Professional versus family management in Brazilian fashion retail companies : exploring value-investors ’ perceptions

Regarding the debate on which sort of management – professional or family administrati on – would more eff ecti vely run businesses, this paper discusses the advantages and shortcomings of family and professional management from a theoreti cal and a practi ti oner’s viewpoint. The study aims at contributi ng to our understanding about the superiority that either type of management might have delivering longterm performance and value creati on to shareholders. Six investors from top value investment funds were interviewed regarding the management of seven fashion retail Brazilian companies. Data analysis revealed that investors do not prefer either type of management – family or professional – when they make investments. Instead, they do look for specifi c characteristi cs and patt erns of behavior in a CEO, which resemble Selznick’s (1957) defi niti on of an insti tuti onal leader. Finally, the paper suggests a new path of research for scholars (relati ng old insti tuti onalism and professionalism) and practi cal guidelines for each type of management (family or professional), off ering, therefore, an academic as well as a practi cal contributi on.


INTRODUCTION
Family businesses are central to the world economy.In fact, they comprise over two thirds of all businesses in the industrialized economies and about one third of the companies listed in the S&P500 1 index (MILLER and LE BRETON-MILLER, 2006;JONES, 2005;ALLIO, 2004;DYER, 1989).In Lati n America, 70 to 80 percent of businesses are family-owned, reaching even higher proporti ons in Mexico and Brazil (QUEIROZ, 2007;TREVINYO-RODRIGUEZ, 2009).However, as businesses mature and succession problems emerge, several family-owned fi rms consider adopti ng the professional management alternati ve.This leads one to wonder which, if any, type of management -family of professional -would more eff ecti vely deliver long-term performance and value creati on to shareholders.
Rather than trivial, this is a strategic issue.While some scholars would argue in favor of family management as a way to enable the preservati on of founders' core values and alignment of interests (GAMA and RODRIGUES, 2013;MILLER and LE BRETON-MILLER, 2006;ALLIO, 2004), others would favor professional management's rati onality, tools and techniques (SCIASCIA and MAZZOLA, 2008;GALLO, TAPIES and CAPPUYNS, 2004).
While both the academic and the practi ti oners' fi elds have discussed this topic, how investors and fi nancial analysts perceive the issue is rather obscure.Financial aspects in the literature that contrasts family and professional management (GAMA and RODRIGUES, 2013;SCIASCIA and MAZZOLA, 2008;MILLER and LE BRETON-MILLER, 2006;ALLIO, 2004;GALLO, TAPIES and CAPPUYNS, 2004) usually focus on fi nancial rati os comparisons, and are inconclusive with respect to which management mode would be more eff ecti ve.Moreover, whether a company's type of management would play a relevant role in investors and fi nancial analysts investment decisions remains an open questi on.This paper explores the percepti ons of value investors on the family versus professional management issue regarding fashion shoes and apparel retail fi rms in Brazil.This specifi c segment of the fi nancial sector comprises investors who, in additi on to scruti nizing fi nancial fi gures, actually devote ti me and eff ort to the analysis of companies' management.Their in-depth analyses on management are long-term oriented, including both quanti tati ve and qualitati ve aspects.The fashion shoes and apparel retail sector consti tutes an interesti ng site for investi gati on for organizati onal and economic reasons.For one, there are as roughly many family-managed as professionally managed companies in the sector.In additi on, the fashion apparel industry currently experiences consolidati on and professionalizati on change (VENTURA, 2010).Finally, the economic relevance of this sector is indisputable: according to PWC (2014), the Brazil is the fi ft h largest consumer market in the world, with total retailing economic acti vity in close to 25% of Brazilian's GDP (IDV, 2014), and fashion shoes and apparel responding for roughly 12% of it -or 3% of total GDP (ABVTEX, 2016).
In view of the relevance of and the inconclusive fi ndings about the subject matt er, this study aims at shedding some light on this ongoing debate, investi gati ng an ill-explored segment of practi ti oners, the value investors, from a qualitati ve perspecti ve.
In what follows, the paper fi rst introduces the theoreti cal background, then describes the research method, discusses the results of the analysis, and fi nally advances some concluding remarks.

