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DOCUMENTED ESSAY

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WHY DO FILIPINOS CHOOSE TO ENGAGE IN BUSINESS WITH FAMILY MEMBERS?

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WHY DO FILIPINOS CHOOSE TO ENGAGE IN BUSINESS WITH FAMILY MEMBERS?

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SM Investments Corporation, Jollibee Food Corporation, Ayala Corporation, Toby’s Sports, National Bookstore; These companies represent a fraction of the 80 to 90 percent of family-owned businesses that make up the entirety of businesses in the Philippines. The country also ranks number eleven globally in terms of family-owned businesses according to a research conducted by the Credit Suisse Research Institute (Klerk et al., 2017). These businesses include big multi-million companies as well as small, local enterprises like apartment buildings, mom-and-pop shops, “Carinderias”, and “sari-sari” stores, which are often on the premises of a family’s home. The above listed companies are only multi million or billion companies. The contributions of small and medium enterprises, howbeit, contribute a larger portion in the number of businesses in the country. Family plays a vital role and importance in the Philippines that leads most of the business organizations have the Filipino family as their model. In this paper, the term "relative" will refer to members of the family who are related within the third degree. This involves spouse, brothers and sisters, children, grandchildren, great-grandchildren, parents, grandparents, great-grandparents, uncles and aunts, cousins, and nieces and nephews. Relationships can be by consanguinity, which refers to relatives related by blood (including parents, siblings, and children), or by affinity, which refers to in-laws or relatives because of marriage (Umali, 2015). The objective of this paper is to discuss 3 reasons why Filipinos choose to engage in business with family members rather than with “outsiders” by exploring core Filipino values and their effects in the business models in the country. In this paper, we will also take a look at a couple of large, successful family-owned companies in the Philippines; specifically Ayala Corporation and SM Investments Corporation (SMIC).

The first reason for Filipinos choosing relatives over “outsiders” is because families share the same values, which makes it easier to trust each other with business matters. Typical Filipino families share certain values like being family oriented, respectful, God-fearing, and hospitable. (Traditional Filipino Values that make us distinct among others, n.d) In addition, each family has their own set of values. For example, patriotism, hard work, and stewardship are values that the Zobel de Ayala family share and are careful to instill in each generation of the family. To them, it is integral, especially as business partners, that they share the same values in order to preserve family unity. It is for the same reason that they have a “no in-laws in the business” rule. According to Eddleston and Kellemann (2007), having good quality relationships is important to the success of a family and its business. In addition, involving in-laws in family-owned businesses is discouraged. Involving in-laws in family businesses tends to pose challenges to maintaining family relationships. Families would rather have trustworthy people than competent people (Santiago, 2011) whom they cannot fully depend on. In Santiagos’s words, “Since the objective of most families in business is to maintain harmonious relations with their members amid the challenges of growing the family business, many look toward in-laws as additional complexity that could be done without”. The level of involvement and whether the company allows for involvement of relatives by consanguinity, or by affinity, or not at all is dependent on the management but in any case, each member of the business must know their boundaries. For the case of outsiders stepping into a   family business, the prevailing values must be adopted. Today, the Ayala Corporation is being managed by the 7th generation since its founder, Antonio de Ayala. Their values remain consistent from generation to generation as a result of their thoroughly planned successions (Leleux & Glemser, n.d). In addition to having the same values with family members, Filipinos seek the advice and involvement of people close to them when making important decisions (Philippines-Cultural Challenges, 2015) Approaching family members first, even for business matters, is a customary for the Filipino. Doing so with the knowledge that the person one is asking advice from shares the same morals is comforting and advisable for making important decisions. Lastly, as stated by Havie (2015), “families are the bricks that Filipino society is built on, and the loyalty inherent in those family relationships is the mortar that holds those bricks together”. Not only society is built on family relationships. In this country, majority of the establishments and companies are also built on family relationships, since businesses in the Philippines are mostly family-owned.

Filipino parents are always anxious of their children’s future. Being the family-oriented people that they are, they want to be assured that their child will live a comfortable happy life even when they are no longer around (Natividad, 2015). The second reason for Filipinos choosing to engage in business with family members rather than with outsiders is because Filipino parents want to leave a legacy or build a wealth for their children. Whether in the form of investments, values, or education, Filipino parents find comfort in leaving something for their children. This is the whole concept of the Filipino word “Pamana”. Although unspoken, it has become somewhat a tradition in the Filipino culture. Lot titles or, in the modern day, condo units are usually assigned by parents to their children as their “pamana”.  The significance of leaving a heritage to their children is evident in the way that they go as far as migrating to other countries just to work so that they can send their child to school. Parents tell their children to study hard to get a degree because a good education may be the only legacy, they can leave with them. Meanwhile, other families’ legacy comes in the form of a business; some well-established and others being a start-up. Whether or not the business was conceived with the intentions of making it the owner’s legacy, if the business is successful the owner will most likely choose his children to pass it on to. This is for the good of the business and of his children. Such is the case for Henry Sy Sr., founder of SMIC or more commonly known as the SM group of Companies. Henry Sy started with only a small shoe store. As time passed, he worked hard to keep expanding the business, venturing into new markets until his small shoe store evolved into what it is today. He did not start the business with the purpose of passing it on to his children as his primary motivation but with the wealth that he has built and the size of his company, he needed give some thought about who will succeed the business. After training and mentoring his 6 children, he passed on the company. This was his legacy to his children, and to the generations after them. In the interest of the business itself, the passing on of the business allows for longevity of the company or establishment. If the successors are careful to take care of what has been passed on to them, then the business will be a legacy for generations and generations. A business as a legacy cannot and should not be passed on alone. It must come with a legacy of values, knowledge, and education, as well. Filipinos are also proud of their families. Any victory of one family member or even a relative calls for a celebration. When a child graduates from colleges, it is their parent’s pride to say that their child has a degree- they are proud of the child’s achievement and of themselves for being able support all their needs.

