Role Of Family Ownership Research Articles

The Role of Family Ownership on Internationalization Strategies

The present study examines the impact of family ownership and control on the internationalization strategies of Portuguese manufacturing firms. The study contributes to the existing literature by providing evidence that different forms of international market presence are asymmetrically influenced by family control and by underscoring the importance of innovative strategies. The analysis includes a sample of 25,533 firms observed from 2018 to 2021. Econometric models address the role of ownership in alternative internationalization endeavors, demonstrating that these firms differ from their non-family counterparts. By comparing the export propensity, intensity, and reach of family businesses to non-family businesses, the research sheds light on the challenges faced by family-owned firms and the significance of structural characteristics such as technological regimes and regional competitive advantages. The findings emphasize the negative impact of family presence on internationalization while highlighting the importance of innovation and ecosystem support. Additionally, the study contributes to the empirical refinement of firm classification by proposing a more reliable segmentation method. It also presents alternative econometric methods to appraise internationalization strategies better. Future research directions are suggested, particularly regarding the use of additional information related to innovation and human capital, offering insights for enhancing the global engagement of family businesses in global markets. This research provides valuable empirical evidence and practical implications for policymakers and practitioners seeking to support the required actions to promote the growth and internationalization of family businesses in the context of the Portuguese manufacturing industry.

The impact of economic policy uncertainty on corporate innovation in China: the role of family ownership and political connections

ABSTRACT Economic policy uncertainty (EPU) may pose a risk or provide an opportunity for corporations. This study empirically investigates the impact of EPU on the corporate innovation of Chinese firms using patent information as a proxy for corporate innovation. The study then examines whether family ownership and political connections impede/boost corporate innovation. Using a longitudinal panel dataset of 3,085 Chinese firms listed during the period from 2009 to 2020, the study observes that EPU enhances corporate innovation in China. The study also finds that family firms negatively impact innovative projects during EPU. The study then shows that political connections positively moderate the effects of EPU on corporate innovation. The results of the study are robust to time and industry fixed effects, endogeneity issues, and firm-level time-varying factors.

The Role of Family Ownership in Norm-Conforming Environmental Initiatives: Lessons from China

Drawing on institutional theory and property rights literature, this paper examines how different types of ownership adopt norm-conforming environmental practices in China. We propose that compared to governmental owners and institutional investors, which align themselves with the state and financial logics, respectively, family owners will adhere to a community logic, given their emphasis on socioemotional elements and property expropriation concerns. Thus, they are prone to norm-conforming environmental practices. Using a sample of 622 Chinese firms over six years, we find general support for the notion that ownership types are strongly associated with the adoption of norm-conforming environmental practices.

Family firm competitiveness and owner involvement

PurposeIn many countries, small and medium-sizes enterprises (SMEs) are primarily responsible for wealth, economic growth, innovation and research and development. In this paper, the authors examine the impact of family ownership and owner involvement on the financial performance of unlisted Finnish SMEs.Design/methodology/approachThis is an empirical paper using a random sample of 1,137 non-listed Finnish SMEs. Through regression analyses and robustness tests, the authors examine the effects of family management, family and employee ownership and involvement.FindingsUsing profitability measures, the authors find family-owned and controlled SMEs perform significantly better than non-family firms. The number of family members actively involved in daily business operations bears a significant negative relation to firm performance. In contrast, non-family firms in which owners are actively involved, provide comparable returns to family firms, suggesting that in non-family firms active involvement contributes to performance. The authors find that employee ownership in SMEs does not provide an efficient way to compensate employees since more dispersed ownership does not lead to higher performance.Research limitations/implicationsSME employee ownership does not provide an efficient way to compensate employees since more dispersed ownership does not lead to higher performance.Practical implicationsIn the case of Finland, family ownership is an effective organisational structure. As the depth of the COVID pandemic remains uncertain, firms with committed ownership are key to the economic recovery.Originality/valueThe authors approach the family ownership and involvement issue from a different angle. Unlike earlier studies, the authors examine the impact of both family ownership and involvement on the financial performance of privately owned SMEs. This paper helps shed light on the role of family ownership and involvement as a possible explanatory factor of overall economic performance.