THEORETICAL BACKGROUND
Despite the worldwide prevalence of family-owned fi rms -over two thirds of all businesses in the industrialized economies and about one third of the S&P500 (MILLER and LE BRETON-MILLER, 2006;JONES, 2005;ALLIO, 2004;DYER, 1989), and 70 to 80% of all businesses in Lati n America (QUEIROZ, 2007;TREVINYO-RODRIGUEZ, 2009) -their study remains marginal in management research.Contributi ng an anthropological explanati on for such imbalance, Jones (2005) maintains that family fi rms would not be associated with science and objecti vity, but with a private, domesti c domain -a view Queiroz (2007) endorses.
Research in Family Business is a relati vely new fi eld of study, sti ll very dispersed and fragmented.Regarding the most researched topics, Chua, Chrisman and Sharma (2003) ranked, in order of importance, succession, professional advice, types of family businesses, board of directors, transiti on towards professional management, life cycle stages of family businesses and others.Casillas and Acedo's fi eld review (2007) advanced similar fi ndings.In their view, succession is family fi rms' main challenge, while planning, professionalism, division of personal roles and use of external counselors and advisors are tools that may help overcome this and other challenges such as governance and strategic management, among others.Another fi eld review which also establishes succession as the most researched topic, followed by governance and strategic management, states that "More eff ort is needed to address the complexity of family companies and to understand how they are similar and diff erent from other types of organizati ons" (SCHULZE, LUBATKIN andDINO, 2003a, p. 41 apud BENAVIDES-VELASCO, QUINTANA-GARCIA andGUZMAN-PARRA, 2013).Interpersonal family dynamics and confl ict are another important issues concerning family fi rms, as family members are "locked" in a fi rm, making confl icts more persistent and interests more diffi cult to align.Other relevant topics include business performance and growth, and fi nancial management, which correspond to 6.4% and 7.2% of the total of arti cles analyzed by the authors in the period 1961-2008(BENAVIDES-VELASCO, QUINTANA-GARCIA and GUZMAN-PARRA, 2013).
Inconclusive fi ndings are a typical trait of research on family fi rms.This includes the very defi niti on of what a "family fi rm" is (CASILLAS and ACEDO, 2007;BENAVIDES-VELASCO, QUINTANA-GARCIA and GUZMAN-PARRA, 2013;RODRIGUES and ANDRE, 2013).This paper views family fi rms as those in which one or more families have direct ownership control and governance, and parti cipate in the top management of the company (CHUA, CHRISMAN and SHARMA, 2003;RODRIGUES and ANDRE, 2013).Maintaining generati onal conti nuity as a strategic goal of the fi rm is a feature, which may help disti nguish family from nonfamily fi rms.

On the origins and development of professional management
According to Chandler's (1977) account of the American business development, the Modern Business Enterprise (MBE) emerged in the 19th century.These multi unit business organizati ons were managed by salaried managers and could take three forms: entrepreneurial (controlled by families), fi nancial (controlled by bankers and investors) or managerial (controlled by professional managers).Chandler's historical account maintains that over ti me, organizati ons tended to take the managerial form, as hired managers provided the MBE with a conti nuing existence propensity for two reasons: they could be replaced and they sought for a lifeti me career in their fi rms.Because families could not provide as many managers as fi rm growth required, family-owned fi rms would tend to evolve into the MBE form and become corporati ons.Chandler (1977) viewed the corporati on as "the most powerful insti tuti on in the American economy" (p. 1) and the reason of the country's success.The noti on of professional managers has emerged because of the increasing complexity in running ever-bigger organizati ons.Not only owner families were not able to provide enough family members to run the growing fi rms, but also, in many cases, those members lacked the required managerial and intellectual capabiliti es.Those growing fi rms would then seek an outside, supposedly more objecti ve, and professional managers oft en trained at the business schools, which emerged by that ti me (JONES, 2005;MORRIS, WILLIAMS and NEL, 1996).
While true in the past, Fleck (2003) raises the questi on as to whether the pursuit of a lifeti me career is sti ll as strong as it may have been throughout the historical period Chandler describes.In fact, Fleck (2003) suggests that management mobility across fi rms could actually hinder the growth of the fi rm, being therefore detrimental to shareholders.Miller and Le Breton-Miller (2006) also provide evidence that is at variance with Chandler's lifeti me career argument in recent ti mes: according to the authors, "the average CEO tenure at family-run businesses is said to range between 15 and 25 years, while that of a typical public, non-FCB (family controlled business) leader has reduced to three to four years" (p.78).
The increased complexity of businesses in the second half of the 20 th century has sti mulated research on the implicati ons for growing fi rms of the growth process, as well as on the role management might play in fostering their long-term conti nued existence.The growth process has inspired the development of life cycle or stage models theories.A case in point is Greiner's evoluti on and revoluti on theory (GREINER, 1972).This perspecti ve claims that management styles and strategies that fi t one specifi c stage of organizati onal development are no longer suitable to the following stage of evoluti on.A revoluti onary period would then ensue and the growth of the fi rm depends on how well the managerial styles and strategies change to fi t the requirements of the upcoming stage.Other examples include Peçanha and Oliveira (2015), Trevinyo-Rodriguez (2009), Charan andHofer (1984) andWhett en (1987).Likewise, Berenbeim (1990) states that high growth rates are necessary for the founder to achieve freedom of acti on (att ract talent and be less dependent on external fi nancing).Yet, as the fi rm grows, so does the companies' need for a more sophisti cated management.
Concerning the long-term conti nued existence of organizati ons, Selznick (1957) puts forward the noti on of insti tuti onal leadership, which he views as a key contributi ng element to organizati onal longevity.According to him, insti tuti onal leaders combine three features: leadership (responsible and creati ve), character and criti cal experience, independently of being a family member or a professional manager.He defi nes responsible leadership as "a blend of commitment, understanding and determinati on" (p.143), leading to the avoidance of opportunism (short-term, immediate advantages in detriment of the long run or possibly impacti ng organizati on's character) and of utopianism (avoiding hard choices).Creati ve leadership, on the other hand, refers to infusing purpose to an organizati on and doing its strategic and tacti cal planning.One way of exercising it, is through the creati on of myths, which contributes to a unifi ed sense of mission and helps build an insti tuti on.Summing it up, by being a responsible and creati ve leader, in additi on to having strong character and criti cal experience, one infuses values in the organizati on, thus moving away from being a mere organizati onal manager to becoming a true insti tuti onal leader.
While one might expect that professional management would yield bett er fi nancial results than family members likely would, research studies lack consensus regarding which type of management, family or professional, would generate bett er fi nancial results.This is the subject matt er next secti on addresses.Thereaft er, two secti ons focus on two topics that aff ect organizati onal conti nued existence over the long-term, i.e. succession and corporate governance issues.Denise Fleck Cad.EBAPE.BR, v. 15, nº 3, Article 1, Rio de Janeiro, Jul./Sept.2017. 563-573

