Abstract
Purpose – The purpose of this study is to analyze the relationship between family influence, measured through power, experience and culture (F-PEC) and family business (FB) performance. Performance is measured from a financial and non-financial perspective. Design/methodology/approach – Empirical study using the quantitative method and data collected through a questionnaire, answered by 169 Portuguese family firms. The survey design was based on prior research of FB performance and the F-PEC questionnaire. The exploratory factor analysis and multiple linear regression models are used. Findings – The results indicate a negative relationship between experience and financial performance, a positive association between a culture of family commitment and performance (financial and non-economic goals), and a positive relationship between a culture of family values and non-economic goals. The r esults show the importance of agreement between the firm and the family goals. Family influence on FB performance cannot be seen only from a positive (stewardship theory) or a negative (agency theory) perspective . Originality/value – C ommitment increase s financial performance and the achievement of non-economic goals (perpetuity and family assets) . It is important to study how a culture of commitment leads to superior performance.
Highlights
Businesses (FBs) constitute the predominant form of ownership in current markets (e.g., Carney, Van Essen, Gedajlovic, & Heugens, 2015)and findings gleaned from publicly listed firms may not apply to the ubiquitous, but less frequently studied, privately held family firm (PFF)
In Portugal, the Portuguese Family Businesses Association (AEF) estimates that over 60% of Gross Domestic Product and 50% of employment is generated by such companies, “with their ownership, whether totally or partially, in the hands of one or more family members, and the family [holds] control over the management of the company” (AEF, n.d.)
The objective of this research is to contribute to the theoretical framework on family business (FB) using the following approach: (1) measure “family influence” using the F-PEC scale developed by Astrachan et al (2002) and (2) observe performance from a perspective that considers non-economic objectives and financial performance
Summary
Businesses (FBs) constitute the predominant form of ownership in current markets (e.g., Carney, Van Essen, Gedajlovic, & Heugens, 2015)and findings gleaned from publicly listed firms may not apply to the ubiquitous, but less frequently studied, privately held family firm (PFF). The majority of smalland medium-sized companies (SMEs) are familyowned and their presence extends across various sectors of activity (AEF, n.d.). In this context, the FB emerges as a complex and heterogeneous entity due to the dynamics existing within the respective family and the different levels of influence that its members establish and maintain within the company (Gersick, Davis, Hampton, & Lansberg, 1997), within the scope of which certain factors serve to moderate or influence this relationship (Miralles-Marcelo, Miralles-Quirós, & Lisboa, 2014). From a different perspective, Westhead and Howorth (2007) refer to how FBs attain greater longevity than non-family businesses (NFB), which derives from the commitments of the family in the long term and their strong sense of loyalty to the company (Denison, Lief, & Ward, 2004)
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