Role of Family Ownership in the Relationship between Corporate Social Responsibility and Firm Performance

This study examines the effect of corporate social responsibility (CSR) on firm performance in Indonesia. Most Indonesian companies are family‐owned; therefore, it is important to consider the family ownership’s role in the relationship between CSR and firm performance. The study sample consists of 285 Indonesian listed firms for the period 2015–2019. Our results show that CSR positively affects performance. Companies that conduct more CSR activities perform better, indicating their importance. Further, the interaction between family ownership and CSR negatively affects firm performance. Therefore, family ownership weakens the positive effects of CSR. Family owners have significant disincentives for the CSR’s positive effect in improving firm performance.

The Influence of Audit Committee Characteristics on Investment in Internal Audit: The Moderating Role of Family Ownership

The Influence of Audit Committee Characteristics on Investment in Internal Audit: The Moderating Role of Family Ownership

Pursuing Gains or Avoiding Losses: The Contingent Effect of Transgenerational Intentions on Innovation Investments

AbstractMany business‐owning families aspire to someday transfer their firm to the next family generation. Controversy surrounds the question of how these transgenerational intentions affect risky growth strategies such as investments in innovation: some emphasize the positives of a transgenerational time horizon for investments in future growth, others highlight the negatives of a more conservative mindset with amplified concern for stability and risk avoidance. Using regulatory focus theory, we resolve this long‐standing controversy about the impact of transgenerational intentions by theorizing how they can trigger a promotion focus with increased innovation spending or a prevention focus with reduced innovation spending, depending on the firm’s survival hazard. Based on a sample of around 3,900 German firms using OLS and 2SLS estimation, we find empirical support for our predictions. This study extends the mixed gamble lens on family firm decision‐making with insights from regulatory focus theory to build consensus on the role of transgenerational intentions while shifting consensus on the role of family ownership in relation to the innovation spending decision.

Nonfinancial Considerations in Eco‐Innovation Decisions: The Role of Family Ownership and Reputation Concerns

Societal pressures for greater sustainability can encourage firms to target part of their innovation activities at ecological initiatives (i.e., eco‐innovation). Yet, depending on their value function, firms can respond differently to such pressures and exhibit variance in their eco‐innovation activities. In this paper, we investigate the idea that a firm’s ownership structure may play a significant role in determining its engagement in eco‐innovation. Specifically, we propose that ownership by family blockholders increases the value attached to the company’s reputation and that this, in turn, stimulates higher levels of eco‐innovation. In other words, we model the company reputation motive as a key mediator in the relationship between family ownership and firm‐level eco‐innovation. To account for family firm heterogeneity, we also model the moderating role of owners’ intention to pass the business on to the next family generation (transgenerational intentions) and of the extent to which these owners reside in the firm’s local community (local embeddedness). As theoretical backdrop, our study builds on institutional theory and the mixed gamble logic. To test our hypotheses, we use a large sample of German firms and nonlinear moderated mediation regression analysis. Results reveal that family ownership is positively related to the introduction of eco‐innovations by firms, in part because of the stronger emphasis being placed on the company’s reputation. We find that this effect is strongest when the owning‐family has transgenerational intentions. As such, this study advances our understanding of firm‐level drivers of eco‐innovation. In view of the prevalence of family‐owned firms and the mounting importance of ecological sustainability, it is valuable to extend knowledge on the contingent and indirect effect of family ownership on eco‐innovation.

