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

Abstract

The relevance of traditional methods of project evaluation in the decision-making process for family-oriented businesses 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 related to a Chilean family business, in its attempt to determine the importance that family members attribute to different variables that should be considered when making investment decisions. The investigation considered three types of data: a) evaluation of the investment from a financial and strategic point of view, b) presentation of results to the member of family, and c) follow-up with respect to the decision made and interviews with all the family members. 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.