Definition Of Family Firms Research Articles

A Survey of Asian Family Business Research*

AbstractWe survey the literature on family firms with a focus on Asian countries. We begin with identifying three key motivational drivers of international research on family business—their dominance, relative performance, and extent of family embeddedness in the business. Second, we provide a brief survey of family firms in eight Asian economies with a focus on the history and current challenges faced by family firms in each country. Third, we document the variety of family firm definitions used in the literature and the resulting difficulty in drawing inferences due to a lack of definitional consistency. Fourth, we discuss the strategic advantages family assets such as legacy and networks bring to family firms in the Asian context. Fifth, we identify some unique challenges family firms face in their countries, and provide examples of how ownership and succession structures mitigate these challenges. We close this survey by suggesting some open research questions relevant for Asian family firms.

Family firms and financial performance: a meta-regression analysis

PurposeThe purpose of this paper is to carry out a meta-regression analysis upon the literature that examines the relationship between family firms and financial performance.Design/Methodology/ApproachInformation of publication and study characteristics from 61 primary studies, comprising 726 size effects was collected. In particular, three leading factors highlighted in narrative literature reviews analyzed were: the financial performance measures, the family–firm definitions and the estimation methodologies.FindingsOverall, a positive relationship between family involvement and financial performance was found. A series of results, those linked to return on assets (ROA) – earnings before interest, taxes, depreciation and amortization (EBITDA), suggest positive publication bias from family definition and negative publication bias when OLS is used. Tobin’sQestimates show no linkage to certain traits and aspects of the research process.Originality/valueExisting literature review and meta-analysis studies show not concluding results on the family effect upon firm performance. The meta-regression analysis used in this paper allows to examine simultaneously effect size and publication bias. The latter effect is particularly salient in the approach and findings, and not present in previous studies.

Innovation in family firms – a generational perspective

Purpose The purpose of this paper is to clarify the generation–innovation relationship in family firms. The study acknowledges that the degree of family influence on a firm varies over generations and tests if the generation–innovation relationship is affected by two defining characteristics of family influence (family management and intention to transfer family control). Based on recent research that deconstructed a family’s influence, this paper seeks to contribute to disentangling the ambivalent findings on family firm innovation. Design/methodology/approach The study draws on the Community Innovation Survey and analyzes a comprehensive data set of German family firms. The analysis builds on a structural equation model and tests if the two defining characteristics of family influence serve as mediators in the generation–innovation relationship. Findings The study suggests that family firms raise their innovation output over generations. Yet, a considerable fraction of the increase occurs via indirect paths – particularly via the intent to transfer family control to succeeding generations. The results indicate that increased family influence has positive and negative effects on innovation, reinforcing the need for careful application of the family firm definition. Research limitations/implications The sample is exclusively composed of German firms and the generalizability of the findings is limited. Future researchers may also overcome further limitations related to the survey data used. Practical implications The results urge family firm leaders to recognize the vital role of succession planning and non-family management involvement in an innovation context. Originality/value The study deconstructs the varying degree of family influence over generations and adds to the fields of family firm innovation, family firm definitions and typologies.

Can Supervised Machine Learning Be Used to Identify Family Firms Using a Sophisticated Definition?

The ability to identify family firms is a critical element of any empirical family businesses study, however obtaining representative time series data that applies complex family firm definitions can be challenging and resource consuming. In this method development paper, I propose that supervised machine learning may be used as a scalable imputation approach after a ‘learner’ has been trained with a combination of survey and registry data. I demonstrate this technique using survey data from 7,153 firms that applies the ‘European definition’ of family firms, which captures elements of voting rights and governance. I combine this data with population registry data containing person- level family relationships who are affiliated with the firms through ownership, board membership, or several other ways. After training several random forest, boosting tree and neural network machine learners, I find that random forest and boosting tree learners obtained the best performance by being able to correctly classify ...

Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

Purpose –The primary purpose of this paper is to examine the impact of family control/ownership on auditor choice and audit fees in Hong Kong. Besides, this paper also addresses the impact of multiple directorship of audit committee members on these two external auditing dimensions.Design/methodology/approach –Panel data technique is used to perform analysis. The unbalanced panel data set consists of 2,724 firm-year observations for nine years from year 2001 to 2009.Findings –The results indicate that family firms have a higher likelihood to appoint Big 5 auditors, it supports the signaling hypothesis. Contrasting the perceived higher audit risk, they incur lower audit fees. The results also show the independent audit committee members with multiple directorships are not affected by their busyness. Our results are also robust to the alternative definition of family firms and by using the sub-sample within 2004 - 2009. We also find that the firms controlled by recognized Big family in Hong Kong society incur higher audit fees but no support for family firm incurring higher non audit fee.Originality/value–First, our paper responds to the recent call for research for auditor choice and audit fees within the context of emerging economies. Secondly, this paper also explores other determinants of auditor choice and audit fees in HK such as the characteristics of the audit committee and multiple directorships. Thirdly, our findings contribute to the family firms’ literature by shedding light on family firms do enhance their external auditing function to improve the credibility of financial reporting of the firms which is expected to help investors and public in HK to know more about the effect of family control on the external auditing to protect their interest. The findings in this paper are also valuable to regulators who might concern the corporate governance and informativeness in family firms.

International convergence and divergence on family entrepreneurship problems: the case of family firms in Japan

This study examines the current situation of Japanese family firms. We present evidence from Japan, with a focus on longevity and succession problems. Despite the existence of long-established firms that have survived through the centuries, research on family firms in Japan has barely begun. We build on the few existing studies in this field. We contend that the particularity of Japan can provide interesting inputs to the field of family firms. Supported by the findings, this study suggests a new line of research and contributes to the following: 1) rethinking the definition of family firms; 2) assessment of the status quo based on a comparative approach between Western countries and Japan; 3) stock-taking of Japanese centenary firms; 4) classification of family business issues, especially those related to succession.

International convergence and divergence on family entrepreneurship problems: the case of family firms in Japan

This study examines the current situation of Japanese family firms. We present evidence from Japan, with a focus on longevity and succession problems. Despite the existence of long-established firms that have survived through the centuries, research on family firms in Japan has barely begun. We build on the few existing studies in this field. We contend that the particularity of Japan can provide interesting inputs to the field of family firms. Supported by the findings, this study suggests a new line of research and contributes to the following: 1) rethinking the definition of family firms; 2) assessment of the status quo based on a comparative approach between Western countries and Japan; 3) stock-taking of Japanese centenary firms; 4) classification of family business issues, especially those related to succession.

Innovation and family firms: ability and willingness and German SMEs

PurposeResearch disputes whether family businesses are more or less innovative than their nonfamily counterparts. So far, no consistent results have been achieved. The recently introduced willingness and ability framework suggest that idiosyncratic behavior is only to be expected if both sufficiency conditions – willingness and ability – are fulfilled. The purpose of this paper is to test this hypothesis empirically.Design/methodology/approachA large cross-sectional sample of German small- and medium-sized enterprises is used. The sample offers – alongside numerous moderators commonly used in innovation research – several family firm definitions. Given the censored nature of the endogenous variable chosen, a Tobit model is used.FindingsDrawing upon agency theory and the ability and willingness paradox in family firm innovation, it finds family firms to be less innovative only if both willingness and ability conditions are fulfilled.Originality/valueTo the best of the knowledge, the study provides the first attempt to test the willingness and ability theorem. Therefore, the commonly used family firm-specific measures (self-assessment-, ownership-, and management criterion) are operationalized to better understand what drives innovativeness in family firms. The findings thus add to the ongoing discussion on what really drives family impact on firm-level decisions.

A Meta-Analysis of the Financial Performance of Family Firms: Another Attempt

This study presents the results of a meta-analysis of the financial performance of family firms. Drawing on a sample of 380 studies, we find that family firms show an economically weak, albeit statistically significant, superior performance compared to non-family firms. Furthermore, we find moderating factors to significantly condition the relationship. These results show that the positive effect of family firms on financial performance is more pronounced in samples of public and large firms and when an ownership definition of family firms is used. It is also notable that family firms do best when their performance is assessed by ROA, a measure that is not as influenced by financial structure as ROE. Based on the broad empirical evidence obtained, we discuss implications and avenues for future research.

