Does family power drive the size transition of entrepreneurial family firms? A study on the growth of Italian manufacturing firms
Journal of Small Business and Enterprise Development
ISSN: 1462-6004
Article publication date: 2 July 2024
Issue publication date: 9 October 2024
Abstract
Purpose
This paper explores the drivers and inhibitors of the transition of entrepreneurial family firms from small to large firms. We adopt two contrasting theoretical perspectives, i.e. agency and stewardship, to explore the effects of family power on size transition.
Design/methodology/approach
We adopted an original research design that leverages a unique longitudinal database built starting from the list of the 500 best Italian manufacturing family firms published by the AUB Monitor in 2018. Specifically, we tested our hypotheses using a comprehensive set of financial and governance data from 89 Italian manufacturing family firms covering a 10-year period. To test our hypotheses, we conducted a survival analysis using a Cox regression.
Findings
We find an inverted U-shaped relationship between family involvement in ownership and size transition: size transition is more likely to happen at intermediate levels of family involvement in ownership. Additionally, our analysis shows that family involvement in the board of directors negatively impacts size transition, while the presence of a family CEO has a positive influence.
Originality/value
To the best of our knowledge, this study represents the first exploration of the phenomenon of size transition within entrepreneurial family firms. We believe it was worthwhile for two reasons. First, small size is frequently regarded as a weakness when competing in international markets, investing in R&D, or rewarding shareholders. Second, since small family firms are the major contributors to the world economy, understanding the factors that facilitate their transition to large firms can have a significant impact on overall economic development and prosperity.
Keywords
Acknowledgements
The authors express their sincere gratitude to the organisers and participants of the 2021 FERC Paper Development Workshop, the 2022 CONNECT Workshop on Organization Studies & Family Firms, the 2023 IFERA Conference and the 2023 EIASM Workshop on Family Firm Management Research. They are also thankful to the Editor-in-Chief (Patrick Murphy), the Co-Editor (Mark Schenkel), and the anonymous reviewers for their precious guidance. Sofia Brunelli is in debt with SIDREA for the financial support received.
Citation
Brunelli, S., Vena, L., Sciascia, S. and Naldi, L. (2024), "Does family power drive the size transition of entrepreneurial family firms? A study on the growth of Italian manufacturing firms", Journal of Small Business and Enterprise Development, Vol. 31 No. 6, pp. 1175-1200. https://doi.org/10.1108/JSBED-09-2023-0452
Publisher
:Emerald Publishing Limited
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