Abstract
The debate over the effect of “family involvement” on the performance of private enterprises has existed for a long time. However, most previous research ignored the organizational characteristics. In this paper, we incorporate one of the basic organizational characteristics—firm size—into our analysis by using data from a nationwide sample survey of private enterprises. From the two dimensions of family control and family intension, this work reveals that the agency problem and the resource advantage caused by family involvement were different in private-owned enterprises with different scales. The static positive effect of family involvement decreased as the scale of an enterprise increased. After reaching a certain scale, family involvement would have a negative impact on firm performance.
Highlights
Over the past 30 years, one of the most important aspects of progress in China’s market-oriented reform was the growth in the private sector of the economy
Family intentions, and family control Model 1(A), model 2(A), and model 3 analyzed the impact of firm size on the level of family involvement
Through analysis of the Ninth National Survey of Private Enterprises, we discussed the impact of family involvement on business performance from static and dynamic aspects
Summary
Over the past 30 years, one of the most important aspects of progress in China’s market-oriented reform was the growth in the private sector of the economy. Based on the results of previous research, the general judgment obtained is that in general the level of family involvement has a positive impact on business performance among small- to mid-scale privately owned enterprises, namely α > 0. Since β3 < 0, β4 > 0, β < 0, equation (1) can be described as stating that the level of family involvement has a positive impact on business performance, but its effect is weakened with the expansion of the business scale (hypothesis 2).
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