Firms and performance
This paper views fi nancial performance as "fi nancial returns generated by the fi rm -typically measured by the returns on the assets or equity of the business -that are available to all public shareholders of the fi rm, family or otherwise, either via dividends or stock market returns" (MILLER and LE BRETON-MILLER, 2006, p.74).The literature so far lacks consensus on whether professional management yields superior fi nancial performance than family management.Chart 1 illustrates the positi on of some representati ve studies on this matt er, disti nguishing those in favor of family managed superiority from those supporti ng professionally managed superiority.
Both agency theory and stewardship theory suggest that the greater one's ownership in the company, the greater one's commitment will likely be and the less likely it is that one will squander fi nancial resources of the company (CHUA, CHRISMAN and SHARMA, 2003;JONES, 2005).On the other hand, conventi onal Druckerian management thinking assumes family members involved in management are more likely (and not less) to "free ride".This perspecti ve, thus, favors a scienti fi cally educated professional management over a family one (JONES, 2005).
According to Jones (2005), the belief on the superiority of professional management over family management would be part of a cultural schema based on market capitalism.In this sort of capitalism, the most powerful symbol is the public corporati on, which business schools and consulti ng fi rms usually associate with professionally managed fi rms.As for family fi rms, Jones maintains that "despite their stati sti cal signifi cance, [they] would fall outside of this dominant cultural schema, and are, then, because they are founded on an anthropological principle of kinship and not (primarily) on the principle of the market, subversive" (p.277).As a result, in a cultural construct based on a structured dualism, family fi rms (in oppositi on to professional) would be most commonly associated with emoti on (over reason), humaniti es (over science), private (over public), soft (over hard), subjecti ve (over objecti ve).
Yet, such simplifi cati ons do not fi t family fi rms, since they att end to multi ple logics in multi ple spaces: "spati ally situated in both the aggressive, male universe of competi ti ve capitalism, and in the domesti c, anthropological space of kinship and family social organizati ons" (JONES, 2005, p. 282).Likewise, Queiroz (2007) believes family fi rms have two confl icti ng forces: an economic one pushing for profi ts (fi rm's goal) and a family one pushing for members' well-being (family's goal), with the expression "family fi rm" being therefore a paradox.Allio (2004) associates the superiority of family fi rms in delivering fi nancial performance with several aspects, such as their managers/owners higher levels of loyalty to the fi rm, focus, speed of executi on, deeper pockets for growth and commitment to implementati on (follow-through).On the other hand, he also identi fi es some fl ipside elements.For one, too much loyalty to the family can lead to nepoti sm, irrati onal decision-making and unfair compensati on to family members.In additi on, too much speed can lead to impulsiveness in decision-making, and too much focus can lead to myopia.Moreover, too much focus on growth can lead to emoti onal investments rather than rati onal ones and too much focus on follow-through can lead to compulsive att enti on to daily tacti cal details instead of strategy.So, rather than being just a matt er of cultural bias against family managed fi rms, the list of potenti al problems that impair fi nancial performance in family managed fi rms includes several items.One such issue refers to nepoti sm and lack of professional competence (DYER, 1989;SCIASCIA and MAZZOLA, 2008;MILLER and LE BRETON-MILLER, 2006).Another one concerns confl icts regarding divergent/ competi ng goals of shareholders/family members (SCIASCIA and MAZZOLA, 2008;TREVINYO-RODRIGUEZ, 2009;MILLER and LE BRETON-MILLER, 2006).Two other ones have to do with the use of business resources for personal benefi t and in detriment of minority shareholders (MILLER and LE BRETON-MILLER, 2006), and lack of transparency and access to informati on (BENAVIDES-VELASCO, QUINTANA-GARCIA and GUZMAN-PARRA, 2013).Finally, the pursuit of nonfi nancial or personal goals by family members (GALLO, TAPIES and CAPPUYNS, 2008;SCIASCIA and MAZZOLA, 2008) is also a tricky issue in family managed organizati ons.
On top of that, Miller and Le Breton-Miller (2006) stress that family fi rms lack adequate "access to capital due to ever-increasing needs of a growing family (CHANDLER, 1990) and because of skepti cism by fi nancial markets" (p.73).According to Sciascia and Mazzola (2008), "in order to improve performance and fi rm value, companies operati ng on the capital markets must be sensiti ve to both shareholders and investors who need greater transparency and disclosure from family fi rms" (p.52).Dyer (1989) has highlighetd a few diff erences between family and professional managers.The latt er tend to make more logics-and reason-grounded decisions than intuiti on-based ones.In additi on, professional managers are more likely prone to developing impersonal interacti ons with others, while the founder and family members, who have a personal history with the company and employees, tend to embrace a more personal style.Family members' training is usually more informal, individual and technical (not managerial).In contrast, professional managers' training is usually collecti ve, taking place in MBA classrooms, which emphasize the development of formal, generic standardized skills.
According to Dolz, Iborra and Safón (2015), the fact that family fi rms usually have more than one generati on at decision-making positi ons, provides them with higher diversity of age and experience, as well as an enhanced percepti on of environmental change and ability to respond to it.
In additi on, according to Hall and Nodqvist (2008), "professional family business management rests on two competencies, formal and cultural, of which only the former is explicitly recognized in current family business literature".For these authors, management by family members should be seen as professional management as well, and those who fail to view it this way share a simplifi ed and outdated perspecti ve of professional management.The cultural understanding of the company (cultural competence) seems to be a criterion used to select new CEOs in succession processes.Muzzio (2013) corroborates this view, insti gati ng professional managers, especially those early in the professionalizati on process of the fi rm, to develop a cultural competence and keep the founders' legacy.In their study, Gama and Rodrigues (2013) have found that while family fi rms may have bett er accounti ng performance than professional ones, this does not translate into higher valuati on levels and might not accrue to minority shareholders if the right governance mechanisms are not in place.
As a fi nal remark, many scholars do not diff erenti ate between family involvement in management (FIM) and family involvement in ownership (FIO).Important excepti ons include Sciascia and Mazzola ( 2008) and Miller and Le Breton-Miller (2006).Both studies identi fy diff erent eff ects FIM and FIO have on performance.FIM is more likely to produce superior fi nancial performance than FIO, although several conditi oning factors may apply.

