What is it about?
Extending past research, this paper proposes that the quadratic inverse-U relationship between family ownership and the performance of entrepreneurial firms when moderated by the presence of family management and external blockholding. Specifically, it proposes that both factors exacerbate the decline in performance when the proportion of family ownership in entrepreneurial firms remains high. The proposed hypotheses are tested on ten years of panel data from a sample of European firms. Analysis of data supports the hypotheses. Implications for the theory and practice of entrepreneurial firms are discussed.
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Why is it important?
This research examines the consequences on performance of decreasing family ownership and having a family member in a senior management role. Our results show that decreasing family ownership from complete ownership to lower levels leads to a higher firm financial performance. Consistent with the theory, we also find that when the family shareholding falls below a certain limit, firm performance starts fall.
Perspectives
The findings of this study may help to reconcile previous findings on the performance of entrepreneurial firms. Guided by the findings we propose that future research into the performance of entrepreneurial firms should include considerations of family ownership, family management, and outside blockholder ownership.
Dr Krishna Reddy
Toi Ohomai Institute of Technology
Read the Original
This page is a summary of: Effects of Family Ownership and Family Management on the Performance of Entrepreneurial Firms, Research in International Business and Finance, April 2023, Elsevier,
DOI: 10.1016/j.ribaf.2023.101977.
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