How do Family Firms Deal with the Crisis?

Abstract

This research note proposes to analyse how family firms faced the financial crisis of 2008. Generally, the conceptual literature seems to confirm a better performance of family firms in terms of financial, trade, and economic performance. Indeed, specific characteristics related to family firms may generate competitive advantage in comparison with other types of companies. These theoretical developments are validated empirically (Anderson & Reeb, Journal of Finance, 2003; Maury, Journal of Corporate Finance, 2006; Bughin & Colot, Revue francaise de gestion, 2008), although contradictory results may be found (Gomez-Mejia et al., Academy of Management Journal, 2001 ; Schulze et al., Organization Science, 2001). Indeed, family ownership, family control, involvement of family members across generations, and other control mechanisms enhancing performance have been analysed without a strong consensus. Besides, the financial turmoil that happened in 2008 has had a huge impact on the economic fabric all around the world. Analysing the performance of family firms in such a context therefore seems particularly interesting since minimal research has been carried out in the field during economic or financial downturns. The purpose of this paper is thus to shed new light on the performance of Belgian large family firms during the crisis through a comparison with non-family firms evolving in the same context. This analysis will show that family firms develop idiosyncrasies that make them more resilient than non-family firms. While several arguments arising from stewardship, agency, or resource based theories indicate that family firms may outperform non-family firms during a crisis, evidence has shown that in public family firms where the founder is no longer involved, minority shareholders are expropriated by family shareholders who want to maximize their personal wealth during a period of disturbances. A principalprincipal conflict is thus more likely to occur in family firms under these Int Adv Econ Res (2013) 19:313–314 DOI 10.1007/s11294-013-9412-5