A meta-analysis of the financial performance of family firms: Another attempt

This study presents the results of a meta-analysis of the financial performance of family firms. Drawing on a sample of 380 studies, we find that family firms show an economically weak, albeit statistically significant, superior performance compared to non-family firms. Furthermore, we find moderating factors to significantly condition the relationship. These results show that the positive effect of family firms on financial performance is more pronounced in samples of public and large firms and when an ownership definition of family firms is used. It is also notable that family firms do best when their performance is assessed by ROA, a measure that is not as influenced by financial structure as ROE. Based on the broad empirical evidence obtained, we discuss implications and avenues for future research.

Do Family Firms have Better Access to External Finance during Crises?

AbstractManuscript TypeEmpiricalResearch Question/IssueWe explore whether family firms have easier access to debt during crises than nonfamily firms. We adapt the leverage equation from the corporate finance literature and estimate the differences in the leverages of family and nonfamily firms between expansion and crisis periods.Research Findings/InsightsThe capital structure of family firms is based less on external finance than that of nonfamily firms. Nevertheless, during crisis periods, family firms are less subject to credit restrictions than nonfamily firms and, thus, the impact of the lack of credit on their capital structure is less severe in the former than in the later.Theoretical/Academic ImplicationsWe provide a reliable test of the access of family firms to external finance in a market with severe financial constraints. A precise empirical definition of family firms contributes to the study of the differential characteristics of this group of firms.Practitioner/Policy ImplicationsThis paper shows the relevance of family firms in the economy under difficult financial conditions. The finding that lenders can be less reluctant to lend to family firms during a crisis encourages policies promoting a long‐term view of these firms and their control across generations. The results can also be useful at the time of designing policies related to the access of credit during expansion and crisis periods.

A Meta-Analysis About the Financial Performance of Family Firms: Another Try

This study presents the results of a comprehensive meta-analysis on the financial performance of family firms. Drawing on a sample of 380 studies, we find that family firms show economically weak, albeit statistically significant, superior performance compared to non-family firms. Furthermore, we find moderating factors on country, firm, and family level to significantly intervene in the relationship: these results show for example that the positive effect of family firms on financial performance is more pronounced in samples of public and large firms, as well as when an ownership definition of family firms is used. Based on the broad empirical evidence obtained, we discuss implications and avenues for future research.

Review of Family Business Definitions: Cluster Approach and Implications of Heterogeneous Application for Family Business Research

This review article displays several attempts to define family businesses as well as a systematization approach to get new insights about the relationship between family business definitions and their application under different conditions such as legal framework, culture or regional understanding of family. Potential explanations for the ambiguity of what is meant by family firms are revealed by reviewing 267 journal articles. A consensus about the object of investigation would result in a deeper understanding of family firms’ uniqueness, might lead to more reliable comparative studies as well as interdisciplinary work (e.g., finance and family firms) and enables a quicker consolidation of family business research, especially in contrast to research on small and medium-sized enterprises and entrepreneurship. Therefore, the present review contributes to the development of family business research by providing an initial attempt to comprehensively systematized existing family firm definitions which could be used by researchers in family business research.

Identifying and classifying family businesses

One of the main challenges facing those researching family business is that of defining what exactly constitutes a family business when considering whether family businesses and non-family businesses are different or not. Most research on the definition of family firms has been conceptual-based, and the choice of definition has lacked empirical support. Previous research has not yet obtained conclusive results regarding the differences between family and non-family firms. Moreover, very few countries worldwide have explicit database information to enable them to recognize family firms. This research uses an abductive method to identify family-involved firms (FIFs) with homogeneous features compared to the rest of firms regarding performance, an essential indicator of the firm’s success. Second and later generation FIFs, despite their internal differences, make up a uniform group of firms when considering several dimensions of performance (leverage, efficiency and profitability), and differ significantly from the rest of firms. At the same time we test whether entrepreneurial firms (lone- founder firms) should be considered family firms or non-family firms, according to their behavior. Results agree with making a distinction between lone-founder firms, in which no relatives are involved as internal stakeholders, and FIFs.

