Performance Of Non-family Firms Research Articles

Diversity–performance nexus in an emerging economy: an investigation of family and non-family firms

PurposeThe empirical study aims to examine the impact of board diversity with respect to gender and nationality on firm performance in an emerging economy. This research further splits the sample into family and non-family domains and investigates the diversity–performance nexus in isolation.Design/methodology/approachThe sample consists of 183 listed companies in Bangladesh over the period 2007 to 2017. This study employed the generalised method of moments (GMM) technique to address the possible endogeneity issue in the governance–performance connection. To underscore the strength of diversity, three distinctive assessment measures were used: percentage representation of females and foreign directors, the Blau index and the Shannon index.FindingsThe results for the full sample models reveal that board heterogeneity regarding both female and foreign directors positively and significantly influences firm performance as measured by return on assets (ROA). Further to this, female directors in family-owned businesses have a positive association with profitability, whereas foreign nationals demonstrate a significant positive association with performance in non-family firms. Additionally, at least three women directors are needed to make a positive difference in profitability; however, a sole director with foreign nationality is capable of demonstrating a similar impact on performance.Practical implicationsThe findings are significant for policymakers and organisations that advocate diversity on corporate boards of directors, and the minimum number of diverse board members needs to be considered depending on the identity to bring about a significant change in organisational outcome. Therefore, the findings of this study may be applied to other emerging economies with similar institutional characteristics.Originality/valueThis study reinforces the existing stock of knowledge on the impact of board diversity on the profitability of firms, especially in the context of an emerging economy – Bangladesh. Irrespective of the given backdrop, this study finds that both gender and nationality diversity in the case of Bangladesh is found to have a positive and significant effect on financial performance with respect to all the diversity metrics, i.e. the proportionate number of female and foreign directors on the boards, the Blau index and the Shannon index.

ENTREPRENEURIAL ORIENTATION AS A NEW AGGRESSIVE BUSINESS MODEL IN THE FAMILY AND NON-FAMILY FIRMS: A LITERATURE REVIEW

The study aims to define strategic orientations and examine the relationship between entrepreneurial orientation activities and firm performance. For this purpose, the concepts of strategic orientation, entrepreneurial orientation and firm performance are explained in the relevant sections based on the research in the literature. The study used international examples that associate the entrepreneurial orientation of family and non-family companies with firm performance. One of the most important results of the study is that the entrepreneurial orientation of family firms has a weak or non-existent relationship with firm performance. Family businesses tend to be less involved in entrepreneurial orientation activities than non-family companies. Another important result is that entrepreneurial orientation has a more positive effect on the performance of non-family firms than family firms. This study is likely to positively contribute to the literature by providing a new perspective to scientists and administrators and summarizing important resources in one place. The study differs from similar studies as it deals with the relationship between entrepreneurial orientation and firm performance by including family and non-family companies in the process with a holistic approach. Since the samples subject to the study were selected without making any distinction between country, sector and size in this research, the scope is limited. The relationship between entrepreneurial orientation and firm performance could not be determined statistically since the study is qualitative.

Behind ambidextrous search: The microfoundations of search in family and non-family firms

We offer a microfoundational perspective to challenge the consensual view of ambidextrous search as a superior approach to addressing performance problems. We characterize the nature of search as both ostensive and agentic, and suggest that search performance is idiosyncratic across individuals and highly dependent on decision makers' cognitive frameworks and social contexts. To test our theory, we develop a mathematical simulation model that formalizes the mechanisms regulating the search behaviors of senior leaders in both family and non-family firms. Our results suggest that a search approach that is conducive to superior performance in non-family firms may yield inferior performance in family firms depending on the senior leader's family membership and her/his positional history in the firm (i.e., non-family, founder, later-generation). Moreover, we reveal that while ambidexterity constitutes a superior search approach for family firms with founder CEOs, those with non-family or later-generation CEOs would seem to benefit from specialization.

Political connections, corporate governance and M&A performance: Evidence from Chinese family firms

This paper endeavors to investigate the relationship between political connections and M&A performance and the effect of family ownership on this relationship. We find that political connections reduce M&A performance in nonfamily firms and family firms with political connections have higher M&A performance than their nonconnected counterparts, implying that family involvement in management can mitigate the negative effect of political connection on firms’ M&A performance. Supplementary tests indicate that firms with good corporate governance mechanism have higher market response and there is a substitution relationship between political connections and corporate governance quality in their effect on M&A performance. In the effect on long-term M&A performance, political connection have a substitution relationship with firms’ market competition for nonfamily firms and can strengthen the positive effect of market competition for family firms. Our results remain significant when considering alterative definition of family firm and variable substitution. We contribute to the literature focusing on the interaction between political connections and firm performance.

