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How important is family involvement for small companies’ growth?

Lucia Garcés-Galdeano (Department of Business Management, Institute for Advanced Research in Business and Economics, Public University of Navarre, Pamplona, Spain)
Carmen García-Olaverri (Department of Statistics, Computer Science and Mathematics, Institute for Advanced Research in Business and Economics, Public University of Navarre, Pamplona, Spain)

Journal of Small Business and Enterprise Development

ISSN: 1462-6004

Article publication date: 3 June 2020

Issue publication date: 11 August 2020

476

Abstract

Purpose

Our paper seeks to further understand how family involvement in management influences firm growth.

Design/methodology/approach

Using a sample of small high-tech firms, we classify three different types of firms: family firms managed by family-CEOs, family firms managed by non-family CEOs and non-family firms.

Findings

Consistent with our expectations, we show that firms managed by family-CEOs have less firm growth in comparison with the other two groups. When the family firm is managed by non-family CEOs, the presence of another family member in management positions has a negative impact on firm growth. Finally, we found that founder-led family firms have better firm growth than descendant-led family firms.

Research limitations/implications

Implications for the theory of family firms are discussed.

Originality/value

The value of the present study is to analyse in depth the heterogeneity of the family business trying to close the gap by exploring the effect of family involvement on small firm growth. Thus, we will find different behaviours of these family companies, depending on the family member’s presence in management positions.

Keywords

Acknowledgements

The authors acknowledge the support from the Spanish Ministry of Economy, Industry, and Competitiveness and the European Regional Development Fund (FEDER) through project ECO2017-86305-C4-4-R (AEI/FEDER, UE).

Citation

Garcés-Galdeano, L. and García-Olaverri, C. (2020), "How important is family involvement for small companies’ growth?", Journal of Small Business and Enterprise Development, Vol. 27 No. 4, pp. 531-554. https://doi.org/10.1108/JSBED-06-2019-0190

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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