The paper discusses the family vs. professional management and the reinvestment vs. dividend distribution dilemmas in family firms, alternative solutions, and their impact on familiness, entrepreneurial orientation, and transgenerational wealth. We extrapolate from corporate finance theory to develop some guidelines on how to create positive familiness. The paper extends the Habbershon & Pistrui (2002) model by observing that the family as investor mindset requires two conditions: profit reinvestment and a separation of ownership and management. We also explore the effect on entrepreneurial strategies of considering the family as a fragmented group where the members can have different objectives.

BALAS Annual Conference
Incae Business School

Montiel, E, Sanz, L., Cordero, A., & Severino, I. (2010). Familiness and Transgenerational Wealth Creation: The Influence of Family Management and Dividend Reinvestment. In BALAS Annual Conference.