Family Ownership and Firm Performance: Romania Versus Germany

Abstract A consistent body of research is dedicated to the relationship between the ownership structure of a firm and its financial performance. Despite that, the hitherto researches fail to reach a consensus regarding this issue since both negative and positive relationships have been found out. This paper examines the impact of ownership’s type (more precise the impact of the family ownership) on the firm’s financial performance. The analysis includes a comparison between family and non-family firm performance using a sample of 1,161 Romanian companies and 1,342 German companies for a time frame that range between 2008 to 2015. Based on different types of static panel data regressions: Pooled Ordinary Least Squares (OLS), Fixed Effects (FE), Random Effects (RE) and a corrective model (PCSE), the main findings show very different results for the two considered countries. Financial performance, expressed as return on assets (ROA) and return on equity (ROE) seems to be insensitive to family ownership in Romanian companies and statistically positively correlated with it for German ones. A potential explanation for these outputs consists in the different development circumstances in the two countries in the period that forego the Second War. At the same time, other variables considered do not show significant differences in outcome between the two countries: size, age, capital intensity and leverage negatively influence the financial performance of companies.

Bundles of HRM practices in family and non-family firms: the impact on enhancing performance

This paper analyzes how ability, motivation and opportunity bundles of HRM practices affect enhanced manufacturing performance in family firms (FFs) and non-family firms (NFFs). Five hypotheses were proposed and tested using data from a unique survey of 301 manufacturing plants located in Uruguay and Argentina. Estimations indicate that coherent bundles comprising HRM practices aimed at enhancing abilities (A) and giving workers the opportunity to participate in the decision-making process (O), individually and interactively, have a positive effect on manufacturing performance in FFs. A motivational bundle of HRM practices (M) has a positive effect on enhanced performance in NFFs. The study therefore establishes the existence of hierarchies among bundles, which vary with company ownership.

Strategic posture and performance: Revealing differences between family and nonfamily firms

We investigate two strategic postures, entrepreneurial orientation (EO) and small business orientation (SBO), and their relationships with firm performance, revealing significant differences between family and nonfamily firms. We examine EO and SBO in 377 small businesses, finding that EO has a greater impact on the performance of nonfamily firms, whereas SBO drives the performance of family firms. Contrary to research suggesting that family firms should behave more entrepreneurially, our results indicate that this behaviour has no significant effect on family firm performance. Rather, increased performance is found in family firms that adopt a small business strategic orientation.

Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms

This study examines whether the relationship between corporate board and board committee independence and firm performance is moderated by the concentration of family ownership. Based on a sample of Hong Kong firms, we find no significant association between the independence of corporate boards or board committees and firm performance in family firms, whereas board independence is positively associated with firm performance in non-family firms. Additionally, our findings show that the proportion of independent directors on the corporate boards of family firms is lower than that of non-family firms, but we find no significant difference in the representation of independent directors on the key committees of corporate boards between family and non-family firms. Overall, these results suggest that the “one size fits all” approach required by the regulatory authorities for appointing independent directors on corporate boards may not necessarily enhance firm performance, especially for family firms. Thus, the requirement to appoint independent directors to the corporate boards of family firms needs to be reconsidered.

Founding Family Ownership and Firm Performance in Consumer Goods Industry: Evidence from Indonesia

This research investigates the significant influence of family ownership on the firm performance in order to provide information to decision maker and other interested parties. The analysis includes comparison between family and non-family firm performance in Indonesia. The samples are taken from 31 consumer goods companies, listed in Indonesian Stock Exchange, ranging from 2005 to 2009. The result describes that non-family firms perform better than family firms and no significant influence between family ownership and firm’s profitability. On the other hand, family ownership has negative contribution to firm market valuation. The study suggests that family firms have less financial performance than that of non-family. Family member within the top position and have major control rights contribute negative influence to firm performance. The evidence raises concerns about possible profit manipulation and weak governance law in Indonesia, and as a result there is an expropriation of wealth to the majority and family related shareholders.

FOUNDING FAMILY OWNERSHIP AND FIRM PERFORMANCE: EMPIRICAL EVIDENCE FROM CONSUMER GOODS INDUSTRY IN INDONESIA

This research investigates the significant influence of family ownership on firm performance in order to provide information to decision makers and other interested parties. The analysis includes comparisons between family and non-family firm performance in Indonesia. The samples are taken from 31 consumer goods companies, listed on the Indonesian Stock Exchange, ranging from 2005 to 2009. The results show that non-family firms perform better than family firms and no significant influence between family ownership and firms’ profitability. On the other hand, family ownership has negative contribution to firm market valuation. The study suggests that family firms have lower financial performance than that of non-family. Family members within the top position have major control rights and contribute a negative influence to firm performance. The evidence raises concerns about possible profit manipulation and weak governance law in Indonesia, and as a result there is an expropriation of wealth to the majority and family related shareholders.