Lone founders, types of private family businesses and firm performance

Abstract

Although previous research focused on private firms has revealed that family involvement generally has an insignificant or negative effect on performance, the effects of family on the performance of non-listed firms has not been tested based on a clearly defined relationship. This study considers the limited evidence regarding the performance of private family firms and the debate about whether lone founder and family firms perform differently. It replicates and provides a deeper examination of the Miller et al. (2007) study for private family firms. Therefore, our contribution is mainly empirical. Our results indicate that lone-founder firms perform better than family businesses (FBs) in a private firm context. Our findings also reveal that firms with family involvement do not significantly outperform other firms. Nevertheless, when FBs are characterized by ownership concentration and non-family management, their performance is significantly lower than other firms.