Succession
Family business succession has to do with "the passing of the leadership baton from the founder-owner to a successor who will either be a family member or a non-family member, that is a 'professional manager' " (BECKHARD andBURKE, 1983, p. 3 apud HANDLER, 1994).A more comprehensive view of succession includes the passing of the leadership baton from one generati on to the next one.Most scholars agree that succession, either to a family member or to an outside professional manager, can be quite traumati c. "Family fi rms represent relati vely stable systems so long as the founding entrepreneur is in place" (MORRIS, WILLIANS and NEL, 1996, p. 69).Sti ll, succession planning is not oft en done (HANDLER, 1994) even though it has yielded positi ve results when applied (MORRIS, WILLIANS and NEL, 1996).Aft er the initi al diffi culti es of setti ng up the business, "the most likely causes of business failures are the problems encountered in the transiti on from a one-person, entrepreneurial style of management to a functi onally organized, professional management team" (CHARAN and HOFER, 1984).
Stati sti cs show that only a third of family fi rms survive the transiti on to the second generati on and only 12 percent make it to the third (ALLIO, 2004).In analyzing succession processes Teston and Filippim (2016) list as determinant aspects of preparati on the founder's infl uence, multi generati onal socializati on, demographical aspects and learning.Muzzio (2013) raises the importance of the professional manager keeping the founder's legacy for the success of the succession process and of the business as a whole.

