Family Firm Performance Research Articles

Digital transformation and the performance of family firms: a dynamic capabilities perspective

ABSTRACT Digital transformation (DT) has become a critical strategy for enhancing a firm’s market competitiveness, yet the relationship between digital transformation and firm performance remains contentious. This study employs a dynamic capabilities perspective to compare the impact of digital transformation on performance between family firms and non-family firms, exploring the effect differences at a micro level. The empirical results reveal that while digital transformation in family firms is less effective in enhancing short-term performance compared to non-family firms, it significantly boosts long-term performance more than in non-family firms. Dynamic capabilities serve as the mediating path between DT and performance. Furthermore, focusing on family control characteristics, the paper examines and explains why the effects of DT on performance differ between family and non-family firms. It finds that family ownership and family management weaken the enhancement effect of DT on dynamic capabilities, but family management strengthens the role of dynamic capabilities in improving long-term performance. By exploring the relationship between DT and performance through the lens of firm characteristics, this study not only expands the research perspective on DT in family firms but also contributes to the ongoing debate on the impact of DT.

The influence of corporate governance on succession planning and organizational performance in Chinese family firms

PurposeThis study examines the impact of corporate governance on succession planning and organizational performance. Drawing on agency theory, the main purpose of this study is to identify the effect of corporate governance on succession planning by measuring the different characteristics of the board of directors.Design/methodology/approachThis multi-quantitative research used primary and archival data. A total of 281 valid questionnaires were collected from Chinese listed family firms to gauge succession planning. Relevant archival data were obtained to measure board characteristics and organizational performance. All hypotheses were examined through structural equation modeling.FindingsThe outcomes indicate that corporate governance positively influences succession planning and, in turn, boosts superior organizational performance, which uncovers the mediating effect of succession planning on the relationship between corporate governance and organizational performance. Our findings reveal that board independence and education facilitate the development of succession planning, which is crucial in the family business’s life cycle.Originality/valueThe results of this study contribute to management succession, strategic management and leadership research by demonstrating how corporate governance fosters organizational performance through succession planning, thereby expanding the application scenarios of agency theory in family firms. Additionally, the article also enriches our understanding of how family businesses apply sound governance structures to promote organizational strategic decision-making during the succession process.

Unconventional philosophies and practices: Vietnamese family firm performance in multiple countries

ABSTRACT The diversity of business philosophies and practices across family firms suggests their performance is influenced by factors that can be hard to isolate or understand. Based on 215 observations of Vietnamese firms operating in Asia, Australia, Europe, and North America, we use fuzzy-set qualitative comparative analysis techniques to discern the configurational relationships underlying their performance pathways. Of the 64 possible configurations, three pathways with a high consistency (95 percent) for high performance are distinguishable. These three pathways are characterized by varying degrees of family labor involvement, social network-based labor sourcing, and capital contributions from partners. They reveal how cultural factors, spiritual beliefs and practices, as well as the strength of firm networks influence the way these firms perform. Taken together, these insights offer valuable contributions to the theoretical understanding of family firm performance with practical and policy relevance.

Chairperson gender, policy compliance and ESG performance of family firms

Compared to other types of companies, family businesses tend to be more dominated by the traditional notion of familialism, believing that women should be more responsible for handling family affairs rather than being involved in business operations and decision-making. Yet there is still a controversy about whether female chairpersonship is more favorable to enterprise development than male chairpersonship. Driven by the globalization process and sustainable development strategies, ESG has become an important indicator for evaluating corporate sustainability and social responsibility. This paper empirically investigates the effect and mechanism of the gender of the chairperson on the ESG performance of family firms by using A-share family firms in China from 2009 to 2022 as the research sample. The results show that female chairpersonship significantly enhances the ESG performance of family firms, and this facilitating effect mainly focuses on the social and governance dimensions, and policy compliance is an important reason why female chairpersonship promotes the ESG performance of family firms. The study also finds that female chairpersons contribute more to family firms’ ESG performance in family firms whose chairpersons are from outside the family, those are indirectly founded, those with a high degree of ownership and control rights disparity, and those with single actual controller. This paper provides a framework for the study of the gender of chairpersons on the ESG performance of family firms, and also provides useful references for the professional equality between males and females and the selection of chairpersons in the real economy.

