By José Ángel de la Paz

The identification of a set of rules to quantify the financial sustainability of the family business, regarding the achievement of its non-economic goals, is part of the contributions of new research by Dr. Federico Trigos, professor at EGADE Business School at the Tecnológico de Monterrey.

The findings are presented in the paper "The Sustainability of Resource-Sharing Family Business in Relation to Family Non-Economic Goals", co-authored with Dr. Mario Doria, professor at the Universidad Iberoamericana, and published in the prestigious International Journal of Project Management and Productivity Assessment (IJPMPA).

The researchers introduce financial sustainability elements into the Socio-Emotional-Wealth theory and also identify a particular kind of family business to be called resource-sharing.

For the study, Trigos specified, they interviewed owners of small- and medium-sized companies from the manufacturing, retail and service sectors in Mexico, United States and Italy.

“All these businesses have family expenses that are paid for by the company, such as tuition or even real estate. It also works the other way round, with family resources being shared with the company, but not recognized financially by the same,” explained the also member of the Strategic Focus Research Group (GIEE) in Strategy and Management of Organizations in Emerging Economies.

Doria stated that, when the company and the owner family share resources without due recognition, they are jeopardizing the business’s sustainability by making financial decisions based on distorted information that does not reflect the economic reality.

Trigos highlighted that their research provides feasible, applicable financial metrics that allow the family to gain a greater understanding of their interaction with the company, as well as a model for discovering the company’s position and helping the owner family to make better strategic decisions, so as to sustain finances and, at the same time, socio-emotional wealth.

Doria commented that the results of this investigation will be included in a book to be published in the near future with the support of the IMEF Foundation. 

You can consult the scientific article here.