Discussion Papers are preliminary materials circulated to stimulate discussions and critical comments
DISCUSSION PAPER No. 12
Family Business in Mexico: Responses to Human Resource Limitations and Management Succession
Abstract Indigenous firms in Mexico, as in most developing countries, take the shape of family businesses. Regardless ofsize, the most predominant ones are those owned and managed by one or more families or descendent families of the founders. From the point of view of economics and business administration, family business is considered to have variety of limitations when it seeks to grow. One of the serious limitations is concerning human resource, which is revealed at the time of management succession. Big familybusinesses in Mexico deal with human resource limitations adopting measures such as the education and training of the successors, the establishment of management structure that makes control by the owner family possible and divisions of roles among the owner family members, and between the owner family members and the salaried managers. Institutionalization is a strategy that considerable numberof family businesses have adopted in order to undergo the succession process without committing serious errors. Institutionalization is observed in such aspects as the establishment of the requisite condition to be met by the candidate of future successor and the screening by an institution which is independent of the owner family. At present these measures allow for the continuation of familybusinesses in an extremely competitive environment.
Keywords: family business, ownership, management, succession, Mexico JEL classification: K22, L22, M12, M13
Deputy Director-General, Area Studies Center, IDE (email@example.com)
The Institute of Developing Economies (IDE) is a semigovernmental, nonpartisan, nonprofit research institute, founded in 1958. The Institute merged with theJapan External Trade Organization (JETRO) on July 1, 1998. The Institute conducts basic and comprehensive studies on economic and related affairs in all developing countries and regions, including Asia, Middle East, Africa, Latin America, Oceania, and East Europe.
The views expressed in this publication are those of the author(s). expressed.
Publication does not
imply endorsement by theInstitute of Developing Economies of any of the views
INSTITUTE OF DEVELOPING ECONOMIES (IDE), JETRO 3-2-2, WAKABA, MIHAMA-KU, CHIBA-SHI CHIBA 261-8545, JAPAN
©2004 by Institute of Developing Economies, JETRO
FAMILY BUSINESS IN MEXICO Responses to Human Resource Limitations and Management Succession
Indigenous firms in Mexico, as in most developing countries, take theshape of family businesses. Regardless of size, the most predominant ones are those owned and managed by one or more families or descendent families of the founders1. After 1982, under continued economic crisis and advancing economic liberalization, many uncompetitive firms were eliminated, and many new firms taking advantage of the situation emerged. However, there are no differences between firmsthat have survived competition and newly emerging ones in that both are family businesses. The fact that family businesses in such a country develop into large scale firms after having survived in an unprecedented competitive environment, constitutes a very interesting phenomenon from the point of view of economics and business administration. From the point of view of economics and businessadministration, family business is considered to have a variety of limitations. If the objective of such a business is to grow, it is necessary that it overcome these limitations. In this way, it can be transformed into a managerial firm. H. Morikawa explains the limitation of family firms from the perspective of “human resources” (Morikawa ). He points out that the human resources from which a...