Con icts and corporate governance
According to Cyert and March (1963), organizati ons consti tute a coaliti on of individuals united with a common purpose.In their view, organizati ons do not have objecti ves or goals; individuals do.Whenever organizati onal stakeholders diverge with respect to goals, organizati onal instability and confl ict result.
Two opposing perspecti ves contribute insights into the corporate governance of family fi rms.The fi rst, agency theory, advances some factors that lead management to seek its own interest to the detriment of the best interest of shareholders.Such factors include asymmetry of informati on (managers knowing more than owners) and a potenti al confl ict of interest between managers (agents) and shareholders (principal).Several mechanisms including compensati on packages and overseeing boards exist to align and monitor managers' and shareholders' fi nancial interests.
The principal-agent problem is typical of professionally managed fi rms, whereas it is less relevant in family managed fi rms unless there are confl icti ng interests among shareholders.Gama and Rodrigues (2003) and Miller and Le Breton-Miller (2006) have raised another important agency problem concerning family fi rms, a "principal-principal" problem.The concentrati on of ownership and management of a publicly-held corporati on in the hands of a family creates room for a potenti al confl ict between controlling shareholders and minority shareholders, with the former possibly making decisions that are benefi cial to them but detrimental to the last.Hence, the need for governance procedures and external monitors arises.
The second perspecti ve, stewardship theory, stresses the emoti onal and fi nancial att achment to the business that some top managers experience.Such feelings may refrain them from grounding their acti ons exclusively on self-serving economic principles, leading them also "to act with altruism, for the benefi t of the organizati on and its stakeholders" (MILLER and LE BRETON-MILLER, 2006, p. 74).Stewardship is usually present in top managers that are either family members or individuals emoti onally linked to the family (MILLER and LE BRETON-MILLER, 2006).

Research Objectives and Method
The study reported in this paper sought to capture fi nancial investors' percepti ons on the family versus professional management issue regarding fashion shoes and apparel retail fi rms in the Brazilian economy.To carry out an exploratory investi gati on on this matt er, the study has performed a qualitati ve analysis of the collected data, which comprises interviews with representati ves of major Brazilian investment houses, and "lett ers to investors" these houses issue in order to disclose to their clients their performance, investment policies and beliefs.

Delimitation of the study
While the spectrum of financial investors ranges from pure speculators to true business investors, this research has focused on value investors.In addition to scrutinizing financial figures, these investors actually devote time and effort to analyze companies' management.The investment firms that make up the value investment community share a set of principles.These are in line with the theory of Graham (1949), Graham and Dodd (1951) and with Warren Buffet's practice.Buffet, often viewed as the most successful investor of all times, was a former student and employee of Graham at his investment firm.
According to Hagstrom (2005), the main concepts Warren Buff et has adopted from Graham's ideas include: i) margin of safety (buying at a market price lower than the underlying business' value); ii) long-term horizon of investment; iii) buying businesses, not stocks (acti ng as business owners); iv) independent judgment (decisions based on sound and logic conclusions, not on peer movements); and v) being aware of market speculati ve characteristi cs (people's greed and fear cause the stock prices to reach values that go far below or beyond a company's intrinsic value.In such circumstances, there is room for investment, which can benefi t those who rely on logical reasoning and refrain from emoti onal reacti ons).
Buff et, however, has added a few other concepts into his investment policies derived from his professional and academic experiences (HAGSTROM, 2005).These include the importance of (i) management; (ii) the business itself; and (iii) looking to other sources of informati on besides balance sheets and annual reports, such as interviews with clients, suppliers, employees.Namely, Buff et's investment analysis combines qualitati ve and quanti tati ve scruti ny.Regarding the focus of this paper -the importance of management -Buff et emphasizes honest and competent managers, who he must admire and trust (HAGSTROM, 2005).In analyzing a business investment, Buff et investi gates whether management is rati onal in its decisions; whether management is candid to shareholders (admitti ng mistakes and having a full disclosure posture); and whether management resists the insti tuti onal "imperati ve", which may force management into blindly following industry peers.

Sample selection
In consonance with the purpose of investi gati ng fi nancial investors' percepti ons on the family versus professional management issue regarding fashion shoe and apparel retail fi rms in the Brazilian economy, the study has selected a theoreti cal and contextually relevant sample (EISENHARDT and GRAEBNER, 2007), which has enabled in-depth analysis.
Six individuals were personally interviewed by one of the authors between April 20 th , 2015 and April 30 th , 2015.Being in charge of the investment decisions of three top investment fi rms in Brazil, these investors share a strong belief in value investment concepts.The investment fi rms selecti on included two criteria.First, their fi nancial relevance -together they manage over R$12 billion, accounti ng for over 7% of the Brazilian total investment fund's net worth.Second, their intellectual relevance -all three fi rms hold a strong reputati on in the market, they are perceived as opinion-makers or infl uencers, and their performance had beaten the IBOVESPA benchmark over the previous 12, 36 and 60 months (AMBIMA, 2015).
Three characteristi cs of the Brazilian fashion shoe and apparel retail segment make it an adequate research site.First, there are instances of family and professional management among publicly traded companies.Second, the investi gated issue is relevant and ti mely, in view of the sector's current stage of development.In fact, the ongoing process of consolidati on and professionalizati on in this segment has att racted new investors from the capital markets and has compelled fi rms to make use of more complex organizati onal structures (VENTURA, 2010).Finally, the fashion retail sector is economically relevant, with revenues of over US$56 billion in 2016, about 3% of the country's GDP (ABVTEX, 2016).
The interviews prompted respondents to assess and comment on the management of following companies: Arezzo, Renner, Riachuelo, Marisa, Hering, Restoque and Inbrands.None of the interviewees has any personal relati onship with any individual in these companies.

