PurposeFamily firms strive for transgenerational survivability. Thus, bankruptcy is a daunting event. Whether family firms fail for other causes than non-family firms has been scarcely researched and is investigated in this study.Design/methodology/approachThe paper draws on a sample of 459 Austrian bankruptcy cases to examine the effects of the distinct characteristics of family firms on failure causes.FindingsOur results indicate that family firm characteristics impact their failure, as bankruptcy causes differ from non-family firms. While family firms fail less often than non-family firms due to unqualified management and poor business-economic competencies, external bankruptcy causes, in particular bad debt and economic slowdown, are more widespread.Practical implicationsAs our findings suggest that the close social bonds of family firms may become a burden in crisis situations and make them especially prone to external bankruptcy causes, owner-managers should pay more attention to the dependencies, deficiencies and risks that come with their binding social ties. Moreover, they should rely on external advice and appropriate management tools to better recognize and fend off the resulting risks.Originality/valueTo the best of our knowledge, this is the first study that quantitatively examines differences in bankruptcy causes between family and non-family firms.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.