Family businesses: roots as a competitive advantage

BarcelonaThe world is changing. The entire international and geopolitical system that emerged from the Second World War has given way to another dominated by the struggle and competition for power, with two giants like the US and China, although the dollar has so far won the battle. And "in a fragmented world, being local and having roots is today a competitive advantage." This is a statement by José Juan Ruiz, president of the Elcano Royal Institute, a renowned expert. think tank private, which participated in the 28th edition of the National Congress of Family Business, held in Burgos under the motto Origin/Destination.

And he added, in front of the hundreds of owners and directors attending this annual meeting, that being linked to a specific territory is one of the great advantages of family businesses, those controlled by people with parental ties, such as parents and children, siblings, cousins... This is, for example, the case of a bakery, one of whose promoters, the mother of the current CEO, wondered years ago why muffins were round and why they couldn't be square. This idea was one of the driving forces behind what would eventually become Vicky Foods (named in honor of this enterprising woman, Victoria), an international industrial group. This, thanks to the square muffins and the Dulcesol brand, which also became rooted in Villalonga, Valencia, where he was born in the 1950s, explains its CEO, Rafael Juan, a member of the third generation.

In fact, it is ingenuity and innovation that led to the creation and subsequent growth of other businesses that have now become major member companies of the Family Business Institute (IEF), which brings together around 100 of the most important companies. The latest addition is the Hotusa hotel chain, headquartered in Barcelona; founded more than 40 years ago by Amancio López Seijas, who made his debut in Burgos as a member of this powerful business lobby. His daughters Clara and Marina are now also part of the leadership.

But just as with the radical change in the shape of Vicky Foods muffins, other family businesses were born from an idea or innovation, such as Pikolín, from the Soláns family. In 1948, Pikolín was born, a mattress manufacturer that is now sold worldwide, but with its headquarters in its birthplace, Zaragoza. This is also the case with Persán, a company specializing in personal and household care products. It was founded in 1941 by the grandfather of the current president, Concepción Yoldi. It started out producing soap from olive oil waste and is now internationally based in Seville, where it was born.

Another example is the Antolin Group, which started as a small mechanical workshop run by Avelino Antolín López and his sons Avelino and José. The company produces and distributes vehicle interiors worldwide, with headquarters in Burgos since its inception. Or the multinational cosmetics, perfume, and fashion company Puig, founded in 1914 by Antoni Puig Castelló, which began its rise eight years later with the Milady lipstick. Today, the founder's grandchildren run a publicly traded multinational company with its headquarters in Hospitalet de Llobregat.

Or the Vallesan company Fluidra, today a giant in everything related to swimming pools, after swallowing up the American Zodiac in 2018. Chaired by Eloi Planes, who took over from his father Joan, who died (the four Garritas and those who are one of the representatives of the Corbera family), the company is today part of the Ibex-35, like Puig, and has its headquarters in Sant Cugat del Vallès. Astral Construcciones Metálicas, in 1969, was the origin of this current multinational.

In the end, it's about having the ingenuity to innovate with products and services to meet needs. The reason is that this trait of companies controlled by relatives, which account for more than 90 out of every 100 of those in existence and 70% of private employment, provides competitive advantages. The evolution of these types of companies demonstrates this: they are growing in value more than twice as fast as those on the continuous market, 7% annualized compared to 3% between 2014 and 2023; and 3% annualized growth in employment compared to 0% during the same period, according to a study commissioned by the IEF and the consulting firm McKinsey.

Furthermore, they have lower debt and obtain returns on invested capital above the continuous market average. A similar situation exists with employment, as they register lower-than-average staff turnover rates, which means greater retention of their professionals, to whom they dedicate more training hours than the rest. In addition to innovation, other defining features of these companies are internationalization—many of them began to do so even during the autarkic era in Spain—and diversification and training of their people.

During the congress in Burgos, an interactive survey was conducted among the attending business leaders, as is done at each annual meeting, and the majority mentioned absenteeism as their main concern and a burden on competitiveness. It is "a black cloud on the horizon", described the president of the IEF, Ignacio Rivera, who is the chief executive of Corporación Hijos de Rivera, producer of Estrella Galicia beer, among others.

In any case, 52% of those surveyed consider the country's economic situation somewhat better than a year ago, and the majority plan to maintain their workforces. Those surveyed defend their roots, although 68% state they receive no support to continue in their territory of origin, and 71% reveal difficulties in finding professionals to work in their place of origin. And this is an obstacle that affects companies in less populated areas more than those located in Madrid or Barcelona, ​​​​according to Rivera.

For his part, emphasizing the connection with a region, Juanjo Cano, president of KPMG, a specialized consultancy, explained during his speech at the congress in Burgos that "when a family business invests in transformation, it is also investing in the development of the territory." He asserts that these types of companies "are essential players in the country's economic and social progress." He added that values such as roots, legacy, and tradition "are not a hindrance to innovation but rather levers of growth and modernization when applied with a clear strategy."

The CEO of Vicky Foods is convinced that in his case, as in that of other family businesses, "the main cause of growth has been innovation: when my mother invented square muffins, and that continued over the years." The same goes for process innovation. "The products in this sector are not that different, and the processes allow us to be faster, more flexible," and more unique. The same is true for distribution. And he adds two other essential elements: internationalization and diversification.

One of the conclusions is that these companies see roots as a tool for competitiveness. The president of Pikolín, Álvaro Soláns, who inherited the position from his father, explains that despite having a lot of business in France, which would justify having their headquarters in Paris, they remain faithful to their origins and "out of conviction" decided to stay in Zaragoza. And the vice president of Persán explains that roots "confer values and a unique identity. It's not nostalgia or immobility. In an increasingly individualistic world, having unique values provides competitive advantages and makes it easier to attract talent. Uniqueness provides a unique identity and a differential advantage." And Soláns summarizes: the connection with the territory "reminds you of where you come from. It's not the entire bottom line, but there is a legacy that must be cared for."