Data collection and preparation
All interviews took place at the investors' offi ces.Open questi ons sought to capture informati on on two main issues: the interviewees' investment processes and the interviewee's assessment of the seven selected companies' management.The questi ons covered several issues, such as the interviewee's view on the management of the seven companies, and the interviewee's own preferences with respect to management style, parti cularly concerning family versus professional management, among other topics.Following the open questi ons, they all gave their evaluati on of each company's top management.Some of them did rank the fi rms in order of preference.As a data collecti on method, interviewing is not without shortcomings.Not only there is a very personal aspect in the collected data, but also disti nguishing facts from individual opinions can be challenging (MANN, 1979).In view of the exploratory nature and purposes of this study, however, this method is suitable, if one introduces some additi onal procedures.In fact, in order to neutralize inherent defi ciencies of the interviewing method and increase validity, data collecti on included two triangulati on procedures (EISENHARDT, 1989): interviewing more than one person from each investment house and scruti nizing the most recent "lett er to investors" each investment house issued.

Data analysis
Each interview was fully transcribed and analyzed.Analyti cal procedures comprised identi fying statements related to subject matt ers addressed in the theoreti cal background -family and professional management, corporate governance and performance -as well as coding Selznick's (1957) insti tuti onal leader characteristi cs: leadership (L), character (C) and criti cal experience (CE).
In additi on, for triangulati on purposes, data analysis compared and contrasted interview contents among same house investors, as well as against the "lett ers to investors".Finally, data analysis compared and contrasted interview contents among competi ng investment houses.Next secti on reports and discusses research results and analysis.

RESULTS AND ANALYSIS
Chart 2 summarizes some key characteristi cs of the investi gated retail companies as well as how investors perceive the quality of their management.

