects with private and/or public institutions. g. Share, negotiate and transfer knowledge developed in the web with other companies in order to achieve joint benefits with or without the participation of the Government, along with supporting institutions. h. Be part of local or regional innovation and competitively entities, submitting proposals and developing initiatives in the territory, its sector and chain. 12. Communication and Information: a. Constantly develop conversations by the management and their collaborators in order to receive comments: on the company’s plans and activities, on the needs of all the groups in the company, on information useful to negotiate with customers, allies, third parties and government entities. b. Implement a process to review the company’s documents, i. So the information meets quality, quantity, relevancy and mode standards, and ii. For storage, distribution, destruction and improvement purposes. 13. Innovation and Knowledge (Ecosystem for Sustainable Innovation): a. Have outside talent related to the inside talent in order to develop the knowledge, experience and skills required to undertake sustainable innovation activities. The collaborators are joined by open innovation networks and contribute to the sustainable innovation processes in the organization. b. Develop a process based on values looking for an economic, social and environmental balance allowing the ideas of the workers to become projects, products and services of the company and considering the development of new products and/or services from an integral sustainability point of view. The company is recognized as a sustainable innovation leader in its sector. c. Support the company’s innovating activity in the interaction and contribution of all of its groups of interest with fairness and justice, developing the ability to systematically replicate innovation processes. d. Establish a management system of the innovating activity with the relevant process and result indicators, in economic, social and environmental terms. For this purpose, the company has allotted resources to be specifically and exclusively used in the innovation activities. 350 Conflict within Colombian Family Owned SMEs e. Control the mechanisms, instruments and regulations to protect the results of the innovating activity and define policies and strategies to protect its innovations. f. Permanently search for new ways of sustainable integral development for the different groups of interest and control the abilities to generate innovations in products and services, production processes, marketing ways, management systems and business models. g. Control know-how in an integral manner in order to achieve an operation friendly to the environment and the community. For this purpose, it establishes a technological action plan according to the strategy so as to assure the company’s sustainability, and it anticipates to technological changes and implements prospective actions in order to build its own sustainability. 14. Social and Company Responsibility: a. Have, display and give feedback to a Corporate Social Responsibility (CSR) policy and strategy model, integrated to the company’s mission, vision, principles and values. 15. Environmental Management: a. Structure, implement and evaluate an environmental management process which includes: objectives, goals and indicators related to a SEAI indicator (Significant Environmental Aspects and Impacts) REFERENCES Aira, L. (n. d.). Family companies. Avendaño-Alcaraz, J., Kelly, L., Trevinyo-Rodríguez, R. N., & Madero-Gómez, S. (2009). A family-based competitive advantage: Handling key success family factors in Mexican family businesses. Cuadernos de Administración, 22(39), 191–212. Betancourt E.A.D., Arcos M.S., Torres V.A.E., & Olivares B.L.D (n. d.). Empresas familiares. Revista académica Tlatemoani. Retrieved from http://www.eumed.net/rev/tlatemoani/09/emvb.html Boorman, J. (Producer), & Boorman, J. (Director). (1981). Excalibur. [Motion Picture]. Cabrera Suárez. M.K. (2012). 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Retrieved from http://www.bdigital.unal.edu.co/1803/1/paulazuluagaarango.2010.pdf ENDNOTES 1 2 354 “Caudillo” is a word utilized to describe a typical Latin American strong man/woman. An autocratic figure, though not necessarily a dictator. Late Venezuelan president Hugo Chavez is a fine example of the Latin American Caudillo. Definition made by Garcia-Pelayo y Gross, Ramon, and appearing in small Larousse Illustrated. Argentina. p.464