The Impact of CEO and CFO Gender on Family Firm Performance

The Impact of CEO and CFO Gender on Family Firm Performance

Unpacking Saudi Family Firm Performance Benefits of Entrepreneurial Orientation, Digitalization, Ambidexterity, and Involvements

This study aims to enhance family firm research by introducing contemporary concepts such as entrepreneurial orientation, digitalization, and ambidexterity. It develops hypotheses to examine their impacts on family firm performance, while also exploring the influence of family and generational involvements on the relationship between entrepreneurial orientation and family firm performance. Furthermore, the study investigates the mediating role of innovation ambidexterity in the relationship between entrepreneurial orientation and performance. Using a quantitative approach, this study analyzed data from 256 Saudi family firms through structural equation modeling (SEM). The findings indicate that both firm digitalization and entrepreneurial orientation significantly affect innovation ambidexterity. Additionally, entrepreneurial orientation and innovation ambidexterity have significant impacts on family firm performance. However, firm digitalization does not demonstrate a significant effect on family firm performance. Moreover, innovation ambidexterity mediates the relationship between digitalization (fully) and entrepreneurial orientation (partially) with family firm performance. This research highlights the importance for family firms seeking to combine entrepreneurial orientation with a high degree of digitalization to explore and leverage innovative practices, especially when family involvement holds greater significance than generational involvement. These findings reinforce the notion of revitalizing entrepreneurial orientations by involving new, well-educated generations. The study also calls for further empirical research on the potential of Saudi family firms and their generations to engage in entrepreneurial behaviors, ensuring their sustainability and modernization in the digital era.

Confucian culture, environmental innovation, and family firms' performance: The moderating role of market competition

AbstractEnvironmental innovation has become an important way for family firms to meet institutional requirements and market demands. Based on the dual perspectives of informal institution and environmental innovation, this study constructs a research framework of “culture‐innovation‐performance” to explore the relationship between Confucian culture, environmental innovation, and family firm performance as well as the moderating role of market competition intensity. A total of 529 family firms in the manufacturing industry listed on the Shanghai and Shenzhen A‐share stock markets between 2015 and 2021 were selected as the research sample to test the hypotheses using multiple regression analysis. The results indicate that Confucian culture significantly promotes the quality of environmental innovation but does not have a significant effect on the quantity of environmental innovation; moreover, both the quantity and quality of environmental innovation can promote the performance of family firms, and this promoting effect is stronger in an environment with lower market competition intensity. This study not only enriches the application of Confucian culture in environmental innovation but also provides guidance on how firms can improve the quality of environmental innovation.

A systematic literature review on determinants and outcomes of ESG performance in family firms

AbstractAs the predominant business type, family firms hold a unique position to influence the global sector’s ESG footprint. However, research on their ESG activities and performance is complex, multi-layered, and currently lacks integration. This review aims to bridge these research disciplines by providing an integrative overview of the current state of family firm ESG literature. By systematically reviewing 127 peer-reviewed studies published between 2000 and mid-2024, I examine the determinants and outcomes of family firm ESG performance, synthesize existing knowledge, and suggest future research directions. The findings reveal the nuanced and at times ambiguous role of family involvement across different ESG dimensions. Additionally, methodological challenges have contributed to inconclusive results in certain areas. This literature review identifies several promising new directions for future research at the intersection of family firm and ESG research to enhance our understanding and foster a more integrated and comprehensive approach to studying ESG in family firms.

Fostering Sustainable Innovation and Hybrid Performance in Family Firms

Fostering Sustainable Innovation and Hybrid Performance in Family Firms

Family Control, Ownership Dispersion, and Family Firm Performance

Family Control, Ownership Dispersion, and Family Firm Performance

Top Management Team Faultline Size and Family Firm Performance

Top Management Team Faultline Size and Family Firm Performance

Growth and Performance: Business Model Innovation in Family Firms

A business model, defined as the underlying logic of a company, is not permanent over time. Instead, companies need to introduce innovations in the business model to be competitive in the market. This is even more critical for family firms which are continuously looking for a way to obtain sustainable growth, together with satisfactory performance. The objective of this research is to analyze the impact that business model innovation activities have in the short/long-term growth and performance of family firms. This study was obtained from panel data made up of 112 valid responses from family firms involved in business model innovation. A composite model approach has been used for data analysis. The significant components of BMI that lead to greater growth and performance are identified, the distinction between long-term and short-term effects of BMI on those outcomes is made, and BMI is proven as an authoritative source of competitive advantage and growth in family firms. Those aspects are valuable insights for researchers and managers with regards to which innovation propositions help sustain growth and performance over time.

