What do we know about Private Family Firms? A Meta–Analytical Review

Abstract

The universe of family firms is heterogeneous, and findings gleaned from publicly listed firms may not apply to the ubiquitous, but less frequently studied, privately held family firm (PFF). As PFFs are insulated from capital market pressures, owner-managers have greater latitude in setting strategic goals, which may result in different strategic choices and performance outcomes. By employing meta-analytical techniques on 48 studies conducted in nine countries, we synthesize prior PFF research. We show that PFFs prefer more conservative strategies, but contrary to received wisdom, this risk aversion does not hurt their performance. We conclude with an agenda for future research.

Effects of Family Ownership, Debt and Board Composition on Mexican Firms Performance

“…In this manner, the study tried to examine if the risk aversion and other motivations of family firms vary as the generation in control changes [57,58].…”

“…The dispersion of ownership in family firms has been proven to lead to less use of debt [57]. Carney, van Essen, Gedajlovic, and Heugens [58] also find that reliance on debt of first generation private family firms harms their performance, and in successive generation family firms become more averse to acquiring debt. Among the most important reasons for abstaining from debt is the effect it can have on diminishing family control [59], compromising long-term investments [60], and the possibility that debt can exacerbate family conflict [18].…”

Identity in Family Firms: A Theoretical Analysis of Incentives and Contracts

“…Our rationale suggests that organizational identification is affected by the level of collectivism that characterizes a society, both directly and indirectly through the influence of the altruism towards family and nonfamily managers in the family firm. Therefore, our model is both family firm specific and it fills a gap in the knowledge about how formal and informal institutions at a country level affect behaviors in family firms (Carney et al, 2015;Pindado & Requejo, 2014). In consonance with Whetten (1989), we show that the inclusion of organizational identification in the model significantly alters our understanding of the phenomena of executive compensation in family firms.…”

“…We explored two of these factors, respectively the intensity of psychosocial altruism flowing from family owners to family members, and the level of collectivism of the society. Thus, our model is both family firm specific and it fills a gap in the knowledge about how formal and informal institutions at a country level affect behaviors in family firms (Carney et al, 2015;Pindado & Requejo, 2014).…”

“…Currently, it is fairly accepted that family firms are less impacted by problems that arise from the separation of ownership and management (Carney, Van Essen, Gedajlovic, & Heugens, 2015;Chrisman, Kellermanns, Chan, & Liano, 2010;Salvato & Moores, 2010;Songini, Gnan, & Malmi, 2013). Existing empirical evidence appears to support this view both for small (Chrisman, Chua, & Litz, 2004) and large family firms (Anderson & Reeb, 2003;Villalonga & Amit, 2006).…”