“For better or for worse” – the role of family ownership in the resilience of rural hospitality firms

ABSTRACTFamily business research has identified contributing factors to the dominance of family firms in the tourism industry worldwide. The tourism literature, however, has focused more on start-ups than on long-term survival, especially in areas of rural tourism. Thus more knowledge is needed of how family ownership contributes to the resilience of hospitality firms. In rural Europe, many family-owned hotels that have existed for generations are now struggling to survive. However, some family-owned rural hotels are still performing well. This study uses interviews with ten former and present hotel owners to explore how family businesses respond to various challenges and how family ownership has influenced the survival of rural hotels. Drawing on research into tourism business resilience and family businesses, the study suggests that the resilience of rural hotels depends on family capital. This is in line with previous studies of family firm resilience outside of the tourism and hospitality context. The scientific contribution of this paper is the identification of components of human and social capital that build resilience in rural hospitality. The findings may advance hospitality management by recognising the family members’ important contributions to long-term survival of family firms.

Corporate Social Responsibility and Earnings Management: The Moderating Role of Family Ownership

This study aims to explore the impact of family ownership on the relationship among corporate social responsibility (CSR) and earning management (EM) in Pakistan. Data is collected from nonfinancial listed firms on Pakistan Stock Exchange (PSE) for the period 2009-2017. Our results of pooled ordinary least square regression indicate that CSR has significant negative impact on EM. Furthermore, results also indicate that association between CSR and EM is moderated by family ownership. Family firms which perform CSR activities are less involved in EM as compare to nonfamily firms perform CSR activities. This variation in behavior of EM in family and non-family firms can possibly be explained by socioemotional wealth theory. Keywords: Corporate Social Responsibility, Earnings Management, Family Ownership

The moderating role of family ownership on the relationship between ownership concentration and comply-or-explain disclosure: An analysis on Italian listed companies

The aim of the paper is to investigate the relationship between ownership concentration and the degree of comply-or-explain disclosure regarding the composition and functioning of boards of directors, also considering the moderating role played by family ownership. The study is conducted on a sample of 227 Italian non-financial listed companies. The results reveal a negative relationship between ownership concentration and the degree of comply-or-explain disclosure. Moreover, this relationship is stronger in companies having a family firm as a dominant shareholder. The paper contributes to previous studies on the degree of adherence to corporate governance code by investigating both the comply aspect and the explanations provided in cases of non-compliance. Moreover, the study contributes to previous research on the relationship between ownership structure and disclosure by considering the moderating role played by shareholder identity.

The Role of Firm-Specific Variables in Explaining Heterogeneous Stock Market Reactions to Dividend Announcements

The finance literature reports mixed results about the stock market reaction to dividend announcements. We try to explore that the heterogeneous stock market reaction to dividend announcements might be attributed to a number of firm-specific financial and non-financial factors. In this vein, we investigate the role of family ownership, firm size, leverage, dividend yield, market-to-book ratio, and firm growth in explaining the stock market reaction to dividend announcements. We use a sample of 206 dividend announcements of 136 firms listed at the Karachi Stock Exchange over the period of 2008 to 2012. Results of both the univariate and multiple regression analysis show that family ownership, firm size, and leverage negatively influence the stock market reaction to dividend announcements while dividend yield positively influences the stock market reaction to dividend announcements.

The Role of Family Ownership and Family Management in the Governance of Agency Conflicts

The study examined the interplay of two governance dimensions, dominant ownership and management control, that result in differential impacts of the two types of agency conflicts (primary and secon...

Reverse takeover: the moderating role of family ownership

ABSTRACTThe aim of this study was to analyse the determinants of reverse takeovers, examining the influence of target firm shareholders’ type in the agreement. We examine reverse takeovers implemented in the Alternative Investment Market between 1999 and 2012, paying special attention to the differences between family and non-family target firms, as well as the impact of the financial crisis.We propose that family firms have a lower probability of accepting a reverse takeover (‘shell’ firm), to avoid both diluting the ownership structure (loss of control) and new shareholders entering their firm. Our main findings show that the higher the percentage of ownership held by family holders, the lower the probability of their being the target firm in a reverse takeover. This effect is maintained during the crisis period, in accordance with the expectation that family firms will have fewer financial constraints.