Family Versus External Block Holders’ Ownership and Firm Performance: Empirical Evidence from India

This article studies the non-linear relation between family ownership and firm performance (FP) in the Indian context by taking firms listed on NSE 500. The sample firms are investigated for 11 years, 2011–2021. The article also tries to study the impact of various categories of external block holders on the performance of Indian family firms due to their capacity to pressure management and monitor their actions. The study results show a U-shaped relation between family ownership and Indian family firms’ performance, as depicted by ROA and TQ. The findings further suggest that two prominent kinds of outside block holders that have been observed to be related to greater performance in family firms are government and foreign institutional shareholders. Thus, it can be assumed that these external block holders’ greater monitoring ability is linked with reduced agency costs and increased FP. The study is unique in finding out the influence of the ownership and governance mechanisms in the sample of Indian family firms on their performance.

Family firm performance through transformational CEO leadership and familiness-related team forces

PurposeThe purpose of this study is to test the role of familiness-related team forces induced by the CEO of family firms. In particular, we report on the effects of the transformational leadership style of CEOs on their respective top-management team (TMT) and firm performance when viewed through a familiness lens.Design/methodology/approachSurvey measures were taken from a snowballed sample of 72 CEOs of German family firms as well as from 245 members of their TMTs. We tested the aggregated firm-level data with objective performance indicators of the firms they led.FindingsSupport was obtained for the three hypothesized team-force mediations and the four-path mediation model. The relationship between CEO’s transformational style and high family-firm performance is found to be serially mediated by TMT cohesion, behavioral integration and efficacy. Together, these three types of collective forces are assumed to be the familiness effect of a family-member CEO with a transformational leadership style.Originality/valueWith our model, we quantitatively tested familiness-type forces vis-à-vis firm performance. Theoretical and practical implications of these findings are discussed.

Does internationalization and board diversity affect family firms' sustainable performance? Empirical evidence from an emerging economy

AbstractThe purpose of this study is to examine the relation between internationalization and firm sustainable performance on a set of listed Indian family firms belonging to mid‐cap and large cap categories and listed on NIFTY 500. This paper aims to explore the heterogeneity among internationalization and a set of defined variables, namely, female representation on the board, firm size, firm age, industry type, leverage, corporate social responsibility (CSR) and the number of female executives in influencing the firm performance. We aim to incorporate corporate governance, the factors influencing decisions related to it and gender diversity in understanding the relationship between internationalization and firm performance in the context of Indian family firms. The Generalized Method of Moments (GMM) and panel data regression models are both used in the study's empirical methodology. In order to examine the relationship between internationalization, as indicated by the percentage of foreign ownership, and family firm performance, as indicated by Return on Equity (ROE), the study uses the data from 2014 to 2023 for analysis, totaling 16,586 firm‐year observations. The findings indicate that internationalization, measured in this study by the investments the companies make abroad, positively affects the performance of the family firms. Age, women on board and number of female executives are seen to have positive associations with the performance of family firms. However, it is seen that firm size for family firms negatively impacts the performance while CSR and leverage seem to have no significant impact.

Relationship between the implementation of formal board processes and structures and financial performance: the role of absolute family control in Colombian family businesses

PurposeWe investigate the effect of the adoption of formal board structure and board processes on firm performance in Colombian family firms, in a context where firms can choose specific aspects of board structure and processes. We deploy insights from the behavioral governance perspective to develop arguments about how family businesses may choose board elements based on their degree of control over the firm (absolute control or less), and its effect on firm performance.Design/methodology/approachWe use an unbalanced data panel of 404 firm-year observations. The data was obtained from the annual financial and corporate governance reports of 62 Colombian stock-issuing firms for the period 2008–2014 – due to change in regulation, data could not be added beyond 2014. Panel data technique with random effects was used.FindingsThe results show that board structure is positively associated with financial performance, however, this relationship is negative in businesses where family has absolute control. We also found that there is a negative association between board processes and performance, but positive association in family-controlled businesses.Originality/valueOur research contributes to research streams on effects of family control in firm choices and on the interactive effect of governance choices and institutional context and more generally how actors interact (rather than react) with their institutional context.

