Job Turnover in Times of Crisis: Family Firms and Rural Context

Abstract

Financial crises inevitable leads to downturns in the labor market and increased unemployment. Family firms are known for their long-term orientation which help them to survive hardships. In times where short-term profit maximization is compromised, there are reasons to believe that family control can be a source to sustainable business behaviour. In the present study, building on the the nonfinancial logic and local embeddedness literatures, we theorize that that family involvement mitigates involuntary job turnover following an exogenous economic shock (in our case, the 2007–2009 global financial crisis), and especially in rural areas where local ties are likely to be strong. Relying on a panel dataset of Swedish firms, our study contributes to a better understanding of how companies react to employee layoff in times of crisis while shedding some further light on the link between regional economics and family involvement.