"Bayanihan" is a core value of Filipinos that used to refer to volunteerism but is now more appropriately used as teamwork. By definition, it means “a spirit of communal unity or effort to achieve a particular objective” (AskDefine: Define bayanihan. n.d.). It entails offering any form of aid to people who have desperate needs at urgent times. After the typhoon Haiyan, locally known as Yolanda, hit the Philippines back in 2013 the rest of the world applauded the Filipinos for their self-recovery efforts that were based on this core value. As a tropical country that often experiences super typhoons, the Philippines has experienced calamity after calamity brought by these storms but because of this core value of Bayanihan that the Filipinos remain resilient and refuse to stay down. As the Filipino proverb goes, “Kung sama-sama, kayang-kaya” in English, “When we’re together, we can do it”

. Moreover,  Filipinos are also said to value and take good care of their family. That is why regardless of where one family member is, family ties will always remain (Saito, Imamura, & Miyagi, 1996). Be it the United States of America, Australia, Hong Kong, or even the neighboring municipality, Filipinos make it a point to go home to where the rest of their family is regularly. Genuine care for family is the reason behind their “family first” mentality. Tracing back to precolonial days, datus always protected and helped their families because it is their duty as a leader. They would even form alliances with other datus to secure the safety and wellbeing of their own family. The concept of Bayanihan taken together with this Filipino trait of having close family ties results in helping family members before anyone else, in all aspects of life. If any member or relative of the family is in need of financial support, it is custom for him or her to turn to family for support rather than just taking a loan from a bank. It is also common case for Filipinos to have a family members abroad working to financially support their family, sometimes to the second degree, by sending remittances for their needs in the Philippines. Furthermore, these core values are reflected in businesses in the form of business owners employing relatives even if they do not have the right credentials for a particular job. This show of nepotism is prevalent in the country’s government system. Nepotism is defined as the practice among those with power or influence of favoring relatives or friends, especially by giving them jobs. It has caused issues in the past and has resulted in laws to manage these occurrences. In addition, in certain companies, there are policies for employees against relatives being employed at the same time. Nepotism can be taken too far in certain cases, most definitely; but under the right circumstances, nepotism can be turned into a positive concept. It can, therefore, be said that Filipinos prioritize helping their immediate family members. In the context of this paper’s thesis, Filipinos will engage in business with family members as a priority over “outsiders” because it is incumbent to them to help uplift their relatives to the best of their abilities. Proof of this are the many Filipino OFWs who have sacrifices much in order to find employment with better payment in countries outside of the Philippines. They reason out that if they stay in the country, their family will not have enough to put food on the table every night

Majority of business owners in the Philippines choose to engage in business with family members rather than with “outsiders” as we can observe even in our local town establishments and in the nationwide companies. Families share the same values therefore making it easier for a business owner to trust family relatives with business matters as compared to “outsiders” whose values may not be in line with the owner’s. As a result of Filipino parent’s concern for their children’s security after they have gone, Filipino parents see to it that their children inherit any form of legacy from them. Finally, the desire of filipinos to help their relatives as long as they are capable comes as the manifestation of the spirit of “Bayanihan” and the principle of “Family First” Filipino family businesses. In conclusion, the trend of Family-owned establishments and companies prevailing in the Philippine business scene can be justified by certain values that are ingrained in Filipinos as a result of prevailing practices in the Filipino culture.

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One of the most striking statements from last Saturday's ted talk was "I share therefore I am". In 5 words, the speaker managed to describe this generations philosophy. Our "self" has become hinged on what we choose to share online. We can now customize, online at least, "who we are" in any way we want. This build-a-bear-online-profile and our true identities are now taken as one, but they are not. They're rarely the same person.

"We expect more from technolog than we do from each other". We hide behind an online facade because relationships are messy, conversations are scary, and people don't listen. The result? More and more people feel lonely and unheard. We've isolated ourselves, and we don't even know it. Ironically though, we look to fill the void of relationships behind the same facade that created it.

Online interactions make us feel like we have more control over our lives. It also sucks the fun out of the real lives we have to live. Real world relationships will never be compensated by anything online. So, let's stop being alone together.