Entrepreneurial orientation and socioemotional wealth as enablers of the impact of digital transformation in family firms

PurposeThe research aims to investigate how digital transformation (DT), entrepreneurial orientation (EO) and socioemotional wealth (SEW) impact the financial performance of family firms in uncertain business environments. Drawing from existing literature, we propose that DT and EO drive firm performance. Additionally, we suggest a new role for SEW, which positively moderates this relationship in family firms, especially in terms of risk behavior and innovation for survival.Design/methodology/approachWe used the STEP Consortium’s 2020–2021 database, derived from a global survey that explored how family businesses responded to environmental shocks. Following STEP’s definitions, we proposed three hypotheses and tested two models using structural equation modeling.FindingsThe findings show that EO significantly enhances the impact of DT on family firm performance. Family businesses exhibit a notable willingness to take strategic venture risks to protect their SEW. These findings align with conclusions drawn in related literature, supporting all hypothesized relationships proposed.Practical implicationsThe study has made an applied contribution by challenging the misconception that family firms are outdated and provides insights into supporting their approach to entrepreneurship, innovation and transgenerational entrepreneurship. Furthermore, it provides business families and consultants with a new view of SEW as a strategic asset.Originality/valueOur study adds to the literature by showing how entrepreneurial orientation catalyzes the positive impact of digital transformation on firm financial performance. We also highlight the contextual influence on family firm decision-makers' risk propensity, which affects SEW development and firm outcomes. This context dependency of SEW can hinder or enhance performance, offering new research and support avenues for family firms.

Familiness and Business Strategy: Unraveling the Moderating Effect of Familiness on Performance in Family Firms

Existing literature has examined several viewpoints in the field of family business research. Nevertheless, the correlation between strategy and performance in family enterprises has not been extensively studied. Furthermore, the extent to which family influence impacts the link between strategy and performance is not well-defined. The distinguishing factor between family businesses and non-family businesses is the concept of familiness, which refers to the unique qualities and talents that stem from family influence. The current body of research focuses on examining the moderating influence of familiness on the link between strategy and performance in family businesses. This study focuses on examining the impact of business strategy on the development of exceptional performance in family firms. Additionally, it investigates if familiness has a moderating function in this connection. This study aims to conduct an empirical analysis of the connection between strategy and performance in family-owned businesses. Additionally, it seeks to investigate the influence of familiness as a moderating factor in this relationship. The research population consists of individuals who own or manage family businesses. A total of 203 owners/managers were chosen using a simple random sample method from the family businesses located in Multan. Data were obtained using a cross-sectional survey, and the hypothetico-deductive technique was employed in the research design. Partial least squares structural equation modeling (PLS-SEM) was utilized for assessing data. The research findings suggest a direct correlation between familiness and the performance of family businesses. The results also reveal that familiness moderates the association between family business strategy and family company performance. The findings of this research have crucial significance for family company owners/managers by underlining the fact that family business strategy’s influence on family business performance may be strengthened by concentrating on the aspects of familiness; power, experience, and culture. This research also contributes to the family business literature by evaluating the moderating influence of familiness on the strategy-performance relationship in a family company setting.

Socioemotional Wealth and Family Firm Performance: The Moderating Role of CEO Tenure and Millennial CEO

AbstractThis study sheds light on how socioemotional wealth (SEW) theory functions in family firms. Focusing on the impact of the most highly appraised FIBER dimensions on the performance of such firms, we contextualize SEW by discussing the heterogeneity among family principals via the under‐researched role played by specific characteristics of family CEOs. Integrating arguments from SEW and generational theory, we test our theoretical hypotheses using global survey data from a sample of 1833 family firms from 33 countries. The main findings suggest that while family control and influence is not associated with performance, family members’ identification with the firm (FI) improves performance. Moreover, the positive impact of FI on family firm performance weakens in family firms with long‐tenured family CEOs. Finally, in family firms led by Millennial CEOs, the positive impact of FI on family firm performance is stronger. Our findings enrich both the theoretical insights into and practical comprehension of SEW priorities in relation to family firm performance, thereby underscoring the diverse performance outcomes associated with various types of family CEOs.

Family involvement in management, social trust and the environmental responsibility performance of family firms

Based on the perspective of socioemotional wealth, this paper explores the effect of family involvement in management on environmental responsibility performance and the moderating role of social trust by using the data of Chinese A-share listed family firms from 2010 to 2019. The results show that an increase of family involvement in management significantly improves the environmental responsibility performance of family firms, and a decrease in social trust strengthens the positive effect of family involvement in management on environmental responsibility performance. We further investigate the impact of life cycle stages on the above relationship and find that family involvement in management has the most significant positive effect on environmental responsibility performance and that social trust has the most significant moderating role in mature family firms. Our results demonstrate the importance of socioemotional wealth, external environmental factors and life cycle stages for the environmental responsibility strategies of family managers.