Family versus professional management: a CEO's desirable traits
Chart 2 data do not suggest any apparent associati on between the type of ownership, type of management and investors' evaluati on.This refl ects the fact that all interviewees declared to have no clear preference for either type of managementfamiliar or professional.Instead, what they valued had to do with having in charge an individual qualifi ed for the task.
For several reasons, this fi nding seems unexpected.For one, mainstream historical management thinking views professional management as a natural evoluti on for family fi rms.In additi on, because fi nancial investors are minority shareholders in the analyzed fi rms, they could feel exploited by family managers who are major shareholders and might hold divergent interests companies: exploring value-investors' perceptions Cad. EBAPE.BR, v. 15, nº 3, Article 1, Rio de Janeiro, Jul./Sept.2017.568-573 (MILLER and LE-BRETON-MILLER, 2006).Finally, quite oft en, private equity fi rms, who are fi nancial investors themselves, have chosen most professional managers.As a result, one might expect that the chosen managers and the interviewed investors would hold similar interests.Nevertheless, the study's interviewees diff er from private equity bankers and other short-term oriented investors.Value investors, by contrast, are concerned with the companies' long-term prospects.
All investors stated that they carried out the analysis of companies and management on a case-by-case basis.Moreover, management evaluati on emphasized the abiliti es, personality and qualifi cati ons of the individual in charge rather than the management type -family or professional.This long-term perspecti ve goes in line with Selznick's (1957) noti on of insti tuti onal leader, which comprises leadership, character and criti cal experience.These three features of insti tuti onal leadership has inspired the analysis of interviewees' views regarding the most desirable characteristi cs in a retail top manager.Three characteristi cs -orientati on for results, long-term vision, and CEO-owner -refer to Selznick's leadership.Two other features -good character and intenti ons, and consistency -pertain to Selznick's character.
Finally, two other aspects -experti se in retail and CEO's track record -have to do with Selznick's criti cal experience.
Regarding orientati on for results, because fashion retail can be fascinati ng and glamorous, some managers might be carried away and focus on products and fashion shows to the detriment of results.Even though product focus is essenti al, an orientati on for result has to be in place.Some fi rm founders and family members tend to be more passionate about their products and companies, as well as less cost conscious than professional managers.These tend to be more rati onal and objecti ve, but according to respondents, this is not a rule.Moreover, some professional managers tend to exaggerate cost-cutti ng programs, which may jeopardize company's products and essence.
With respect to long-term vision, even though investors may not have a long-term perspecti ve at all ti mes, they all want the company to have an enduring vision to avoid diluti ng its assets.Family members tend to have longer-term vision than executi ves, who may change jobs quite oft en (FLECK, 2003;MILLER and LE BRETON-MILLER, 2006).
The CEO-owner noti on relates to embracing an owner's perspecti ve if not by fact (actually owning shares), but by behavior (acti ng as if he was).All investors view the CEO of Renner, José Galló, as a benchmark of professional management that embodies an owner perspecti ve.One of them went even further, stati ng that companies that go bankrupt for taking too much risk usually are the ones that fail to have an owner.Family businesses, this investor believes, "may also fail, of course, but for diff erent reasons; but not for taking too much risk".Owners are more careful regarding their own money, reputati on and family name (MILLER and LE BRETON-MILLER, 2006).
Concerning good character and intenti ons, even though this might seem an obvious desired trait in business aff airs, some shortterm oriented investors will not give weight to this quality, as long as management yields above-average returns.However, as pointed out by Hagstrom (2005), this feature is crucial for value investors, as can be seen by one of the respondents: "you need honest people both in management and on the board; you cannot trust that the audit companies will do their jobs".As regards consistency, respondents agreed that CEO's consistency in decisions and behaviors is crucial for investors to feel comfortable with an investment decision, because they know what to expect.
On the subject of experti se in retail, if managerial practi ces favor professional managers, this experti se in retail favors family managers, as they have grown inside the retail companies.The Brazilian context is quite challenging with respect to specifi c experti se.For one, retail family businesses are usually run by family members and do litt le investment on developing middle management.In additi on, there is not yet a specialized workforce available for hiring.As a result, more oft en than not professional managers lack experti se in retail.Adapti ng to this sector is challenging, especially for those individuals whose background experience has been in the fi nancial sector, since the fi nancial and retail sectors require completely diff erent skill sets.
As to the CEO's track record, in additi on to having a positi ve track record, it is desirable to have some negati ve track record as well (some "scars", as one of the investor put it) from which the CEO has supposedly learned from.An exclusively positi ve track record could be due to mere luck and/or might infuse the CEO with an undesirable over-confi dence that could result in a dangerous propensity to take riks.From this perspecti ve, family managers would have an advantage, as they usually have longer tenures than professional CEOs, increasing therefore the chances of learning from their mistakes (MILLER and LE BRETON-MILLER, 2006).

Cultural credentials
Another unexpected fi nding was the importance given to culture by respondents, specially coming from fi nancial investors.They unanimously agreed on the relevance of culture in managing retail businesses.This is in consonance with Muzzio's (2013) and Hall and Nodqvist's (2008) ideas regarding the need of both formal and cultural competence to manage a business.Selznick`s (1957) leadership role of a CEO also includes the concept of "insti tuti onal self-preservati on", or "the maintenance of basic identi ty, with the integrity of a personal or insti tuti onal 'self'" (p.142).
Hence, in additi on to the above coded characteristi cs of an ideal CEO, investors menti oned the need of having what they called a "culture guardian", someone who would protect the company's culture and essence.In the growing and professionalizing route (even in family fi rms), processes and strategies tend to change over ti me.Thus, companies need someone to remind everyone of who they are, of the "dos and don'ts", of what is their essence and of what is off limits.In a family company, this role is usually performed by the founder (as CEO or on the board), or a descendent.According to the interviewees, this was the case in companies with a long history of success, such as Wal-Mart.In professionally managed fi rms, this is usually more challenging, but some have successfully done it.A case in point is Renner, which has had in its long ti me professional CEO a strong guardian.However, someone other than the CEO can also perform this role.

Focus on short-term nancial performance
Counter-intuiti vely, these investors are not fond of CEOs with a strong focus on short-term fi nancial performance and stockmarket prices.They prefer those with endurance, who can cope with short-term bumps for a longer-term vision and strategy.They believe many executi ves (professional managers in special) may have too much of a short-term horizon due to their fi nancial compensati on, thus focusing acti ons, and someti mes even accounti ng, to benefi t short-term results only, in detriment to long-term performance."I don't blame them, I just don't want them on my team", said one of the respondents frankly.In additi on, in the words of another interviewee, some managers "get addicted to monitoring stock market prices and quarterly results".By aiming to please the fi nancial markets, frequent and unnecessary changes in strategy may result.
Again, this is in line with Selznick's (1957) defi niti on of a responsible leader, who should avoid opportunism, i.e. "the pursuit of immediate, short-run advantages in a way inadequately controlled by considerati ons of principle and ulti mate consequence", p. 143; or " a narrow self-centeredness, in an eff ort to exploit other groups for immediate, short-run advantages", p. 146.
These atti tudes may aff ect both professional and family managers.However, they possibly aff ect the former in greater magnitude than family managers, who usually have emoti onal and fi nancial att achment to the business (MILLER and LE BRETON-MILLER, 2006), caring for its long-term reputati on, profi tability and survival to future generati ons.

