Abstract
This paper contributes to the literature on comparative performance of family and non-family businesses by accounting for self-selection and by comparing performance within and across sectors. Using an extensive data set of Dubai businesses in the four different major sectors in the Dubai economy (construction, manufacturing, services, and trading); we find that the sector matters. Family businesses outperform nonfamily businesses in trading, followed by construction as a far second. Performance of family businesses is weakest in manufacturing and services, only in trading did family businesses outperform nonfamily exporting businesses in other sectors. Reasons for that are discussed and policy implications are drawn. We also find strong evidence of self-selection bias.
Highlights
In their overview of family business performance, Jackiewicz and Klein (2005) [1] report that of the 41 studies that compared family to nonfamily businesses, 25 find the former outperform the latter, 5 find the opposite, and 11 find no significant difference between the two types of firms
Using an extensive data set of Dubai businesses in the four different major sectors in the Dubai economy; we find that the sector matters
In this paper we use an extensive data set of Dubai businesses to test for differences in family versus nonfamily firms within and across the four major sectors in the Dubai economy
Summary
In their overview of family business performance, Jackiewicz and Klein (2005) [1] report that of the 41 studies that compared family to nonfamily businesses, 25 find the former outperform the latter, 5 find the opposite, and 11 find no significant difference between the two types of firms. If selection bias is present, the observed differences in firm performance are attributed to business type when they may be due to differences between the entrepreneurs who chose between the two types of business structures. In this paper we use an extensive data set of Dubai businesses to test for differences in family versus nonfamily firms within and across the four major sectors in the Dubai economy (construction, manufacturing, services, and trading). The section reviews and discusses the literature on comparative performance of family and nonfamily firms.
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