Family Control and Corporate Social Responsibility: Evidence from East Asia

This paper investigates the impact of family control on corporate social responsibility (CSR) performance. Using Carney and Child's (2013) newly collected data on the ultimate ownership structure of publicly traded firms in nine East Asia economies, we find that family control has a significantly negative impact on CSR performance, which is consistent with the entrenchment view of family ownership. Also, we find that the presence of multiple large shareholders helps to improve the CSR performance of family firms. Moreover, our results are robust to inclusion of other types of ownership, different CSR components, endogeneity tests, subsample tests, alternative estimation methods, and alternative definition of family firms. Our study contributes to our understanding of the corporate governance of family-controlled firms and the determinants of CSR.

Do agency concerns inhibit internationalisation of family owned firms?: a comparative study of the USA and Poland

Although family firms are a dominant part of the industrial landscape in the USA and Poland, they normally do not capitalise on international opportunities. We hypothesise that the lack of internationalisation is primarily due to agency concerns such as losing control of executive power, difficulty in external coordination, and diluting the firm’s mission. We investigate the structural and cultural differences of family firms in the USA and Poland based on sample surveys. A more comprehensive definition of family firms is employed based on the F-PEC scale of power, experience, and culture. Preliminary survey results indicate that agency concerns are substantial in both countries and could be a major impediment to internationalisation. Moreover, family firms generally prefer a low control mode of entry such as a sales agreement/representative, supporting the incremental approach to internationalisation. The main driver for internationalisation seems to be the lure of expanding markets rather than lower cos...

Family firm research: sketching a research field

Due to the importance of family firms for the economy, researchers have begun to embrace family firms as a research object. This article seeks to summarise and to structure family firm research based on an extensive survey of the literature. Important research foundations such as the definition of family firms, a theoretical foundation in the resource based view and in entrepreneurship and research topics such as performance differences of family firms, their goal structure, psychological ownership and business succession are outlined and discussed.

A Research About of Family Firm Defintion

The general purpose of this study was to better understand the development of the family business studies according to orientation, authors, journals and theories associates. However, the main purpose of this research is to give general inside of the Family Firm definitions based on thirty-two years review and the essential implications of different lines of research in Family Business worldwide.The authors analyzed different family business articles published in most important management journals between 1975 and 2007 and examined variables and their relationships that help to explain the family business evolution. The authors also provide a context analysis of the articles and offer suggestions for future research.

Family Firms and Investments

Family firms are a widespread control structure in most countries, especially among smaller firms. A vast literature addresses the question of whether they are performing better or worse than comparable non family firms, with not entirely conclusive results. Here we take a different, indirect approach and test whether investment decisions in family firms are more sensitive to uncertainty than in other firms. By using a novel dataset that includess both a better definition of family firms than commonly used (through self evaluation) and a very good proxy of the uncertainty on future demand that firms face, we are able to verify that – as compared to other firms – family firms are significantly more sensitive to uncertainty: this might contribute to explain why in some situations they perform better, whereas in others they do worse. We find evidence that this greater sensitivity to uncertainty in family firms is basically due to the effects of risk aversion and capital irreversibility, where the latter appear to be associated to a greater opaqueness of family firms rather than to the degree of sunkness of fixed capital. Finally, we propose some evidence that the prevalence of family firms in Italy might be associated to long standing institutional factors, such as an inefficient law enforcement system and a low social capital.

How Do Family Ownership, Control, and Management Affect Firm Value?

Using proxy data on all Fortune 500 firms during 1994-2000, we establish that, in order to understand whether and when family firms are more or less valuable than nonfamily firms, one must distinguish among three fundamental elements in the definition of family firms: ownership, control, and management. Specifically, we find that family ownership creates value only when the founder serves as the CEO of the family firm or as its Chairman with a hired CEO. Control mechanisms including dual share classes, pyramids, and voting agreements reduce the founder's premium. When descendants serve as CEOs, firm value is destroyed. Our findings further suggest that the classic owner-manager conflict in nonfamily firms is more costly than the conflict between family and nonfamily shareholders in founder-CEO firms. However, the conflict between family and nonfamily shareholders in descendant-CEO firms is more costly than the owner-manager conflict in nonfamily firms.