Making Investment Decisions in a Family-Oriented Business: Who is Right the Parents or the Children?

Abstract

The variables that shape an investment decision in a family business have not received the attention that they deserve. In particular, the relevance of traditional methods of project evaluation in the decision-making process for this type of company is not completely clear, as compared with the importance of other variables such as the project's coherence with the family's values and interests, amongst others. This article presents a case study in its attempt to determine the importance that family members attribute to different variables that should be considered when making investment decisions. The results show that the parents feel that stability in the family investment policies and the impact of the investment on the roles that each family member plays in the business are the most relevant variables, whereas the children assign more value to aspects associated with business returns.