Abstract
This study investigates the performance of medium-sized family businesses – hereafter MSFBs – during the economic recession by comparing family and non-family firms, and correlating the organisational performance to the family ownership and firms’ solvency. An empirical research study was carried out on a sample of 128 Italian medium-sized businesses – hereafter MSBs - (76 family and 52 non-family businesses). We used the AIDA – Bureau van Dijk database to collect data referring to three years 2007, 2009 and 2014, respectively corresponding to the pre-crisis phase – 2007, the great recession – 2009, and the post-crisis phase – 2014. STATA software was used for analysing data and the analysis was organised into three steps. First, we collected the descriptive statistics. Then, we used a t-test to determine if businesses’ performance and solvency significantly differ in family and non-family businesses subgroups. In the last step, we performed a regression analysis to examine the relationship between firms’ profitability (dependent variable) and family ownership and solvency (independent variables). Contrary to previous research, we found that MSFBs performed worse at each stage of the crisis, especially during the harshest phase of the crisis. Results also show that family ownership negatively affected businesses’ profitability. On the contrary, solvency positively affected firms’ profitability at each stage of the crisis. Finally, we analysed and discussed a model case study, to better understand financial and economic dynamics of family firms during the analysed period. Although family firms’ performance during the recession period has been widely studied, they generally referred to large companies. Analyses haven’t considered MSBs, even if in recent years they have played an important role in several economic systems and show some distinctive features that can significantly differentiate them from large companies. The main contribution this study brings to the literature is investigating family business performance during a downturn, paying attention to MSBs. Key words: Family business, medium-sized enterprises, performance, solvency, economic crisis.
Highlights
This study investigates the performance of medium-sized family businesses – hereafter MSFBs – during the economic recession by comparing family and non-family firms, and correlating the organisational performance to the family ownership and firms’ solvency
STATA software was used for data analysis, divided into three phases: (1) We described the basic features of our sample providing the descriptive statistics for the main variables we used in our analysis: turnover, firm‟s seniority, employees, industry, Ebitda margin and equity ratio (Table 1). (2) We employed an independent t-test (Hamilton, 2013) to distinguish similarities and notable differences in profitability and solvency between family and non-family firms in the three years included in our analysis: 2007, 2009, 2014 (Tables 2 and 3). (3) We employed a regression model for each year of analysis to assess if and how firms‟ performance is affected by ownership structure and solvency, (Table 4)
In line with previous research (Corbetta et al, 2015), family-owned businesses have a longer life than nonfamily businesses
Summary
Firms play a significant role in several economic systems, in both industrialised and developing countries. The intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families” (Chrisman et al, 1999). This definition cannot be used to determine the exact number of existing family businesses, or to carry out comparative studies between different countries. Several analyses on the presence of family businesses in different countries, as well as numerous empirical studies on this topic, use different variables to operationalise the definition of family business and to measure the number of such companies (Astrachan et al, 2002; Klein et al, 2005)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
