Kriselipsis and Inverted Complementarity Diversity (ICD): New Concepts Applied to Familiness in Ecuador

Introduction

Seminally introduced by Habbershon and Williams (1999) as an intangible value to benefit the family firm, the concept of familiness has been included as a resource with the potential to generate competitive advantage and to enlarge business relationships (McGrath & O’Toole, 2018). Each firm has a unique endowment of resources and capabilities to make it different and unique that integrates into the idea of familiness. This concept has been increasingly used by family firms, and primarily by applying family learning mechanisms defined by knowledge accumulation, integration, codification and socioemotional wealth preservation (Barros, Hernángomez, & Martín-Cruz, 2016), so a scale to measure was needed and proposed by Frank et al. (2017) with their Family Influence Familiness Scale (FIFS).

Familiness directly connects to intangible value (Sacristán, Forcadell, & Montero, 2002) and also to succession processes in family firms, as knowledge transfer from predecessors to the successor is defined by combining human capital, knowledge, relational capital, and the dimension of the succession process (Cabrera-Suárez, García-Almeida, & Saá-Pérez, 2018). This knowledge transfers faster and more efficiently the firm to the heir, especially when there is a robust family-business socialization in cohesive family businesses (Bozer, Levin, & Santora, 2017). Familiness and high levels of trust in small family businesses both influence power relationships between successors and predecessors positively (Muskat & Zehrer, 2017).

In the Latin American economy, on average, more than 90% are family businesses, while raw materials currently account for 30% of the region's GDP (Dini, Rovira, & Stumpo, 2014) where the intensive use of unskilled labor define these companies due to difficulties in accessing credit and restrictions generated by its informality. Thus, in Ecuador, the value-price has been sustained in the last 50 years where national savings cover, on average, 5% of GDP, and where the entire financial system (public and private), on average for the same period, serves 20% of GDP being more than 95% of demand deposits. Therefore, in Ecuador, the solidarity economy has a growing role, which harms the economy based on accumulation. Thus, both the Ecuadorian microenterprise and SME are regulated through the Secretariat of the Popular Economy and Solidarity that works with the Ministry of Social Welfare and are treated, not as a mechanism of accumulation, but as a subsistence and social assistance channel.

After having analyzed 760 Ecuadorian SMEs (Tables 1 and 2), results show that businesses take up to ten years to double their capital, while startups are tiny and weak, with less than $5,000 of the initial investment. Besides, the most successful companies have sales of less than $12,000 per month, so no savings are possible. As a result, the economy supports and maintains productive and commercial precariousness, while the causes of informality are not known. Offers are short-term, and the price structure is highly complex, so commodity markets have a precarious organization, and there is a constant lag between monetary emission and production generates inefficiency. Finally, improvisation and necessity create startups. These characteristics directly affect both the duration of the offer and the capacity to make business volume in the microenterprise and the Ecuadorian SME.

Source: Authors from Castillo (2015)