Corporate Governance: East Asian Style A Literature Study on Typical Determinants of Corporate Governance in China, Japan, South Korea and Taiwan

Diefenbach, Yannic ; Kim Park, Miriam Ji Hyun; Noll, Jurgen.February, 2016.Corporate governance : East Asian style,Reports,[Wien]University of Vienna,37

Controlling Shareholder and Tax Avoidance: Family Ownership and Corporate Governance

The objective of this study is to analyze the entrenchment effect of controlling shareholder on tax avoidance, as well as looking at the role of family ownership, commissioner effectiveness, audit committee effectiveness and external audit quality. This research is a quantitative research using fixed effects model. Sample of this research is 70 firms with an observation period of 2010 until 2013. This study finds that the entrenchment effect of controlling shareholder has negative effect on tax avoidance. Other test results show that when a family is the controlling shareholder, entrenchment effect of controlling shareholder do not affect on tax avoidance. Board of commissioner and committee effectiveness proved to weaken the relationship between entrenchment effect of controlling shareholder and tax avoidance. However, the role of external quality audit does not prove to weaken the relationship between the entrenchment effect of controlling shareholder and tax avoidance. DOI : https://doi.org/10.21632/irjbs.8.3.167-180 Keywords: Controlling Shareholder, Commissioner, Audit Committee, External Audit, Tax Avoidance

Board Quality of SMESs in Malaysia: The Governing Role of Family Ownership

Abstract A lack of good governance characteristics among SME boards of directors is expected to lead to lower performance. Ownership structure is expected to monitor the management function of board of directors. Prior studies mostly attended on either listed companies or SMEs in developed countries, hence, resulted in the lack of evidence on governance practices among SMEs in developing countries. This study examines board characteristics among SMEs in Malaysia namely size, independence, expertise, ethnicity, and CEO duality and how they differ between family owned and non-family owned SMEs. A survey on SMEs in Klang Valley and Selangor finds that overall, the quality of board of directors of SMEs is low. The existence of more than 55% of family owned SMEs does not really provide a monitoring on the management. Differences in poor board characteristics between family owned and non-family owned SMEs are not significant. Further research is necessary to address the importance of ownership monitoring on SMEs management in order to further enhance the performance.

The influence of family and non-family social capital on firm innovation: exploring the role of family ownership

Using a sample of 172 Spanish family firms this study explores whether the effect of family and non–family social capital on family firm innovation is contingent on family ownership. We test a structural model that explores whether the relationship between family and non–family social capital with family firm innovation is moderated by family ownership. We use partial least squares structural equation modelling to test our hypotheses. Our results extend the understanding of innovation within family firms, which are characterised by nuanced social and affective behaviours.

The New Lyrics of the Old Folks: The Role of Family Ownership in Corporate Innovation

According to conventional wisdom, family ownership, which signals a lack of social capital and trust in an economy, may impede innovation. This argument, however, fails to recognize that modern family firms can benefit from capitalist institutions that promote innovation. Using a comprehensive sample of U.S. family-owned public firms and patents for the period from 1998 to 2010, we show that family ownership plays multiple roles in promoting innovation and its influence can be attributed to reduced financial constraints, a greater commitment to long-term value, and improved corporate governance. Causality is confirmed through an instrumental variable analysis, a difference-in-difference analysis based on an exogenous regulatory shock and a matched sample analysis.

The role of family ownership in international entrepreneurship: exploring nonlinear effects

Empirical research on international entrepreneurship is growing, but results on the role of family ownership in this phenomenon are inconsistent. We believe these inconsistencies owe to prior researchers having not yet investigated nonlinear relationships. Drawing on opposing perspectives of stewardship and stagnation, we explore potential benefits and drawbacks of family ownership for international entrepreneurship and explore nonlinear relationships among these two variables. Using a sample of 1,035 US family businesses and applying ordinal regression analysis, we find an inverted U-shaped relationship between family ownership and international entrepreneurship: International entrepreneurship is maximized when family ownership stands at moderate levels. We discuss the implications of our findings for theory and practice and indicate avenues for future research.