Title Family Business in Peru: Survival and Expansion under the ...

INSTITUTE OF DEVELOPING ECONOMIES
Discussion Papers are preliminary materials circulated
to stimulate discussions and critical comments
DISCUSSION PAPER No. 7
Family Business in Peru: Survival
and Expansion under the
Liberalization
Tatsuya SHIMIZU*
Abstract
It is argued that joint stock companies would be transformed from family firms to
managerial firms with their development in size and scope. Such managerial firms
would have many small shareholders; hence the ownership and management of the firm
would be separated. However, in many developing countries including Peru, family
businesses, in which families control both ownership and management, still play an
important role in the national economy. After the liberalization of economy, which
started in Peru in the 1990s, the national market has become more competitive due to
the increase in participation of foreign capitals. To secure competitiveness, it is
indispensable for family businesses to obtain management resources such as financial,
human and technological resources from outside of the families. In order to do so
without losing the control over ownership and management, Peruvian family businesses
have incorporated companies with distinct characteristics to the extent that they can
secure the control over ownership and management inside of their group. While
keeping exclusive control of companies in traditional sectors, they actively seek alliance
with other families and foreign capitals in competitive sectors. The management of
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