Corporate governance
In consonance with the theoreti cal background, corporate governance issues are a substanti al concern for these investors.Fundamentally, respondents think the CEO's interests have to be in line with minority shareholders' for the investment to be interesti ng, in accordance with empirical fi ndings (MILLER and LE BRETON-MILLER, 2006) and (GAMA and RODRIGUES, 2003) as well as with the value investment principles (HAGSTROM, 2005).Usually, respondents believe, such alignment is greater when the CEO is a shareholder himself.He can either be a family member or a professional manager with stocks or stock opti ons (investors diff er in preferences), as long as interests are aligned and CEO is of good character, otherwise a principalprincipal agency problem might arise -in line with Gama and Rodrigues (2003).
Another interesti ng point menti oned by respondents was that not only FIM matt ers but also FIO.This issue has been raised by some authors (MILLER and LE BRETON-MILLER, 2006;SCIASCIA and MAZZOLA, 2008), who maintain the fundamental role that ownership structure plays in making an investment att racti ve.Someti mes too much of a dispersed control can be seen as detrimental by the investors herein interviewed, as they tend to like companies with "owners" (again, as long as interests are aligned), someone watching out for their money.
2. Family members working in the company should be limited to positi ons in accordance to their capabiliti es and qualifi cati ons.The family should develop a strong middle management, devoti ng att enti on to att racti ng and retaining talents.3. Family issues and fi ghts should be handled outside company borders.4. Strict and clear rules should be established in order to avoid misunderstandings and generati onal disputes.These include establishing reti rement age and prerequisites for family members to work in the company, among others.5. Family members in top positi ons should manage the fi rm professionally.They should refrain from power abuse, as well as from extracti ng any fi nancial value from the company for personal purposes.Instead, they should act on behalf of all shareholders.
If professionally managed, humanize it -Despite having strong formal qualifi cati ons, a CEO must also develop some soft ones to manage a business bett er, especially in retail, as this study indicates.
1.If a CEO does not have a strong experti se in retail (or in any specifi citi es-rich sector), s/he should be surrounded by and listen to those who do, especially employees who have longer working experience in the company and/or in the market.2. The professional CEO should respect whoever plays the role of "culture guardian" of the company -a member of the board, a marketi ng director, the head stylist in the case of a fashion company, etc.It is very important to appreciate the company's culture and its "D.N.A." to really benefi t from its capabiliti es. 3. The CEO must think of the company as a unique case, analyzing it very carefully and deeply understanding it, not trying to apply any pre-formatt ed package of managerial best practi ces learned in MBA classrooms or cloned from other successful enterprises.4. The CEO must feel and act as if s/he owned the company, being more emoti onally involved.5.The board of directors has the important designati on to control and give the right incenti ves to the CEO, guaranteeing that he will have the necessary drive and fi nancial moti vati on to deliver short-term results but that he is also thinking long-term, aligned with all shareholders.
Finally, in both cases, CEOs must be clear and consistent in their thinking and behavior, have a long-term vision and think independently of the market.Too much and too constant att enti on to stock prices may also be a trap, as stock price oscillati ons will occur on the short-term, whereas the CEO must aim at the long-term value creati on.

Contributions, limitations and recommendations for future research
The study contributi ons include addressing a relevant topic through an original perspecti ve (value investors), off ering guidelines to practi ti oners and suggesti ng that further research on family business might explore insti tuti onal leadership and old insti tuti onalism noti ons.The study also suggests that despite being the main indicator of success by the scholars herein reviewed, accounti ng performance and profi tability may not be the best fi nancial instrument when analyzing family fi rms (or for comparing family and professional fi rms).These outcomes may not translate into value added for the average investor (minority shareholders), if adequate governing mechanisms are not in place (GAMA and RODRIGUES, 2013).
This study, however, is not without limitati ons, considering that it has investi gated a small number of value investors located in Brazil.It would be interesti ng to replicate it in other geographical regions and to compare and contrast the results found.In additi on, it would be interesti ng to contrast the view of these value investors with the view of other types of fi nancial investors.
Finally, given the complexity of family businesses as well as of today's current corporate structure, it may not be suffi cient to analyze management alone when contrasti ng family and non-family fi rms.This calls for a broader governance analysis, which includes not only management but also ownership structure and forms of corporate controls in place.