Does a government's organizational structure affect the governance structure of local family firms? A perspective on the number of cities’ subordinate counties

Abstract

Previous research has explored factors influencing the governance structure of family firms from family and corporate levels, while this study taking the number of a city's subordinate counties as the lens, examines the impact of a government's organizational structure on local family firms’ governance structure. Results show that in cities with a larger number of subordinate counties, local people are more likely to form a sense of identity with the county rather than the city. Influenced by this “small-group” sense of identity, locals tend to place greater emphasis on familial unity, trusting and relying more on family members. Thus, when running family businesses, local people are more willing to involve family members in operations and increase their shareholdings. Moreover, in regions with lower population mobility, this relationship is more significant. By analyzing the factors which can affect family firms’ governance structure from a macro institutional environment perspective, this study elucidates how regional characteristics impact local family firms’ management, and establishes an academic link between public administration research and business administration research.