Responsible ownership behaviors and financial performance in family owned businesses

Abstract

Purpose

This study aims to examine the relationship of ownership behaviors with both firm financial performance and family assets in the context of family owned businesses.

Design/methodology/approach

The research framework allows for a comparison of predictions drawn from social psychological, economic, and management literature. The hypotheses are tested using ordinary least squares hierarchical regression analyses conducted on a nonrandom sample of medium and large family businesses.

Findings

The empirical results identify four potential categories of responsible ownership behaviors: professionalism, active governance, owner as resource, and basic duties. Professionalism (i.e. acting in accordance with expectations and agreements among owners and in relation to the firm) is the only behavior positively associated with financial performance. The effect of active governance (i.e. the monitoring of management) on financial performance is moderated by business size – this behavior has a negative effect on the dependent variable for all but the largest firms in the sample.

Research limitations/implications

The limitations of the current research and directions for further research include issues related to sampling, other possible variables to be explored, and alternative validations of the responsible ownership concept.

Practical implications

This study has direct practical implications for owners' actions in relation to one another and with other actors in the firm.

Originality/value

This study contributes to existing research on governance by developing a better understanding of the role of owners and their influence on the firm.

Citation

Berent‐Braun, M.M. and Uhlaner, L.M. (2012), "Responsible ownership behaviors and financial performance in family owned businesses", Journal of Small Business and Enterprise Development, Vol. 19 No. 1, pp. 20-38. https://doi.org/10.1108/14626001211196389