Political behavior in family- and founder-controlled firms

Abstract

Purpose

The political behavior of founders, families and their firms in the form of campaign contributions has not been explored by family business scholars. Yet partisan and ideological campaign contributions raise a range of governance issues and hold implications for myriad stakeholders, including investors, employees, customers and the public. The purpose of this paper compares and contrasts the campaign contributions of founder- and family-controlled firms relative to managerially governed firms and develops theoretical explanations for observed differences.

Design/methodology/approach

This paper develops a “principal owner” hypothesis based upon a typology of firm ownership characteristics (founder/family control or not; publicly traded or privately held). This hypothesis is tested by multivariate empirical analyses of the campaign contributions of 251 firms across 14 industries with four types of ownership structures.

Findings

Founder- and family-controlled firms are more partisan and ideological relative to other firms in their industry and this finding is consistent across industries. Founders and family members influence political behavior, including in publicly traded firms.

Practical implications

Given potential controversies raised by ideological and partisan campaign contributions and the unpredictable returns on political investment, it behooves founders and their family members to assess the impact of their political behavior on the business and on key stakeholders.

Originality/value

This paper is the first to raise governance issues related to founders’ and families’ political spending and develops original insights into the ideological and political behavior of these businesses.

Citation

Clark Muntean, S. (2016), "Political behavior in family- and founder-controlled firms", Journal of Family Business Management, Vol. 6 No. 2, pp. 186-206. https://doi.org/10.1108/JFBM-02-2015-0009