The family character of Italian and Spanish medium-sized enterprises helped many of them to evolve into “new multinationals” in the last twenty years, according to Family Character and International Entrepreneurship. A Historical Comparison of Italian and Spanish “New Multinationals”, an article by Andrea Colli (Department of Policy Analysis and Public Management), with Esteban García-Canal (Universidad de Oviedo) and Mauro Guillén (Wharton School), forthcoming in Business History.
Since the mid-80s the entrepreneurial demography of Italy and Spain has radically changed as a reaction to globalization, transforming them from inward looking economies (with outward foreign direct investments accounting for a paltry 2% of GDP) into very dynamic ones (in the case of Italy the number of manufacturing firms controlling income-generating assets abroad has multiplied by a factor of ten, from 282 to 2,784). And the majority of these new multinationals are both family-owned and family-managed, despite the traditional view of family firms as inclined to sticking to domestic markets and to adopting conservative behaviour.
“Instead of leveraging on technology and brands in the traditional sense”, the authors write, “these new multinationals have expanded throughout the world upon the basis of their ability to organize, manage, execute and network” - soft skills which Colli and colleagues associate with the family character of the firms through the analysis of the business history of six companies (three Italian: De Agostini, Sol and Fontana; and three Spanish: Planeta, ALSA and Gestamp) in closely-related industries.
The case-histories show that firm-specific human capital (in the form of commitment, low turnover rates of top management and early involvement of new generations), social capital endowment (relationship with external stakeholders), patient financial capital (with a long-term horizon) and low agency costs strongly contributed to the expansion of the new multinationals by granting more freedom to the managers to develop their business model, by facilitating the transfer to, and exploitation of, this model in foreign markets, and by making easier the adoption of governance structures based upon trust.