Since the creation of Wharton’s Latin American Advisory Board three years ago, the U.S. has signed the North American Free Trade Agreement (NAFTA) and joined the World Trade Organization.
In December, Wharton organized a three-day seminar in Miami on leadership training for the successor generation in Latin American family-owned corporations.
And just this month, Wharton’s Latin American students held their fifth annual Latin-American Conference titled “Partnership in the 21st Century.”
These events illustrate the rapid changes taking place in the global economy and the important leading-edge involvement of Wharton in all regions of the world. Along with our growing activities in Europe and Asia, Latin America offers the School an exceptional opportunity to work within emerging regional economies and move toward global market competition.
Family-owned corporations are the predominant form of business organization throughout the world. In the U.S. alone, at least 75 percent of businesses — including 35 percent of the Fortune 500 — are family-owned or controlled. In Latin America, with the opening up of trade borders, family-owned firms now face significant challenges in areas such as capital acquisition, corporate organization, family member involvement and strategic realignment.
One of the issues discussed with our Latin American Advisory Board, which met again in Lima last month, was the challenges faced by Latin American family businesses and the educational responses best suited to meet their needs. Additionally, many of the School’s 1,100 Latin American alumni either come from, or work for, family-owned businesses, and they too are a tremendous resource in helping to guide our efforts.
Because family firms are so crucial to Latin America’s global adaptation, Wharton’s Family Business Program is poised to play a strategic role. While much of the existing research in the U.S. on family-owned firms traditionally has centered around succession and estate planning, and has been largely domestic or regional in scope, our Family Business Program under the direction of Tim Habbershon is working with firms internationally, focusing initially on Latin America to create new practice models for family firm competitiveness as well as to establish an educational network of family-owned corporation stakeholders. This model can then be replicated in other emerging economies around the world.
Latin America is an ideal place for the program’s current focus before it expands to Asia and Europe. Because of the region’s political and economic history, family-owned businesses have tended to be mini-conglomerates, with their own sourcing, production, distribution channels and even banks. Given the changes in the global marketplace, these firms are already searching for new organizational structures that will help them focus more efficiently on specific competencies and enhance their family’s involvement.
The opportunity for us at Wharton is to leverage the School’s strengths, including its global capabilities and international perspective, into creating new business practice models for these family-owned firms. If we are going to access and impact Latin America in the coming decades, we have to understand the family corporate structure and work to enhance its competitiveness.
The opportunities are there for sharing information and experience, not just goods and services. It can indeed be a 21st century partnership.
Thomas P. Gerrity