Familial relationships and firm performance: the impact of entrepreneurial family relationships

Abstract

While the family may serve as a resource for entrepreneurs, it has been studied separately in different disciplines. In this paper, we combine the arguments on familial relationships (family firm literature) and skill variety (regional learning literature) to analyse how different forms of entrepreneurial family relationships (co-occurrences) facilitate firm performance, and how familial relationships moderate the effects of skill variety on firm performance. Using longitudinal data (2002-2012) on a sample of privately owned firms with up to 50 employees with matched information on all employees, our results show that entrepreneur-children relationship is the dominant dyad familial relationship in family firms. The fixed effects estimates demonstrate that entrepreneurial family relationships do affect firm performance but that this is dependent on the type of familial relationship. Children and spouses show a positive relationship with firm performance while siblings of the entrepreneur show no significant relationship with performance. The estimates further indicate that familial relationships involving spouses abate the negative effects of having too similar or too different types of skills. The paper thus contributes to new knowledge regarding not only whether family relationships matter for performance, but also in what way they matter. ARTICLE HISTORY

The perceived impact of agency control on the performance of Zimbabwean small-to-medium enterprises

“…Even though the current study did not separate family from non-family SMEs, its results could not sustain the aforementioned tendencies. In fact, in line with a recent study by Adjei et al (2019), spouses and children showed a positive relationship with business performance.…”

An emperical study into the informal sector: The link between entrepreneurial activity and firm performance

“…Leiva Alegre & Monge 2014; Paltasing 2012) concurred that entrepreneurial education/learning is a lifelong learning process. All the accumulated knowledge that a person has gained throughout his or her life can contribute to setting up a new firm (Adjei et al 2019). Efforts of entrepreneurial education can include learning from entrepreneurs' positive and negative experiences (Pagano, Petrucci & Bocconcelli 2018).…”

The matter of locality: family firms in sparsely populated regions

“…There is the responsibility for keeping staff as in Case 1, but the citizenship (cf. Adjei et al 2018) expressed in interactivities goes further through promoting the region to raise its attractiveness and make people move into the region. This again results in an interactivity with other firms and the municipality as an organization in terms of shared efforts to raise attractiveness of the region, but also development of the firms (through the R&D project engaging also a university).…”

“…The context, as described in family firm studies, is largely the social context, inferring kinship and social relations creating legitimacy and status for the family (Anderson, Jack, and Dodd 2005). On the broader definition of the context as a location, the heritage of being locally founded and the citizenship mean that the family firm would integrate with the region (Adjei et al 2018;Berrone et al 2010;Bjuggren, Johansson, and Sjögren 2011). Traditions and the heritage of being founded in the region would make the firm less inclined to change location, and there would be a strong dependability on local resources and individuals for recruitment, also woven into how a family firm expectedly would be risk averse and rather keep with the present and past than change company focus or location, let alone expand or internationalize.…”

“…The majority of family firm studies have focused on large, publicly traded firms, and the context dimension has usually not been explicitly considered (Bird and Wennberg 2014;Wright et al 2014;Zahra 2016). Family firms, and not the least small ones, would be key contributors to local (or regional) growth (Adjei et al 2018;Bjuggren, Johansson, and Sjögren2011), making it relevant to focus on small family firms and related to our purpose, also based on how sparsely populated regions more rarely include the publicly traded firms. Multiple case studies allowed for contrasting cases, capturing patterns and adding dimensions, all of which are intending to theorize according to the process of emerging theory (Davidsson 2005), a method of theorizing aiming for generalization from empirical observations to theory, rather than to a population (Yin 2013).…”